PLANNING PROCESSES UTILIZED BY DAIREN'S MACHINE FACTORY NO 17

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00047R000400320008-3
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 11
• Document Creation Date: December 22, 2016
• Document Release Date: July 2, 2009
• Sequence Number: 8
• Publication Date: May 14, 1954
• Content Type: REPORT

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CLASSIFICATION CONFIDENTIAL e
CENTRAL INTELLIGENCE AGENCY
INFORMATION REPORT
COUNTRY China
SUBJECT
Planning Processes Utilized by Dairen's
Machine Factory No 17
DATE DISTR. /4L May 1954
25X1
NO. OF PAGES 1i
NO. OF ENCLS.
(LISTED BELOW)
SUPPLEMENT TO
REPORT NO. 25X1
TNIL 0000MENT CONTAIN[ INIOMYATION API[CTIN. THE NATIONAL DEI[N.t
01 THE UNITED [TA T[RI .ITNIM TM[ YLANIN?OF TITLE 191 L[IT
IONt 7B!
AND 7901 Of THE V.B. COD[, AL AMENDED. ITS TNAN.YI..ION ON NINE.
LATION OP ITS CONTENT[ TO ON RECEIPT by AN ONAOTMOR11t0 PERSON IS
PROHIBITED BY L... THE .[PRODUCTION OF THIN room is PROHIBITED.
THIS IS UNEVALUATED INFORMATION
1. Machine Factory No 17 in Dairen had two planning departments, as do most of the
larger Soviet factories, ie, those with 1,600-1,500 or more workers. One of 25X11
It was called, in Russian, Planovo Economichiskii
e . The ether was the Technical Planning Department or in Russian
"Planovo Technichiskii Otdel . Each department had about five men in it. The
;conomic Planning Department.was directly under the Director of the factory. In
general it was charged with overall planning as well as maintenance of-'records
of production. The main duty of the Technical Planning Department was to
calculate necessary labor and material required to produce each item in the
production plan. This type of planning was very detailed, taking into consider-
ation every part of each item provided on each machine. The Bureau of the Chief
Technologist was charged with preparing the technological processes to be used;
this did not Include the problems of labor and materials. The Technical
Planning Department and the Bureau of the Chief both under the
Chief Engineer of,the factory. However, this set-UP 25X1:,
in, practice was not strictly divided. Join wor was o ten done by both planning
departments, this method of work would have to continue for 25X1
several years. By the above although both planning departments in 25X1
theory had separate duties an respons ilities, they frequently had to work to-
gether for a time in developing plans, or in calculating materials and labor.
Sometimes even informal planning of technological processes was included in this
joint work, depending upon the time of the production year concerned. For
example, if decisions as to which process to use had not been made, but the
Economic Planning Department had to have figures for materials and labor so as
to plan the production program for the next year, then both planning departments
had to arrive at some general decision as to the processes to be used so that
planning calculations could be made for the next year.
2. The general organization of Factory No 17 was as follows:
(a)
The Director - he had overall responsibility for the factory. He directly
supervised the Chief Engineer, the Inspection or Control Department, the
Economic Planning Department, the library, the laboratories, and the
Commercial Director. The latter official was chief of the administrative-
housekeeping section (administrativno-kioziastvenii otdel) which included
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the club, housing, the fire brigade, the office, etc. He also was
charged with purchase of local materials.
(b) The Chief Engineer- he supervised all production processes and was
responsible for them along with the Director* Usually the salaries
of the Director and the Chief Engineer were the same. Under the
Chief Engineer were: the Chief Technologist, who headed the
Technical Bureau; the chief of the Construction and Projecting
Bureau; the chiefs of the mechanical and electrical repair shops;
and the chiefs of all the manufacturing shops.
(c) The Chief Accountant- his department was distributed between the head
office and the shops. He was responsible not only for keeping the books,
but also for expenses and collections. It was he who had to see that
the latter activities conformed to financial regulations and plans set
by higher authority.
(d) The Chief Inspector- this official and the members of his department,
who were mostly assigned to the various shops, were charged with the
inspection of the production of the plant.
