// WORK. DENSE FOREST. NECESSITY
This time, the joint research project of Dengi (Money) magazine and the NTV program Namedni (The Other Day) took us to Belarus. The "local" brands don't just come from factories: the Belovezhskaya forest, former head of state Stanislav Shushkevich, and even the model of the state itself are all on a level with Minsk refrigerators, MAZ truck tractors, and BelAZ dump trucks.
Brand #1: Soviet Conformist-2002
This was the most popular social model in the USSR from 1917 to 1991 and remains so to this very day in Belarus, where it's called "market socialism." Its advantages are immediately obvious from the cheerful faces of the workers in factory workshops. Cleanliness, silence, and confidence in the future reign on the streets of the Belarussian capital, upheld by the police standing everywhere.
The republic's inhabitants take special pride in their president's concern for their health. You won't find fake vodka in any store: all products are factory-made and high-quality. If illegal or, God forbid, counterfeit vodka is discovered, the entire sales and production chain is thrown in jail.
Another source of pride is the absence of crime bosses in Belarus. At one time, they were found here as they were everywhere in the USSR, but then they all disappeared somewhere:They couldn't adapt to market socialism.
Anachronisms like the posters hanging in factory workshops also evoke nostalgia. However, the confident march of the market has changed the content of the slogans from the insistent calls to improve productivity under ordinary socialism to calls to improve quality and management under market socialism.
"High efficiency, outstanding quality, deliveries on time," reads an inscription on the grounds of the Minsk Computer Technology Production Association (MPO Vychislitelnaya tekhnika, or MPOVT), once the flagship of Soviet computer manufacturing. At the compressor plant in Baranovichi, quality is worshiped like a god, and the shop is adorned with enigmatic but moving slogans like "Quality means prosperity," or "A high-quality product is a product that satisfies all our customers' demands at the right price." Other slogans earnestly exhort workers not to pass or accept low-quality products on the production line and remind them to be conscientious and responsible.
The factory's crowning glory is this pearl of wisdom: "The worse we work, the poorer we'll be." Such pessimism is out of place here, since the compressor plant is one of the newest and most progressive factories in Belarus and everyone works well and earns more than the average wage for the republic (about $200 per month).
It is also comforting to note that manufacturers of memorable Belarussian products like Minsk (now Atlant) refrigerators, MAZ truck tractors, BelAZ quarry dump trucks, Gorizont televisions, and MTZ (Belarus) tractors are still operating and even expanding.
To be sure, not all companies welcome journalists. For example, after some second thoughts, the management of the Minsk Tractor Plant (MTZ) refused to meet us, perhaps because the factory's general director had recently been jailed as part of "batka's" [President Lukashenko, who is often referred to as "batka" ("father")] well-known promise to jail 15 directors (overfulfilled with great dispatch). At the Atlant Production Association (PO Atlant), the reaction to the "Made in the USSR" (Sdelano v SSSR) project was ambivalent, but after some hesitation they agreed. The company's former director had already been released on recognizance and a new director had taken his place.
Our Own Atlant
At Atlant they made the Soviet Union's most award-winning refrigerators
The scene is out of a pastoral idyll. Cows from nearby houses graze in the city center, right on the presidential route and not far from the entrance to the Atlant refrigerator factory.
"We landscaped the area around the factory and then we noticed that these cows were eating our flowers," recounted one of the factory's administrative employees. "It made a lot more work for the guards, but on the other hand, it was pretty good advertising: see how clean the environment is around our factory."
This year, the first Minsk refrigerator is 40 years old, but the Minsk brand no longer exists. In the early 1990s, the government decided to charge a fee for the use of place names and so the refrigerator was renamed Atlant.
In 1959, a factory to produce household electric refrigerators was established at a gas fittings factory. The first refrigerator was called the Minsk-1 Compression Refrigerating Unit-125 (KhKS-125) and was produced from June 1962 through 1963. In those days, refrigerators were made of wood. The Minsk-12 won a gold medal at the Leipzig Trade Fair. In 1973, the first two-chambered Minsk-7 refrigerator was produced in the USSR; and in 1974 , the first Minsk-17 freezer. The most popular model was the Minsk-15, with more than 4 million units output from the start of production in 1978.
