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enault, the leading European car builder in Russia, is investing US$150 million to boost capacity at its Avtoframos factory in Moscow. The factory builds Renault's Logan vehicle, a popular car in Russia. The Avtoframos expansion, aided by the City of Moscow's contribution of land and buildings, will double Logan production by mid- 2009 to 160,000 per year. The plant opened in 2005 and is being extended to take in the neighboring land of the former OAO Moskovitch factory.
   General Motors is also boosting capacity in Russia, more than doubling the originally planned capacity it is building in Shushary on the outskirts of St. Petersburg. The Shushary plant, which will go on stream in 2008, will now have the capacity to build 70,000 Chevrolet Captivas and other vehicles. GM's total investment is now $300 million.
   "Russia is our biggest market for Chevrolet in Europe," said Carl- Peter Forster, GM's Europe president.
   While it remains to be seen if St. Petersburg will become the "Russian Detroit," as predicted by Valentina Matvienko, governor of St. Petersburg, Russia's vehicle market is now the fifth largest in Europe. The capacity expansions

Automakers Upgrade Plants in West W hile the prevailing trend is east, there continues to be scattered auto manufacturing investment in Western Europe, with most involving modernizations of existing facilities:    • Ford's €715 million ($955 million) investment program in its Genk, Belgium, facility continues to bear fruit with the recent roll- off of the first new Ford Monteo. When production reaches capacity at the facility, nearly 1,200 Mondeo, S- MAX and Galaxy models will be built there daily, with 98 percent being exported to more than 60 countries.    • Ford began production in March of its C- MAX vehicle at its plant in Saarlouis, Germany. Ford invested €17 million ($22.7 million) to modernize the plant for production of the new vehicle.    • Toyota plans a reported £100 million ($196 million) investment to upgrade its Deeside engine plant in north Wales, near Liverpool. The upgrade will be for the new Auris model and will help the company maintain 200 jobs at the plant. TOP OF PAGE

by Renault and GM are among the latest indicators of the eastward move in Europe's auto manufacturing sector.
   Rafal Krasnodebski, a Poland- based partner in PricewaterhouseCooper's Performance Improvement practice, says the eastward trend will continue as automakers find success in establishing manufacturing beachheads in Central and Eastern Europe. Krasnodebski says that Poland, with 40 million people, and Romania, with 28 million, offer the largest potential work forces in the region and have the greatest availability of engineers. Both countries are now part of the European Union, giving them another advantage, he says.
   Looking further ahead, Krasnodebski says the push will continue eastward into the Ukraine and Russia.
   "Ukraine is seen as a bridge between East and West as 'East' is moving farther east in essence," Krasnodebski says. "The old Soviet bloc countries are now seen as becoming more Westernized.
   Krasnodebski says there will be a lot of investments in Ukraine and Russia because the local markets are huge.
   Krasnodebski says another factor to consider is that the World Bank and the Organization for Economic Cooperation and Development (OECD) believe the wage differentials between East and West will continue for another 20 years.
   "Russia is still a little bit less Westernized in business compared to Ukraine," Krasnodebski says. "Ukraine still has a long way to go in terms of stability, but nevertheless it is further down the line and feels more like a Western place to do business. But Russia can catch up quickly."
   Manufacturers looking in these high- risk, high- reward countries will face challenges dealing with intellectual property, rules of law and political management of the economy, Krasnodebski says, but stand to gain if they can overcome these hurdles because the markets are large. He says future investment in Western Europe will be limited.
   "The problem in Western Europe is that it's expensive. Labor costs in Poland are about a third of the costs in Western Europe. If you go to Ukraine, it's half that again. That's the sort of numbers we are talking about. It's not quite the level of China, but it's not far away. The only thing that keeps production in the West is, in essence, national pride in keeping jobs at home. There are not many economic reasons left to do so."

DaimlerChrysler has developed a Digital Factory Planning Team to virtually design factories of the future. Digital Design Provides Peek at Factories of the Future T he kind of collaborative design process usually reserved for cars is reaching the facilities that make the cars at the DaimlerChrysler plant in Sindelfingen, Germany, with the company's new Digital Factory project. The company plans to take the process to all territories.    As the company describes it, "the factory and production planners sit in a semi- circle in front of a "Powerwall" about the size of a soccer goal. Wearing 3D goggles, they immerse themselves in very realistic virtual worlds that provide them with a detailed look at the buildings and facilities of tomorrow."    At the heart of the virtual system is the Microstation from Bentley, which makes possible comprehensive three- dimensional planning of buildings. Using the Microstation, DaimlerChrysler specialists then developed the FAPLIS factory planning system, the first version of which was used in 1984. These days, FAPLIS can depict and assemble all the different components of a factory in 3D.    "Simply put, what we've got here are digital building blocks that can be used to construct a complete factory," said Peter Csavajda, leader of the Digital Factory Planning Team, in a company release. "As part of the process, all of the 50 or 60 specialized areas needed to build a new factory are digitally registered in a standardized database. The really special thing about our digital planning room is that we bring people and data together simultaneously within the framework of an integrated factory planning system, and then we try to come up with the best solutions."    The cost can be high to get all contractors and vendors on board with the digital system. But the company says the payoff is high.    "In the past, a project might have been planned with an investment volume of one million euros, but that figure would increase by an average of 20 percent as a result of repeated planning changes later at the construction site," says the company. "We've been able to reduce these additional costs by 95 percent through digital planning," said Csavajda. – Adam Bruns