VAZ refused Borisov generators, Minsk region
Workers of the Borisov Plant of Automotive Electrical Equipment (JSC “BATE”) say, the Volga Automobile Plant (AvtoVAZ) refused delivery of a large batch of automobile generators manufactured in Borisov, quoting their unsatisfactory quality.
A delegation of BATE experts was sent to Toliatti however failed to overturn the decision.
This was not the first industrial dispute of the kind. Traditionally, Borisov plant is one of the largest suppliers of starters and generators to the assembly line of VAZ. The Russian auto giant aims to have several suppliers of components and mounts to avoid price dictates and deterioration of quality and to encourage competition among suppliers.
The delivery refusal of generators from Borisov could seriously impair the financial and economic situation at the BATE, particularly during the foreign currency crisis in Belarus.
This Borisov company is one of the largest in the city (3.5 thousand employees), it managed to stay afloat largely because of the secondary market. Given the lifetime of starters and generators manufactured at the Borisov BATE was usually less than the lifetime of a car, there was a steady demand for these products from the owners of old cars from Russia and other CIS countries. Therefore, the affordable price of Borisov starters and generators, and perhaps surprisingly, their relatively poor quality, contribute to their sales at the secondary market. Nevertheless, a temporary moratorium of the AvtoVAZ, the main consumer of the BATE products, on the deliveries of generators, indeed, severely damages the image of the Belarusian enterprise.
The country's leadership has instructed the local authorities to raise minimum wages at enterprises by the end of 2019 to BYN 1,000, which would lead to an increase in the average wage in the economy as a whole to BYN 1 500. The pace of wage growth in 2017 is insufficient to ensure payroll at BYN 1000 by late 2017 without manipulating statistical indicators. In order to fulfil the president’s order, the government would have to increase budgetary expenditures on wages in healthcare and education, enterprises – to carry out further layoffs and expand the practice of taking loans to pay wages and restrict investment in modernisation of fixed assets. In 2010, the artificial increase in wages led to a threefold devaluation in 2011, an increase in the average salary to BYN 1500 will not match the capabilities of the economy and would lead to yet another devaluation.