SPECIAL REPORT
The Soviet Chemical Industry and the
Gorbachev Reforms John A. Martens Department of Commerce
Since coming to power in the Soviet Union in March 1985, the Mikhail S. Gorbachev-led team of Communist Party officials has fired, or at least kicked upstairs, almost all of the nation's top civilian industrial leaders. Of the approximately 20 ministers who oversee the manufacture of mostly nonmilitary goods, only four pre-Gorbachev appointees survive. All top leaders in the Soviet chemical industry were removed. It is unlikely that poor job performance or old age caused so many top executives to be replaced. Many of the fired ministers are well below retirement age and could have demonstrated steady growth and fulfilled plans in each of their industries. Soviet statistics for the chemical industry show that since 1960 the U.S.S.R.'s output of a number of major commodities (among them synthetic ammonia, sulfuric acid, fertilizers, synthetic rubber, and plastics) grew at average annual rates greater than was achieved by either the U.S. or the European Community. Although lower initial output levels made success statistically easier for the Soviet Union in the 1960s, the growth in output for these products has continued to exceed growth in the western nations since 1980, as well. Some western Soviet watchers view these managerial changes skeptically, pointing out that personnel shakeups and clamor for reform have accompanied past leadership changes without much lasting effect. In their view, Gorbachev is simply getting his people in 28
January 18, 1988 C&EN
place, after which the noise will die down and it will become business as usual. Other observers, however, link the massive personnel shakeup directly to the Gorbachev-led party's plans for radical economic and social reform. New top Communist Party executives fault the old economic policies for involving excessively detailed national economic planning and for sheltering Soviet producers from the economic signals broadcast by domestic and international markets. The old Leonid Brezhnev-era policies have, they believe, hamstrung technological innovation and failed to meet even modest consumer expectations. As a result, more of the same could erode Soviet military power and possibly spark domestic unrest. The new top party leaders want their own team of loyal subordinates, these observers maintain, to ensure complete support for any major economic reform. Incumbents, tainted with being too committed to the old ways of doing business, were quietly retired. Recent events seem to support this second view. In the Soviet Union, the Communist Party dominates all aspects of the economy, and economics is really politics. The Gorbachev Administration's readiness to loosen up politically—freeing political prisoners, broadening the permissible range of public expression, and granting some Jewish émigrés return visas to visit family—may, oddly enough, indicate that substantial economic reforms are in the offing. For years, Kremlin leaders have tried to create a world economic power out of their country's wealth of raw materials and highly trained specialists. Gorba-
Reactors produce herbicide in chemical plan tat Sterlitamak, south of Ufa and west of Ural mountains
chev, by vigorously pursuing economic reforms, is raising expectations within the U.S.S.R. that his team of officials is now equal to the task. Just how far Gorbachev's team can go in overhauling the economy will likely determine whether the Soviet Union will emerge as a competitive force on world markets.
