REDUCTION OF PRODUCTION COST IN HUNGARIAN HEAVY INDUSTRY

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700020131-2
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: August 23, 2011
• Sequence Number: 131
• Publication Date: November 6, 1951
• Content Type: REPORT

Sanitized Copy Approved for Release 2011/08/23: CIA-RDP80-00809A000700020131-2
COUNTRY
SUBJECT
HOW
PUBLISHED
WHERE
PUBLISHED
DATE
PUBLISHED
LANGUAGE
CLASSIFICATION CONFIDENPIAIA
SECURITY INFORMATION
CENTRAL INTELLIGENCE AGENCY
INFORMATION. FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS
Economic - Heavy industry
Monthly periodical
Budapest
May 1949
Hungarian
THIS DOCV YENT CONTAINS IN FO RY ATIOX AIiEOTIN6 iN[ NATIONAL D[FIN SI
Oi TN[ UNITED STATFS WITHIN TN[ YEA KING OF t3 PIONAGL AC7 t0
U. 3. 0.. SI AND SZ. AS AY[MD[0. ITS TRANSMISSION OR TN[ RL[[~ATION
Oi ITS CONTENTS IN ANT MAN NIR TO AN UNAUTNO RIZ[D F[RSON IS PRO?
NIDIT[D SY LAW. R[PRODVOTION OF TNI! TORY IS PRO NIGITC D.
REPORT
CD P:O.
DATE OF
DATE DIST. ~ Nov 1951
N0. OF PAGES 3
SUPPLEMENT TO
REPORT N0.
THIS IS UNEVALUATED INFORMATION
Thy industrial undertakings under the Central Directorate of Heavy Indus-
t.rv operated with a deficit of 1+0-50 million forints per month when they were
`?aken over by the state. The planning work resulted in rapid improvement; pro-
d:::ti.on increased and the financial position of these undertakings also improv-
ei by m_3-19!+75 reducing the deficit by half. The situation deteriorated again
laier, and as a result of sabotage of right-wing Social Democrats in the plants
*,he d~ticit increased again to li0 million forints per month at the end of 1947.
In a speech delivered by Rakosi in October 1947, 1 clay 1848 was set as a
l;.mit. for operation of Hungarian heavy industry to break even, and a plan was
~~cxked out to achieve this aim. The heav~i industries were indeed working with-
o?"?: a deficit at the date fixed, and monthly production increased from 130 to
lti0 rniiiion forints on 1 May 1948. From that date on, Hungarian heavy industry
3::3 r.+ot get any more financial support from the state, and in the subsequent 5
mcnrh; heavy industrial enterprises paid'4,mi11ion forints per month to the
Hungarian Treasury from profits.
The completion of the Three-Year Plan in 2 years and 5 months confronts
H+,:ngarian.heavy industry with a difficult task. Mechanization of Hungarian
agricniture9 the building up of the armed servicP~. and the development of the
~onsum~rsT goods industry make it necessary to develop heavy industry. Social-
ist induct=y must also prove ita superiority over capitalist industries in being
sble to produce at competitive prices. It is, therefore, necessary to mobilize
e;sis+.ing production reserves to enable the contribution of the 387 million fo-
rints which rationalize3 heavy industry is required to contribute from profits
is 191+y to the Hungarian Treasury.
It was imperative to al:~t the amount to be paid to the Treasury justly
among the various heavy industry enterprises. The allotment was made as
follows production figures for three months of 1949 were used as a basis to
calculate theoretical profits. In addition, other factors were taken into con-
sideration; the anticipated increase in production as a result of capital
Gepy No 3, 1949.
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CONFIDENTIAL
,.r:veetments, competitions, reduction of overhead costs, etc., Groups of finan-
cial. administrative, and technical experts were sent into the plants to work
eu*. recommendations with the cooperation of the managements. This helped
reduce red tape to a minimum. The results were compiled into a plan for all
heavy industry.
It was subsequently found that the recommendations were reasonable. Sev-
eral plants undertook to pay even larger contributions to the Treasury. Only
or_e or two of the enterprises claimed that it was nee=^sary to reduce their
contributions. As a result of this survey, it is intended to increase the pay-
men+. t.o the Treasury from accrued profits from the 387 million forints proposed
originally to 428 million forints. This sum will be composed of the following
payments (in million forints): Industrial Center for Heavy Machinery 175, Cen-
ter of the Iron and Steel Industry Lit is not stated whether the mining industry
is include 103, Matyas Ral:osi Works 115, and Center of the Engineering Indus
try 35~
Of the total, 60 million forints are to be paid in the first quarter, 100
million in the second, 125 million in the third, and 143 million in the fourth
guar}er of this year.
To reduce production costs, Hungarian industrial leaders propose to extend
cooperation with other countries, to make better use of available patents, and
to carr;/ out the capital investments as planned.
r'ooneration ldith Foreign Countries
Cooperation agreements are being concluded with the neighboring states.
