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Russian - Turkish Business Forum Thematic trend : Strategy of innovative development of Russian Federation automotive industrial cluster Report theme : Regions’ development by means of Industrial parks creation . Project of Dimitrovgrad Industrial Park creation

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20 22 october 2010


Thematic trend: Strategy of innovative development of Russian Federation automotive industrial cluster

Report theme:Regions’ development by means of Industrial parks creation. Project of Dimitrovgrad Industrial Parkcreation

Reporter:Chairmanof the Management Board of ОАО «United Automotive Technologies» MihailNikolaevichDobyndo

20-22 October 2010.

20 22 october 2010

  • Brief information about UAT plants

  • Brief description and plants location

  • The necessity of government support for operating plants

  • Development trend of production line of UAТ plants

  • Greenfield development in Samara and Ulyanovsk regions

  • Choice of UAT plants development trends: Greenfield or Brownfield on the example of DIP project

  • Project development support from Ulyanovsk Region Government concerning Brownfield development and Joint Ventures

  • Brownfield project development and Joint ventures on the examples of DIP

  • Availability of production areas for projects

  • Proposals to change regulatory framework for automotive components manufacturers support

20 22 october 2010

Brief description about UAТ plants

UAT «United Automotive Technologies» was established in 2008. Company managers twelve industrial plants manufacturing automotive components which located in different regions of the country.

UAT «United Automotive Technologies » was established in 2008. Company managers twelve industrial plants manufacturing automotive components which located in different regions of the country.

ОАО «United Automotive Technologies»brings in investments (including foreign) into Russian automotive Industry, raise competitiveness of manufactured products, extends production line, and as a result , increases business worth. At the present moment the main aim of UAT is formation of the instrument for AVTOVAZ strategy realization of formation automotive component «quasi-branch» around automotive manufacturer and to the highest extent is aiming to mother company activity – AVTOVAZ.

Strategic Company’s plans include establishing Joint Ventures with foreign partners, oriented to automotive components production, assembled in Russiawithin production localization programs

Actually UАТ is the first automotive component cluster in Russia

20 22 october 2010

Steering system

Air and fuel electronic engine supply systems

Gas exhaust system

Braking system

Lock systems , access system and door modules

Front suspension module

Development trends of UAT plants production line

Main functional vehicles modules (TIER I)

Body and exterior

Engine/Assist systems




  • Passenger seats

  • Front section

  • Rear section

  • Roof

  • Front doors/rear doors

  • Front/ rearpart

  • Trunk door

  • Windows/glasses

  • Lighting

  • Systems of locks

  • Windscreen wipers

  • Additional equipment

  • Engine

  • Additional power systems

  • Conditioning system

  • Exhaust system

  • Fuel injection

  • Roof

  • Saloon

  • Passenger protection

  • Doors

  • Pedals

  • Acoustic

  • Ventilation

  • Power supply

  • Tape recorder

  • Engine control

  • Chassis/actuator

  • Comfort

  • Safety

  • Wheels

  • Suspension

  • Bumpers and springs

  • Steering

  • Supporting elements

  • Braking system













Development of traditional competencies

Assimilation of new competencies


Planning modules for assimilation by UАТ plants

Cooling andheat exchanging vehicle systems

Rear suspension modules

Planning technologies for assimilation by UAT plants

Small stampings

Average and big stampings

Automotive turning parts

Metal Powder metallurgy

Aluminum casting

Joint Venture

Iron castings

Upset forging technology

Rubber parts Production







20 22 october 2010

The necessity of government support for operating enterprises

  • The plants owned by UAT were built in the beginning of 70-s years ofthe last century for supplying AVTOVAZ with automotive components. Most of the plants , due to application of the gradation system, used to be town-forming enterprises, which besides of population employment, provided towns with central heating, sewerage and drain waters cleaning. UAT’s plants fulfill their main task by supplying AVTOVAZ conveyer but together with out-of-dating old models «Classics» and minimum volumes of component development for new vehicles modules, plants are loosing production volumes very rapidly.

  • Understanding the situation, Ulyanovsk Region Government and OАО «United Automotive Technologies» signed the agreement about joint project creation «Dimitrovgrad Industrial Park» in Dimitrovgrad town in the manufacturing site of ОАО«DAAZ». ОАО«DAAZ» and a number of plants located in this territory, used to provide100% of AVTOVAZ volumes on injection and cooling engine systems, heating saloon systems, locks, window regulators, mirrors and so on.

  • The aim of Industrial Park Creation is transformation of UAT’s plants from today-yesterday status into new supplier model, providing in such a way a traditional role of reliable supplier for automotive assembling plants, and the most important point, providing population employment at the expense of creation new jobs instead of the old ones which are going away together with old vehicle models.

  • To solve this task is possible only with the partnership with the leading world famous automotive component manufacturers. Meanwhile, leading automotive manufacturers do not hurry to localize production in Russia,offering direct parts deliveries from their abroad plants. If you were on their place you would do the same, as applicable regulations of 10-s years favor their activities:

  • concessionary duties (0 to14%) for components import, as for assembly, so as for resale at after market;

  • absence of possibility of bringing in government’s investments into energy communications, which are on the plants’ balance;

  • absence of government support concerning investments into plants’ R&D .