Inherited economic problems Most Soviet citizens, blue- and white-collar workers alike, are convinced that their economy is not working well. Nikita Krushchev's prediction in 1957 that the U.S.S.R. would surpass U.S. industrial output by 1982 is now an embarrassing piece of historical trivia. The unexpectedly hefty profits from petroleum exports that helped shelter officials from facing many economic problems during the 1970s are gone. Public disenchantment has sprung from slower than expected economic progress, continuing embarrassment over general technological backwardness, and, in many cases, the belief that living standards are dropping. In 1982, I revisited the neighborhood grocery store
in Leningrad where I had shopped as an American graduate student in the mid-1970s. A middle-aged man burst out of the store's entrance and barked at me, "Worse than during the blockade!" Colorful overstatement to be sure, but his comparison of the food situation to that of the darkest days of World War II exemplifies today's consumer frustration. Much to the concern of Soviet leaders, low consumer morale has considerably dampened the incentive to work. In the past, Soviet workers often grumbled about low wages, saying, "They pretend to pay us, and we pretend to work." Today, the same workers are becoming increasingly disenchanted with the usefulness of even the pay they do receive. According to some Soviet economists, savings account deposits have been growing at a faster rate than wages simply because there is so little to buy. These swollen accounts represent a worrisome amount of pentup consumer demand and are viewed as a measure of consumer discontent. Disenchantment extends beyond the average consumer to many dedicated senior government officials, as well. The optimism of the early 1960s, which foresaw the Soviet Union becoming a major exporter of manufactured goods, an important source of new technologies, and an economic model for the Third World, has evaporated. Today's official apologies stress the moral side of economic issues—no chronic unemployment, low crime, no illicit drug industry, no homeless. Far from taking a place next to the western economic powers, the Soviet Union has found it increasingly difficult to compete with the developing countries in exporting to the West. One western study of Soviet and Third World trade concludes that "The Soviets have not been very successful in diversifying their export base and may have growing difficulty in future years as competition from [developing countries] intensifies." The study points out that where the U.S.S.R. and developing nations compete head-on for markets in the West, those countries are more often than not the victors. For example, during the latter part of the Brezhnev era, the U.S.S.R. lost shares of western markets to developing countries in such diverse areas as road motor vehicles, organic chemicals, paper and paperboard, and pig iron. Massive investments in research and development and in technical education have not propelled the Soviet Union into a leadership position in any major commercial technology. "The gap with the most developed countries in scientific-technical development has grown to our disadvantage," Gorbachev bitterly complained in a proreform speech to important Communist Party officials last June. The Soviet Union's scientific community is keenly aware of the fast pace of technological changes abroad and avidly devours western scientific publications; most of its members are equally aware that their economic system seems incapable of the flexibility needed to foster cross-disciplinary developments or to move new ideas quickly into production. Soviet scientists and engineers are also aware that the Communist ParJanuary 18, 1988 C&EN
29
Special Report Output of chemicals has been moving toward the East
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ty's extreme controls on the dissemination of information seem archaic in light of the information revolution occurring in the rest of the world. And many believe that continued rigidity will only widen the scientifictechnical gap with the West. In addition, the impressive early postwar growth rates that had bolstered Moscow's claim of being an attractive alternative to capitalistic development in the Third World have disappeared. Official Soviet statistics for total economic growth show a definite declining trend during the past decade, with an all-time low annual growth rate of 3.2% in 1984. Privately, some Soviet economists have stated that real growth was even lower, approaching zero. (The U.S. Central Intelligence Agency estimated growth for 1985 to be only 0.8%.) In his June speech, Gorbachev again minced no words, calling the poor economic growth of the late Brezhnev era "the onset of stagnation" and a "precrisis economic stage," descriptions that Soviet officials previously dared only apply to western capitalistic economies. Gorbachev's push for openness, or "glasnost," has included a thorough airing of economic dissatisfaction. Soviet party officials are not disputing the presence of severe economic problems, and all pepper their speeches with Moscow's lastest buzzword, "perestroïka" (rebuilding). None of the solutions being discussed, however, 30
January 18, 1988 C&EN
Soviet chemical production (tinted areas) has been shifting from the older industrial areas of European Russia to the petroleum-rich areas west and north of the Caspian Sea and in central Asia and the fertilizer producing region around Tashkent
even begin to suggest that socialism be scrapped. Gorbachev reminded officials of the discussion's limits this June, noting "that those who suggest antisocialist alternatives should be rebuffed. Indeed, the people are not suggesting that we change the system, but that we uncover the potential of socialism."
