YEARLY PLANNING IN INDUSTRIAL ENTERPRISES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00810A004400090006-1
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 5
• Document Creation Date: December 20, 2016
• Document Release Date: June 28, 2007
• Sequence Number: 6
• Publication Date: July 21, 1954
• Content Type: REPORT

a
Approved For Release 2007/06/29 : CIA-RDP80-0081OA004400090006-1
Thb Document contains information affecting the Na-
tional Defense of the United States, within the mean-
ing of Title 18, Sections 793 and 794, of the U.S. Code. as
INFORMATION REPORT to amended. Its tranamlasion or revelation of bited
to or receipt by an an unauthorized person is V pro OrohiDlted
by law. The reproduction of this farm 1 prohibited.
SECRET/CONTROL-U.S.OFFICIALS ONLY 25X1
SUBJECT Yearly Planning in Industrial
Enterprises
REPORT
DATE DISTR. 21 July 195It
NO. OF PAGES 5
REQUIREMENT NO. RD
REFERENCES
THE SOURCE EVALUATIONS IN THIS REPORT ARE DEFINITIVE.
THE APPRAISAL OF CONTENT IS TENTATIVE.
(FOR KEY SEE REVERSE)
1. General. 25X1
a. The central planning authority of the Hungarian economy is the National
Planning Office (Orszagos Tervhivatcl.),ancj its official publication, Bullet
for Planned Economy (Terveazdasagi Ertesito), lays down in detail all regula-
tions and directives regarding the techniques of production planning. This
bulletin is distributed to industrial enterprises throughout the country and
serves as a basic document for drawing up of the enterprises' yearly plans.
b. Each enterprise draws up the preliminary annual plan, or draft plan, on the
basis of the yearly production envisaged for that enterprise by its controlling
authority, usually the respective industrial directorate of the ministry con-
cerned. At the same time the marketing department of the enterprise attempts
to obtain details of the requirements in finished products for the coming
year from the marketing directorate (hrtekesitesi igazgatosag) of the ministry
concerned. The two sets of figures must then be coordinated to allow the '
drafting of a compromise plan which will satisfy all concerned to some extent.
Theoretically, detailed plans for the coming year's production should be
drawn up in the first quarter of the preceeding year and forwarded to the
ministry for approval in April, thereby enabling orders for raw materials to
be placed in time. In practice, the draft plans are usually sent to the
ministry in July or early August, where they are checked, altered, summarized,
and forwarded to the National Planning Office. The planning office makes
final alterations on the basis of resources in raw materials, export require-
ments, and quantities and categories of industrial products and consumer goods
as dictated by the present policy. The final and approved plan then reaches
the individual enterprise in December. However, most industrial enterprises;
particularly engineering works, must place their orders for raw materials from
three to twelve months in advance, i.e. when the draft plan is prepared. Since
the approved plan usually differs considerably or totally from the draft plan,
the entire production scheme is impaired or reversed; some of the materials
SECRET/CONTROL-U.S.OFFICIALS ONLY
STATE I X IARMY X NAVY X AIR X FBI AEC ORR EV x
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previously ordered turn out to be superfluous while ot:r>rs unordered but now
required prove to be unobtainable. The enterprisers management or its res-
pective department heads are always made responsible for failure in fulfill-
ment, and their objections to the delays and contradicting directives of the
controlling authorities are almost never accepted,
c. The ovejell yearly plan of an enterprise, as drawn up by its planning depart-
ment in cooperation with those departments concerned, consists of the following
separate plansg
(1) Production plan (;ermelesi terv)
(2) Financial plan (Penzugyi tern)
(3) Materials plan (fig tery)
4 Marketing plan ( ekesitesi terv)
5 Labor plan (Munkaugyi tern)
6 Technical development plan (Muszaki fejlesztAq berv)
7) Preventative maintenance plan (TervszerA Megelozo Karbantartasi tern)
(8) Training plan (Oktatasi terv)
(9) Transportation plan (Szallitasi terv)
2. Production Plan,
a. The production plan is based upon the figures supplied by the industrial
directorate of the ministry. These figures include the total value in forint
for the coming year's output and its division into those groups of articles
to be produced. The technical and marketing departments of the enterprise
work out in cooperation the detailed draft plan which contains quality and
value of the coming year's volume of business and a breakdown of the article-
groups listed by the ministry into types and models. This draft plan is then
divided into quarterly plans, each of which details the articles and their
values to be produced during each quarter of the year.
