Ordeal on the Volga

On a snowy plain near the Volga River 625 miles southeast of Moscow stands the most important monument to East-West trade yet erected: the $800 million Togliatti auto plant. Completed in 1970 and equipped by Italy's Fiat, the plant is scheduled to turn out some 500,000 sedans this year. For businessmen throughout the West, Togliatti's completion stands as proof that capitalists and Communists can cooperate in a major industrial venture. But for Fiat, the experience has been a virtually profitless ordeal.

Fiat Chairman Giovanni Agnelli concedes that the company has done no better than break even on the contract; unexpected costs ate up $100 million in fees that it received from Moscow. Now the last of the 2,000 Fiat engineers who worked on the project are returning to Italy and filling in the details of a story of unending problems. Their narratives should be of interest to U.S. businessmen who are getting overtures to build plants in the Soviet Union.

Headlong Trouble. The biggest trouble was that the Soviets were in a headlong rush to motorize; they insisted that the plant be in operation within three years from the day that ground was broken in January 1967. The country had only a fledgling auto industry at the time, so the plant had to have its own foundries and forges, and turn out its own spare parts and accessories. Its three assembly lines were to produce a single model based on the Fiat 124. But to negotiate Russia's rutted rural roads, the chassis had to be redesigned to ride 1 1/2 inches higher off the ground than the 124. To survive bitter Soviet winters, the car had to start unfailingly at -13DEG F. "To do all this in the time allowed, we had to take risks," recalls Vincenzo Buffa, Fiat vice-director-general. "We started building before we knew what machines would be needed" to construct the modified car.

Slip-ups came like ice on the steppes. The Italians estimated that 17 million cubic yards of earth would have to be moved for the plant's foundation; the final total was closer to 40 million. When construction stretched into the severe winter of 1968-69, work crews had to mount jet aircraft engines on trucks and focus the exhaust on the ground to thaw it, and on newly poured cement to keep it from cracking. In the spring, the construction site became a sea of mud. Hundreds of yards of dikes and runoff canals had to be built. Fiat had to rely on Soviet subcontractors to supply many of the parts it needed in the early stages of production. Tires from the factory of Jaroslav wore out after no more than ten miles of testing. One Italian at the plant estimated that fully half the parts furnished by Soviet suppliers had to be discarded.

Fiat engineers found their Soviet workers something less than heroic. The buses that brought workers from their homes about seven miles away somehow took 1 1/2hours to make the trip, so that few workers were ever on the job before 10 a.m. To avoid missing the bus home, they sometimes quit a half-hour early. One Italian mechanic reported finding a machine that had been leaking 40 Ibs. of oil a day for two weeks; its Soviet operators had neglected to request repairs. "Our conception of maintenance is entirely unknown to them," the Italian said.

Still, Fiat executives insist that Togliatti was a worthwhile undertaking. Bringing the U.S.S.R. into the auto age has brought considerable prestige and publicity to Fiat. More important, executives apparently figure that they have learned enough from the mistakes at Togliatti to profit elsewhere in Eastern Europe. Since construction at the Togliatti plant began, Fiat has sought and won contracts to build auto plants in Yugoslavia and Poland.

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