The official relationships between the above four officials were as follows:
the Director had the right to give orders to the Chief Engineer, but the
..atter had the privilege of protesting to higher authority. Formally, the
Director had no right to give orders first-hand to the manufacturing shops
or to the offices underFthe Chief Engineer, but was supposed to go through
the Chief Engineer. The Director alone could not dispose of money or materials.
His instructions in this regard had to be countersigned by the Chief Accountant.
For example, if in the planning specifications of materials for some product a
steel number 3 angle of 75x75x5 mm was mentioned, but the chief of the shop
asked fo r an angle of 60x60x6 mm, the Chief Accountant normally required the
reason "':,r such a c?linge and could, if necessary, stop work on the item for
a day while checking on the change. The Chief Accountant was required to
carry out the second order of the Director given on such a controversial
m'n"ter, but could report at once on this development to higher authority if
ho fnund that this order contradicted the production plan. In regard to the
Chief Inspector, he had. to follow the orders of the Director as far as the
organizationn of his department was concerned, but no one could order him to
pass man?a:?etured items as satisfactory if he or his subordinates felt that the
items --..re sub-standard. The above three officials--the Director, the Chief
.=finer, and the Chief Inspector--were responsible for the quality of
production and were subject to almost equal punishment if failures occurred.
The above gives an idea of Soviet factory organization. In early 1952, even
under Chinese management, this system had not been changed.
3. Approved plans from higher authority were received by Factory No 17 five times a
year. These approved plans were for the total year and for each of the four
quarters. Each quarterly plan was divided into three separate months. The
plans for the total year and for the first quarter were received in December or
in January. The plan for the second quarter arrived in March or early April.
The plans for the third and fourth quarters usually arrived at the same time--in
June or July, representatives of the Communist 25X1
Party and of labor unions did not participate in the planning process on the
factory level. Soviet advisors did not participate in formulating the production
plan for 1952 for No 17. This plan was the first one under the Chinese admini-
stration.
4. While Factory No 17 was still under DALENERGO, the production plan for the coming
year was discussed in July or August. This was effected by means of preliminary
conversations between the Director of No 17 and his planning personnel on the one
hand and officials of DALE_NERCO's planning department and (unofficially) of the
economic section of the Soviet Civil Administration. The factory presented a
short memo listing items of factory production and recommended amounts. In turn,
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DALENERGO indicated to No 17 the items and quantities that it expected would
be needed, particularly mentioning articles which had not yet been produced
by No 17. After some informal bargaining, the production program for No 17
for next year was fixed by an official letter from DALENERGO which normally
was written in September or October. No 17's Planning Department then worked
on the plan and submitted it in full detail to DALENERGO in November. Approxi-
mately the same process was followed except that in the place of 25X1
DALENERGO there was the Chinese Northeast Industrial Administration, located in
Mukden. However, the practice of engaging in face-to-face conversations and
discussions was to be abolished, and the initial outlines of the program
submitted by the factory early in the fall had much less influence on the final
plan. No 17, therefore, was to be kept much less informed about prospective
production development. The approved plan for the coming year was usually
delivered to No 17 either in December of the previous year or sometimes in
January. However, at times important changes were made in the middle of the
year, that is, for the third and fourth quarters. These changes usually meant
an increase or decrease for certain items to be produced. For example, the
plan included 400 tire vulcanizers. Nearly all of them were partially 25X1
or comp etely finished by mid-year, but DALENERGO changed the lan and 25X1
decreased the number of vulcanizers
5. In regard to the question as to how much freedom was ven at the plant level
in revising goals and details, the final plan which was given to No 17 25X1
from Mukden was criticized in some details only. For example, 25X1
the Russian emigrt engineering staff of No 17 refused to make riveted boilers
for steam rollers and insisted that they be welded. They also refused to
construct riveted bridges for cranes and insisted on welding plate iron. Both
points were won by the factory.