=here agreements define what items should be produced by Hungary, Czechoslo-
vakia, or Poland. They are to gear the production of each of the participating
coun~ries to certain groups of products, thus making it possible to produce these
prodt::ts in larger quantities and more economically. Cooperation is particularly
rood with Poland; and a permanent mixed committee is being formed which will meet
aC certain times to discuss current cooperation agenda.
Agreern=r_?.s are being negotiated with other states to obtain equipment and
~xp~r*. advice for Hungarian industry. For example, an agreement with Sweden
prow+_dea for the shipment, of mechanized equipment +o +hP Matyas .PAkosi. foundries
and also fo?? assistar_ce in introducini, appropriate foundry techniques.
Contact is also being made with foreign scientif is and technical bodies
fo;. i:,forrnation on current foreign developments, and licenses are being sought
to vermit the use of processes which rosy be of interest to Hungarian industry.
Ar_ example of such an agreement is that made with the Bureau d'Etude et de
Recherches pour 1'Industrie idoderne on a very wide basis.
A permanent committee is being formed to study the practical utilization
of patents, and satisfactory progress is expected in the utilization of German
and Soviet patents.~t is not clear whether the author means Soviet Zone or
Yiest German patents.
The formation of a research institute for?the heavy industry is planned.
The +aork program of thie institute has already been worked out and includes
re=-earch on pig-iron production. (blast-furnace process), steel production,
foundr;~ problems, heat treatment, welding, cold working, material analysis,
and associated problems. Work on this program has already started in the labor-
atories of the Technical University, and it is expected that the research insti-
tute will work in its own buildings in 3 to 4 months. Most of the research work
is ;tarried out in .the various plants.
CO[~FID~~T~~'~~
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I
CON~IDENTIA~.
Efforts are being made to reorganize production. Each plant should, wher-
ever possible, specialize in certain products, and choice of the products should
be left to the fact^~~~ which is most suited to the purpose from the view point
of equipment anu skilled personnel. Avery. important factor is the serious
shortage of expert personnel. Concentration of production in a small number of
plants will enable better utilization of the existing machinery and manpower,
will make control of production and renewal of obsolete equipment easier, and
should result in cheaper production and a speed-up of?deliveries,
Capital investments are expected to bring about reduction of production
cents: the most important of which are the followings
In Ozd a Greenewald ore-grading and ore-agglomeration plant is being
iiuilt, and it is anticipated that coke consumption in the blast furnaces will
be re9ur_ed as a result of using graded ores and of agglomeration of pulverized
or>.s. It? is estimated that 9 million forints per year will be saved when this
p.lar_?? =arts operation. The building of a new railway line for transporting
ere is nearing completion, The new line and the extension of the Sajo-Varkony
raii~way and railway stations will bring about a further saving of 12 - 2 mil-
~on forints per year by reducing the idle time of railway cars.
Two limekilns now being built in Ozd are expected to result in the follow-
ing sa~~ir.~ss the use of burnt lime for steel production will reduce the produc-
c~o~ costs of steel by 1,4 forints per ton, or 300,000 forints per2Y0atons of
lime furnace will be heated with blast-furnace gas, thus saving 7, 5
c.oa.'_ per year, valued at 450,000 forints. The most important saving, an esti-
ma*?ed 3 million forints per year, will result from burning?the lime on the spot.,
The ingot mold-handling stand and the tar-plant capacity will also be in-
creased in Ozd. This will increase the mold life and eliminate the necessity
of using imported graphite and other mold paints. Also, the surface quality
of the ingot will be better, and this will result in the reduction of rejects.
Thy anticipated saving is about 50C,000 forints per year.
An ore-grading and agglomeration plant is also being built in Diosgyor.
Tre saving which can be obtained as a result of bitter utilization of the ore,
coke, and blast,-furnace gas is estimated at 9 million forints per year. Eauip-
In?.rlt for splitting scrapped rails is being installed, The rails will be split
i.n`.o thres parts which will be used for the production of spades and hoes.
Over 50 percent of the agricultural implements will be produced from scrap after
r?his--plant is in operation, and the anticipated saving is about 1.5 million
forirt?s.
To increase the production of steel wire, modern equipment is being installed
at Salgotarjan, This will permit supplying the needs of the textile industry
which, up to now, had to rely on imports. Part of the wire produced may also
be exported. The anticipated saving is about 2 million forints per year.
`~Y.e utilization of the exhaust steam of steam operated drop hammers for.~~~
G.ea*..ing in the MAVAG (Steel and Machine Works of the Hungarian. States Railroads)
z> also of great importance and is expected 'to save about 100,000 forints per
yea:.
It is emphasized that the lowering of production costs will be possible only
if the workers realize its importance, It is `'_moerative to develop the brigade
movement this year and to see that useful suggestions by workers are applied in
production. .There is,?however, no doubt that heavy industry will be able to
contribute 428 million forints to the Treasury if the employees make a concen-
trated effort. CON~IDEN'f~A~
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