  • A possible way out of this situation can be a federal, regional and local

  • authorities support for the operating plants.

20 22 october 2010

Greenfield Development in Samara and Ulyanovsk enterprisesregions





Territory area 660 Ha



✍ Federal law «About Special Economic Zones in Russian Federation» №116-ФЗ of July, 2 , 2005.

✍ RF Government resolution of August, 12, 2010. N 621 «Aboutcreation of Special Economic Zone of Industrial Type in the territory of Samara region”




Project is being realized at government support at expenses of budgetary appropriations from Investment Fund of RF(RF Government directive of 28 August 2009 №1250-р)


Comparison of Ulyanovsk region privileges with General Economic Zone (GEZ):

According to experts it is possible to expect start of production in 2014-2015

Financing of creation engineering, transport, social, innovative and other infrastructure at the expense of:

Federal budget- 53% (7193 millions of rubles);

Samara region budget – 5,7% (734 millions of rubles);

Samara region Stavropolskii district municipal budget – 0,3% (40 millions of rubles );

Off-budget resources - 41% (5602 millions of rubles ).

But there are more than 300 000 m2not being used production areas with prepared infrastructure in the territory of Togliatti


20 22 october 2010

Choice of development trend of U enterprisesАТ plants: Greenfield or Brownfield

on the example of DIP projects


Brownfield (operating plants)

  • Long-term contracts withOEM

  • Sales market development at the expense of partners’ sales markets

  • Experience in execution of logistic and service functions

  • Formation of cooperation chains concerning new products manufacturing

Building of engineering infrastructure at the expense of federal, regional and local budgets

The necessity of houses and social infrastructure building for the personnel or organization of personnel delivery by buses from the nearest population centers



Индустриальный парк

  • Price reduction for manufacturing at the expense of prepared industrial buildings

  • Price decreasing for logistics

  • Outsourcing or service functions

  • Minimization of investments risks

Diversion of funds for a long period

Personnel can’t wait for some years during building and starting of production at Greenfield and people have to find jobs in different regions

  • Prepared infrastructure, provision by personnel

  • Preservation of jobs

  • Creation of conditions for social stability in the region

  • Investments to buildings repair and infrastructures

  • Tax revenue

  • Positive influence on secondary industries (building, maintenance service)

Competition with the operating manufacturing sites

Additional costs of Government

Non-realization of automotive industry development program concerning development of trend «Partnership»


Strategy of plants development envisages usage of operating manufacturing sites of Brownfield, the process of Joint Ventures has already begun.

20 22 october 2010

1 enterprises

Tax preferences


Increasing of tax revenue into regional budget

Financial model


Bringing in investors


New productions development

2010 - 2018

Project development support from Ulyanovsk Region Government concerning development trend of Brownfield and Joint Ventures

  • Regulatory framework regarding to concessionary taxation of Industrial parks is being formed now

  • in October-November 2010

  • 2. The system of «common window» is being created now

  • during 2010 – 2011

  • 3. Bringing in investmentsby means of Intergovernmental agreement is being organized

  • during 2010 – 2015

  • 4. Social block development is being organized(hotel business, relaxing infrastructure)

  • during 2010 – 2012

  • 5. Ulyanovsk region project development in the field of automotive industry, logistics and industrial cooperation, regional and urban infrastructure (investments bringing in)

  • in 2011


during 2010-2011 the product localization process is going on !!!

Plants are getting a new development impulse

Joint Ventures are being created

Business structure of the current manufacturers is being changed, new products appear

Additional employees are involved – social status of region is being stabilized

20 22 october 2010

Brownfield enterprises project development and Joint Ventures on the example of DIP



Ulyanovsk region Government


ООО «Dimitrovgrad Industrial Park»









Joint ventures






Investments and federal programs

(investment protection from the side of Ulyanovsk region Government)

Other customers


20 22 october 2010

Availability of production areas for projects enterprises

Areas for projects being realized 46553 m2

Free areas6408 m2

Areas, planned to be freed by 2012 70 337 m2

3-d priority


1st priority

20 22 october 2010

Proposals to change regulatory framework for automotive components manufacturers support

  • Continuation of government politics concerning support of automotive manufacturers components regarding to requirements on components production localization forOEMin the territory of Russia

  • Requirements on higher volumes localization – min 80% automotive components in the territory of RF

  • Creation of Joint Ventures at the operatingBrownfield

  • Increase of customs duties at the import of foreign components (at the present moment average 14%, to increase to35%)

  • Investments toGreenfield only in case of absence of operating productions atBrownfield

  • Government financing of electric-power modernization, logistics and road building of operating Brownfield

  • Credit concessionary program for Russian party (at 5-6% annualy)

  • Subsidization of 50% R&D for operating plants

20 22 october 2010

Thank you for your attention components manufacturers support!