The First Popular Car in Yugoslavia

No one recalled that the mass production of the popular Feecha (a version of the Fiat Topolino 750), the car that marked the period of industrialization in Yugoslavia, began in 1955 and ended in 1985.

In the spring of 1953, Voja Radic, then director of the Crvena Zastava vehicle factory, informed his management board that a German had come to him offering to produce a car in Zastava. The German had also asked to see the factory but was not allowed to. Just hours after that visit, an offer came from the Americans.

Of all the negotiations with the French, Germans, Italians, British and Americans, the first decision seemed to have been Willys Overland Jeeps and on May 18, 1953 reports came to Kragujevac that the first shipment of 12 was on its way from the US by ship. Those negotiations with the American company fell through because the Americans wanted 6% of the profits for intellectual property but refused to agree to send in their experts or set up the factory.

Mijalko Todorovic, promoter of the automobile industry in the leadership then, said no, because he wanted the production lines to include civilian and military vehicles.

Todorovic also wanted Zastava to school engineers since there were just 15 of them in the factory. The new personnel were literally mass produced; there were years when the factory sponsored up to 850 students and the engineering school and university in Kragujevac grew because of that.

There seems to have been pressure from the army for the production of the Willys jeeps but in the end they opted for Fiat although the Italian manufacturers all-purpose vehicles were not the best but they offered civilian production and were generous with their licenses and because Yugoslavia had 150 million lira in reparations and because there were vague ideas of producing a car that would be affordable to all Yugoslavs.

Negotiations with Fiat were conducted during the Trieste crisis (strong-armed formations were deployed on both sides of the border and tank troops from Kragujevac bragged that they were first at the border) and lasted four months. They were conducted by engineer Branko Nikolic who is said to have gone into great detail. When they ended, Zastava's director informed his board that "the whole thing has to go in for more scrutiny", and added importantly "Comrade Tito has been informed".

So how did the Feecha come out of that story? The decision is a good anecdote. New director Prvoslav Rakovic was under pressure in mid-1955 to reduce the number of his employees from 5,500 to 3,000 and show a profit. That was probably suggested by Todorovic and Ivan Gosnjak (both big shots at the time) over lunch at the Belgrade writers' club. Rakovic said later that in searching for a car for Kragujevac he decided to go to Fiat and ask them if they had a model Yugoslavs could afford so he wouldn't have to face the wrath of his home town over the dismissals.

In August 1955 he announced that Zastava plans to assemble 1,000 cars next year (that was Fiat's daily production at the time, start building a car factory and take over 45% of the production with the prospect of taking over the manufacture of everything possible.

The contract on building the car factory included facilities for the production of 12,000 cars but that was expanded to 32,000 two years later. In June 1958, the project was defended by a wide-ranging group of experts (engineers, colonels, economists) including Borisav Jovic who was in charge of sales and marketing at the time. Permission was given on the last working day of 1958. After a few snags, a delegation left for Torrino to negotiate the deal. Rakovic instructed his delegation to lock the Yugoslav embassy's economic advisor in their hotel room to prevent him ruining the talks. One of the delegation (from the national bank) seems to have been under orders to leave the talks midway but he stuck by Rakovic who had an open telephone line with Todorovic. Bora Jovic was sent to the central committee with the following message: "You sent me out on patrol and told them to shoot me in the back!"

Rakovic then started building a factory with a capacity of 82,000 vehicles. "I saw that at Fiat", he said whenever he was criticized. He signed a secret contract (a big hall) and a public contract (small hall) with the Rad construction company. The Croatian delegate in the Investbanka management board accused Zastava of exceeding the permitted capacity. A state commission was formed which the men in Kragujevac somehow duped with the help of partisan veteran Ziva Djordjevic who was an official in the city inspector's office. When Croatian representatives raised a fuss they were told that no one has the right to doubt the state commission.

At the same time, loans were signed by factory employees to help the construction which now leads some to feel that Zastava belongs to them.

The new car factory was opened on July 6, 1962 by federal prime minister Aleksandar Rankovic who said the factory has to produce 150,000 cars.

When Tito came to Kragujevac 15 years later, tired of performance ceremonies, he said shortly he didn't like the factory because the machines are too close together and workers can't get through.

A few years before Tito's visit. Zastava was relatively fortunate at the time of the persecution of the techno-managers and break up of large companies. Party activists came to Zastava to talk to the communist workers board who were told that "Tito is specially interested in Kragujevac". The workers' board just named a few liberals and that was that.

Rakovic was unscathed in the first wave perhaps because the second stage of completion of the factory was underway nor was he named a liberal but he was charged with technocratic behavior by the mayor of Kragujevac. He got support from Belgrade, maybe even from the army and said later that he was tired. On December 31, 1974 he handed over to Bojanic, a former Serbian prime minister, this was advertised as a return to production or something similar. Rakovic left Zastava and was director of the construction of the military chemical complex in Iraq until 1982.

Several decades after the war many believed that the metal industry, especially car manufacturers were the driving force and this turned into pressure for every republic to have its own car factory. The Yugoslav market opened for Volkswagens, Simkas, Renaults, Opels, Skodas. Factories popped up in Slovenia and Bosnia and Vojvodina.