6, Yearly production plans contained 5 columns--one for the year and one each for
the 4 quarters. The detailed program for the first quarter had as enclosures
separate plans for each month. The detailed plans for the second, third, and
fourth quarters which were given to the factory also contained programs for
each month, but frequently did not repeat the yearly figures. 25X1
No 17, no plans were formulated for less than a month. The amount of wages per
hour of work was fixed by the government and differed for each of the 8 grades
of workers (under the Chinese grade scale for workers, there are 8 categories at
present; under the Soviet there were 7 categories). Higher wages were paid to
markers who did hest=r or hot work, ie, those engaged in casting, melting, and
moving of heavy units. This wage scale was attached to regular plan forms which
were usually given to the factory in October or November. A scale of salaries
was also included. Bonuses usually were not planned. The factory had the
authority to pay bonuses if certain conditions were met. The conditions were
such that bonuses in effect were paid from wages saved by increased efficiency.
The cost of raw materials and: other purchases was also furnished beforehand in
a special catalogue.
For detailed information on provisions for plan changes see above.
authorities such as those at DALENERGO could either increase or decrease factor
plans. The factory, however, could apply only for an increase in production.
the same practice was retained by Chinese authorities. A factory
could apply to enlarge its production program on the following grounds. by
presenting practical evidence that it could produce more than the plan required,
and that it had the necessary materials for such an increase.
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8. In regard to the question as to whether the Planning Department's plan
merely establishes norms, the answer is in the affirmative. It is a technical
section, not a part of the Planning Department, which determines the processes
to be used within a factory.
In regard to statistical records, the formal records were the monthly reports,
made out on prescribed forms, which were forwarded to higher authority. The
current daily records, however, were locally devised.
10. In regard to production. norms, see the information above on planning. However,
based on the Soviet definition of "norm",, which
refers to time. In Soviet terminology norm refers to the time allotted for
producing each detail or even for each part of the process in turning out that
detail. This was calculated by the Technical Planning Department. These
figures were criticized by shop authorities, including representatives of the
labor unions, usually on the basis of changes in technology, as technological
processes were frequently revised. These revisions were made to develop a new,
more economical process or to meet a necessary substitution of materials and
machines. Usually the shops attempted to do the work in less than the time
allotted, so as to stimulate over-production of the plan, A general change of
norms for articles normally included in the production program could be made
not sooner than one year after the previous norm was instituted. However, in
practice, particularly in connection with new types of items to be produced,
trial norms were set for a certain period only. These were very easy to meet
and were fixed in such a manner as to allow workers to become accustomed to the
new processes. For example, in regard to production of lighters in 1948 and
1949, the first lighter was manufactured in 141 months. After four months,
about 2-21 or,3 lighters were completed per month. The norms were changed about
three times for this type of production and each time they were exceeded by
more than 50%. In practice, the norms were based on decisions reached by the
planning departments. These decisions themselves were based on figures which
the Planning Engineer knew from previous experience. Of course, the decisions
were affected by the conditions and types of machines available. In general,
the norms were set so that an average workman could exceed them by not less than
15%. Time was calculated for the average grade of worker, ie, third or fourth
grade.
11. The Planning Department draws up plans for each shop. That is, the monthly
factory plan is divided according to the type of shop in the factory and each
shop finds in the plan the number of items and the allotted time granted to the
particular shop. For the mechanical shops, even the machine time was calculated,
broken down by each type and size of machine. However,
as the shops operated according to the manner they
thought most efficient, guiding themselves only by the given goals of producing
at. least as much as the production plan called for and by not exceeding the time
allotted.
12. The production plan for the factory had many facets. The items of production were
expressed in quantity and "fixed prices". The plan total was expressed in fixed
prices. The idea of fixed.prices was introduced to Manchuria from the USSR.
These prices were based on the cost of production. Initially in the USSR fixed
prices were as of 1927, the year of the beginning of "industrialization". The
point in using the fixed price system was that it enabled the Soviet authorities
to obtain an overall production total for all the USSR, and to compare the
production for each year. This comparison, again for the whole country, included
groups of factories and individual factories, even though the type of production
in the factory may have changed. However, in the mid-1930's, these prices lost
their meaning, as during the interval after 1927 many new articles had come into
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production and each one had been entered into the general list with the
actual cost of its production at the time of its first manufacture. The cost
of production by 1935 had become much less than it had been in 1927, and yet
the new items were listed under the new prices while the old items which had
been produced from earlier times were still listed by their prices of 1927.