PO Atlant included the Minsk, Smolensk, and Alytus (Lithuania) refrigerator factories and a compressor factory (for refrigerator motors) in Mazeikiai, also in Lithuania. After the collapse of the USSR, the Minsk factory was left without Lithuanian compressors, so the factory's managers set up their own compressor factory at an unfinished machine-tool plant in Baranovichi. Baranovichi reached its full capacity of 1.5 million units per year in 1995.
A factory for producing household appliances has also been built in Minsk. Several years ago, construction of the machine-tool plant at Baranovichi was completed (it was also included in the production association) and began producing plastic-molding machines, conveyor systems, and other equipment. The compressor factory even smelts the cast iron used to make the compressors. At the production association, they explain this kind of natural economy ("we consume what we produce") as an attempt to create jobs in the republic and a wish to decrease production costs.
As of 1990, there were 24 factories manufacturing household refrigerators in the USSR, which produced a total of 6 426 000 units. At that time, Minsk refrigerators accounted for 11% of the market, or 728 000 units. Only the factory in Krasnoyarsk (Biryusa brand) produced more than Atlant (12%).
Ten years later, production in the former Soviet Union had fallen to half, but at Atlant, production markedly increased. In 2001, the factory produced 845 000 refrigerators; and production in 2002 is forecast at 865 000 units, which gives it a 27% share in the same former Soviet Union. Today, however, the recently built Stinol factory in Lipetsk is in the lead with a 33% market share. Production at Atlant has increased 1.78 times compared to 1989, and the factory employs 4000 workers.
In the quality control department where refrigerators are checked for all temperature and power parameters, I was directed to a 30-year veteran of the factory. Pleased at this stroke of journalistic luck, I pulled out my notebook and asked:
- "What is your name?"
The veteran asked me sternly why I needed that information and who had approved the questions, and on receiving a reply, informed me that he was not obliged to answer them. Then the Belarussian "partisan" made a statement for the press:
- "I and the other controllers in our department don't like the way some Russian TV stations portray our country and especially our president. And what's there to say about our work? We work for the customer, not for advertising. I know advertising is needed in order to sell poor-quality products, but good-quality products don't need advertising. Write that down. And I'm senior control expert Ivan Andreevich."
Unfortunately, there are few such veterans left at the factory, because they don't hire anyone over 35 for the production line. The production line is no joke, and every two hours there's a ten-minute break. According to Sasha, a packer, the pay is about $170 per month.
Atlant has experienced hard times; for example, during Russia's default in 1998, debtors were disillusioned and demand fell, so the company had to sell refrigerators for next to nothing. However, the factory quickly recovered and today a new packaged refrigerator comes off the production line every 17 seconds. Atlant manufactures 29 basic models, which is a good figure for any manufacturer in the world. General director Viktor Shumilo has an Atlant freezer and refrigerator at home, and he says his wife is happy with them.
This show of sovereignty has little effect on Russo-Belarussian cooperation. The main steel and copper components are made in Russia, and 12% of production is exported, mainly to France and Germany. As Viktor Shumilo says, "We and the Russians make a very high-quality, ISO-9000-certified product that is just as good as similar German or Japanese products."
According to Mr. Shumilo, demand for refrigerators will double in the next five years and so the factory is making plans to expand production. This is despite the fact that the social package is a holdover from Soviet times in the sense that the company helps employees get an apartment. For example, within a period of five years from the time a worker is registered on a waiting list, he is issued credit for ten years, which the company subsidizes 50%. Taking inflation into account, a worker has to pay only about 30% of the cost of an apartment (a three-room apartment in Minsk costs about $20 000).
Then There's the MAZ
The Minsk auto plant's first models carried loads, but today's models carry really big loads
The MAZ plant covers an area of 100 hectares. It's a city within a city, where the roads between the shops even have stoplights. Sixty-four trucks are produced every shift, or 15 500 trucks per year, and the plant employs 23 000 people.
The state-owned Minsk Automotive Plant (MAZ) has been operating since 1944, and in that time has produced 1.5 million trucks. The first MAZ-200 truck was produced in 1947. The MAZ-500 series, the first cabover truck in the USSR and the only one that met European standards of the time, appeared at the end of the 1960s. Then in 1987, the MAZ-2000 Perestroika created a sensation at an exhibition in Paris. Soviet television audiences were familiar with these special MAZ truck tractors, which carried Grad ballistic missiles and systems in military parades in Red Square.