b. The value of future production is calculated in two ways: the plan price,
which represents the price as of August 1946 and which remains constant, and
the current price. If certain articles were not in production in August 1946,
their plan price is determined on the basis of a key-system which was devised
for this very purpose. This process is one of the most complicated and dan-
gerous responsibilities of the chief of the planning department, and the
slightest error,, accidental or premeditated, may result in the chief being
imprisoned on charges of falsifying the plan. The current price of articles
is calculated on a cost-plus system and must be approved by the finance
department of the ministry's industrial directorate.
c. The plan price is generally about 30 percent higher than the current price,
the result of constant increases in norms with approximate corresponding cuts
in prices of the products. In those few instances where the plan price is
lower than the current price, the management of the enterprise attempts to
slow or stop the production of such items, even if the latter are in demand
or are urgently needed. In general, enterprises concentrate on production of
such articles as are the least complicated and therefore most favorable
from the point of view of fulfillment of the plan.
d. The management of an enterprise usually postpones the fulfillment of orders
for complicated articles, such as for the machine and machine tool industry,
so long as there is no danger of trouble from superior authorities. While
the ministry to which the customer is responsible may intervene with the
ministry to which the enterprise is responsible, its industrial directorate
is usually a silent `ally. The directorate's sole interest is to see that the
plans of its enterprises are fulfilled, and it does not place any particular
emphasis on what is or is not in the national interest. This attitude is
encouraged 17 the fact that the directorate designates only the general
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article-groups, while the enterprise itself determines the detailed break-
dot:m of the article groups.
3. Financial Plan.
The financial plan, drawn up by the enterprise'b finance department or its
chief accountant, includes the total capital requirements for the fulfillment
of the production plan. It specifies the money needed for raw materials, wages,
maintenance of equipment, new investments, and cultural expenses. In accordance
with directives, a parallel plan for lowering production costs is also drawn up,
but such plans remain paper ones because of the constant confusion in supply of
raw materials, transportation, and unsatisfactory production methods. In most
cases, the much publicized overfulfillment of norms is attained by using better
and more expensive raw materials and by overloading machinery.
4. Materials Plan. -
a. The materials and goods department of the enterprise draws up the material.,.
plan on the basis of the production plan, and it consists of the following
sub-plans:
(1) Basic materials plan (Alapany~g terv)
(2) Auxiliary materials plan (Segedaryag terv)
(3) Niel plan (Tuzeloaryag terv)
(4) Machinery plan (Gepmintaany?g tern)
(5) Instruments plan (Muszer szllk 4gleti terv
(6) Built-in instruments plan (Beepftesre kerulo jiuszerek tgrv)
(7) Waste materials plan (Vullad&k es mellk termek beijtesi tern)
(8) Storage plan (Raktarozasi tern)
(9) Balance of iron and steel castings (Szurke es acelontveny merle )
(10)Balance of forged steel mouldings (KovAcsolt ac&lidomok m&rlege)
(11)Gooperation plan (Kooperacios terv)
b. The basic materials plan consists of separate sections covering all types of
materials used in actual manufacture: rolled steel (rods and sheets)., metals
(copper, brass, lead, aluminum, and aluminum alloys), wood (planks, pl,;wood.
and hardwood), and chemicals. Before 1952 technical experts compiled these
figures on the basis of their past experience in the manufacture of such
products. After 1952 all enterprises were instructed to draw up technical
norms (Mflszaki norms) or materials norms (Anyag norms) to comprise all
materials needed to produce each article, including ready-made parts received
from other enterprises. These norms listed the gross weight of the hroduai.
(the total of all listed materials required for its manufacture), its net
weight (the actual weight of the finished product), and the quantity and
weight of the waste. However, since the authorities could not supervise
effectively the norms thus calculated, the National Planning Office ordered
that indices of industrial norms, the so-called "Normativa", be drawn up.
These average norms are calculated by dividing the quantity of the material
by the total number of pieces to be made:
Meat mincers
"X" steel
Quantity to be produced
Type
Quantity required
Total
50
AB 33
1 kg
50
30
AD 34
1 kg
'0
100
AB 35
3 kg
200
180
.
