CONSTRUCTION IN SELECTED HEAVY INDUSTRIES IN THE USSR THROUGH 1960

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01141A001200160002-8
• Release Decision: RIPPUB
• Original Classification: U
• Document Page Count: 132
• Document Creation Date: December 23, 2016
• Document Release Date: April 29, 2013
• Sequence Number: 2
• Publication Date: December 1, 1958
• Content Type: REPORT

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CONSTRUCTION
IN SELECTED HEAVY INDUSTRIES
IN THE USSR THROUGH 1960
CIA/RR 158
December 1958
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FOR OFFICIAL USE ONLY
ECONOMIC INTELLIGENCE REPORT
CONSTRUCTION IN SELECTED HEAVY INDUSTRIES IN THE USSR
THROUGH 1960
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Construction of new capacity is a key factor in the rate of growth
of Soviet industry. The persistent failures to achieve the goals of
construction in recent years contributed to the over-all failure of
the Soviet economy to fulfill the rate of growth planned for 1956, to
the need for revising the plan for 1957, and to the subsequent re-
placement of the Sixth Five Year Plan (1956-60) by the new Seven Year
Plan (1959-65).
The theses of the Soviet Seven Year Plan which have been announced
recently give an outline of the goals for construction through 1965.
The present report surveys the achievements and the failures in con-
struction in selected heavy industries and attempts to determine the
role of construction in the development of the Soviet economy through
1960. As such,. the present analysis will serve as the basis for a
subsequent report (to be published in 1959) which will examine the
goals for construction under the Seven Year Plan against the back-
ground of Soviet experience to date.
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FOR-OFFICIAL USE ONLY
I. Introduction . . . . . . . . . . . . . . . . . . . . . 5
II. Construction Materials Industry . . . . . . . . . . . . 9
A. Cement . . . . . . . . . . . . . . . . . . . . . . . 9
1. Construction of Productive Facilities . . . . . 10
2.' Problems in Construction . . . . . . . . . . . . 15
3. Revision of the Draft Sixth Five Year
Plan (1956-60) . . . . . . . . . . . . . . . . 19.
B. Precast Reinforced Concrete Components . . . . . . 24
1. Construction of Productive Facilities and
Production, 1955-57 . . . . . . . . . . . . . . 24
2. Problems in Construction . . . . . . . . . . . 28
3. Prospects for 1960 . . . . . . . . . . . . . . . 29
C. Other Construction Materials . . . . . . . . 31
III. Ferrous Metallurgical Industry . . . . . . . . ... . .. 33
A. Iron Ore . . . . . . . . . . . . . . . . . . . . . 35
1. Construction Under the Fifth Five Year
Plan (1951-55) . . . . . . . . . . . . . 35
2. Draft Sixth Five Year Plan (1956-60) . . . . 36
3. Plans, Achievements, and Failures, 1956-58 . . 40
4. Prospects Through-1960 . . . . . . . . . . . . 44
B. Coke and Pig Iron . . . . . . . . . . . . . . . . . 52
1. 1956 ..................... 52
2. 1957 ..................... 53
3. Prospects for 1958-60 . . . . . . . . . . . . . 54
C. Crude Steel . . . . . . . . . . . . . . . . . . . -57
1. 1956-57 . . . . . . . . . . . . . . . . 57
2. Prospects for 1958-60 . . . . . . . . . . . . . 59
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1. 1956-57 ... ..............
2. Prospects for 1958-60 . ... . . . . . . . . . .
E. Problems and Prospects . . . . . . . . . ... . . . .
IV. Coal Industry . . . . . . . . . . . . . . . . . . .
A. Draft Sixth Five Year Plan (1956-60) . . . . . . . .
B. 1954-56 ....... . . . . . . . . . . . . . . .
C. 1957-58 . . . . . . . . . . . . . . . . . ...
D. Problems in Construction . . . . . . . . . . . . . .
1. Shortages of Construction Resources and High
Costs . . . . . . . . . . . . . . . . . . . .
2. Prolonged Construction Periods and Misallo-
cation of Resources . . . . . . . . . . . .
3.. Construction Carryover and New Starts . . . . .
E. Summary and Prospects . . . . . . . . . . . . . . .
V. Survey of Construction in Other Heavy Industries . . . .
A. Electric Power Industry . . . . . . . . . . . . . .
l.`. Draft Sixth Five Year Plan (1956-60) and Long-
Term Development . . . . . . . . . . . .
2. Construction and Commissioning, 1951-58 . . . .
3. Problems in Construction . . . . . . . . . . . .
4. Prospects .. . . . . . ... . . . .
B. Petroleum Industry . . . . . . . . . . . .. . . . . .
1. Fifth and Draft Sixth Five Year Plans, .
1951-60 . . . . . . . . . . . . . . . . . . .
2.. Malpractices in Planning Construction of
. Refineries . .. . . . . . . ... . . . . .
3., Prospects . . . . . . . . . . . . . . . . . . .
C. Nonferrous Metallurgical Industry . . . . . . .
D. Chemical Industry . . . . . . . . . . . . . . . . .
E. Machine Building Industry . . . . . . . . . . . . .
F. Summary .. . . . . . . . . . . . . . . . . . . . . .
94
96
97
100
103
loo
105
lo6
108
110
112
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VI. Construction as a Limiting Factor in Short- and Long-
Term Development of Heavy Industry . . . . . . . . . . . . 113
A. Underestimation of the Volume of Capital Construction
and Construction Resources Required . . . . . . . . . 113
B. Priorities in the Allocation of Construction
Resources . . . . . . . . . . . . . . . . . . . 120
C. Conclusions . . . ... . . . . . . . . . . . . . . . . 121
Appendix A. Methodology . . . . . . . . . . . . . . . . . . .
1. Commissioning of Annual Capacity for Cement in the USSR,
1946-6o . . . . . . . . . . . . . . . . . . . . . . . . . 21
2. Commissioning of Capacity for Production of Precast
Reinforced Concrete Components in the USSR, 1955-56 . . . 26
3. Fulfillment of Selected Planned Construction-Installation
Work on Iron Ore Construction Projects to Be Commissioned
in the USSR in 1958 . . . . . . . 45
4. Commissioning of New Capacity for the Extraction of Iron
'Ore in the USSR Under the Fourth, Fifth, and Draft
Sixth Five Year Plans, 1946-60 . . . . . . . . . . . . . 50
5. Fulfillment of Planned Construction-Installation Work on
Coke Batteries to Be Commissioned in the USSR in 1958 55
6. Fulfillment of Planned Construction-Installation Work on
Blast Furnaces to Be Commissioned in the USSR in 1958 . 58
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7. Fulfillment of Planned Construction-Installation
Work on Crude Steel Facilities to Be Commissioned
in the USSR in 1958 . . . . . . . . . . . . . . . 61
8. Fulfillment of Planned Construction-Installation
Work on Rolling Mills to Be Commissioned in the
USSR in 1958 . . . . . . . . . . . . . . . . 65
9. Commissioning of New Capacity for the Extraction
of Coal Under the Ministry of the Coal Industry
in the USSR Under the Fifth and Draft Sixth
Five Year Plans, 1951-50 . . . . . . . . . . . . 9o
10. Fulfillment of Goals for Construction-Installation
Work, Commissioning of Capacity, and Production
in Selected Heavy Industries in the USSR Under
the Fifth Five Year Plan (1951-55) . . . . . 114
Figure 1. USSR: Principal Construction Projects
Included in the Draft Sixth Five Year
Plan (1956-60) . . . . . . . . . . . . . .