The chemical industry Soviet chemical science has historical roots that extend well into czarist Russia. A well-developed chemical industry, however, is a more recent phenomenon. Soviet economic officials first pushed the development of domestic chemical production in the 1930s, when the country's rapid industrialization began to be slowed by a backward chemical industry. Development in the 1930s depended heavily on western technology and know-how, with western companies building numerous turnkey plants, and shifted the concentration of Soviet production away from the Moscow-Leningrad area to the resource-rich areas of the Urals, Western Siberia, and Central Asia. By the onset of World War II, the U.S.S.R. was estimated to have the fifth largest chemical industry in the world; yet, the range and quality of the industry's products remained poor by western standards. During the past three decades, the Soviet government has generously funded its chemical industry. In 1958, Khrushchev announced a crash program for
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Special Report "chemicalization," with emphasis on agrochemicals and synthetic materials. Once again, the attention paid to the chemical industry occurred only after its backwardness was viewed as holding back other economic programs. More fertilizers and pesticides seemed a plausible technological fix, a way of attaining satisfactory agricultural output without undoing the large socialized system of state and collective farms. Synthetic materials would relieve the high demand for metals caused by the postwar economic reconstruction. As a result, investments flowed freely into the chemical industry. Imported western equipment consistently accounted for a large share of these investments and at times constituted more than a third of total Soviet machinery imports, a clear indication of the chemical industry's favored position with senior economic officials. Today's Soviet chemical industry is highly centralized. The Communist Party is the top authority, with most industry executives being both technical specialists and politically active party members. The party sets broad industrial policy and makes key personnel decisions through its Central Committee staff. These decisions are relayed to the chemical industry by the Central Committee's Chemical Department. The actual management of production is centered in five industrial ministries: Chemical, Petroleum Refining & Petrochemicals, Mineral Fertilizer, Medical & Microbiological, and Chemical Machinebuilding. Coordinating bureaus that join groups of related ministries have been established recently by the party to overcome excessive ministerial independence. For the chemical industry, a newly created bureau headed by Deputy Prime Minister Vladimir K. Gusev has joined the chemical-producing ministries with the pulp and paper ministry. Gusev, a chemist, recently held the post of chairman of the Consumer Goods & Services Commission after serving as party chairman of the Saratov region. The Chemical Machinebuilding Ministry, however, reports to another bureau dealing with
Soviet economic growth has been moderate during 1980s Annual change in gross national product, % 4
0 1981
82
83
84
85
a Preliminary. Source: Laurie Kurtzweg, Central Intelligence Agency
32 January 18, 1988 C&EN
86 a
all types of equipment production, headed by Deputy Prime Minister Ivan S. Silayev. Each industrial ministry is subdivided into broad, product-related industry associations, such as the Ministry of Petroleum Refining & Petrochemicals' Rubber Technical Products Administration, which are further subdivided into specific production facilities or groups of facilities. Chemical research facilities parallel this centralized administrative system. They are usually attached to a ministry's industry association, conducting broad, future-oriented research for the industry as a whole, or to a production facility, solving current production problems. In addition, the Soviet Union's higher-education facilities and its Academy of Sciences' network support vigorous chemical research programs. Although as a general rule these academic centers conduct mostly fundamental research, they are increasingly being pulled into applied work or even into small-scale production as a result of their contracts and joint laboratories with industrial facilities. Not all academic institutes welcome the pressure to do more applied work, and the Soviet press continues to write hard-hitting articles criticizing irrelevant basic research programs. One long-standing Russian joke has a listener writing to the staff of a fictional "Radio Armenia": Listener: What is scientific research? Radio Armenia: So far as we can determine, scientific research is the satisfying of personal curiosity at the government's expense. Indeed, the pressure for greater involvement in industrial work has led to today's Academy of Sciences becoming an important producer of specialized laboratory instruments, with sales of $35 million to $48 million annually (converted to U.S. dollars using the 1986 official exchange rate of 1 ruble = $1.19), and highly pure chemical reagents. Soviet organizational philosophy seems grounded in the belief that all of the country's scientific tasks can be centrally parceled out to an appropriate organization, or (expressed in more Soviet-style jargon) that there can be a clear, centrally defined division of labor among all of the country's research and production organizations. Science and production, it has been assumed, are best guided from the top down. Responses to new interdisciplinary developments often have suffered from this organizational rigidity, for creating new organizations is time-consuming and coordinating existing organizations is fraught with bureaucratic turf and budgetary disputes. For example, the Soviet scientific press at present is writing extensively about the economic potential of new developments in polymer membrane technology for use in making energy-efficient filters for the medical and food processing industries. Top industry leaders have even mentioned membrane technology as a priority area for the chemical industry, a major goal along with such areas as biotechnology, new construction materials, chemicals for microelectronics, and new pesticides. A new special organization consolidating research and production efforts was even established, with Minister
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Special Report
Influence of the Communist Party on chemical production, research, and education, although 1 General Secretary 1 M. S. Gorbachev 1 Politburo
iEducational ministry
! Other departments
Central Committee I
Permanent staff
Chemical Industry Department
1
1 Science & Education Department
[
1 1
ι r
V. A. Grigor'yev
\ * Academy of Sciences
Yu. A. Bespalov
|! Basic chemicals
G. /. Marchuk Chemical Biochemistry, biophysics & chemistry of physiologically active compounds Research institutes
Synthetic fibers
departments
General & technical chemistry
Research institutes
--
1 of the Ministry Chemical Industry
Ministry of Higher & Secondary Specialized Education G. A. Yagodin
\
.