Con otteoD, therefore, become very .if f icult and frequently and obviously the 25X1
results were inaccurate. Therefore, new fixed prices were assigned, based on
the production level at the end of the 1930ts. approximately in
1950 in the USSR the fixed prices were again recalculated according to the
new production level and the assortment of goods manufactured. In Dairen,
fixed prices were assigned by the Soviet Civil Administration in 1946 or 1947.
These prices were calculated in round figures only, and were based on the
current Soviet fixed prices of the time. However, these prices for Dairen
took into account the fact that the producing capacity of Chinese workers was
li or 2 times less than that of Soviet workers. During the period 19+6-1951
the currency in Dairen changed its value at least three different times. The
fixed prices were altered to match the official rates. For 1951 and 1952,
Factory No 17 received new fixed prices, some of these did not 25X1
at all seem to be correct as compared to otner prices n the list, and that
factory officials successfully requested that some of the prices be altered.
Returning to the immediate subject of factory planning, the most important
part of the planning was indicated on the type of form illustrated below.
For Year
For First Quarter
For 2nd
Quarter..
Quantity
Total Cost
Quantity
Total Cost
Items of
Fixed Price
Production
Per Unit
Ordered
in Fixed
Ordered
in Fixed
Prices
Prices
Cranes,
20 T.
In addition to expressing items of production of the factory in quantity and in
fixed prices, the same information was also expressed in: working hours; and
gages to be paid to workers directly engaged in production. In addition,
calculations of output costs (cost to the factory of producing an item) were
also included in the plan. Each calculation included the following;
(a) Main materials used in production
(b) Auxiliary materials - those used in manufacturing but not delivered to the
customer, such as foundry sands, abrasives, lubricants,
etc.
(c) Fuel ? used directly for melting drying, heat treatment, forging, etc.
(d) Wages - those directly connected with production were considered as the
main wages; supplementary wages were considered those used for
illness, annual leave, etc.
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(e) Power - this is calculated in the cost of power as related to wages
paid (the manner in which this ratio is arrived at is explained
in (f) below).
(f)
(g)
Shop expense - this included wages of shop personnel and auxiliary
workers, such as crane operators and transportation workers,
and also some materials used by the shops for current repairs.
The item of shop expenses is calculated at a percent ratio to
wages. This ratio is obtained as a result of comparing the
planned total of wages to be paid to workers directly engaged
in production. That is, the total cost of the maintenance of
shops (including. salaries) for the year is first calculated. Then
the total wages to be paid during the year for workers directly
engaged in production are calculated. A ratio is then obtained,
ie, for example, maintenance of shops could be 50% of wages. Then
the cost in wages to produce one item is calculated. The ratio
mentioned above is then used to obtain the cost of shop
expenses for this one item. The "self-cost of the shop" (tsekhova a
sebestoimost) is therefore, equal to (a) plus (b) plus (c plus d
plus a plus (f5.
Factory expenses- this includes all expenses which cannot be directly
attributed to the shops, such as the factory office, laboratory,
storage, garage, transportation, loading and unloading personnel,
club, Y ousing department, control department or inspectors, and.
medical personnel and office. Calculations for factory expenses are
done in the same manner as explained in (f) above for shop expenses.
As a result "self-cost of the factory" (zavodska a sebestoimost)
equals (a) plus (b) plus (c) plus (d) plus a plus (f) plus (g).
(h) Two or three items of a purely',financial character-- these are added to
the total'indicated in _(g) above using a per cent ratio set by
higher authority. The items include: cost of storage and insurance
of materials and fuel (this equals approximately 2% of the cost of
main and auxiliary materials and fuel); about 5-10% for the
accumulation of basic capital (nakopleniye kapitala), ie, profit
derived from the selling price. At times the above two items were included
in the total of "self cost of the factory"; sometimes they were
listed in addition to that sum.
how it was done
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in the plan However, e item covering
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the accumulation of basic capita was at times divided between Factory
No 17 and DALENERGO, or later, the Industrial Administration in
Mukden. Also about 5% was used to pay the Chinese tax on the turn- 25X1
over, ie, the total selling price for all annual production. All
the above items made up the selling prices of finished production.