Figure 2. USSR: Major Construction in the Cement s
Industry to Have Been Completed in 1956 12
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CONSTRUCTION IN SELECTED HEAVY INDUSTRIES IN THE USSR
THROUGH 1960r*
Plans for constructing and commissioning facilities in heavy in-
dustry in the USSR were not consistently fulfilled under the Fifth
Five Year Plan (1951-55) or in 1956 and 1957. Apparently, construc-
tion is lagging behind plan again during 1958. The extent to which
plans were fulfilled can be seen in the following data for com-
missioning production capacity in several important branches of
heavy industry:
Fifth Five Year Plan
Branch of Industry
(1951-55)
1956
1957
Raw iron ore
60
50
70
Pig iron
87
60
100
Crude steel
72
50
70
Finished steel
56
60
80
Coal
85
56
76
Cement
60'
30
61
Petroleum (primary distillation)
67
N.A.
N.A.
Electric power stations
84
N.A.
N.A.
The most basic cause of shortfalls is that Soviet planning au-
thorities have consistently underestimated the volume of capital in-
vestment and of construction resources required to fulfill plans. As
a result, insufficient resources have been put at the disposal of con-
struction organizations. The planning of construction programs much
larger than warranted by the resources made available has resulted in
the practice of dispersing investments among too many projects and
prolonging periods of construction. Designs and specifications were
delivered late, often after construction had been started. Tardy.
deliveries of production equipment also handicapped construction.
Frequent shortages in supplies of construction materials, construction
* The estimates and conclusions in this report represent the best
judgment of this-Office as of 1 October 1958.
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workers, and construction equipment have created problems in the con-
juncture of construction activities that no amount of good management
could have prevented. Thus more efficient organization of construc-
tion activity, within the resources allocated, could have provided
only a partial resolution of the failure to fulfill plans for construc-
tion.
In spite of the failure to fulfill plans for commissioning new
capacity in heavy industry under the Fifth Five Year Plan, produc-
tion goals generally were fulfilled or exceeded. This phenomenon
was at the center of the disagreement which developed in drafting
the. Sixth Five Year Plan (1956-60) and the plan for 1956 over the
volume of investments required to support production goals.
At the Twentieth Party Congress, M.Z. Saburov (then Chairman of
the State Economic Commission) asserted that production goals for
1956 were feasible and complained that the production ministries had
presented inflated requests for capital investment which were not in
keeping with the available resources or with the requirements of the
ministries. The ministries, on the other hand, disputed the low in-
vestment allocated and emphasized the imperative need to accelerate
construction work and meet construction schedules.
The difference of opinion between the central planning authori-
ties and the ministries is demonstrated by the requests of the
ministries for capital investment for 1956, 1957, and the Sixth Five
Year Plan as a whole, which in each case amounted to approximately
40 percent more than the plans finally confirmed.
In December 1956 a Plenum of the Party, convened to discuss the
outstanding problems in the economy in the light of failures during
1956, resolved the disagreement in favor of the central planning
authorities and actually called.for a reduction of capital invest-
ment in the Sixth Five Year Plan. Furthermore, the Plenum gave
greater priority to fulfillment of plans for construction of housing.
Finally, it stipulated that drafting of the goals for the Sixth Five
Year Plan was to be completed and presented to the Supreme Soviet of
the USSR in the first half of 1957.
A completed version of the plan was not submitted, however, and
in September 1957 it was announced that a new Seven Year Plan would
be drawn up for the years 1959-65, linking the last 2 years of the
Sixth Five Year Plan with the following 5 years. The real reasons
for this decision were not stated, but it is clear that the persistent
shortfalls in construction for heavy industry played a large role in
the virtual scrapping of the Sixth Five Year Plan.
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The Sixth Five Year Plan had anticipated considerable returns in
production from construction of new capacity in heavy industry during
1956-60. Overestimation of the feasible returns in production from
intensified utilization of existing capacity made the meeting of con-
struction schedules all the more important. The fact that commission-
ing of new capacity during 1956 and 1957 fell short of the goals
greatly lowered the chances for fulfilling plans for new capacity
under the Sixth Five Year Plan and, therefore, for obtaining the re-
turns in production which had been expected from new capacity.
Although the theses of the Soviet Seven Year Plan have been
announced, a detailed statement of plans for construction of facili-
ties in heavy industry during 1959-60, as part of the Seven Year
Plan, has not yet been issued. There are, however, some preliminary
indications of trouble. Construction of facilities in heavy indus-
try has continued to lag during the first half of the transitional
year, 1958. Moreover, the Seven Year Plan for commissioning housing
space has been established at levels which will require more resources
than provided for in the plan, particularly during 1958-60. Thus
fulfillment of the plan for commissioning housing would impose a
considerable drain on the resources available for construction in
heavy industry, especially during 1958-60.
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I. Introduction.
Construction has played a crucial role, both positive and nega-
tive, in Soviet, economic development. Although its contribution to
development of the productive base of the economy has been enormous,
performance in construction generally was below levels planned under
both the Fourth and Fifth Five Year Plans (1946-55)? One distinctive
feature of construction in the period of the Sixth Five Year Plan
(1956-60) of the USSR is that the perennial shortcomings in construc-
tion, long recognized but not overcome, had forced the Party and the
government to begin a reappraisal of many of the goals of the Sixth
Five Year Plan before the first year of the plan had expired. Thus
construction is one of the most important limiting factors which
must be considered in evaluating the impending Seven Year Plan
(1959-65) of economic development in the USSR.
The original directives on the Sixth Five Year Plan* indicated
that the volume of state capital investment in the USSR in 1956-60
was planned to be 990 billion rubles (in prices effective 1 July
1955**), or 67 percent more than under the Fifth Five Year Plan.
Approximately 600 billion rubles of this investment were to be ex-
pended in construction-installation work, an increase of 60 percent
more than under the Fifth Five Year Plan.*** ****
More than 600 billion rubles of the planned 990 billion rubles
of state capital investment were to be allocated for investment in
industry under the Sixth Five Year Plan. Of that figure, more than
400 billion rubles were to be directed into investment in electric
power stations and in the chemical, ferrous and nonferrous metal-
lurgical, petroleum, troleum, coal, construction materials, and timber in-
dustries.tJ The volume of state capital investment for construction
* References in this report to the "original directives" or the
"draft" plan are to the draft Sixth Five Year Plan'as adopted on
25 February 1956 at the Twentieth Party Congress.
** Unless otherwise specified, data on the volume of capital in-
vestment are in terms of prices effective 1 July 1955.
*** The principal components of capital investment are (1) invest-
ment in construction-installation work and (2) investment in both
fixed and mobile machinery and equipment. Other capital expenditures
account for less than 10 percent of investment in the USSR. Construc-
tion-installation refers to the erection of buildings and other struc-
tures (roads, bridges, and the like) and the work entailed in install-
ing machinery and its equipment in such structures but does not include
draft Sixth Five Year Plan are shown in Figure 1, following p. 6. Vyy
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of housing, schools, hospitals, theaters, and other municipal facili-
ties was to total more than 200 billion rubles.* 3
Preferential development of the base in heavy industry in the
USSR has been and continues to be a constant aim and concern of the
Party and the government. Much of the development of heavy industry
achieved in the past was provided by construction and installation
of additional productive units at established enterprises and by con-
struction of new enterprises. The importance of fulfilling the goals
established for construction in various heavy industries under the
Sixth Five Year Plan is revealed by the degrees to which the increases
in production called for by the draft plan were to be obtained from
additional productive facilities commissioned** during 1956-60 (in
approximate percentage of the increase in production planned for 1960
above 1955, as follows) 5/:
Cement 68
Asbestos-cement shingles 44
Soft roofing 73
Window glass 14
Ferrous metals
Pig iron 65
Crude steel 53
Rolled ferrous metals 60
* The greater part of the 200 billion rubles was included in the
600 billion rubles planned for investment in industry, so that these
figures are not additive.