-j
V. G. Afonin
Universities
Technical institutes
Chemical reagents Dyes & organic products Glass fibers & reinforced plastics
Physical chemistry & technology of inorganic materials
Household chemical products Paint & lacquer Plastics & plastic containers Oxygen
Research institutes
Photographic chemicals Soda ash Chlorine
The Communist Party organization (shown in red) is the highest decision making authority in the Soviet Union—in the words of the Soviet constitution, ' 'the guiding and directing force of Soviet so ciety." The party's influence (represent ed by the dashed red lines) extends over science and industry in several ways. For one thing, almost all important ad ministrative officials are party members. For example, Nikolay I. Ryzhkov, who as chairman of the Council of Ministers since 1985 is the top Soviet industrial executive, also is a member of the top Communist Party organization, the Polit
buro. In addition, overall party policies, high-level appointments, and the resolu tion of important disputes frequently in volve party organizations. The Council of Ministers and its subor dinate organizations (shown in blue) di rectly manage the Soviet economy. The individual ministries have long been the most powerful Soviet industrial entities. Industrial ministries, in turn, are subdi vided into functional "main administra tions," which oversee the operation of a number of factories and research orga nizations. The Main Administration for Rubber Technical Products, for exam
of the Chemical Industry Yuriy A. Bespalov as its head. (Similar organizations also were set up for work on catalysis, corrosion resistance, thermosynthesis, optical cables, and biotechnology.) Yet the press also has reported that efforts to initiate this top-priority Soviet membrane program have bogged down. "To sign a decree is still a long way from taking action/' complained a leading official, who then cited difficulties in getting equipment, test production facilities, and agreements with other organizations on sharing the tasks for everything but basic research. 36
January 18, 1988 C&EN
ple, which is involved with making spe cialized rubbers for industrial products like belting, hose, automotive compo nents, gaskets, and seals, has at least 14 plants and one research institute under it, as shown in the chart. Not all of the main administrations for the five chemi cal ministries are shown on the adjacent organization chart; the main administra tions for the relatively new Ministry of Medical & Microbiological Industry are not yet clearly known. In addition, regulatory agencies, such as the State Committee for Prices, also
In addition to confronting their own lengthy minis terial chain of command, chemical producers face a multitude of central government regulatory agencies. Product mixes, prices of goods bought and sold, job classifications, wage rates, supply and distribution net works, quality standards, and general research themes are either dictated by or negotiated with a Moscowbased central organization. Production organizations also carry many additional responsibilities, such as providing their employees with housing, day-care cen ters, supplemental food supply, and vacation facilities.