In the peak years of 1991-1993, MAZ produced up to 40 000 trucks per year; but in 1995, it was in a difficult situation and production fell 75% to 9600 units per year. However, the company managed to reorganize itself and today all output is made exclusively to order. The range of options has also been expanded. Previously, no one ever considered antilock braking systems (ABS) for trucks, but today a customer can order pneumatic suspension, air conditioning, and cab color. At the Moscow Motor Show last August, the MAZ 5440-03 was judged the best truck of the exhibition. Altogether, MAZ produces more than 250 models and modifications, whereas up to 1990, it produced only 7 models.
In addition, for the last ten years, the plant has been producing city and intercity buses, and last year began producing trolleybuses. The history of bus production began when the plant bought a license to manufacture Neoplan buses. However, only six were actually made, and they quietly vanished in the face of local realities. People were used to jamming onto buses until some were hanging on the footboards, but the doors of Neoplan buses reacted to people and wouldn't close until everyone was aboard. Not a very useful feature overall.
About 65-70% of all components are made in Russia; for example, engines, tires, and paints are supplied from Yaroslavl. In 1995-1996, an intergovernmental program to develop diesel auto production was started, for which there were high hopes. However, financing has been delayed and this year, the first tranche arrived only in August.
The aim of the program is to set up production of engines and cars conforming to the Euro-2 environmental standards. MAZ already produces such vehicles and has an ISO-9001 quality certificate. Specifically, the ISO-9001 standard means that all operations are documented; thus, each nut on the assembly line has someone's name on it, and this person is held accountable if something happens.
Production is gradually increasing and so are salaries, which are paid regularly on the 10th and 20th of each month. Nearly all the social and cultural amenities have been kept on the balance sheet. The company's financial situation is stable, but, notes Viktor Kalechits, first deputy general director of the BelavtoMAZ Production Association (PO BelavtoMAZ), "the truck market is difficult to predict, and any of our Russian partners' problems have an immediate effect on us." This was the case in 1997, when the Yaroslavl Motor Works (YaMZ) ran out of working capital. Market realities also have to be taken into consideration. Today, for example, Russia annually imports about 15 000 foreign trucks and another 6000 Belarussian trucks. KamAZ produces just as many.
At Gorizont they install only imported French, Korean, and Lithuananian picture tubes
The Gorizont brand (the name means "Horizon") is associated with what was formerly the USSR's second-largest television producer. Only the Lvov factory (Elektron brand) produced more, and today it is struggling. The Russian picture tube industry has disappeared, apparently forever. Today, the only former Soviet republic still producing picture tubes is Lithuania, at a plant in Panavezys.
The Gorizont Production Association (PO Gorizont) also produced the first color television in the USSR. The most popular models in Soviet times were the 417, 441, and 510, nicknamed "cubes" because of their shape.
Even in 1991, people would put their names on a waiting list for Gorizont televisions and customers came from all over the Soviet Union. Unfortunately, the company's managers missed their chance to invest in development and from 1993 through1995, the plant was heading for collapse. In those years, people hurried to assemble their own Gorizont televisions from factory-made components and the dormitories of engineering schools turned into underground "branches" of the factory. Gorizont's reputation fell through the floor, as they say.
As a result, the factory abandoned models with a bad reputation, along with wooden frames, as plastic turned out to be much more practical. Efforts to improve quality restored customer loyalty, although the factory's objective in 1997 was to produce 500 000 sets, whereas in 1990, it was producing 1 million sets per year. The number of employees fell by almost half from 11 000 to 6400 in the same seven-year period.
In the words of Yury Predko, PO Gorizont's general director, "Today the Koreans have more than 50% of the Russian market and are crowding out the Japanese. If you're talking about picture quality, you can argue about whether we or the Koreans are better. But we don't have the money to invest in advertising; we have 6000 employees plus the social package. Still, the company has 54% of the market in Belarus and 8-9% of the market in Russia."
One good thing about imports in Belarus is that they don't compete with Gorizont because they are much more expensive. But at the same time, new assembly plants in Russia have become strong competitors. The attitude toward them at the Gorizont factory is mixed. On the one hand, it isn't real manufacturing because all components are imported, whereas Gorizont has both a full scientific research institute with its own designers and its own workshop for producing printed circuit boards. On the other hand, the assembly plants are living well on their market share.
A Soviet-Style IBM
In Russia today, only the military and long-time programmers remember what the Minsk Computer Technology Production Association (MPOVT) represented, although 15 years ago, the "ES" was the best known of three or four Soviet computer brands.