** In this report the term construction and commissioning, or simply
commissioning, of additional capacity will include only the additions
to capacity which are made by way of capital investment in the con-
struction of new plants and expansion or modernization of existing
plants. The draft Sixth Five Year Plan did not define clearly the
terms of reference outlined for the industries indicated. In the
cement industry, however, it is.known that 32 percentof'the planned.
increase in production was to be obtained not only from the "better
organization of production and more efficient utilization of exist-
ing production capacity" called for in the draft directives but also
from modernization, reconstruction, and expansion of existing plants.
Thus 68 percent of the increase in production of cement was to be
provided by entirely new cement plants. completed during 1956-60..V
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 Fhum~
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Gmm7F GutFer
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USSR
Principal Construction Projects Included
in the Draft Sixth Five Year Plan
(on which construction was to have been started, continued,
and/or completed in the period 1956-1960)
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Selected Products
Percent
Nonferrous metals
Refined copper -
58
Zinc
53
Lead.
66
Aluminum
80
Nickel
40
Coal
Other
Hydraulic turbines
46
Automobiles
45
Excavators
52
Chemical equipment
65
Forge-press machines
71
Electric locomotives -
60
A survey of achievements and problems in construction in several
key heavy industries, therefore, should provide a means for testing
the feasibility of some important goals for construction and thereby
provide one of the bases necessary for determining the feasibility
of some of the important goals in industrial production.
-7-
FOR OFFICIAL USE ONLY
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By investing in the construction of enterprises which produce
construction materials, the construction materials industry of the
USSR is investing in its own productive base. Construction organiza-
tions, therefore, should display a tendency toward superior perform-
ance in construction of enterprises to produce construction materials.
For many reasons, this tendency has not occurred in the USSR. In
fact, even those construction organizations formerly under the juris-
diction of the Ministry of the Construction Materials Industry have
failed consistently to meet their construction schedules.
Although many new plants for producing cement, precast reinforced
concrete products, and other construction materials were built in the
years after World War II, construction of such enterprises has lagged
behind the tasks assigned by the state. J As a result, the inadequate
productive bases of construction organizations and inadequate produc-
tion capacity of the construction materials industry have continued
to be serious handicaps in meeting construction schedules, fulfilling
the planned volumes of work, and achieving a desirable and feasible
level of efficiency in the construction industry.
In retrospect, the overwhelming importance accorded the con-
struction of new cement plants in the draft Sixth Five Year Plan
(1956-60) of the USSR must be attributed in great part to the atti-
tude prevailing at the Builders' Conference in December 1954. In
his speech to the builders, Khrushchev voiced the change in policy
as follows: "In developing the building materials industry, we have
until recently been wrong in stressing the building of brickyards at
the time when we needed to develop the cement industry in every
way." J
The draft Sixth Five Year Plan provided that 68 percent of
the planned increase in production of cement in 1960 above that in
1955 was to be obtained by construction of new cement plants. There-
fore, 27 new cement plants were to be completed under the Sixth Five
Year Plan,* the majorituy~ of them to have a capacity of 1 million or
more tons** per year. J
Construction of new cement plants has been and continues to
be an important means for obtaining a rational, regional distribution
* Construction of a number of these plants had been started before
the Sixth Five Year Plan.
** Tonnages are given in metric tons throughout this report.
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of production in conformance with the requirements of underdeveloped
areas in the USSR. Of the 27 new plants, 17 were to be built in the
eastern areas of the USSR, and the remaining 10 were to be built in
the western areas, as follows 9/:
RSFSR
12
RSFSR 7
Kazakh SSR
4
Georgian SSR 1
Turkmen SSR
1
Ukrainian SSR 1
Moldavian SSR 1
In the period since World War II, new cement plants were con-
structed and put into operation in the Urals (at Magnitogorsk, Nizhniy-
Tagil, Novo-Pashiysk, and Orsk); in Siberia (at Krasnoyarsk and
Timlyuy); and in Kazakhstan (at Karaganda and Sas-Tyuba). A number of
new plants which were to have been completed in the eastern areas un-
der the Fifth Five Year Plan (1951-55) were carried over into the
period of the Sixth Five Year Plan. 10 A serious lag in construction
has prevailed in the cement industry throughout the USSR and is not
peculiar to construction in the eastern areas.
The draft Sixth Five Year Plan stipulated that annual
capacity to produce cement would be increased 40 million tons by the
end of 1960 (3 times the increase achieved under the Fifth Five Year
Plan) to a total capacity of 67 million tons, about 2.5 times the
capacity at the beginning of the Sixth Five Year Plan. This increase
was to be achieved by constructing new cement plants, by expanding
existing plants, by modernizing equipment, and by intensifying the
productive processes.* 11 The Fifth Five Year Plan, on the other
hand, had called for the capacity of the industry to be increased to
approximately 2.1 times the level at the beginning of the plan, but
this goal was not achieved, primarily because of failures to con-
struct and commission on schedule the additional facilities planned. 12
* Thus not all of the planned increase in capacity was to be obtained
from capital investments in the construction and/or installation of
additional facilities. For example, capacity in the cement industry
was increased by approximately 5 million tons under the Fifth Five
Year Plan without significantly taxing investment resources -- that
is, by improved organization of production, technical innovations,
capital repairs, and the like.
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In every year of the Fifth Five Year Plan the commission-
ings of additional capacity were not fulfilled as scheduled. 13
Moreover, in the 7 years 1950-56 the planned construction and com-
missionings of additional capacity to produce cement were fulfilled
by only 52.8 percent. L4/ Although commissioning of capacity was
not fulfilled under the Fifth Five Year' ~P~lan, the increase planned
in production of cement was achieved. yl/' Consistent shortfalls in
the construction and commissionings of facilities to produce cement,
however, put the industry on tenuous ground for the start of the
Sixth Five Year Plan. Because a much greater share of the increase
planned in production of cement was to be obtained from the construc-
tion of new cement plants alone, the lag in construction of new plants
presented a proportionally greater handicap to achieving the goals of
production in the industry under the Sixth Five Year Plan than under
the Fifth Five Year Plan. 16 This problem existed in 1955, although
to a lesser extent than later.
a. 1955.
The revised plan for 1955 stipulated that production
of cement would be increased 22 percent in 1955, with approximately
60 percent of the increase to be obtained from improved utilization
of existing capacity. L7/ Of the planned increase of 4 million tons
in production of cement, approximately 1.6 million tons, or 40 per-
cent, of the increase was to come from facilities to be commissioned
in 1955.
The failure to commission on schedule the planned ad-
ditions to capacity of the industry in 1955, therefore, contributed
to a shortfall in production of approximately 500,000 tons of cement
in 1955. 18 Of the 3 or 4 ministries which were then the largest
contractors in construction for the cement industry, the Ministry
for Construction of Metallurgical and Chemical Industry Enterprises
fulfilled its plan for commissioning capacity to produce cement by
only 46 percent in 1955, and the Ministry of Construction completed
only 20 percent of its plan during the first 9 months of 1955. 19
b. 1956.