Zastava talked to many factories aiming to cover 80% of the needs of the domestic market but it stuck to Fiat because anyone else would bring in their own new program and abandon the old ones. Industrial thinking at the time ran along the lines of taking over production.

Zastava was aiming to become a mass producer within 10 years oriented towards the Middle East. Later it turned out that it would assist Fiat in expansion to the east. The Poles were the first to turn to Zastava, asking for help in planning and constructing a factory to produce outdated Russian Pobeda cars. Zastava passed them on to Fiat and even pressed Polish ministers to give permission. When the Soviets started talks with Fiat, the Yugoslav foreign ministry asked Zastava to produce its own licensing contract. Certainly, Zastava and Fiat talked about joint strategies for the Soviet Union, Bulgaria and Hungary.

Efforts to transfer to third world countries failed. In Jakarta, production of the Zastava 615 four-wheel drive ended because of a rebellion and the production of Zastava 1300 for taxis in Bogota was not very successful.

A contract with Fiat in 1968 envisaged a symbolic participation of Fiat in Zastava's development and that was perhaps the farthest it got in direct placement of foreign capital.

When Zastava started exporting Yugos to the US in 1984, the owner of Yugo-America brought dealers to Kragujevac to show them it really was a car factory. The "deal of the century" fell through in the US although Zastava engineers feel that even the little they achieved is a success because of the US market but the state couldn't support it any longer. That was the end of the engineering and start of the marketing era. Elements of that start are visible in the joint ownership of the truck factory by Zastava and Iveco. The Italians insisted on two things: no surplus workforce and the trucks have to be sold.

In 1989, Zastava produced 223,000 vehicles and that was its maximum. Since then the system has been falling apart but the state leadership isn't aware of it yet. During a visit by Milosevic in the late 1980s, an elderly woman worker kissed the president's hand. Yugoslavia fell apart and the factory tried to seal its holes and take over the production that was located in other former Yugoslav republics.

Dragan Lazic, director of the Zastava chassis factory which employs 6,000 workers (the car factory employs 15,000) said Zastava produced 8,000 cars last year (which means that it dropped from the optimal 17-18,000 a month to under 1,000) but he said that was a success in these conditions. In January and February this year, the factory didn't produce a single car because of a shortage of materials, traffic, the power crisis, winter, vacations and other failures.

"The greatest problem was the shortage of engines from "21 May" factory and I think that will remain a problem," Lazic said.

Zastava is at virtual war with Belgrade's "21 May" engine manufacturer.

Zastava had cooperation deals with 105 companies in the former Yugoslavia. Hundreds of small plants had their technical standards raised. Most of those companies in the other republics face a crisis since the breakup of the country and have practically stopped their production until the sanctions are lifted.

At least in public Zastava as a corporation doesn't seem to have tried to protect its corporate interests and save the country. Close to 500,000 car manufacturers were silent witnesses to what was happening. It seems Zastava managers did not know on time that the sanctions were coming.

Tomislav Stosic, economic development advisor in the Zastava strategic development department and the author of the idea of revitalizing car production, said once that all the contradictions of the development of the Yugoslav economy are manifested in car production.

The metal working industry is paralyzed with independent and state unions calling on the government to do something and warning that some 450,000 workers in the branch are on compulsory leave throughout the country.

MIN director Milovan Krivokpaic told a meeting of leading company directors, metal workers union leaders and Serbian economic chamber representatives that there would be a 30-40% surplus workforce even if every industrial facility was employed fully. The Nezavisnost union described their situation as desperate and humiliating in a letter to the Serbian political leadership in January 1995. Some workers are flocking to factories to start strikes even though they are on compulsory leave.

Petar Medic, head of the Zastava independent union told VREME that Kragujevac, the fourth largest city in Serbia is now 168 in terms of salaries while Zastava was among the top 13 companies in Serbia once, Medic said some 63% of factory workers have been pushed back to farming which is also facing hard times. Average incomes in Zastava stand at 72 dinars. Medic spoke of almost completely demoralized people with no hope. He said there were engineers herding sheep, technologists smuggling goods from Bulgaria, qualified workers painting or selling gasoline. There's isn't a country in the world who has smugglers and street vendors with levels of education this high. The children of the Feecha are waiting patiently but they don't know what they're waiting for any longer.

Srboljub Vasovic, chairman of the Zastava group, told reporters recently about the factory's contacts with foreign partners. He said Zastava is negotiating with foreign partners and would not make an issue of who gets more capital. He said Zastava would most like to continue with Fiat but was seriously considering other offers.

In other words, Zastava is prepared to remarry. Rumor has it that talks are underway with Renault and Toyota. One worker said he was called in from compulsory leave when directors wanted to show French partners the factory. The problem is that conditions now are much less favorable than seven years ago and an agreement depends on whoever decides whether the sanctions will be lifted and the country opened.

Before the breakup of Yugoslavia over 100 companies participated in Zastava's production:

• 47 in Serbia,
• 14 in Croatia,
• 15 in Slovenia,
• 9 in Bosnia-Herzegovina,
• 2 in Macedonia,
• 2 in Montenegro,
• 11 in Vojvodina,
• 4 in Kosovo