Newsgroups: biz.americast.samples
From: americast-post@AmeriCast.Com
Organization: American Cybercasting
Subject: \HD Privatization perils
Date: Fri, 11 Sep 92 09:14:26 EDT

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\SE A
\HD Privatization perils
\SH Jobs disappear along with dreams
\BY Gerald Nadler
\CR The WASHINGTON TIMES
\DT CHELYABINSK, Russia

CHELYABINSK, Russia - Every trolley and bus line in this southern Urals
city of 1.43 million people ends at one of its monster factories, belching
symbols of the now-faded socialist dream of rapid industrialization and a
job for every willing hand.

The Chelyabinsk Tractor Plant, employing 55,000 workers in seven huge
buildings, epitomizes this gigantism.  Longtime residents recall it
produced its first tractor, the "Stalinets," or "Little Stalin," in 1933 at
the height of the American Depression.

But in the wreckage of the Soviet Union and its central planning system
of subsidies and unlimited industrial credits, the CTZ, as the tractor
plant is universally known, is fighting to stay alive as a private company
with stockholders.  Output has fallen from 2,000 vehicles a month to 1,000.

For the first time, fear of unemployment haunts Chelyabinsk, the
traditional Urals gateway to Siberia and the most industrialized area of
the former Soviet Union.

The city will be a major test of whether unemployment will spark social
unrest as Boris Yeltsin's market reforms compel the former state factories
to fend for themselves without "the good uncle," as workers call the
government.
The regional parliament has forecast that 206,000 people - up to
one-fifth of the work force - will be looking for work before the end of
the year and that 67,800 of them will be declared officially unemployed.

Many qualified specialists have already quit to find other work without
waiting for their pink slips.

"In the last five to six years, we have lost 12,000 workers," said
Boris Artemyev, deputy director of economic management at CTZ.  "We used to
have 67,000 workers.  . . . But nobody is leaving now.  There is no work in
the city."

The pattern is the same at the city's other plants.  The
pollution-belching Chelyabinsk Elektrometallurgical Kombinat, built in 1931
and employing 10,000 workers, stopped taking work applications last month,
though its union believes there will be no layoffs.

At the Kalyushin Road Building Vehicle Works, the assembly lines for
earth-moving machines and small bulldozers stand idle.  Some women workers
have been fired two months after returning from maternity leave.

"They [the management] are trying to do it one at a time, so others
will say 'Thank God, it was not me!'  " said Tatyana Kraikova, who works in
Kalyushin's engineering division.

Now the unprofitable state factories, which floundered badly this
summer as Mr.  Yeltsin's reform team restricted credits, are trying to
privatize by offering shares to the workers, the management and the public.

CTZ workers demonstrated against the privatization plan, maintaining
that management, all of whom owe their jobs to the former Communist
bureaucracy, will end up with the controlling interest.

"No to nomenklatura privatization," read a banner at the demonstration
by about 300 workers on Aug.  30.

Directors of the Chelyabinsk factories race abroad so often in their
frantic search for foreign partners that a local newspaper prints a
timetable of their visits.

"I don't know what they do abroad; they don't report to anybody," said
Ms.  Kraikova, the engineer at the Kalyushin Road Building Vehicle Works.

As she spoke, one of the directors climbed into a company car parked
under a banner urging fulfillment of the Communists' final central-planning
blueprint: "The 12th Five-Year Plan, Shock Work, and the Search for
Initiative."

The factory, which sells road graders for 2 million rubles, is
surrounded by a sea of muddy, unpaved paths.  "That is the paradox: We
produce road-building vehicles and have no roads," Ms.  Kraikova said.

A new version of the grader, which apparently is still marketable, is
on the drawing boards.  It will feature a new cabin and will sell for 4
million rubles.

"The new cabin has a better view for the operator, is better heated
with easier access to the controls.  Everything for the operator," said
Viktor Chapanov, and a veteran of 21 years at Kalyushin.  The remark was a
play on an old Communist slogan: "Everything for the individual."

Mr.  Artemyev, the deputy director of economic management at CTZ,
explained plans to streamline the plant and find new markets for the
tractor factory, where the first gray Stalinets to roll off the line in
1933 still sits on a pedestal outside.

He also revealed how unemployment figures have been kept so low: Ten
percent to 40 percent of the labor force at different times has been put on
"administrative leave" but not officially fired.

"In May, we discovered certain shortcomings and 1,300 white-collar
workers were fired, or 12.5 percent of that group," he said.

"All the 5,500 part-time technical workers will be fired.  But we will
not touch the qualified workers.  We will suffer it through.  We will
probably reduce salaries somewhat or have a more gradual increase in wages
. . . and some jobs will be put on piece rates.

"Also," he said, "if someone comes to work drunk, he will be fired
immediately without any warning, and the trade unions have agreed."

Such a measure would have been unthinkable during the Leonid Brezhnev
era that bought worker peace through cheap vodka and iron-clad job
protection.

Although Mr.  Artemyev worked for more than 20 years under the
command-administrative economic system, he now says, "It was clear to
everyone at the end that the system was moribund."

"Our tractor sold for 4,000 rubles then.  Is that not absurd?"  the
economic manager said, noting the metal alone in the machine was worth far
more.

Now prices for the tractors are 22 times as much, "while the cost of
our raw materials has risen from 50 to 100 times."  His comment illustrates
the problem of making such industries profitable, let alone economically
viable.

In the Brezhnev era, the tractors and bulldozers were simply sent to
Eastern European satellite nations, a market now lost.  Now CTZ has set up
a special firm to market its bulldozers and tractors abroad and has had
success in China, the Philippines, Argentina, Jordan and Egypt.

"There is no other alternative besides privatization . . . but a well
thought-out privatization," Mr.  Artemyev said.  At the same time, he
expressed skepticism about the sales of shares to workers to convert the
facility into what is called a "joint stock company."

"To expect immediately that changing the signs or that a piece of paper
will declare our work collective to be property owners is a fantasy," he
said.

"To expect that someone with his . . . 18,000-ruble stock share will
say 'I am the owner and will manage the factory' is fantasy.  All the more
so since the shares do not confer the right to vote.

"In the near future, there will be no change in the form of
management."

At the Elektrometallurgical plant, which processses such
steel-hardening substances as wolfram and molybdenum, a trade union chief
put it more simply: "Just like they drove us into collectivization, they
are driving us to privatization."


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