MPOVT was established in 1956 on the basis of an existing garment factory. In the mid-1950s, as soon as cybernetics stopped being regarded as a pseudoscience and a prostitute of imperialism, the garment factory was quickly reorganized into a computer factory. The first model, the Minsk-1, came out in 1960. It was a huge box as high as a person that could perform 3000 operations per second. The best known series was the Minsk-32. In 1970, the Council for Mutual Economic Aid (SEV, or Comecon) saw the potential of designing IBM-type machines, and the first such model, known as the Unified System Electronic Computer 1020 (ES EVM 1020), was developed in Minsk. The most widespread model-the ES EVM 1022, which could perform 90 000 operations per second-was produced from 1975 through1980. In 1986, MPOVT developed the first PC, the PVM ES-1840. Computers from the Minsk factory also went into space aboard the Salyut spacecraft. However, by 1990, it was clear that there was no future for ES machines.
At the time of the slump, 20 000 people worked at the factory. Only 4000 remained, but the factory survived. Stuck with outdated Soviet technologies and worn down by the Jackson-Vanik amendment [adopted by the US in 1974 as a form of economic sanction against communist countries that hindered the free movement and emigration of citizens, especially Jews], the factory recognized the advantage of assembling computers from ready-made components. Today, assembly in Belarus accounts for 20-25% of the company's revenues. The factory has also started production of digital telephone exchanges (40% of revenues). A joint venture to produce digital exchanges has also been formed with Alcatel's German division. Production of devices for measuring water and heat consumption, as well as cash registers, accounts for another 10-15% of revenues. The remaining 15-25% of revenues come from production of lamps. There was once a rule that for every ruble's worth of defense production a company produced a ruble's worth of consumer goods. The company chose lamps, which today can be found not only in Minsk, but in Russia as well.
In 1999, a federal program for developing supercomputers was begun. Experimental models have been designed in cooperation with Moscow scientific research institutes. Production is increasing, and although the RF Ministry of Defense is not a customer, the factory supports itself without loans and this year even hired 81 young specialists. The main clients are the Ministry of Communications of Belarus, Russian telecommunications companies, RAO UES of Russia (RAO EES Rossii), Gazprom, and the railway and agricultural sectors. The main customer for computers is the public education system. The average salary at the company is 200 000 Belarussian rubles (about $110); for senior programmers, this figure is about 600 000 Belarussian rubles or about $300.
A PENSIONER OF NATIONAL STANDING
"They grow food in gardens"
Stanislav Shushkevich, the former chairman of the Supreme Soviet of the Republic of Belarus, not only destroyed a very wealthy country, but also became the poorest former head of state.
- "You're known as one of the three people who wrecked the USSR in the Belovezhskaya forest. Can you also claim to be the person who wrecked the Belarussian economy?"
- "The USSR began to fall apart long before the Belovezhskaya agreements. It was already ungovernable; it was a nuclear monster. We wanted to follow the same economic path as the Baltic states. We carried out gradual privatization and introduced private land ownership before Russia did, but today, these initiatives have been cut back."
- "Nevertheless, we've visited some very successful companies that place a lot of emphasis on quality:"
- "I worked in the medium engineering industry and I can tell you that during the years of Soviet power, they didn't beat diligence and the drive for quality out of our people. It wasn't for nothing that Belorussia [the Belorussian SSR] was called the USSR's "assembly shop."
- "How much do you get paid?"
- "I plan to get into the Guiness Book of Records as the lowest paid former head of state. As a former head of state, I was granted a pension that's worth about $1500 a month today, but it's all been eaten up by inflation. I earn most of my income in the West by giving lectures."
- "What are the prospects for the Belarussian economy?"
- If we start doing everything right tomorrow, in two or three years we'll pull through. We still have to kick away the "Russian prop." You see, the main principle of Russian policy is "if we lose Belarus, we lose Kaliningrad Region." The move to a single exchange rate is a major achievement. Not long ago, there were five different rates: the National Bank rate, the noncash rate, the rate for nonresidents, the commercial rate, and the Russian exchange market rate (the lowest one).
- "How have people been living since the introduction of the single exchange rate? Prices have soared, but salaries have stayed the same."
- "The villages live off subsistence farming. They grow their own food in gardens and only buy bread, vegetable oil, and sugar. There won't be any social explosion in Belarus."