CRITICAL FINANCIAL SITUATION IN THE "TRECI MAJ" SHIPYARD, RIJEKA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00247A001700460001-1
• Release Decision: RIPPUB
• Original Classification: C
• Document Page Count: 5
• Document Creation Date: December 27, 2016
• Document Release Date: January 29, 2014
• Sequence Number: 1
• Publication Date: October 23, 1964
• Content Type: REPORT

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INFORMATION REPORT INFORMATION REPOKT
CENTRAL INTELLIGENCE AGENCY
This material contains information affecting the National Defense of the United States within the meaning of the Espitnage Laws, Title
18, U.S.C. Secs. 793 and 794, the transmission or revelation of which in any manner to an unauthorized person is prohibited by law.
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COUNTRY Yugoslavia
REPORT
SUBJECT Critical Financial Situation in DATE DISTR.
the "Treci Maj" Shipyard, Rijeka
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REFERENCES
DATE OF
INFO.
PLACE &
DATE ACQ.
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THIS IS UNEVALUATED INFORMATION. SOURCE GRADINGS ARE DEFINITIVE. APPRAISAL OF CONTENT IS TENTATIVE.
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1. The engineers of the shipyard stated openly and firmly that
they could assume no responsibility for the machines and
various pieces of equipment because the funds available to
them for maintenance were inadequate.
2. The shipyard, whose annual production amounts to 29 billion
gross tonnage, is without funds; at the present time, they
have only 508 million dinars from the amortization fund on
hand, scarcely adequate for the replacement and maintenance
of machinery. In view of this situation, any expansion or'.
modernization of the shipyard is out of the question.
3. In 1964, the shipyard is scheduled to deliver 6 ships; of
these, several have already been launched and two consigned.
(Consigned - DROMON, EPITACIO PESSOA; launched - VISEVICA,
MYRON, SKYRON; still on ways - TUHOBIC.) Next year the
ships ordered by the Soviet Union will be built. The
shipyard has orders through 1967.
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4. Recently a 36,000-ton freighter, costing over 5 billion dinars
was begun At the time the contract was signed,
the shipyard estimated a profit of about 40 million dinars.
The engineers, who had figured the costs, reported that by
the time construction actually began, the net profit
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(Note: Field distribution indicated by "*".)
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INFORMATION REPORT INFORMATION REPORT
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had already been transformed into a loss, through an increase
in costs of 150 million dinars--and that this figure is
growing larger due to the constantly increasing costs of
construction materials. The work of the engineers was criti-
cized by one person only--Marko Lukovic, a political func-
tionary who spoke for the cadres. Lukovic accused the engi-
neers of not havin considered rising costs. In fact, the
contract with the shipping firm was signed only in
December 1963.
5. Since 1956 the value of production increased from 11 to 28.6
billion dinars, but the net profit dropped from 3.8 to 3.7
billion dinars. During the same period the following increases
were effective:
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(a). Interest on credit amounted to 1.1 billion dinars;
(b). "Social" contributions rose from 82 to 280 million dinars;
(c). Other contributions rose from 6 (in 1958) to 41.7 million
dinars.
On the basis of these unofficial figures, out of 100 dinars
revenue, only 28 went to the shipyard; the remaining 72 dinars
were_paid out as various contributions5hich include taxes,
etc /
6. In the negative balance of the shipyard are also the fines for
delayed deliveries; the loss incurred is sometimes greater
than the value of the ship. For each day overdue, the ship-
yard pays from $1,000 to 300 pounds Sterling, depending on
the contract. There have even been cases where the ship-
yard had to pay penalties of $50,000 or more. Prior to 1962,
the shipyard had never incurred a fine, but as of that year
and continuing through today, this is frequently the case.
Experts attribute this to the fact that the due dates are
too early and that there are delays in deliveries of parts
from supplier firms. The shipyard is also said to be cur-
rently overstocked with employees assigned to positions
beyond their capabilities. Work discipline in the shipyard
is said to be scant; there are too many unjustified absences,
no desire to fulfill the set norms, etc. The lack of work
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discipline is illustrated by the following example: 610
workers from the assembly unit held a meeting, stopping work
and shutting off their machines for the purpose, to protest
against a recent distribution of 5 million dinars after prof-
it earned by their unit. Each worker reportedly received
from two to seven thousand dinars; white-collar employees,
however, received up to 45-thousand dinars. The management
answered the protest by stating that this was in accordance
with regulations, whereupon the workers began to protest
loudly against the regulations. The incident had wide
repercussions throughout the shipyard, and in communal and
district organs as well. As a result, the shipyard has sus-
pended the protested regulations and has returned to the
former system, pending a review of the situation, in order
to avoid a repetition of the incident: The local authorities
sent a committee to the shipyard to investigate the incident,
stating that most of the time absenteeism and malcontent were
caused by the. management. The management replied that there
shoilld be no malcontent at a time when pay was relatively
high and on the increase. The average pay during the first
four months of 1964 was about 44,000 dinars, as compared
with 36,000 dinars /for the same period7 in 1963.
7 The committee reported that of the 3,200 workers, 1,100 were
white-collar employees; 200 of these latter had only elemen-
tary school certificates and 625 only had intermediate or
secondary school diplomas. The committee recommended that
many million dinars could be saved if the shipyard had more
rigorous criteria for wages. The management supplied the
following statistics on wages:
specialists are paid from 52,000 - 70,000 dinars per month
skilled workers " U 32, 000, - 51,000 "
semi-skilled " " IT 23,000 - 38,000 "
unskilled IT TT TT 21,000 - 28,000 " TT
The lowest pay is 21,000 dinars per month, the highest 103,000.
The wage scale is rising as manual labor is being eliminated.
The work force of the shipyard includes 1,892 specialists
and skilled workers, 443 semi-skilled workers, and only 150
unskilled laborers.
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8. The committee ordered the shipyard to evaluate the work of
each employee and to prepare a list of those considered
indispensable, with a view towards a large reduction in force
of white-collar employees. The shipyard is said to be the
"refugium peccatorum" of former activists and politicians
from the Rijeka district, the majority of whom ride on the
backs of the workers and other employees because they are
totally, incompetent and without the requisite training.
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