ndirect, is strong
rH Economic Planning Supply Finance
Chairman of the Council of Ministers N. I. Ryzhkov
Prices i H Foreign Trade Chemical & Paper Bureau Regulatory &
Η Standards
coordinating agencies
• H Others
Science & Technology
Council of Ministers
' -i * I
I I Ministry of the Mineral Fertilizer Industry Λ/, M. Ol'shanskiy
Mining & chemicals Potash Nitrogen Fertilizer products Automation
Chemical
ministries
Ministry of the Chemical Machinebuilding Industry V. M. Luk'yanenko
Ministry of the Medical & Microbiological Industry
Ministry of the Petroleum Refining & Petrochemical Industry TV. V. Lernayev
V. A Bykov
Chemical equipment Carbon black technology
Polymer equipment Compressors & refrigeration equipment
Processing of oil & production of synthetic organic products
Cryogenic equipment
Processing of shale
Petrochemical equipment
Crude rubber
Pipeline fittings
Synthetic rubber
Pulp & paper equipment
Tires
Pumps
Rubber footwear
Special petrochemical equipment
Rubber technical products
are subordinate to the Council of Minis ters, and administer standard regulations for all the industrial ministries. So are the recently established coordinating bureaus, such as the bureau joining the chemical industry ministries with the pulp and paper ministry. The real influence of these coordi nating bureaus is still uncertain. The U.S.S.R. Academy of Sciences (shown in green) functions somewhat in dependently from the state and party, though it, too, is under party influence. It has been the only Soviet organization with secret elections. Its present leader ship is pushing academy departments into more work for industry.
Special petrochemical equipment Pipeline repair Foreign construction
Central Scientific Research Institute for Rubber & Latex Products (Moscow)
Main administration for rubber technical products Plant Bakovsk Barnaul
χ
Bobruysk
Cherkassk
Borisov
Chemical industry problems Generous investment in the chemical industry has resulted in achievements that are often cited in the "good news" portion of industry officials7 "good newsbad news" speeches. Production growth has consis tently outstripped the overall growth of the rest of Soviet industry since the early 1960s. By 1986, the U.S.S.R. led the world in the production of chemical fertilizer (34.7 million metric tons, on the basis of nu trient content), synthetic rubber (2.25 million metric tons), and synthetic ammonia (19.4 million metric tons
locations
Kazan
Kursk
Noginsk
Lisichansk
Sumy
Orenburg
Ufa
Tambov
Volgograd
of nitrogen). And it is one of the leading producers of sulfuric acid (27.9 million metric tons), plastics (5.3 million metric tons), and caustic soda (3.2 million met ric tons). It employs about two thirds as many chemists with advanced degrees as does the U.S. Yet the chemical industry has not been immune from many of the same problems that have haunted the Soviet economy as a whole. The Soviet press recently has published a number of scathing articles on the chemical industry's problems. One particularly barbed article, entitled "Where did all the dirty-grey bears January 18, 1988 C&EN
37
Special Report
New officials now are running the Soviet chemical industry All of the top executives in the five chemical industry ministries have been replaced since 1985. Most of the departing executives had acquired their production-line experience during the first years of state economic planning and the mobilization for World War II. For more than 30 years, they had worked in the central ministries or their equivalents. The careers of the new executives blend varying degrees of technical expertise, industrial management experience, and Communist Party staff work. These new leaders are surprisingly young, even by Gorbachev-era standards, with four of them 50 years old or less. Venyamin Georgiyevich Afonin has been head of the Chemical Industry Department of the Central Committee of the Communist Party since 1983. As such, he is the Soviet Union's top chemical industry executive. Plans for industrywide changes and communications on new Communist Party policies are passed on to the chemical industry's other chief executives from his office. Afonin worked directly for Gorbachev in the southern Russian party organization (Stavropol·), and, when Gorbachev was appointed to the national party staff in Moscow in 1980, Afonin was picked to come with him. His personal relationship with Gorbachev likely gives him excel-