13. A large form was used.to summarize all expenses, subdivided as indicated ab ave,
for every item of production, per unit and for all the planned production. The
last column to the right indicated the total price of planned production. See an
example of the form below.
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14. In regard to planning requests for materials, the Economic Planning Department
of the factory in August or September of each year began work on the next
year's production plan. After the production program was approximately
settled by the factory and agreed to in principle by the authorities of
DALENERGO (and for some items suer. as spare parts and tools for trucks
agreed to in principle by Soviet Army authorities), the Planning Department
had to know the type and amount of materials needed for each item in the
production plan. If the department did not yet have this exact information
it had to make approximate calculations, because these figures were used as
a basis by the department in preparing requests for materials needed in the
production program. The requests were made on the following form (see below):
Sheets,
6 mm
1,200
nmflom(,'rf
cKK NET 5F-LPINCE OF
___ NEEDE-M NIT' Rii%.
FIS or-irbegm"Rm
This form included several hundred items. After many changes occassioned by
changes in the program plan and by reduction of the request by higher author-
ities, the factory's request was included by Mukden and Peiping in the general
.lists of materials to be made in China or to be imported from the USSR. Before
the Chinese took over control of Factory No 17, this list had to be in Moscow
not later than 1 December. There the request was again reviewed and then
orders for the materials were placed in various Soviet factories, which had to
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ship the materials to_-No.17-.as they were.included-_in,the.:production plans for
the Soviet factories. In practice, however, this whole process functioned
rather slowly and materials which had been ordered began to arrive at Factory
No 17 only in the summer months, with most of the deliveries occurring toward
the end of the year. The above circumstances caused No 17 much inconvenience
and endangered its production for the first half of the year. The factory
naturally attempted not to remain idle during the early part of the year and
therefore acted as follows:
(a) increased stocks of materials most needed toward the end of the year;
(b) attempted not to complete too many items, limiting over-production of the
plan to about 15 or 20%. As a result there was much unfinished production
for which materials were received only in the last weeks of the year and
this production was delivered only in January or February of the next year;
(c) rearranged within the factory actual production plan for the first months
of the year, so that the factory could work up in that period all the
material available, disregarding the fact that these products might be due
only much later in the year*
15. In addition, two orthree forms were utilized by the Planning Department for
the financial plan, 1the exact contents of these tables,
were figured in contemporary currency. the
financial plan used Chinese yuans.
16. In re and to possible failure to fulfill production lane 25X1
the Economic Planning Department every day received signed copies of
receipts given by the General. Storage Department to the various shops for products
which had been completed and delivered to storage by the shops. These copies bore
the signature of the inspector. Current statistics were based on these receipts
and tin, t duction owls would be noticed in a few
da s.
under this 25X1
system a shop cannot fail in its production and yet escape notice. The Chief
Engineer also kept an eye on production and the Chief Technologist did so to an
even greater extent. Each shop chief, of course, was aware of the rate of
production in his own shop and himself reported any difficulties. Any such
unfavorable developments were either reported to the Director of the factory,
if noticed by a member of the Planning Department, or to the Chief Engineer,
if any of the above officials were involved. If any such report was made, the
Director would at once, and quite informally, assemble all of the persons
mentioned above and find out the reason for the trouble. If anything went wrong
with machinery, supply, or there was a delay in delivery by some shop of parts
that had to be worked up by another section, then the officials connected with such
matters, such as the Chief Mechanical Engineer, the Commercial Director, and the
bookkeeper, were invited into the Director's office by means of the telephone, and
the difficulties were settled then and there. If the technical process decided
on for planning production was stated to be inappropriate by a shop chief, the
engineers meeting in the Director's office decided immediately what had to be
done.. and divided any necessary work between them, or passed it on to the
laboratory engineers. If trouble was caused by a shortage of skilled or semi-
skilled labor an immediate reapportioning of workers was ordered. Therefore, the
failure of a shop could not be hidden and was immediately corrected by the
administrators of the factory, if this was at all possible. The situation would
be different, of course, if the factory could not fulfill the production plan
because of lack of proper machines, labor, and materials which it needed at the
time. However, please note that under normal conditions the factory had no real
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excuse for failure, because production plans were purposely made in such a
manner that they could be fulfilled with reasonable ease. In addition,
higher authority, such as DAIMNERGO,or the.Industrial Adminis;
tration in Mukden, preferred in general to set easy goals so that they could
indicate progress in comparison to the previous year. However, higher authority
did not want too much progress in any one year because it wished to leave a
margin for overfulfiliment of the plan and also for progress in coming years.