The plan for 1956 called for state capital invest-
ment in the cement industry,* to be more than double that of 1955.
Additional investment apparently was allocated later in 1956;
* In this report, data on investment in given industries include
investment in both productive and nonproductive facilities (for
example, workers' housing), unless specifically stated as invest-
ment in productive facilities only.
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nevertheless, the investment plan was underfulfilled.* LO/ In the
very first year of the Sixth Five Year Plan, therefore, shortfalls
in construction for the cement industry were particularly severe.
The plans for commissioning capacity to produce cement
in the first half of 1956 were not fulfilled by construction organiza-
tions of the Ministry of the Construction Materials Industry, the
Ministry of Construction, and the Ministry for Construction of Metal-
lurgical and Chemical Industry Enterprises. 21 The Ministry of
Construction was slated to commission additional capacity of more
than 1 million tons in the first half of 1956, but none of this was
accomplished. L2/ In fact, the Ministry achieved no more than half
of its planned commissionings in the year as a whole, whereas the
Ministry for Construction of Metallurgical and Chemical Industry
Enterprises,' although behind schedule, did fulfill its planned com-
missionings for the year, accounting for more than 60 percent of
the commissionings achieved for the entire cement industry. L3/
By the end of September 1956, therefore, the progress
achieved in construction for the cement industry was distinctly in-
adequate. The share of construction work completed at the new cement
plants by the end of September 1956 indicates that, of four new cement
plants which should have been in operation already, only the Rustavi
plant had been commissioned. (See Figure 2.**)
By the end of 1956, only 1 of. the 5 new cement plants
which were to have been commissioned in 1956 was completed.*** 25
Along with the lag in construction at existing plants, therefore, the
plan for construction and commissioning of additional capacity to
produce cement was fulfilled by only 30 percent in 1956. The short-
fall in commissionings amounted to 3.7 million tons of capacity. 26
Of a plan calling for commissioning approximately 5.3 million tons
of capacity in 1956, it is estimated that only 1.6 million tons were
achieved.
The lag in construction of additional facilities in
1956 directly impeded fulfillment of the plan for production of
cement that year. During the first 8 months of the year, production
* This fact is deduced from data on the declining production of
clinker per million rubles of productive capital stock in the cement
industry.
** Following p. 12. Part of the construction of additional capac-
ity under way at some existing plants also is shown. All these fa-
cilities were to have been commissioned in the fourth quarter of 1956
but were far behind schedule. 24
*** The new Irkutsk cement plant is not shown on the map, because
its output was not planned to be significant in 1956.
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 g,"V Nn.n.zddbrn...k
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P,USSR Major Construction in the Cement Industry
to Have Been Completed in 1956
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of cement from facilities which were to have been commissioned earlier
in 1956 was to have amounted to more than 1 million tons, but'less '
than 100,000 tons was so obtained. 27/ By the end of the year the'"
lag in commissionings entailed a cumulative shortfall in'production''
of cement of 1.1 million tons, or 60 percent of the total underful-'
fillment of production planned for 1956. 28
Lazar'Kaganovich, then Minister-of the Construction
Materials Industry, issued two decrees late in September 1956 which'
outlined urgent measures, as followsc' (1) to improve the operation
of existing cement plants and (2) to accelerate the construction and
commissioning of new facilities to produce 'cement. The latter stipu-
lated that capacity totaling 1,375,000 tons was to be commissioned
by the Ministry of the Construction Materials Industry alone"in the
fourth quarter of 1956. Kaganovich'also appointed his deputy minis=
ter to supervise the fulfillment of planned ~conn/struction of facili-
ties to produce cement by other ministries. .?9 The Ministry of the
Construction Materials Industry had little success in carrying out
Kaganovich's decree on construction in the fourth quarter of 1956.
In 1957, little success in construction for the cement industry was
achieved. -
The revised national-economic plan for 1957 was one
of moderation and retrenchment of rates of growth in the Soviet
economy. Construction resources were to be concentrated on the most
important projects and on those nearing completion, and the number
of new construction' projects was to be minimized. The general policy
of concentration was implemented in construction for the cement in-
dustry, at least in the early part of 1957. A proposal that the plan
for 1957 provide for construction to begin on a new cement plant 1n-
the Kermine district of Uzbek SSR apparently was rejected in conform-
ance with this policy. 30 Moreover, concentration of resources
certainly facilitated the commissioning of 3 new cement plants in the
first quarter of 1957, although all 3 were to have been commissioned
in 1956. 31
In view of the sizable failures in 1956, the revised
plan for 1957 called for accelerating the completion of facilities to
produce cement. Six new cement plants'were to be completed in 1957
(3 of them in the first quarter),* as were additional production lines
at 12 other plants. A total of 5.9 million tons of additional capac-
ity was planned to be commissioned in 1957, 32 but this figure was
* The Alekseyevsk, Yemanzhelinsk, Novo-Zdolbunovsk, Irkutsk, Kuy-
byshev, and Semipalatinsk plants'.
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only a nominal increase above the level of commissionings which had
been called for in the plan for 1956. Later in 1957 the goal was
raised to 7.2 million tons of additions 33 and still later was
lowered somewhat to 6.9 million tons. In conjunction with the latter
goal, the plan was that capital investment in the cement industry dur-
ing 1957 would total more than 1.5 billion rubles. 34
The three new cement plants -- Alekseyevsk, Yeman-
zhelinsk, and Novo-Zdolbunovsk -- which had been scheduled to be
operative in 1956 were finally commissioned in the first quarter of
1957. Along with the completion of some additional production lines
at existing plants, therefore, the quarterly plan for commissionings
in the cement industry was slightly exceeded. Capacity totaling
2,579,000 tons of cement per year was commissioned, whereas only
2,551,000 tons had been planned. 35
By the end of the first half of 1957, more than 3
million tons of additional capacity had been commissioned, but this
amount was considerably less than that planned for the half-year
period. 36 Less than 600,000 tons of additional capacity had been
commissioned by the end of the second half of 1957, even though the
new Irkutsk cement plant was commissioned near the end of the year,
bringing the total commissionings for the year to 3.6 million tons
of capacity. 37 This figure represented only 61 percent of the
5.9 million tons initially planned.
The commissionings planned for 1957 were expected to
yield more than 2 million tons in increased production of cement dur-
ing the year.* In spite of the fact that commissionings were below
the planned level, the revised plan for production of cement was ex-
ceeded in 1957** 38 in contrast with 1955 and 1956, when shortfalls
in commissionings caused production to fall below the planned levels.
In sum, 1957 was a year of failures and significant
achievements in construction for the cement industry. Although 3
new cement plants were commissioned in the first quarter of the
year, only 4 of the 6 new plants planned had been commissioned by
* This achievement depended on the higher goal for commissioning
6.9 million tons of additional capacity.
** The revised production goal set for cement in 1957, although
14.7 percent above the level of production achieved in 1956, was
more than 1 million tons below the level initially planned for 1957
in conjunction with the draft Sixth Five Year Plan. Although the
revised plan for 1957 for production of cement was exceeded, the
initial plan was not. 39 The failure to fulfill the plan for com-
missioning additional production capacity in 1957 as in 1955-56 was
directly responsible for much of the failure to fulfill the initial
plan for 1957 for production of cement.
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the end of 1957. New production lines were completed at only 7 of
12 plants. LO/ The end result was that the additional capacity com-
missioned during 1957 no more than made up for the shortfall'in com-
missionings during 1956.
d. 1958.
