'Trust-busters' rejig big Hungarian plants
If Adam Juhasz and his colleagues at Hungary's Ministry of Industry were in Washington, they would be called trust-busters. The ministry has been ordering the breakup into smaller companies of a number of Hungary's larger state enterprises.
''Whenever we think a smaller enterprise can work with greater efficiency, we split up the big company,'' Mr. Juhasz, secretary of state in the ministry, said in a recent interview.
Hungary's industrial structure, he explained, has been ''somewhat overconcentrated.'' This goes back to the cold-war period after World War II when the aim of the East European nations was to obtain economic self-sufficiency. In this Stalinist period, the government forced the development of such heavy industries as steel and aluminum according to a central plan. Big companies made it easier for the government to plan.
''Trade relations between East and West were constrained, not only on our side, for ideological reasons, but on the other side,'' Mr. Juhasz recalled. The West imposed an embargo on trade with the Soviet bloc which was ''stricter than today.''
The policy of autarchy, however, resulted in the creation of some industries - such as steel - that were not economic, he admitted. It would have been cheaper to import the products of these industries. ''The mistake we made was, we did not concentrate on the areas which would be favorable to us,'' he said. ''Now we are trying to eliminate those mistakes.''
Through its allocation of credit, the government does do some industrial steering. It has encouraged the manufacture of buses, vehicle axles, pharmaceuticals, insecticides, and agricultural equipment.
''Our planned economy ... presupposes that enterprises are to a large extent independent,'' Juhasz said. The central five-year plan does not give individual companies instructions on what investments to make, what products they must produce, and so on. Nor do companies have to submit their plans to the Ministry of Industry for approval. ''The national economic plan is sort of a prognosis, and it is not obligatory.'' But it does provide that those enterprises involved in priority lines of business will get preferential treatment when borrowing.
The communist regime more and more is leaving it up to executives of state enterprises to, Juhasz says, ''fill the gaps in the market without any intervention.'' The ministry believes smaller operations are better able to seize business opportunities and are less bureaucratic, so state enterprises are being broken up where feasible.
In 1982 a steel products and machinery conglomerate, Csepel, with nine plants , was split into nine companies. Last year, Lampart, a maker of equipment for the chemical and food-processing industries as well as household plumbing hardware and kitchen heating materials, with four factories, was divided into four companies. An electric equipment manufacturer, VBKM, was also split into four units.
Hungary expects those companies running at a deficit to turn around, he said, and ''bankruptcy will follow if they don't remedy the situation.'' Government financial assistance will not continue ''for the long run.''
If a company does go bankrupt, the government will first replace the leadership of the enterprise. The new leadership must draw up a plan for making the company profitable. This must be approved by the National Bank of Hungary and the Ministry of Industry before further funds are provided.
With communist doctrine providing that every worker should have a job, it is difficult for Hungary to allow a company to lay off workers to reduce losses or make a profit. But there has been an occasional instance of jobs being arranged elsewhere and then people being let go.
Nor is it politically feasible to shut down a major industry completely. For instance, Hungary's steel company has plants (including blast furnaces) in three locations producing 4 million tons of steel. Steel experts reckon that is not nearly enough capacity to be efficient. Juhasz admits ''productivity is low,'' but ''since we have them, we have to keep them. We will try to rationalize production and improve efficiency.''