Zastava: Waiting for a Foreign Partner

A Bankrupt Company Dreams of Profit

In September they put together 810 vehicles, slightly less than what a single shift used to assembly when the factory was in its prime. Management stresses that what is most important is that "the Republic of Serbia has decided to preserve the nation's industry," which means that Zastava will survive.

AIM Belgrade, October 7, 2001

A man and his wife supporting a family of seven launched a hunger strike when they saw their names on the list of redundant workers at the Zastava factory in Kragujevac. When reminded that they weren't able to make ends meet even before with what the factory could pay them, they spontaneously replied: "Yes, but that was certain." Certainty was the most often spoken word during last summer's protests against the transformation of the one-time leading Yugoslav car producer, during which workers demanded to keep their jobs. A government consolidation program envisaged halving Zastava's 30,000 strong work force, with a tendency of further reduction. Fear of an uncertain future was ultimately much stronger than the misery of the present and workers' occasional engagement in the cold factory halls. Still, the vast majority of Zastava's redundant workers clung to their jobs until the very end.

Zastava, which at the end of the 1980s produced 220,000 vehicles annually, last year offered buyers only 10,000 models, designs several decades old. Empty production halls, obsolete equipment and machinery, a speedy brain-drain and partisan management, which through ad hoc crisis committees took control and privileges is today's image of the one-time industrial giant. The government intends to use Zastava to set "the new foundations of Serbian industry."

At the end of July when an agreement on accepting the program for the Zastava Group's restructuring, transformation and strategic consolidation was signed, the process of dividing the Kragujevac-based company into 29 independent companies and the Zastava Vehicles Group started. The program, signed by representatives of the Serbian government, factory management and all trade unions stipulates the forming of ties with foreign partners and FFR350 million investment in basic capital over the next four years which is expected to annually result in the production of 22,000 vehicles of domestic and 78,000 of foreign make. Some 6,000 people would annually yield at least DM50 million in profit.

Before the transformation program the car factory employed over 11,000 workers of which the majority was just listed on the payroll. In the hot August days many in Kragujevac and elsewhere worried where the army of jobless people would go. After fierce protests, the factory is now calm. The redundant workers, of whom most have not entered the factory for years, put themselves together and tried to find "the winning combination" within the offered program.

The elimination of redundant workers is the first and most difficult part of the factory's transformation. Workers have been offered three options: to join the newly-formed Zastava Employment and Retraining company, to quit and get severance pay, or to go on unemployment with all benefits granted by the state. Most of them, 9,000, opted to stay in the factory and acquire new skills. According to the program, in the next four years they should get new jobs either in the Zastava Group of elsewhere. Meanwhile, they will receive half the average salary in the republic. Only 2,800 people decided to take DM200 for each year of employment as severance pay and leave the factory for good.

In the "disintegration" progress it has one again been confirmed that managers always get a better deal in crisis situations. Most managers who spent years in Zastava and were not listed as redundant, over retirement age or close to retirement age, were offered another chance to choose what suits them best. Their statement that instead of retiring they would rather opt for unemployment was enough. Thus certain managers, include those who had supported the forming of a "human shield" in the factory to prevent its destruction during the 1999 NATO bombing, were given an opportunity to gain from DM10,000-DM15,000. Their "reward" stemmed from the collective contract stipulating that in such circumstances workers, depending on the length of their employment, are entitled to receive up to 12 gross monthly salaries. Since their salaries are much higher than the average, this sum exceeded in some cases DM10,000. The fact that not one of them was declared redundant, and, as opposed to ordinary mortals, compelled to retire when legally required, instead being entitled to receive huge sums of money, additionally enraged ordinary workers. Because of that, this privilege was soon revoked.

Conditions in the factory are now back to normal. In September 810 vehicles were produced, slightly less that one shift regularly put together at the time when the factory's was the height of its glory. The factory management says that what is most important is that "the Republic of Serbia has decided that the nation's industry should survive," which means that Zastava will have a future. Everybody is now waiting for a foreign partner. One of the famous Zastava directors of the Socialist era used to compare the factory to a girl waiting for her marriage to be arranged: "We all know that the bride is no longer young and not too pretty; this is why all of us should do our best to ensure her a safe future." A rich foreigner will probably be her best opportunity, but they are hardly standing in line to come to Kragujevac, at least not according to what the latest reports say.

Olivera S. Tomic

(AIM)