The plan for 1958 stipulates that more than 2 billion
rubles are to be invested in the cement industry, an increase of more
than 33 percent above investment in 1957. Approximately half of this
investment is scheduled for the cement projects (new plants and ex-
pansions) which are to be commissioned in 1958. Almost 7.5 million
tons of production capacity is planned for commissioning during the
year.* Three new cement plants are to be commissioned -- the Semi-
palatinsk and Chimkent plants in Kazakhstan and the Kuybyshev plant.
Both the Semipalatinsk and Kuybyshev plants were to have been com-
missioned during 1957. The plan for 1958 also calls for additional
facilities to be commissioned in the plants at Kuznetsk, Krasnoyarsk,
Spassk, Teploye Ozero, Karaganda, Magnitogorsk, Irkutsk, Nizhniy
Tagil, and elsewhere. The first five of those listed also were to
have been commissioned in 1957. Construction of two new cement
plants is to be started in 1958 -- the Angren plant in Uzbek SSR and
the "Noviy Spartak" plant in Ryazan Oblast. 41
Although the first production line at the Kuybyshev
plant and additional capacity at 5 other existing plants were to be
commissioned during the first quarter of 1958 (according to the plan
for 1958), progress during the first 2 months precluded fulfillment
of this goal. Moreover, progress of construction at other cement
projects during the first 8 months of 1958 has been discouraging,
and probably even the initial goal for commissionings in the cement
industry will not be fulfilled in 1958. L2/
Protracted periods of construction have been a particu-
larly troublesome problem in construction of cement plants. By the
beginning of the Sixth Five Year Plan, compulsory norms for the
duration of construction of cement plants had been worked out, con-
firmed, and put into use. New cement plants were to be built in not
more than 40 to 48 months, depending on the planned capacity of the
plant and on whether or not a construction-installation organization
was already operating in the given city or region.*-*
* The plan was raised later to 10.2 million tons.
** Such norms for the period of construction were defined to include
the entire period from the beginning of preliminary construction work
to commissioning of the first production Oootnote continued on p. 1g
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. The.Sebryakovo and Rustavi cement plants were said to
have been built in 2-1/2 to 3 years.* / The Irkutsk plant,,com-
missionedat the end of 1957, was constructed in. approximately 3
years. L5/ The draft Sixth Five Year Plan obviously had antici-
pated that most of the new cement plants would be constructed in
3 years or less.
As.a rule, however, construction of new cement plants
in the past has dragged on for 6 to 8 years. L7/ Of cement plants
completed or to be completed under the Sixth Five Year Plan, the -
Yemanzhelinsk and Alekseyevsk plants, completed early in 1957, had
been under construction for 8 years. / If completed as planned in
1958, the Semipalatinsk plant will have been under construction 6 to
7 years. IL9JThe plan for 1958 also calls for completion of the
Chimkent plant, which is in its fifth year of construction. The rate
of construction at Chimkent, though quite slow in 1956, improved dur-
ing 1957, but problems in, the delivery of designs and materials re-
main in 1958.- The Topkinskk cement plant had been under construc-
tion 4 years by the beginning of 1958 and is not yet scheduled for
completion by the end of 1958. 2_ It has not been unusual for expan-
sions o?-existing plants to drag out over 3 to 4 or more years, as
occurred at.:the Krasnoyarsk and Pervomaysk cement plants. LJ
The reasons for protracted periods of construction are
numerous. One of the-most important is the low ratio of capital in-
vestment which is..allocated?and/or achieved year by year to the total
estimate cost** of,the-project. The norms set for the duration of-
construction of cement plants,.therefore, were supplemented by norms
for the distribution of capital investment. In constructing a cement
plant in a,city or region with a construction organization at its dis-
posal, capital investment in the first year-of construction was to
constitute 20 percent of the estimate cost of the project, 35 percent
in the second year, 40 percent in the third, and 5 percent in the
line of the enterprise. Preparation of designs, specifications, and
estimates; drainage of-territory; and selection of deposits of local
building materials were not included as preliminary work. Presumably;
demolition work in clearing the site also was excluded.
* The definition of the construction period is not always strictly
applied in the Soviet press, so that actual periods of construction
are at times stated with less than desirable clarity.
** Estimate cost is the Soviet term used to express the anticipated
(estimated cost of a construction project and is based on a system
of planning prices and norms for wages, production of construction
workers, and overhead costs and includes planned profits and other
planned accumulations of the contractor.
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fourth.year:*c'Along withrsuch norms, changes during'-the(year in;the !oo
design:of.:the.plant:or!subprojectscor in the construction'schedule e,1ud
were to be precluded:i53 ri ~' 7i 1t~lJflo rI t' (1^l?siup 9tt3 ci aabtP c1W9
Yd :JcnL: fryu! .) Iu to!7or^x3ar:_ ; ':c, Cti'7 2v :n a i,f;irfi~bau (a
4_, LiThe,norms for:the.yearlyidistribution:of.capitaltinvest-,,'Lt
ment (are violated f as f frequently: as 4th OSe L for' the -construction Lperiod 7o-l u
During 6 years of , construction; only.2)4:percentrof:theiestimate.cost iia?
of work at the Yashinsk cement plant had been performed. Only 17 per-
cent of the capital: investment c for i expansion of:the'Krasnoyarsk
cement,plant had:been,made.`after 3 'yearsLOfrconstruction:1 ,Lt Duringo'-
approximately 4;years:oftconstruction!of:the Semipalatinsk:cement '?~Cig
plant, only:10!percent of'the:required capital'finvestment?was!Eade;.t'c-~J
and after. more Lthan;6,years ofconstruction,'. work! amounting cto,onlyorre
21 percent of:the'estimatetcost:had.been performed:'( 9JEven'the 3t-a o,t
Slantsy,cement plant p:construction,of which'apparently?was startedok=lC
in the,first:year,of:the Sixth, Five.Year Plan,-; had 'capital! inv6stC7Wlov
ment?appioved:for,1956.amounting_t6'lesstthan'.7'percent o?-the&esti- dco
mate cost, of: construction:: /r_a` L-b7io fotc ievc '?u : . Std 11_ave Ion lip
`til :di'D:,r :! n?L._so:r_Iau;.J `~ _TO .T.9 ~;ilb.7'. n~~~, 3U:1 V9 ~ c5.tlc 1:rf
-~: YJ _ Blame, forLthec slow: rates of.constructi6nfbf.,cemeiitiplazitsj3.li
can be placed:on nearly every, organization concerned .'thefclientoiai."
organizations making Lthe:.investmentiincement- producing .facilities ;s?e.:)
financialiorgans,-tthe contract ,construction. brganizations'.performing !'ci
the work, the former construction ministries;.,and:otherplaning'or-"wf+
ganizations of the state and the Party. L7J Because construction
resources are scarce,' the,responsibility.for the:slowlrates of con-
struction+lies on.those,who.have:awarded priorities.for the:construc. =d
tion of,cement'plants'--:rpriorities.which'arettoo.low'.to:insuretheTCri.:
timely!completion?of,planned:construction:`lsr.InI 'mod .sios(c:q trsm-?a
t?,-.s L'nr.: i., i(Lgoub ..dt aZ(_,sz9 'i:: -- '"_eLdoty $i'Slrrn:J000 .^.. 'i-1, cein
-eb -iwdm The -former:construction ministries' have , been"criticized::oie
for..paying'inadequate,attention to-development of.thedcementlindus- .`o!"
