GAZ PRODUCTION SYSTEM
The Open Joint Stock Company GAZ is the only Russian factory with the new production system of labor management running for over one year and accepted in the biggest automobile companies of the world. The main goal of the new production system successfully mastered at JSC GAZ is to manufacture products of bigger volumes and higher quality with less costs and efforts. The whole staff of the Gorky Automobile Plant headed by Alexey Barantsev, the JSC GAZ General Director, and assisted by the professional management team of Basic Element and RusPromAvto Holding had been working out a very complex objective: due to thought-out labor management in all the structures to increase productivity and reduce material costs i.e. production price, improve vehicles quality and raise salaries. During this time serious improvements aimed at increase of quality and consumer attraction of our vehicles were made.
As a result, since introduction of the new system the daily production volume has increased from 450 to 660 units - at commercial vehicle assembly lines, and from 249 to 310 units - at passenger car assembly lines. The quality has improved. The number of defects per one vehicle reduced by more than 10 times. The loss from production defects and warranty repair expenses were also reduced.
JSC GAZ liabilities reduced from 28 billion (in 2000) to 6 billion rubles.
In April 2004 the experts of the certification company TUV Management Service GmbH (Germany) conducted a careful audit of many GAZ divisions for compliance of quality system with world standards and noted substantial improvements compared to the previous year. Consequently, the period of validity of Certificate for compliance with international standard ISO 9001:2000 for design, development, body-and assembly production as well as market of passenger cars, commercial vehicles and buses was prolonged. After nonferrous castings production unit was audited in November 2004, the Certificate would also covers both manufacture and market of castings and blanks made of nonferrous metal and alloys.
All this became possible due to realizing by the company personnel of the main principles of the JSC GAZ philosophy: think of customer, people - our most valuable asset, permanent everyday improvement of manufacturing process, all attention to working area.
For development and implementation of GAZ Production System it's author's team - factory employees was awarded the Nizhny Novgorod Prize. Alexey Barantsev, General Director, was awarded the title "Leader of Russian economy"
JSC GAZ became the Laureate of Main All-Russian public award "Russian National Olympus" for high achievements in industry.
 
TECHNOLOGICAL AND PRODUCTIVE POLICY
In 2004 JSC GAZ continued to reconstruct production, develop vehicles model range, increase yield meeting the needs of both domestic and foreign markets.
In February 2004 JSC GAZ launched production of the Volga GAZ-31105 passenger car. In addition to modernization of the Volga undercarriage, carried out in 2003 (front wheel ball-joint suspension, rear wheel suspension antiroll bar, modernized gear box), serious changes in Volga GAZ-31105 were also made in respect of exterior, lighting equipment and body equipment. In March 2004 a new robotized body welding - and assembling line for GAZ-31105 was launched. The introduction of the modern line improved the body production technology, increased quality and thereafter consumer characteristics of the vehicle.
The renewed Volga stimulated the demand in the automobile market: over 70000 passenger cars will be produced this year.
The demand for commercial vehicles - the family of GAZelle and Sobol restyling commercial vehicles and minibuses - remained also firm. Many special models for different economical, communal and social fields are constantly being designed. Due to mounting of diesel engine D 245.7 (Minsk Motor Plant), GAZ medium-tonnage trucks became more attractive. Vehicles fitted with this engine have lower fuel consumption rate and repay themselves quicker because the D 245.7 operation time is longer than this of an gasoline one.
On December 21, JSC GAZ launched batch production of city-type medium-tonnage truck GAZ-3310 Valdai. Consumer characteristics of this vehicle - maneuverability, low loading height, payload capacity up to 5 t., diesel engine - make the vehicle ideally fitted for the use in city conditions.
The improvement of consumer characteristics of GAZ vehicles enhanced foreign trade activities. In 2004 18633 vehicles and autokits were exported, in 2002 - 34853 units, in 2003 - 39133 units. For the 11 months of 2004 export sales volume of GAZ vehicles to CIS and foreign countries has amounted to 41151 vehicles and autokits which is by 37.5% more in comparison with the same period of 2003. The title "Best exporter in automobile sector", granted to GAZ by the Ministry of economic development of the Russian Federation is a proof for the company's business reputation in international markets.
JSC GAZ is the sole company in the country producing commercial vehicles, trucks, passenger cars as well as special purpose vehicles. In 2004 national tests of
armoured troop-carriers Vodnik GAZ-3937, BTR-90 and military version of multipurpose vehicle GAZ-2330 Tiger were completed and the models were recommended for batch production. Production of these vehicles will be launched in 2005.
During the whole year the measures for production of EURO-2 vehicles had been implemented. In July first samples of EURO-2 passenger cars and small-tonnage trucks were assembled. Production of passenger cars Volga with engines ZMZ-40621, GAZelle GAZ-5601 and Sobol GAZ-5603 with engines ZMZ-40522 fitted systems of exhaust gas neutralization and fuel vapor recovery was launched. Since 2005 when the law of vehicle's compliance with EURO-2 comes into force, production volume of these vehicles will be 100%.
In Turkey in co-operation with a foreign partner commercial vehicles of the GAZelle and Sobol model range with diesel engine GAZ-5601 EURO-2 were homologated and their commercial supplies started. To provide sales of GAZelle and Sobol vehicles with diesel engine GAZ-5602 EURO-3 to the European countries, activities for their homologation are being arranged and carried out.
In 2005 JSC GAZ plans to develop GAZelle and Sobol vehicles with diesel engine GAZ-5603 complying with EURO-4 ecological norms.
JSC GAZ introduced production of GAZelle rear-drive right-hand drive vehicles packaged for supplies to the Republic of South Africa. First batch of minibuses has already been delivered to RSA. Conditions of their sales to other left-hand traffic countries are being worked out.
Among the investment projects implemented at the plant in 2004 are ecological programs. Now JSC GAZ belongs to the largest factories in Russia having the minimum environmental impact: the plant was ranked second in the ecological rating of the Russian factories made by the "Independent ecological rating agency". GAZ is the Laureate of ecological award "Ecomir - 2004". The plant was called the winner in nomination "For socially useful activity" in the framework of All-Russian competition "Best Russian companies" arranged by the initiative of the Russian union of manufacturers and businessmen and Chamber of Trade and Industry of the Russian Federation. The award in nomination "For socially useful activity" was instituted for the first time and was given to JSC GAZ for business high social responsibility.