lent access to Moscow's major decisionmakers. In 1986, he became a candidate member of the Communist Party's Central Committee, a several-hundred-member elite party organization. Little is known in the West about Afonin's background, but his absence from the pages of important Soviet scientific periodicals suggests that he is not a scientist or engineer. Yuriy Aleksandrovich Bespalov, 48, was appointed head of the Ministry of the Chemical Industry in August 1986. His career has blended considerable experience in industry with high-level Communist Party work. Bespalov joined the party in 1967 and studied at the S. M. Kirov Chemical Technological Institute in Kazan and at a special Communist Party school, the Central Committee's Academy for Social Sciences. He is the recipient of a doctor of technical sciences degree. His 20 years' experience working in production facilities included a number of years at the Borisov plastics factory near Minsk and ended with a seven-year assignment as chief engineer at the important Scientific Production Association "Plastpolimer" in Leningrad. Prior to his appointment as minister, he worked for seven years in the Chemical Industry Department of the Communist Party's
come from?" recounts a Soviet shopper's dismay at only being able to choose from an assortment of "faded and dismally colored" toys—green rabbits, pink monkeys, and dirty-grey stuffed bears. In researching the shopper's complaint, the reporter lays bare a number of problems plaguing the central Dyes & Organic Products Administration. Industry officials, however, denied any serious problems and issued a series of statistical smokescreens. "We fulfilled our assigned tasks. How can anyone complain about us?" gruffed the now former head of the association to the reporter. Poor technological innovation runs as a common thread through most criticisms of the chemical industry and is portrayed by the press as the economy's severest problem. State officials from the country's top science policy organization, the State Committee for Science & Technology, surveyed the chemical industry in 1986 and concluded that it remained behind the West in five of the state's eight indicators of the technological level of production. A similar study of the top scientific institutions of the Ministry of the Chemical Industry concluded that an extremely low proportion of their research projects 38
January 18, 1988 C&EN
Central Committee. His rise to the Central Committee predates Gorbachev's rise to power and therefore suggests that his present appointment is not directly tied to Gorbachev's influence. Bespalov has published extensively on such topics as plastic injection molding, including several articles with his wife, who is also a chemist. Nikolay Mikhaylovich Ol'shanskiy, 48, was named Minister of the Mineral Fertilizer Industry in September 1986. Communist Party work has been the focus of Ol'shanskiy's career. He joined the party in 1965 and studied at the L'vov Polytechnical Institute and at the party's Central Committee's Academy for Social Sciences. He worked for slightly more than a decade at the Ministry of Chemical Machinebuilding's regenerator factory in Sumy, a small town near Kharkov in the Ukraine, where he became director. Ol'shanskiy spent about a decade in local and regional Communist Party work in Sumy, where he oversaw a test program for one of the party's present key economic reforms. His management of this reform, now widely touted in the press as the "Sumy experiment," likely propelled him to national prominence. Immediately prior to his appointment as minister, he worked for three years in
were being conducted at world levels. Presumably this latter study (details of these studies have not been published) drew on the large number of success indicators (such as number of foreign patents and licenses, relation to international industrial standards, and publication of results in foreign journals) that were used by the officials to compare Soviet research projects to work being done in the West. Excessively rigid central economic planning and irrational centrally dictated prices are increasingly being identified as the primary culprits undermining innovation programs at chemical plants. Although many innovations follow a zigzag path to fruition, Soviet state planning procedures require managers to know their equipment, manpower, and instrumentation needs one or more years in advance. The failure to reach centrally planned output goals, even if caused by the need to digest new technology, has severe consequences, including loss of jobs, bonuses, and such important perquisites as housing programs, for the entire factory. This predisposes management to travel welltrodden paths and "pickle" truly important innovations.