try, even .though .they were?the.principal,.consumersoof.,cement. ? Theug:i:j
volume of construction ,performed Wby.the~Ministry of Construction-in!-ft!
the erection of'cement';plants,under the FifthfFive YearPlanwas:only 3f~
1.4 percent of the total volume of construction performed by this
ministry; hin 1956 the vo1ume pianned.was to be only &L.7;.?percent. The
effort made.by.the Ministry..for. Construction: of .Metallurgical'andotbnnd
Chemical~2Industry:Enterprises was.proportionslly.smaller-:=-:0.34'.per- ed
cent:under..the Fifth Five, Year iPlan, and 0.7:percent in 1956..?L8/:abnsgsb
TheYrrelatively, insignificant sshare s?.of..their'total'.volumes of: work _cd:o
?Sy^???^> rLt ''r. .'t. : i^_:) 7:t..' n! It^!L^~:_` :t '3;,!'.:: k1pstcJ7 z eR f15T.:Inrroo
Where,a construction organization did not^exist.previously and~L:ln!'t
where the productive base for building a cement plant must be built
simultaneously with ,.the'cement :plant,-!capital%investment.was-to be s:f
'
15 percent.of.the estimate?cost in%the first year, 35ipercent:in .the
'z
second, 35 percent in the third, and 15 percent tin;thel.fourth?"_e.^- aoi;
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committed to construction for the cement industry probably contri-
bute to laxity on the part of the construction ministries. At least
two sides to the question of responsibility, however, appear:
(a) underfulfiliment of plans for construction of cement plants by
the construction ministries, in spite of adequate allocations of
capital investment by the client organizations, and (b) insufficient
allocations of investment by the client organizations.
Other problems in construction of cement plants can be
found in the deficient organization of material and technical sup-.
ply.* The institutes.(under the Ministry of the Construction Ma=
terials Industry) which design cement plants and issue technical
specifications have been criticized roundly for consistent failures
to meet.deadlines for delivery of designs and specifications to con-
struction organizations. Designs and specifications for a large
volume of construction work frequently are delivered to the site,
but the working drafts for those projects which must be started first
are not available. Moreover, not only are designs delivered late,
but often they contain many errors. 59 Construction is frequently
handicapped, both before and after the start of construction, by re-
visions in designs and plans -- location of the plant, designed
capacity, selection of equipment, and other changes in designs --
initiated by the design institutes, by the client organization, or
even by the construction organization. LO/
According to a Soviet newspaper, many letters and tele-
grams from construction sites to the central organs testify to a .
shortage of construction materials as a continuing problem at many
cement projects. 61 Intermittent shortages in supply of materials
also are a continuing problem -- for example, the supply of sand and
stone at a given site may be sufficient and the supply of lumber de-
ficient, but by the time the lumber has arrived the supply of sand is
exhausted. Shortages of building materials give rise to excessive
idling of construction workers on the site. At other cement projects,
construction workers themselves are in short supply. L2/
Tardy deliveries of machinery and equipment also have.
handicapped the scheduled completion of cement plants and appear to
be a. serious threat to. future completions. In the past the USSR has
depended heavily on the receipt of equipment for cement plants from
other nations, especially East Germany. The size of the problems en-
countered as a consequence is implicit in the criticism of the former
Ministry of the Construction Materials Industry for having been
* Material and technical supply includes the drawing-up and delivery
of designs and technical specifications and the supply of construc-
tion materials and equipment.
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"recklessly unconcerned" about the development of domestic production
of such equipment. Present plans call for the start of domestic pro-
duction in 1958 and complete self-sufficiency in 1961. 63
Some cement plants have been commissioned even'though
some subsidiary production departments of the given enterprise were
not completed. Poor quality of construction and deviations from
specifications have resulted in structural failures at some cement
plants, Q Such practices obviously delay the effective operation
of the commissioned enterprise.
3. Revision of the Draft Sixth Five Year Plan (1956-60).
More than 10 million tons, or 32 percent', of the increase
in annual production of cement planned in the draft Sixth Five Year
Plan was to be obtained by reconstruction and expansion of existing'
plants, greater utilization of existing capacity, and better organi-
zation of production. Construction of new cement plants, on the
other hand, was to provide for 22 million tons of the,planned in-
crease in production.* 65 To meet this requirement from new 'con-
struction, 27 new plants were to be completed under the Sixth Five
Year Plan. 68 Thus the average contribution to the production of
cement per new plant would be more than 800,000 tons per year, and
the average new plant would have a capacity of 900,000'to 1 million
tons per year.
The enthusiasm displayed by planning organizations toward
construction of huge, new cement plants under the-Sixth Five Year
Plan obviously was based on the following: -(a) regional developmental
programs and (b). design- studies indicating lower 'original capital in-
vestment per ton of annual capacity, lower production costs, and
higher productivity per worker, the larger the plant. / Such'en
thusiasm was not based on an accurate analysis of the past record in
building new cement plants, or of the volume of construction resources
required to build the plants~on schedule', or of the possibilities of
expanding existing plants.
Expansion or modernization of existing- cement-plants
generally requires considerably less capital expenditure per ton"o#'
added capacity than construction of new plants. Therefore, as one
* Various interpretations of these relationships have been made.
The report of Bulganin on the Sixth Five Year Plan, for example,
indicates confusion on the part of Gosplan, USSR, in this respect. 66
The statement made in the official technical journal on the cement
industry is accepted in this report as the most accurate; additional
support is suggested in an article on the prospective development of
the cement industry. 67 - -
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Soviet analyst noted, the possibilities of expanding existing plants
should be considered first and foremost in working out prospective
plans for development of the cement industry. New plants should be
constructed, as a rule, only when possibilities of expanding plants
are inadequate to meet the increasing requirements for cement in a
given area or when it is necessary to bring the production of cement
nearer to,the points o? consumption. 70
The record of construction of additions to capacity under
the Fifth Five Year Plan was a serious challenge to the feasibility
of completing 27 new, large cement plants during the period of the
Sixth Five Year Plan. The continued failures to meet the plans for
commissioning additions to capacity in 1956'and 1957 indicate not
only that the volume of construction put in place at,cement plants
carried-over from the period of the Fifth Five.Year.Plan--into the
Sixth was insufficient to support the plans for completions in 1956
and 1957 but also that the volume of construction put in place by
the end of 1957 was quite insufficient to support the goal,for com-
missioning additions to capacity under the Sixth Five Year, Plan.
The record-to the end of 1957 and the requirements to. fulfill the
draft.Sixth?Five Year Plan. are presented in Table 1.*
Table 1*?.shows that only 15 percent of the estimated com-
missionings of,additions to capacity under the Sixth Five Year.Plan
had been attained by the end of the first 2 years of the plan, whereas,
the plans for 1956 and 1957 had called for a minimum of 33 percent.
The Plenum of December. 1956elaborated on the necessity
of bringing the overambitious construction program in the entire
Soviet economy into line with the available material and financial
resources. The revised plan for 1957. for the cement industry, how-
ever, called for an accelerated rate of construction and completion
of productive facilities compared with. that attained in 1956.. Even
so, acceleration,of construction during 1957 was not sufficient to
insure completion of the 27-.new cement plants during 1956-60. A
survey of the construction at individual cement plants indicates
that, of the 27 new plants to be built, construction of 11 to 13
probably would not have been started before 1959. Of the other 14 to
16 plants, the construction record through the 1958 plan was?as"fol-
lows:.
