In Russia, an ironclad businessOct 08, 2009
By Carl Schreck
NIZHNY NOVGOROD, RUSSIA // Yury Yavorsky was making the rounds at his factory this summer when he learnt that the president of Russia’s restive republic of Ingushetia was hit by a suicide bomber.
The car bomber detonated his vehicle near the motorcade of Yunus-Bek Yevkurov, setting off a blast with the force of 70kg of TNT in the republic’s main city, Nazran.
“We were getting updates every 10 minutes and managed to obtain quickly photographs from the scene,” Mr Yavorsky, a burly former military man, said in a recent interview at his factory in this central Russian city.
Aside from the human drama, Mr Yavorsky had another reason to fret over Mr Yevkurov’s fate: it was his company, RIDA, that had outfitted the Ingush president’s car with bulletproof armour and glass.
Mr Yevkurov and his brother survived the attack with serious injuries, and managed to return to work two months later. The president’s bodyguard and driver died in the hospital of injuries sustained in the attack, though Mr Yavorsky notes that they were alive when pulled from the wreckage.
“Sadly, two men died, but the explosion was simply massive,” he said. “After such an explosion, such an attack, he and his brother returned to work. That shows that we make a quality product.”
Mr Yavorsky has gone on a public relations offensive since the attack, which thrust into the spotlight the opaque market for armoured luxury vehicles.
The attack has also highlighted the hurdles Russian producers face in overcoming a widespread stigma about anything stamped with “Made in Russia”.
In a country where small and midsized businesses struggle to survive suffocating red tape and rampant corruption among authorities, RIDA appears to be a minor success story.
The company employs 200 workers and claims an annual profit growth of 25 per cent to 30 per cent over the past five years by armouring expensive vehicles and selling them for a premium to officials and businessmen in turbulent regions such as the North Caucasus – where Ingushetia is located – and Iraq.
Even the global economic crisis has not rattled the company, Mr Yavorsky says, as armoured vehicle buyers tend not to pinch pennies on their own safety. Furthermore, the economic crisis has brought in new prospective clients who see RIDA’s bulletproof glass – which the company makes itself– as a quality, budget alternative to expensive European imports.
But persuading customers at home and abroad to buy cheaper Russian products is not always easy.
Senior Russian officials have lamented the country’s sluggish attempts to diversify away from natural resources, and many Russians themselves routinely dismiss domestic production by saying “Russians can’t make anything”.
In Soviet times, “there was never any demand abroad for any of our products other than weapons and expensive technology – like atom technology”, Mr Yavorsky said. “That has influenced the situation that we have today.”
The suicide bomb attack on Mr Yevkurov has pushed Mr Yavorsky to defend RIDA’s armoured cars. Following the assassination attempt, the Russian daily newspaper Moskovksy Komsomolets suggested the Ingush president’s car had been armoured on the cheap in lieu of purchasing an imported vehicle.
Although it did not identify Mr Yavorsky’s company by name, the report hinted that the company was a fly-by-night operation whose cars are inferior to western vehicles, as evidenced by the severe injuries suffered by the passengers.
RIDA has filed a civil suit against the newspaper and the website Lenta.ru, accusing them of damaging the company’s business reputation.
Obtaining broad data about the armoured vehicles sector is notoriously difficult as producers are generally reticent when it comes to discussing the identity of their clients.
In 2002-2003, about 1,000 armoured vehicles were produced in Russia. That figure has grown by 250 annually, estimates Dmitry Girin, the director of marketing and sales of Laura, a St Petersburg armoured car company.
“In the past five years, we’ve seen a growth in demand for Laura armoured cars, and if in 2003 we sold around 180 units, last year we sold more than 500,” Mr Girin said in e-mailed comments.
Unlike most Russian armoured car producers, RIDA focuses almost exclusively on luxury vehicles, of which it sells about 150 new units in Russia each year, Mr Yavorsky said. Dozens more are sold to customers in such places as Iraq, Nigeria and the Philippines.
“Oftentimes we don’t know where the cars ultimately end up,” said Mr Yavorsky’s son, Gennady, who has worked at the company’s representative office in Jordan in recent years.
Mr Yavorsky considers his main competitor in Russia to be the Mercedes-Benz Guard series of elite armoured cars. While he respects their vehicles immensely, he said his company can armour a Mercedes-Benz S-Class at the same level of quality and sell it for US$500,000 (Dh1.8 million), at least $300,000 less than what an armoured factory model from Germany would cost.
A Mercedes spokesman, Michael Allner, said the company as a rule does not provide data about its business markets, but said in e-mailed comments that customers “who know Mercedes-Benz Guard and the protection provided by [armour constructed] ex-factory” tend to opt for the German production.
Mr Yavorsky last week invited partners and prospective clients to inspect RIDA’s wares at his factory, which features a giant billboard of Russia’s duumvirate – the president Dmitry Medvedev and the prime minister Vladimir Putin – looking august above a quote from Mr Medvedev about innovation.
Among the guests was Sardar Hassan, an Iraqi businessman and head of the Sardar Group, which sells RIDA vehicles in Iraq.
Mr Sardar declined to discuss figures of RIDA vehicles in Iraq, but said sales have been stable over the past three years and that he hopes to expand sales into non-conflict zones for clients such as banks.
The culmination of the event came when a local policeman donned a RIDA jacket and fired rounds from a Kalashnikov and Dragunov sniper rifle at the company’s 43mm thick bulletproof glass.
The shots were fired in a long, glass-encased rectangular box, at the end of which the block of bulletproof glass was placed. Seven rounds from an assault rifle splintered the front of the thick pane, but the backside remained intact, with just a few smooth, minimal dents from the impact of the bullets.
There was, of course, no reason to take any chances, however impenetrable the company’s products.
“Move away from there,” a company manager told an employee who had drifted behind the target as the policeman lined up his shot.