An example of this was the fact that the cement factory near Dairen, formerly
the Onoda firm, during the period 19+8-51 regularly received plans which used
only about one quarter of its capacity and regularly overfulfilled these plans.
.If the factory really had trouble in fulfilling the plan, higher authority,
as indicated above, wished to help the factory. Higher authority could help by
placing some new orders to replace those which could not be fulfilled (but these
had to be of the same value as expressed in fixed prices) and even by permitting
some mistakes in calculation. For example, in 1950, Factory No 17 received for
the second half of the year an order for 10,000 army bedstands and 3,000 hospital
bedstands; both items had not been indicated in the 1950 plan which had been
received in January 1950. Materials for the order began to arrive at No 17 only
late in October 1950, which left only two months to complete the order.
l7. The pressure to fulfill plans was riot:. great .-at;. Machine ~,Factory.I No 17. :.:In'.addition,
the fact that the management was responsible for the prevention of accidents and
the inspectors for quality of product militated against pressure. Damage to the
machines in the factory occurred usually because of ignorance or carelessness of
workers and lack of supervision by foremen.
18. In regard to inspection visits by outsiders, while No 17 was still under
DALENERGO, primarily in 19+8-49, the factory was visited every week at least by
a supervisor who was a member of the Economic Section of the Soviet Civil
Administration. He was a military engineer, but in peacetime he had been a
professor at the Technical Institute in Moscow. In subsequent years, the
effectiveness of the Economic Section greatly decreased, and therefore No 17 was
tisited less frequently. members of the
Economic Section visited or telephoned every day because of their interest in
completion of the production plan for 1950, particularly in regard to the army
bedstands, mentioned above. These officials inspected, interferred, and gave
advice. Despite all this, it did not prevent miscalculations in regard to the
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fixed prices of the bedstands In regard to 25X1
visits by personnel of DALENERG , le, its director an other officers, these
visits were infrequent--once a month or less. Also, once a year but not
every year, some Soviet Army general would visit the plant. the man 25X1
who directed four machine factories (Nos 17, 18, 19, and 20) visited No 17
two or three times. there were two visits from a representative 25X1
of the Planning Section of the Chinese Industrial Administration in Mukden.
The purpose of these visits was to instruct personnel of No 17 in the proper
method of filling out new Chinese forms for F____]production plan. All 25X1
inspections were of a superficial character.
19. Machine Factory No 17 had no connection with the Chinese Communist Central
Government in Peiping. The highest authority for No 17 was the Industrial
Administration of the Northeastern Government in Mukden. In Dairen, the
highest Chinese official was the man who supervised factories number 17, 18,
19, and 20. This individual functioned under the Industrial Administration
in Mukden. he was not concerned with No 17's
planning, perhaps because the ac ory had efficient top-level personnel.
20. In regard to the question whether all -plant officials were subordinate to
the factory Director,
all officials of No 17 were subordinate
exception of the bookkeeper,
As to whether the organization and management o themm was se on some
directive or manual handed down from above, the organization and management of
No 17, when it was under DALENERGO, was based on Soviet laws. The type of
organization specified depended upon the size of the plant in question. This
general regulation was very well known to the Soviets, but DALENERGO, at times,
provided some general instructions. when No 17 came under Chinese
authority some changes occurred by orders of the Chinese.
21. In regard to methods and procedures for procurement of materials for Factory
No 17
some materials)- such as sancLs
for the foundry, were received directly from the area where they were found,
and were brought to the plant by factory workers in trucks. A few materials
were bought,on the local market in Dairen. Occasionally, materials were
borrowed from other factories and these were to be replaced after similar
materials arrived at No 17 from the place where they had been requested.