Completed by the end of 1957
5
Still under construction by the end
of 1957 (three of vhich.are to be
completed in 1958) '
7 to 9
Construction to be started in 1958 2
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Commissioning of Annual Capacity for Cement in the USSR
1946-60
Actual
Plan
Fulfillment
(Million
(Million
of Plan
Years
Metric Tons)
Metric Tons)
(Percent)
Fourth Five Year Plan
(1946-50) /
6.3
N.A.
N.A.
Fifth Five Year Plan -
(1951-55) W
8.3
14
60
1951-56 c/
9.9
19
53
1956 /
1.6
5.3
30
1957 J
3.6
5.9
61
1958
7.5 /
Average yearly requirement,
1958-6o
9.6 E/
Sixth Five Year Plan
(1956-60) / - 34
a. 71
b. The datum indicating 8.3 million tons of commissionings is from
source 72/. The fulfillment of 60 percent and the plan of 14 million
tons is estimated as outlined in footnotes c and d, below.
c. The actual commissioning of 9.9 million tons is the sum of the
8.3 million tons achieved in 1951-55 and the estimated 1.6 million
achieved in 1956. See footnote d, below.
d. In 1956 the plan for commissionings was fulfilled by only 30 per-
cent; the shortfall in commissionings amounted to 3.7 million tons
of capacity. 73 Thus it is estimated that commissionings of 5.3
million tons were planned and 1.6 million tons achieved in 1956.
Reportedly, the plan for commissionings during the 7-year period
1950-56 was fulfilled by only 53 percent. Data on actual com-
missionings are available for the 6-year period 1951-56. It is
therefore presumed that the 53-percent fulfillment of the plan.for-
the 7-year period 1950-56 can reasonably be applied to the 6-year -
period 1951-56 without significantly distorting the actual, but un
known, fulfillment. In other words, the year 1950 can be ignored.
safely. Under this assumption, the commissionings planned during
1951-56 are estimated at about 19 million tons of capacity. The
Fifth Five Year Plan for commissionings therefore can be estimated
at 14 million tons of capacity, which is 2.2 times the commission-
ings achieved under the Fourth Five Year Plan. This figure is at
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Commissioning of Annual Capacity for Cement in the USSR
1946-60
(Continued)
least consonant with what might be expected in view of the plan to
increase the capacity of the cement industry under the Fifth Five
Year Plan to 2.1 times the level of 1950. 75
e. Actual commissionings were 3.6 million tons. The earliest
statement of the plan for 1957 was 5.9 million tons of capacity,
but later announcements indicated plans for 7.2 and 6.9 million
tons. 76 If the latter plans are used, fulfillment in 1957 would
be lowered from the 61 percent given in the table to 50 percent and
52 percent, respectively.
f. As indicated in the text above, the plan was raised later to
10.2 million tons. 77
g. The average yearly commissioning required in the last 3 years
of the Sixth Five Year Plan was determined from the-difference be-
tween the estimated goal of the draft Sixth Five Year Plan and the
sum of commissionings achieved in 1956 and 1957.
h. Annual production capacity in the cement industry was to be in-
creased 40 million tons by the end of the Sixth Five Year Plan. 78
An estimate that at least 84 percent of this planned increase, or
about 34 million tons of capacity, was to be achieved by construct-
ing and commissioning additional facilities is believed to be a con-
servative one. As already indicated, 32 percent of the planned in-
crease in production of cement in 1960 compared with production in
1955 was to be obtained from expansions of existing plants and other
means (excluding new plants completed during 1956-60). 79 It is
estimated that at least one-half of the 32-percent share was planned
to be obtained from expansions of existing cement plants. The 68-
percent share from construction of new cement plants, plus an esti-
mated 16 percent from expansions, gives an estimated total of at -
least 84 percent of the planned increase in production to be ob-
tained from expansions of existing plants and construction of new
plants. In a like manner, it therefore is estimated that at least
84 percent of the increase in capacity planned under the Sixth Five
Year Plan was also expected to be obtained from construction and
commissioning of additions to capacity in the industry during the
period.
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It is not surprising, therefore, that in June 1957 the
construction of new cement plants under the Sixth Five Year Plan
was given considerably lower priority than in the original direc-
tives on the plan. The new direction was revealed in the statement
that the increase of 40 million tons in capacity under the Sixth
Five Year. Plan was to be obtained primarily from intensification
of production, improvement of technological processes, the replace-
ment of old or installation of new equipment, reconstruction of
existing facilities, and also by expanding existing plants.* This
proposed shift in emphasis substantiates the impracticability of
the original decision to obtain about 68 percent of the planned in-
crease in cement production from new cement plants completed during
1956-60.
The failures to commission planned additional capacity in
each of the 3 years 1955, 1956, and 1957 caused much of the under-
fulfillment in production planned for those same years. Because of
the continued failures in construction of new cement plants and a
shift toward relying primarily on development of additional capacity
at established plants, the goal of the draft Sixth Five Year'Plan of
producing 55 million tons of cement in 1960, has been reduced to 52
million tons. Along with this, the number of new plants to be com-
pleted under the, Sixth Five Year Plan has been reduced from the
original 27 to 16. 81
A reduction of about 40 percent in the number of new
plants to be completed, in-conjunction with a mere 5-percent reduc-
tion in the production goal for 1960, implies that little if any re-
duction was made in the original goal for commissioning of capacity
during the period of the Sixth Five Year Plan. It means, rather,
that a large compensatory increase in the volume of additions to
existing plants would seem to be required. In view of the habitually
tardy deliveries of designs and the inadequate capacity of designing
organizations, the required, shifts in plans probably will be costly
in both money and time. The past record of lagging construction at
projects being expanded in the cement industry also raises the ques-
tion of the feasibility of a large compensatory shift into expansion
of facilities.
* There seems to be some indecision about.the planned degree of
shift in. emphasis. It has been stated that the increase in produc-
tion (or capacity) of cement plants. scheduled for 1959-65 should be
obtained as follows: 12.2 percent from modernization of existing
equipment and intensification of production, 28.9 percent from ex-
pansion of established plants, and 58.9 percent from construction
and commissioning of new plants. 80 If such indecision is not re-
solved expeditiously, serious shortfalls in construction for the
cement industry seem inevitable for the 7-year period 1959-65.
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As indicated above, of the presently planned 16 new
plants, only 5.had been completed by the end of 1957, and 3 more
are planned for completion in 1958, leaving 8 for completion in
1959-60. Construction of two of the new plants must be?started
in 1958. If only because of previous lags in construction of new
cement plants, successful completion of all 16 new plants is doubt-
ful. Construction for other branches of heavy industry, however,
also has lagged' seriously behind the goals of the draft Sixth Five
Year Plan. Therefore, the demands on the available construction
resources are still excessive. The cost to the economy of priority
reallocation to the cement industry of those construction resources
which are interchangeable among the different types of construction
for heavy industry must be appraised carefully. The new goal of
producing 52 million tons of cement still depends heavily on the
successful completion of the construction program, and, therefore,
serious doubt exists'that even the revised plans for construction
in the cement industry can be fulfilled. -
B. Precast Reinforced Concrete Components:
By the end of 1957, annual production of precast reinforced
concrete components* in the USSR had been increased to approximately
10 times that of 1950. L2/ 'Much of the impetus for this rapid de-
velopment of the industry was contributed by two decrees on precast
concrete -- one of 26 January 1952 and the other of 19 August 1954.
1. Construction of Productive Facilities and Production,
1955-57.
The decree of 19 August 1954 provided that during 1955
and 1956 construction organizations were to build a total of 402
plants and 200 casting yards** for production of precast concrete.
