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Last Updated: Friday, 22 December 2006, 11:19 GMT
Renault tunes up Romania's top carmaker
By Ben Richardson
Business reporter, BBC News in Pitesti, Romania

Logan cars coming off the production line
The Logan aims to offer consumers value for money and reliability

Even when the Iron Curtain was fully extended, and consumers in the Eastern Bloc were grateful for whatever they could get, Romania's Dacia cars got a bit of a rough ride.

Not quite as robust as the Lada or as cheap as the Trabant, the Dacia would often solicit a sharp intake of breath from drivers who became experts at keeping their cars running on - and sometimes with - a shoestring.

Today, the brand is enjoying a resurgence after it was bought by the French carmaker Renault and put smack bang at the centre of the carmaker's plans for the future.

Already one of the world's top carmakers, Renault has chosen Romania as a hub for its Logan, the company's lower-cost yet fully-featured vehicle.

The brainchild of Renault chairman Louis Schweitzer, the Logan is hoping to win the hearts of motorists in emerging markets as far afield as Russia, Columbia, Iran and India, and is already proving popular in nations like France.

And in a region where the public perception of privatisation is tainted by images of cowboy capitalists enriching themselves, Renault points out that it is very serious about running a business that benefits both shareholders and Romania.

Racing ahead

A two-hour drive north of Bucharest, the Dacia car factory sits on a hillside, an island of calm in a sea of economic and social churn.

On the road to the plant, dust is kicked up by heavy traffic, all but obscuring the half-finished shopping malls and old women leading cows on a leash.

Once inside the Dacia factory, however, and the atmosphere changes.

Blue-clad workers whitewash kerbstones and finish delicious-smelling meals before heading back on shift, as body parts, engines and cars roll off the production line with an almost boring precision.

Dacia boss Francois Fourmont
The objective of the group is to get Dacia going, so that the whole nation can benefit from it
Francois Fourmont, Dacia general manager

In what could almost be a Soviet-era incantation, signs overhead urge the workers to concentrate on Order, Cleanliness, Rigour and Quality.

Set up in 1966, Dacia was in essence created with the construction of the 2.9 million square metre Mioveni Motorcar Plant, just outside of Pitesti.

Renault bought a 51% stake in Dacia in 1999 and has subsequently boosted its holding to more than 99%.

By the end of 2005, Renault had spent 650m euros (436m) upgrading the Mioveni plant, preparing its production line and training staff.

The company also has had to address environmental concerns and develop a network of local suppliers that can produce to an international standard of quality. Many of the firms, including multinationals like Valeo, are now based inside the fences of Mioveni.

The man in charge of the Dacia project is general manager Francois Fourmont, an urbane Frenchman whose Bucharest office smells of the Montecristo cigars he likes to smoke.

"When Renault comes to a country, it does not come for only a few years," he explains, adding that buying Dacia allowed Renault to fulfil a number of goals, such as building a 5,000-euro car and having a production base near a fast-growing market.

No satisfaction

Romania is already one of the top markets for Renault, ranked as its sixth-largest behind France, Spain, the UK, Germany, and Italy. Its models have 45% of a Romanian market totalling more than 280,000 cars a year

Dacia's turnover at the end of 2005 amounted to 1.2bn euros, and Renault is keen to cash in on its name, which has been voted the most valuable brand in Romania.

Dacia and Renault training school
Renault has put continuous training at the heart of Dacia's business

One worker, who has been with Dacia for more than a decade, remembers what life was like before Renault took over.

"It was hard work, with a lot of effort and very little satisfaction," the 34-year-old explains. "People were suspicious at first, especially when the job cuts came. But then they saw the company was serious and they began to trust Renault.

"Now we feel useful, we have a future making the Logan, and the town is prosperous."

There is no doubt that Renault had to make some harsh decisions, cutting Dacia's workforce from more than 27,000 to the 12,500 it stands at today.

Mr Fourmont says the company had little choice and adds that many of the fired workers were retrained and subsequently found jobs with the suppliers that had moved their production to the area.

"Our first responsibility is to make a money, because that is the only way we can survive as a business," he explains. "Once we have that basis, we can start to think about other factors."

Helping hand?

And it is in this role, working closely with state and local governments, that Renault and similar businesses can fill some of the gap that has been left by the collapse of the socialist state, Mr Fourmont says.

The more efficient and better trained the workforce is, he argues, the more likely they are to withstand competition from abroad, allowing the company to reward staff better for their good performance and quality product.

Renault is already expanding its output in Romania and is creating the world's largest logistical project that will ship Logan cars in bits so that they can be assembled in Russia, Morocco, India, Iran and Columbia.

"We have come for a marriage without end," he says. "The objective of the group is to get Dacia going, so that the whole nation can benefit from it."

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