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Mills Quiet in Russia's Manchester

Free markets are creating industrial ghost towns in this textile capital and throughout Russia

TAMARA LOZHNIKOVA, commercial director of the once-booming Eighth of May weaving mill, fidgets self-consciously as she tries to explain why only 30 of the 268 enterprises in this former Soviet textile capital can pay their bills.

Almost 25 percent of the region's work force is unemployed, giving this region 175 miles northeast of Moscow the highest unemployment rate in Russia. Thousands have been sent home from factories on ``collective holidays,'' and many workers have not received wages for months. The lucky ones who qualify for state benefits receive 20,500 rubles monthly, or about $10, not even enough to buy two large sacks of onions. Since 1991, overall production in the region has dropped 50 percent.

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The Eighth of May mill, founded before the Bolshevik Revolution when Ivanovo was known as Russia's Manchester, used to boast 1,700 employees. But when once-subsidized cotton from former Soviet Central Asian republics, such as Uzbekistan, more than quadrupled in price, management slashed the number of workers to 1,000. Nowadays, Ivanovo's shopping streets are dotted with private merchants hawking cheap polyester blouses from Taiwan. ``It's offensive!'' Ms. Lozhnikova, a former Communist Party official, blurts out. ``We used to dress the entire Soviet Union, not just Russia, but everybody!''

The changes transforming this industrialized region of 1.4 million people into a ghost town are mirrored across Russia, where the crisis in post-Soviet industry is reaching alarming proportions. Industrial production plummeted one-quarter over last year, thanks to disintegrating commercial ties between former Soviet republics, chronic customer nonpayments, heavy taxes and skyrocketing prices for raw materials.

Officially, Russia has 1.2 million unemployed. But the Federal Employment Service estimates that one-seventh of the 70 million workers are actually jobless, a number which could reach 12 million by year's end. Across Russia, state enterprises owe employees about $1.7 billion.

Some blame Prime Minister Viktor Chernomyrdin, a former oil and gas bureaucrat who once opposed ``shock therapy,'' but now proposes slashing state subsidies to failing enterprises. By 1995, 2,000 businesses could go bankrupt, he predicts. If that happens, neither he nor President Boris Yeltsin can forecast the social consequences.

Seventy percent of Ivanovo's industry is textile-related. Last month, regional administration head Adolf Laptyev warned of a ``social explosion'' if government aid was not forthcoming.

Moscow has promised Ivanovo 75 billion rubles ($37 million), but has received only five million ($2,500), says Vladimir Tolmachov, Mr. Yeltsin's hand-picked representative here. Even doctors and teachers have not received June salaries. ``People's patience is wearing thin,'' he cautions.

True to its British namesake, Ivanovo's tekstilishchiki first went on strike in 1905, later founding Russia's first workers' soviet (worker's council). They later manufactured one third of the Soviet Union's fabric. ``Maybe we won't produce as much as we used to, but Ivanovo will not break its historical traditions in the textile industry,'' says Lozhnikova defiantly. ``I am an optimist.''

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Remaining optimistic under such conditions is hard. The usually busy Eighth of May - the date of International Women's Day - is quiet, with all workers on a collective holiday until late August. When the largely female work force returns, their back wages, already two months in arrears, may be delivered in food instead of cash.

Many customers don't pay their bills. Selling fabric abroad is unrealistic: Few looms produce cloth that fits European widths.

``We used to come here and everything was loud and full of life,'' says Valentina Tarasova, a 15-year mill veteran. ``Now you walk in and it's like a cemetery.''

The atmosphere along Ivanovo's wide, leafy avenues is equally gloomy. Most of the social services the mills provided, such as kindergartens and clubs, have closed. The birthrate is plummeting and crime is rising. Graffitied across a downtown wall are the words, ``Russians, Unite!''

Near the main square, which still boasts a huge statue of Lenin, the central unemployment office is crowded with anxious residents. About 51,000 people compete monthly for 900 vacancies, says spokesman Vadim Ignatyev.

Men are occasionally offered temporary jobs shoveling snow or cleaning sidewalks, Mr. Ignatyev says. But women, who after World War II made up two-thirds of Ivanovo's population, are usually the last to be hired and the first to be fired.

Irina Golushkova just graduated from a textile college. But the single mother can't find work. ``We used to live normally, and now we don't have enough money,'' says Irina's mother, Tanya, who fears for her own mill job. ``Perestroika is to blame.''

Galina Kuvarova lost her engineering job last month. Many of her friends are now self-employed. ``Some sell chewing gum and candy at kiosks, some sell their apartments, and some sell themselves,'' she says.

Mr. Tolmachov, Yeltsin's representative, says the mentality of people accustomed to Communism needs to change. Only two textile mills out of Ivanovo's 60 are profitable because they applied Western marketing techniques, lowered their prices, and purchased new technology.

``Enterprises always think that at the last minute the government will bail them out,'' he says. ``They give goods without taking any money and are then forced to take credits. The psychology of the people here is still socialist.''

But for people like Lozhnikova, who is still nostalgic for the Soviet glory days, socialism is the only way. ``The market sets the prices,'' the third-generation textile worker lamented. ``Nobody is setting the rules anymore. That makes it very difficult.''

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