The temperature might finally be warming up after the frigid Russian winter, but the country’s auto industry is suddenly feeling a big chill.
Russia has been the target of increasing sanctions in the wake of its disputed annexation of Ukraine’s Crimean Peninsula and the threat that Russian President Vladimir Putin might send troops into the neighboring country in an expanded land grab. That has led to a flood of capital leaving the country and signs that the crisis could strike hard the Russian economy.
The crisis is causing “uncertainty in the marketplace,” warns consulting firm Accenture.
Ford sent a chilling signal this week when it announced plans to trim 950 jobs at its two Russian plants, including 700 full-timers at its primary facility in St. Petersburg – almost one in five of its employees in the country. The maker is blaming an already weak economy, as well as the weak Russian ruble, but observers warn that this could be just the first sign of a serious setback for the country’s auto industry – especially if the Ukrainian crisis drags on, or rose, escalates.