AUS companies in Russia have reacted differently in recent weeks to the war of aggression that the country has launched against Ukraine. Some have left Russia or restricted their businesses. Others stay put. The automotive supplier and tire manufacturer Continental is now showing a new approach. After production was initially ended, the Dax group from Hanover is partially resuming production, according to information from the FAZ.
It’s about the tire plant in Kaluga, around 190 kilometers southwest of Moscow, where Conti suspended work in early March. In addition, the entire import and export business with the Russian Federation had been stopped for the time being, it was said at the time. Production has been running again since last week, as Conti confirms on request. The group justifies this with “harsh criminal consequences” that threatened local employees and managers if they did not serve local demand. “The basis for this step is the duty of care for our employees in Russia.” We are talking about temporary production “in case of need”, which is significantly below previous capacity utilization of the plant. Conti has “no intention of making a profit”.
1300 employees in Russia
Other tire manufacturers had recently continued their work in Russia, such as Nokian from Finland. They want to retain control of the production facilities there, but will not invest any further, it said. The background to the discussion is that the Kremlin party “United Russia” presented a legislative initiative at the beginning of March that provides for the nationalization of foreign companies if they leave the Russian market or interrupt operations.
The draft law and probably also threats of possible prison sentences for local managing directors had triggered great unrest among Western companies. The hardware store chain Obi recently gave away 27 branches in Russia to a Russian investor, among other things to avoid expropriation. After initial hesitation, the consumer goods group Henkel is also leaving the country.
According to the newspaper Izvestia, which is loyal to the Kremlin, the draft law on expropriation has been put on hold for the time being and has not even been presented to the government. Many of the companies do not want to leave the Russian market forever, but want to resume their activities soon, according to government circles. The government wants to accommodate these companies, so it reserves the law for “extreme cases”.
The Russian sales market is comparatively small for Conti. Nevertheless, the war in Ukraine hits the group hard, mainly due to rising prices for raw materials from the country that are needed for tire production. Around 1,300 employees work for Conti in Russia, most of them at the Kaluga site. These employees want to be “protected from criminal prosecution,” according to the headquarters in Hanover. The management strongly condemned the attack on Ukraine. “Continental supports and is complying with all applicable sanctions and legal regulations imposed as a result of the war in Ukraine.”