MACHINE TOOLS IN NORTH VIETNAM - - WHITE ELEPHANT OR BLUEPRINT FOR INDUSTRIALIZATION

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78T02095R000800070019-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 7
• Document Creation Date: December 20, 2016
• Document Release Date: April 12, 2006
• Sequence Number: 19
• Publication Date: October 1, 1964
• Content Type: BRIEF

Approved For Release 2006/05/24: CIA-5LE7 L 1 95R000800070019-5
CIA/RR CB 64 65
October 1.964
Copy No.
INTELLIGENCE BRIEF
MACHINE TOOLS NORTH VIETNAM---
WHITE ELEPHANT OR BLT EPR:.NT FOR INDUS TRiAL:ZATIO.N
DIRECTORATE OF INTELLIGENCE
Office of Research and Reports
 Approved For Release 2006/05/24: CIA-RDP78TO2095R000800070019-5
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, TUC, Sees. 793 and 794, the trans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
Approved For Release 2006/05/24: CIA-RDP78TO2095R000800070019-5
 Approved For Release 2006/05/24: CIA-RDP78T02095R000800070019-5
S-E-C-R-E-T
MACHINE TOOLS IN NORTH VIETNAM --
WHITE ELEPHANT OR BLUEPRINT FOR INDUSTRIALIZATION?
In recent years, North Vietnam has had the distinction of being the
least developed country in the world that is producing modern machine
tools. The country currently is producing about 600 machine tools
annually in a Soviet-built plant in Hanoi. North Vietnam is far from
being an economical producer of these industrial goods, however, and
the economy is paying a heavy cost for the prestige of producing these
"symbols" of economic development and advanced technology. Contrary
to claims by North Vietnamese officials that their machine tool industry
is up to present world standards, its output actually consists of copies
of old Soviet models of the late 1940's, and the industry itself was built
to Soviet specifications.
North Vietnam's "road to socialism" has called for substantial in-
vestment in heavy industry, including production of machine tools. But
neither the North Vietnamese economy nor the very limited export market
can absorb the present production, and, as a result, the industry is
operating below capacity while pressing demands for equipment more
necessary to the country's present economic development are being ignored.
1. Background
The Hanoi Engineering Factory, located in the suburbs of Hanoi,
manufactures nearly all of North Vietnam's machine tools, although a
few machine tools are produced occasionally at the Duyen Hai Engineer-
ing Plant in Haiphong and at the Tran Hung Dao Engineering Plant in
Hanoi. Other plants referred to as "machine tool plants" usually pro-
duce light industrial goods. Completed and equipped with about 200
modern machines in April 1958 1/ as a part of a Soviet aid program,
the Hanoi Engineering Factory is regarded as the most modern indus-
trial plant in the country. North Vietnamese personnel received tech-
nical training in the USSR, and the factory began by manufacturing
copies of Soviet machine tools, initially general-purpose drill presses
and lathes. The plant, situated along National Route No. 6 between Ha
Dong and Hanoi, is much larger than necessary for its current output
of machine tools. At present, some of its capacity is used to produce
agricultural pumps and automotive parts. 2/ The plant also repairs
machinery and has an apprentice training program for technicians and
designers. Although there is no evidence of production of weapons,
S-E-C-R-E-T
Approved For Release 2006/05/24: CIA-RDP78T02095R000800070019-5
 Approved For Release 2006/05/24: CIA-RDP78T02095R000800070019-5
S-E-C-R-E-T
the industrial equipment and related facilities of the plant suggest a
potential for manufacturing small arms such as rifles, bazookas, and
recoilless rifles but not large weapons or armored vehicles.
Foundries in Hanoi have the capacity to produce most of the less
sophisticated metals used in machine tools. Approximately 70 percent
(by weight) of the requirements for fabricated metal consist of ordinary
grey iron castings used for such parts as beds, ways, and housings for
which North Vietnam has the resources, technology, and facilities.
The remainder of the required metal, which consists of high-grade
steels and alloys used for gears, spindles, and other parts in headstock
assemblies, must be imported, chiefly from the USSR. It is probable
that antifriction bearings and other components and controls also must
be imported.
It is estimated that production of machine tools in North Vietnam
is still in an infant stage and that in recent years output actually has de-
clined. Production reached its peak in 1962, when 1, 240 units were
produced, but declined to 540 units in 1963, and state plans call for pro-
duction of only 730 units in 1965. 3/ A goal of 1, 540 units was set origi-
nally for 1965, the close of the First Five Year Plan (1961-65).
Nearly all of the machine tools produced are copies of older Soviet
machines, as North Vietnam has developed no capabilities in producing
original designs 4/ Soviet technicians are available as consultants,
although they are not permanent members of design staffs. One lathe
currently being produced, model 1616 (or T616), is a copy of a Soviet
product of the same model number that the USSR began mass-producing
in 1949. Model K125, a vertical-drilling machine, is similar to Soviet
model 2A125. Both of these machines are still produced in the USSR
and China. This year a more advanced toolroom lathe (model T630) has
been offered for export.
Although only a small percentage of production has been exported,
!several machine tools have been sent to Cambodia, Indonesia, and India.
The only markets open to North Vietnam are the less developed coun-
tries, which are able to utilize the less complicated machine tools
typical of North Vietnam's production.
Approved For Release16I 5/$4ECIA-RDP78T02095R000800070019-5
 Approved For Release 2006/05/24: CIA-RDP78TO2095R000800070019-5
S-E-C-R-E-T
3. Prospects
At the present time the demand in North Vietnam for the types of
machine tools manufactured at the Hanoi plant is insufficient to absorb
all of the plant's production. The insufficient demand and the inability
to develop sizable export markets explain in large measure the drop in
output of machine tools that has occurred in recent years. 5/
Although North Vietnam has a relatively ambitious industrial de-
velopment program, its requirements for machine tools are limited.
The major types of equipment required by North Vietnam consist of
all kinds of modern industrial machinery to support the development of
its metallurgical, chemical, and electric power industries, all of which
must be imported. At its present stage of development, North Vietnam
machine tools are used primarily to equip machine shops for the repair
of transportation, agricultural, and other equipment. Its own production
of various types of industrial machinery is still too rudimentary to exert
much of a demand for machine tools. In addition, few plants in North
Vietnam have a sufficiently trained labor force to operate and use modern
machines efficiently.
North Vietnam is clearly not an efficient producer of machine tools.
It cannot hope to establish the service organizations or efficiency of
production to compete in the Far East with Japan or even Communist
China. Although the Hanoi plant has introduced modern manufacturing
technology to the country, and in this sense performs a valuable train-
ing function, there are numerous other kinds of output that could have
achieved the same result at less cost and would have been more in line
with North Vietnam's immediate economic requirements -- for example,
agricultural implements.
The wisdom of comparative advantage, under which North Vietnam
would import its limited requirements of machine tools from efficient
Bloc producers, has been ignored, and inefficient production of machine
tools has been emphasized with little awareness of the demand for such
machines or the difficulties of exporting them to world markets.
Approved For Release 200E/Q -GSA-- t '78T02095R000800070019-5
 25X1 Approved For Release 2006/05/24: CIA-RDP78TO2095R000800070019-5
Approved For Release 2006/05/24: CIA-RDP78TO2095R000800070019-5
 Approved For Release 2006/05/24: CIA-RDP78TO2095R000800070019-5
SECRET
Approved For Release 2006/05/245.4gMir78T02095R000800070019-5