22. In regard to allocation and distribution of materials within the plant, all
materials which arrived at the factory were supposed to be stored in the main
storage facility of the plant, which was located in the eastern part of the plant
grounds. This was adhered to~,on paper at least, in that all materials were
recorded in books as having arrived and then having been given to the shops which
needed the materials. In practice, however, some material could be brought
directly to the shop in order to save time. The chief of the storage department
each day gave to the plant Director a list of materials received. If necessary,
the list could be expressed in round figures if the actual weights and sizes had
not yet been checked. This list usually was also distributed to the Chief Engineer
and the Planning Departments. If occasionally the material would not arrive, then
this fact was reported to the planning people over the telephone or obtained by
them as a result of their inquiries. This method was usually followed if there
was no serious shortage of the materials involved or if the shortage did not
endanger the progress of production. In such case, the plant Director and the
other officials mentioned above would pay little attention to the matter. How-
ever, if a critical situation arose, or could arise in the near future, then the
Director would personally devote time to solving the problem, or delegate it to
his most important subordinates. The normal way of allocating materials within
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 Approved For Release 2009/07/02 : CIA-RDP82-00047R000400320008-3
CONFIDENTIAL
the plant was as follows. A shop chief prepared an application to the chief
of the storage department. The application consisted of a small piece of
paper, in triplicate, for each type and size of material, and indicated the
item in the production plan which required this material. This application
slip first went to the Planning Department, which checked whether the type and
quantity of material requested was indicated in the production plan or
whether the requested material was a reasonable substitute. If the application
met these two criteria, then one of the members of the planning staff would
sign the slip. Then the slip was brought to the bookkeeper, who examined it
carefully and who usually refused to sign it if the material was not specifically
mentioned in earlier planning forms. In such case, the problem might be
settled either by telephonic or personal conversation between the bookkeeper
and the planning staff. If the bookkeeper still refused, then the applicant
could bring the slip to the Director of the plant. If the Director signed it,
then'.the bookkeeper also signed it and forwarded the application to the chief
of the storage department, who saw to it that the requested materials were
delivered to the shop. However, if the bookkeeper still believed that the
application was completely out of line, he reported the matter to the bookleeper
of the next higher echelon--DALMMGO, or later, the Industrial Administration
in Mukden. If the factory administration saw that the plant would soon be
short of materials, the Chief Engineer, the Economic Planning Department, or
perhaps some other official reported the matter to the Director and recommended
how the remaining material should be used and what substitutes could be
utilized. The Director then ordered the chief of the storage department to
hand out this material for certain purposes only, or not let it be used at all
without the Director's personal order. This type of decision could be made
either by the Director alone, or by his calling an immediate meeting of the above-
mentioned top personnel, whichever he felt more convenient. 25X1
every type of material before being obtained by a shop was to first be stored in
the main warehouse ( lavni sklad), and later directed to the shops needing it,-
after the necessary applications had been made. In connection with the distri-
bution of materials within the plant, 25X1
~a railway spur line divides the factory grounds into two sections. The 25X1
p ant area east of this line has its own railway tracks of standard and narrow
gauge, as well as a concrete-surfaced road. Moving materials to the shops
situated on that side of the factory did not present any difficulty. Materials
were usually moved on small railway wagonettes of standard or narrow gauge or an
horse-drawn carts. Occasionally trucks were used, but infrequently, as their use
was not too convenient in this area. The welding shop was the largest consumer
of plate and sheet steel of L-, T-, U-, and H-shaped construction steels. This
shop, however, was situated to the west of the main railway spur line and there-
fore was poorly connected with the main storehouse, but the welding shop did
have a railway line of standard gauge of its own. Because of these factors, the
above types of steels were stored on the ground near the welding shop, but were
under the control of the main storehouse. By locating these materials near the
welding shop, the movement of these heavy items was minimized as much as possible,
ie, they had to be moved only from 30-50 meters. This was done by hand. Some-
times one plate would be carried by 16 men or plates and sheets would be towel
by tractors. Machine Factory No 17 had two such tractors.
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