Soviets Seek Projects With Chrysler, Ford
The Soviet Union, eager to modernize its long-stagnant auto industry and become a force in the international market, has opened negotiations with both Chrysler and Ford about a wide range of possible trade links between Detroit’s car makers and Moscow, auto industry officials said here Monday.
Chrysler officials said a team of company executives visited the Soviet Union for the first time two weeks ago to discuss a range of joint venture alternatives with the Soviets.
Company officials refused to say what projects are under study, and would not describe the status of the negotiations.
But the auto industry trade journal Automotive News reported Monday that Chrysler has been talking with the Soviets about a joint effort to modernize an assembly plant in Riga, on the Baltic Coast, that now produces buses, ambulances and other special-use vehicles.
Chrysler Venture in China
Boris G. Hubaev, a Soviet auto industry official visiting an Automotive News-sponsored conference last week, told the trade journal that Chrysler officials had met in early July with officials of the Soviet auto industry ministry.
Although Chrysler has never done much business in the Soviet Union, it already operates a joint venture in China that builds Jeeps for the Peking government.
Ford, meanwhile, has also been holding talks with the Soviets, both about the possibility of importing Ford products into the Soviet Union and about joint production ventures. Ford said the talks began after Soviet officials approached the company last year. Since then, Ford has joined a consortium of seven American firms that are pursuing the potential for joint ventures with Moscow.
Although at least one Soviet official has visited Ford headquarters in Dearborn, Mich., most of the talks have been between the Soviets and officials from Ford of Europe, according to Ken Brown, a spokesman for Ford’s international operations.
Ford and Soviet officials are currently talking about a deal to import Ford’s European-built Scorpio luxury coupe into the Soviet Union, according to Brown. The Scorpio, built by Ford of Germany, has done relatively well in the United States since its introduction in May, 1987; its entry into the Soviet Union would mark a major advance in the quality of luxury cars available for high-ranking Soviet officials.
Change for Big Three
The Soviets, however, seem more interested in obtaining licensing agreements for Western technology. But Ford apparently wants to supply finished products to the Russians instead. “A lot of the talks have focused on some of our European products, and alternatively, some Ford involvement in the Soviet domestic auto industry,” Brown said. “But we have made it clear that we would want any agreement to at least include our supplying North American-sourced components.”
General Motors, the world’s largest auto maker, has had only limited talks with the Soviets recently, a company spokesman said. “We’ve had some contacts, but I don’t want to lead you to believe that anything serious is happening,” said Jack Harned, a spokesman for GM’s international operations. “We haven’t seen anything real promising yet.”
The talks with the Russians represent a major departure for the Big Three, who haven’t done much business with Moscow in decades. Ford built two factories for the Soviets in the 1920s, but since then, the U.S. government has frowned on East-West automotive ventures on national security grounds.
Ford and other U.S. auto makers were invited by the Soviets to bid on the construction of a massive truck factory in 1970. But the Big Three were told by the Nixon Administration, then waging the Vietnam War, not to get involved, since some of the trucks from the plant would likely end up in North Vietnam.
European auto makers, unhindered by security concerns, have filled the void over the years; the Russian Lada subcompact, for instance, is based on a Fiat design.
Now, observers say the Soviets, in the spirit of Mikhail Gorbachev’s economic reconstruction movement, seem to be talking to auto makers all over the world--from Japan to the United States--in an effort to improve the quality of Russian cars. The Soviet goal is to become a major exporter of low-cost small cars to Europe and North America.
“The Russians are looking for engineering support around the world,” said Martin Anderson, an auto industry consultant who works extensively in Europe. “Clearly, the auto industry is being viewed as an engine of growth by Russia.”