,
380 kg
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c. The basic materials plan is drawn up on separate forms for the entire year
and the four quarters and is based on the norms of materials and the
"Normativa". Each material has number and plan price listed in the
Universal Price List (Epyseges Arulista), a 5-volume publication of the
National Planning Office. The basic materials plan is accompanied by a
second plan which reflects the enterprise's actual requirements in materials,
derived by subtracting from the basic materials plan those quantities of
materials in stock at the beginning of the plan year.
d. The auxiliary materials plan comprises all materials required by the enter.
prise to maintain its equipment and those used in production but which have
not been incorporated into the list of basic materials of the specific
product. The competent directorate of the Ministry to which the enterprise
is subordinate fixes the exact norms of auxiliary materials, which may be
expressed either as X quantity of Y material for making Z products or X
quantity of Y material for making articles valued at 1,000 forint.
e. The fuel plan comprises exact details of the factory space, number of calories
required for heating and the corresponding quantities of fuel, gasoline and
oil requirements for the enterprise's vehicles, and the electric power to be
consumed during the plan year.
f. The machinery plan applies to any enterprise which uses another enterprise'a
machines in its products, such as motors for meat mincers. It is included in
the general materials plan because such machines are components of the menu?-
factured article.
g. The instruments plan lists the enterprise's requirements in tools and instru..
ments to meet the production plan.
h. The built-in instruments plan applies to any enterprise which uses another
enterprise's articles in its products, such as fittings, gauges, and instru-
ments.
i. The waste materials plan, based upon the basic materials plan, reflects pri-
marily the wastage between the article's gross and net weight, but includes'
also such materials as waste paper, waste oil, and rags.
J. The storage plan lists in detail the available storage space for raw materials
and finished products.
k. The balance of forged steel mouldings shows the enterprise's requirements
in forged steel mouldings of different weights, expressed in limits of 1-5,
5-25, 25-50, 50-100, and over 100 kilograms.
1. The balance of iron and steel castings is drawn up in the same manner as the
balance of forged steel mouldings.
M. The cooperation plan specifies the enterprise's requirements according to
the categories of raw materials as supplied by such specific groups of suppliers
as foundries, rolling mills, and import companies.
Marketing Plan.
The commercial department of the enterprise compiles the marketing plan. The
yearly production plan is divided into quarterly and monthly periods, and the
sale of finished articles is expressed in quantity and value in forints,
according to categories and types.
6. Labor Plan.
The labor plan is based on each worker's production capacity per hour and gives
the enterprise's specific requirements in manpower. The industrial directorate
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of the competent Ministry determines the manpower limits n accordance with
planned production figures, and the enterprise can plan its distribution of
manpower only within the given limits. The labor plan includes such employees
as apprentices and office workers.
7. Technical Development Plan.
The technical development plan lists details of planned investments which would
increase productivity and decrease production costs. It is of interest that the
production plan takes into consideration these planned investments. If planned
investments are not realized, existing machinery must be overloaded, even at the
risk of ruining it, to reach the planned production figures.
8. Equipment Maintenance Plan.
The equipment maintenance plan is the responsibility of the chief technician
and of the enterprise's maintenance department. This plan specifies the possible
renewals, alterations, and repairs which will have to be made on existing
machinery during the plan year.
9. Training Plan.
The training plan, drawn up by the chief of the enterprise's personnel depart-
ment, lists details of planned professional training courses, number of partici-
pants, training of unskilled workers, transfer of workers from one production
line to another, ideological courses for the staff, and costs for planned
training.
10. Transportation Plan.
The transportation plan specifies the enterprise's requirements in transport
facilities for both incoming and outgoing materials.
11. Priorities,
a. Engineering factories are required to specify the destination of their
finished products as follows:
(1) Heavy industry, power stations, shipyards, and railways
(2) Export orders
(3) Ministry of Defense
(4) Essential products for home consumption
(5) Other products
b. Raw materials allocated to factories whose products are destined for the
first three categories must be handled separately, and they must be used
only in those products. The separate plan for others of the Ministry of
Defense is handled by a special section for confidential matters of the
competent Ministry. When there is a shortage of raw materials, factories
must concentrate their production for the first three categories, and other
production must be postponed until the plan for these three has been fulfilled.