the Chemical Industry Department of the Communist Party's Central Committee. Vladimir Matveyevich Luk'yanenko, 50, became Minister of the Chemical Machinebuilding Industry in January 1986. His career has centered on research and industrial work, with little time in special Communist Party staff positions. He joined the party in 1963 and was educated as a senior engineermechanic. Luk'yanenko spent almost his entire career in Sumy with an organization that grew from a single factory, the M. V. Frunze machinebuilding factory, into a large amalgamation of research, design, and production facilities. This organization, a major producer of industrial centrifuges, compressors for gas pipelines, and nuclear energy equipment, was one of two test sites for the Sumy experiment. Communist Party officials evidently hope that Luk'yanenko's industrial experience can move the Soviet chemical equipment industry toward their goal of reducing Soviet imports of western chemical machinery. Nikolay Vasil'yevich Lemayev, 58, was appointed chief of the Ministry of the Petroleum Refining & Petrochemical Industry in October 1985. More than two decades of successful management at
one of the Soviet Union's largest petrochemical complexes built his career. He was elected a delegate to the last three Communist Party congresses, but has had little pure party staff experience. Lemayev joined the party in 1955 and was educated at the Ufa Petroleum Institute, receiving a doctor of technical sciences degree. He worked for a decade in several responsible production-line positions at the Novo-Ufa petroleum refinery. From 1963 until his appointment at the ministry, Lemayev managed the Nizhnekamsk petrochemical complex near Kazan, a leading producer of butyl and polyisoprene synthetic rubbers and such petrochemicals as benzène, butadiene, ethylene, propylene, ethylene glycol, ethylene oxide, ethylbenzene, and styrene. During his tenure there, the Nizhnekamsk complex engaged Salzgitter and Toyo Engineering for new plant construction and licensed process technologies from Lummus, Mitsubishi, and Scientific Design. Nizhnekamsk management, with Lemayev's personal backing, recently has undertaken a joint venture for producing instruments and control systems with a U.S. firm, Combustion Engineering. Lemayev has published extensively in Soviet scientific journals, including sev-
As if supply problems and the dangers of risk wer en't enough discouragement, centrally dictated prices sometimes make important innovations economically unsound. Why should managers substitute a cheaper material for a more expensive one if the volume of their output is fixed and they would only have to re duce the price they can charge? After all, Moscow's planning officials judge managerial success on the ba sis of the total value of a plant's output. Even if a particular factory hurdles all the barriers to innovation and implements an important new technol ogy, chances are that the technology will never make its way to other factories. The legal cap on domestic licensing royalties is pegged so low that most plants purposely duck having to transfer their technologies to others. In fact, only 20% of all inventions used by fac tories are ever transferred to other organizations. Rigidly drawn organizational boundaries and the plethora of central regulatory agencies affect more than the vigor of the chemical industry's innovation. They also affect the entire supply network of goods and services. "Take care of your own first," is a cardinal principal of Soviet industry. As one reporter noted in
eral articles on environmental pollution, a serious problem in the Kazan area. Valeriy Alekseyevich Bykov, 49, has been in charge of the Ministry of the Medical & Microbiological Industry since December 1985. Bykov was educated at the Kuybyshev Industrial Institute and has been a Communist Party member since 1966. His appointment does not appear to be directly connected to Gorbachev's influence, for he began working as head of the party's microbiology division of the Chemical Industry Department in 1979, well before Gorbachev rose to power. Few details have reached the West about Bykov's early industrial background. As minister of the newly formed Ministry of the Medical & Microbiological Industry, he will oversee the development of the Soviet biotechnology program, as well as the production of pharmaceuticals and medical instruments. He worked for some time at one of the Soviet Union's more modern oil refineries in Kirishi, near Leningrad, quite possibly at its large (100,000 tons per year) η-paraffin plant for single cell protein production. He later became director of an unidentified biochemical plant. His re cent work has centered on the develop ment of fodder additives and the bio chemical purification of wastewater.
explaining a six-year delay in installing an important production line for making a series of composite mate rials by a newly developed method, "on the map, the construction crew was nearby, but in fact the distance was greater, it was in a different ministry." Organizational barriers have pushed the Soviet chemical industry toward an extreme vertical integra tion, with plants developing their own production ca pabilities for an excessively wide range of products or equipment. "The logic is simple," quipped one Soviet reporter sarcastically. "The fewer connections with other enterprises, the fewer the headaches. From my own shops, I'll always get what I need; but if you're tied to others, you're forever in the arbitration courts." Present chemical research programs are severely limited by the backwardness of available computing facilities and instrumentation. This situation was graphically described in a recent report on Soviet com bustion research made by Science Applications Inter national Corp., a La Jolla, Calif.-based technical ser vices company. "Soviet combustion chemistry appears to be greatly weakened by lack of modern laser-based techniques for stimulation and probing of chemical January 18, 1988 C&EN
39
Special Report
Output of major chemicals products moves higher after stalling in early 1980s Mineral fertilizers3
Synthetic ammonia*
Millions of metric tons
Millions of metric tons 20 |
! 40 CO
ο
15
CM
ο
10
10
5
1 I 1 1 1 1 1 1 1 1976 78 80 82 84 86
!
ι ι ιι
Q
1976
78
80
I II 82
Sulfuric acid
Sodium hydroxide
Millions of metric tons 30 I
Millions of metric tons 4I
84
86
3
20
2
10
1 I
1976
I I 78 80
ι ι ι ι 82 84 86
ι • ' ι ι ' ι ' » 1976 78 80 82 84 86
Plastics c
Synthetic rubber
Millions of metric tons
Millions of metric tons 3 I
6|
I 1976 78
80
82
84
86
I I I I I I II
1976 78
80
82
84
86
a Nutrient content, b Nitrogen content, c Includes resins for man-made fibers. Sources: Central Intelligence Agency, U.S.S.R. State Committee for Statistics
reactions, by lack of laboratory computers for acquisi tion and reduction of experimental data, and by lack of large mainframe computers and advanced algorithms for sophisticated chemical kinetics computations. The result is that most present Soviet research in combus tion chemistry could have only a small impact on ad vancement of the science," the report concludes. Poor product quality also has plagued the chemical industry. A new State Quality Control Board, in opera tion since the start of 1987, has led to a tightening of product standards and higher rejection rates, however, which in turn leads to lower output and subsequent demotions or reduced salaries, bonuses, and privileges. One western chemical company reports, though, that as a result of the quality board's efforts, it can buy one chemical from the Soviet Union that is consistently above both western standards and its own require ments. On the other hand, many quality problems stem di rectly from the almost complete lack of competition in 40
January 18, 1988 C&EN
Soviet markets, both wholesale and retail. The staterun central supply network and the state's controls on foreign trade and foreign currency combine effectively to obliterate most competition, domestic and foreign, for producers. If a factory can be paired with a domestic supplier, there can be no discussion of purchasing from abroad. Moreover, once paired, there is little chance of changing domestic suppliers. As the reporter who wrote about the poorly colored plastic toys noted, the lack of alternatives for consumers gives suppliers the complete upper hand. "The principal of 'You've got to take what there is!' reigns." Poor worker safety and labor supply problems also are stifling production at many Soviet chemical facili ties. Industrial accidents, previously treated almost as state secrets, are now given press coverage. The Tog lyatti nitrogen works, on the middle Volga near Kuybyshev, a recipient of large amounts of western equip ment, recently reported that one of its ammonia fac tories was idled for more than 2500 hours after an accident. In neighboring Kazan, 12,000 metric tons of polyethylene were lost because of an accident at the local power station. Charges of bribery, coverup, and faulty equipment design surfaced in the national news after a boiler explosion killed two workers at the Shebkino chemical plant, near Kharkov. A chief safety in spector also accused officials of protecting their annual bonuses by seriously underreporting accidents. Perhaps more serious than safety problems are a number of labor supply problems. Demographics work against European-situated industrial facilities, with an unprecedented decline in the rate of growth of the able-bodied work force located there. Western demog raphers estimate that during the 1970s Soviet workingage population (males between 16 and 59 and females between 16 and 54) grew by about 2.3 million persons per year, but that in 1986 growth was less than 300,000 persons. Moreover, the population growth rates of the southern-tier Soviet republics, primarily in central Asia and the Caucasus, were about two to three times higher than in the more industrialized Slavic and Bal tic republics. In addition, the inability of a number of factories to offer adequate housing and other social benefits is leading to unacceptably high turnover in their work forces. The Toglyatti nitrogen works reported in 1985 that more than 1300 people were stuck in dormitories waiting for company housing and that the poor hous ing situation largely contributed to a 15% turnover of workers in a half year. A similar situation totally frus trated an Omsk plastics factory from completing a planned expansion program.
Gorbachev reforms The announcement of new economic reforms, and reforms of the reforms, has become a peculiarly Soviet pastime. One longtime American Soviet watcher, Ger trude Schroeder of the University of Virginia, charac terizes the U.S.S.R.'s industry as being on a treadmill of reforms that do little more than further the ambitions of the Communist Party's politicians. In light of this background, Gorbachev's highly vocal call for reform
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