Capacity to be commissioned was to total 2,844,000 cubic meters (cu m)
of products in 1955 and 4,855,000 cu m in 1956. Capital investment
then planned for the precast concrete industry,. 1.7 billion rubles for
1955 and about 2.2 billion rubles for 1956, L3/ indicates the high
priority awarded by the decree to development of the industry.-**-x-
* The abbreviated term precast concrete will be used in this report..
** Enterprises for producing precast concrete'are of two general
types: (1) the usual type of plant br shop built for year-round
operation and (2) the casting or open-yard-type, which is erected with.
relative ease compared with the plant type.
*** These data on investment are not in prices of 1 July 1955. A
rough comparison with' capital-investnient of approximately 1 billion
rubles made in the cement industry during 1956 shows planned invest-
ment in the precast concrete industry to be considerably greater.
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The decree of 1954 also was pointed toward eliminating
consistent failures in meeting plans for constructing new plants
which had been occurring in spite of the earlier decree of 1952.
Lags in construction persisted through-1955-56, and, as a result,
the plan for commissioning capacity for production of precast con-
crete was fulfilled by only 59 percent over the 7 years 1950-56.
Performance in construction during 1957 improved little. L4/
Construction organizations failed to fulfill plans
for commissioning enterprises for producing precast concrete during
1955-56. The pattern of achievements and failures is summarized in
Table 2.*
Although the goal set by the decree of 1954 on
planned commissioning of capacity during 1955 was slightly exceeded,
the revised plan for 1955 was fulfilled by only 72 percent. Delays
and lags in construction were encountered throughout the year. For
example, 81 of the plants to be commissioned in 1955 had not even
been put under construction by 1 May 1955. Of the group of plants
under construction which were to be commissioned in 1955, 32 were
less than 25 percent complete. 85 The plan for commissioning capac-
ity in the first half of 1955, therefore, was fulfilled.by only 85
percent. L6/
By the end of 1955, only 97 of the 193 plants planned
for commissioning during the year had been constructed and put into
operation. Failure to commission the other 96 plants resulted in a
shortfall of 1.6 million cu m of capacity. L7/ construction of the
more easily erected casting yards, however, had been accelerated dur-
ing 1955 in order to speed up the commissioning of productive facili-
ties. A total of 367 yards was completed during the year, in con-
trast with the 200 yards projected for 1955-56 in the decree of
1954. ?/ Because commissioning of casting yards exceeded the plan,
total capacity commissioned during 1955 was only 1.1 million cu m
short of the plan (as indicated in Table 2).
During 1956, even more serious lags.in construction,
and erection of enterprises for producing precast concrete occurred.
The half-year plan for commiAnss/ioning additional capacities was ful-
filled by only 59 percent. / The plan for the year as a whole was
only 22 percent fulfilled after 9 months, 20Y so that by the end of
the year little more than half of the final plan for commissionings
had been achieved.
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Commissioning of Capacity for Production
of Precast Reinforced Concrete Components
in the USSR
1955-56
Plan
Actual
Shortfall
Fulfillment
Years
Statement of Plan
(Million Cubic Meters)
of Plan
(Percent)
1955
Decree of 1954 1954 c/
2.8
2.9
102
Revision J
4.0
2.9
1.1
72
1956
Decree of 1954
4.9
4.1
0.8
84
Revision (1)
5.1 e/
4.1
1.0
8o
Revision (2).f/
7.6
4.1
3.5
54
1955-56
Decree of 1954
7.7
7.0
0.7
91
Revision (1)
8.3 J
7.0
1.3
84
Revision (2)
9.1 h
7.0
2.1
77
Revision (3)
11.6 1
7.0
4.6
6o
a. The data as presented in this table have been rounded to the
nearest hundred thousand cubic meters. The original data from the
source, where available, have been presented in the unrounded form in
the explanatory footnotes. All percentages have been computed from
the unrounded data.
b. Numerous upward revisions in the construction plans for the given
years were made after the decree of 1954. The known revisions for the
years 1955 and 1956 are stated chronologically in the table.
c. The data from the decree of 1954 on plans for 1955, 1956, and
1955-56 are from source .9-1/.
d. Production capacity of 2,911,000 cu m was commissioned in 1955.
The plan was fulfilled by only 72 percent, however, and the total
shortfall amounted to 1.1 million cu m of capacity. 92 The revised
plan for 1955, therefore, was about 4.0 million cu in.
e. 93
f. In 1956, production capacity of 4,094,000 cu m was commissioned,
but 3.5 million cu m of capacity was not commissioned in spite of
the plan. 94 The latest plan available for 1956, therefore, called
for commissionings totaling 7.6 million cu m of capacity.
g. This goal was revealed on 19 August 1955, the anniversary of the
decree of 1954. 9
h. Computed as the sum of the revised plan for 1955 and Revision (1)
for 1956. In view of the 8.3 million cu m planned earlier for 1955-56
-26-
FOR: OFFICIAL USE ONLY
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Commissioning of Capacity for Production
of Precast Reinforced Concrete Components
in the USSR
1955-56
(Continued)
(see footnote f, above), probably little or no double counting is in-
volved: that is, the 5.1 million cu m planned under Revision (1) for
1956 was formulated independently of the shortfall of 1.1 million cu m
in 1955?
i. Computed as the sum of the revised plan'for 1955 and Revision (2)
for 1956. If double counting is entailed, it would be at most 1.1 mil-
lion cu m (see footnote g, above); the sum of the capacity to be com-
missioned under.the plans for 1955 and 1956 would still be at least
10.5 million cu m.
Although the plan for 1957 called for expediting com-
pletion of precast concrete enterprises, plans for capital investment
and commissioning of additional capacity again were not met. Accord-
ing to preliminary. data, the commissioning of additional capacity was
not less than 2.5 million cu m. 26 This amount is considerably less
than the capacity commissioned in 1956 and probably somewhat less than _
that commissioned in 1955 (see Table 2).
The goals for production of precast concrete set
forth in the 1954 decree were exceeded in each of the years 1954-57,
inclusive, 97 but the .revised production goals were not.
Failure to fulfill the revised plan for commission-
ing capacity in 1955 did not handicap production significantly dur-
ing 1955. The revised plans for production in,1956 and 1957, however,
were considerably underfulfilled. The two latest revisions to. the
plans for production of precast concrete in 1956 and 1957 and their
respective fulfillment were as follows:
* Much of the favorable performance, especially in the earlier
years, is explained by two factors other than accelerated construc-
tion of additional capacity: (1) the definition of precast concrete
was broadened after the decree of 1954 and (2) the planned assort-
ments of components were ignored in favor of components of greater
gross volume.
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Production in 1956
Million Cubic Meters
Plans for 1956 Production Shortfall
Stated in 1955: 9.0 98 8.4 99 0.6
Stated in 1956: 9.8 100 8.4 1.4
Plans for 1957 Production Shortfall
Stated in 1955: 13.8 101 12.8* 1.0
Stated in 1957: 13.9 103 12.8 1.1
Many, if not all, of the shortages in production-in 1956 and 1957
could have been prevented had construction organizations commissioned
the additional capacity planned during 1955-57. 104 (See Table 2**
for.the shortfalls in commissionings during 1955-5 )
The persistent violations of ,schedules for construction
of enterprises for producing precast concrete and the problems in
overcoming them have been similar to those in construction of cement
plants. Delays and lags in construction of enterprises for producing
precast concrete, especially plants, are well documented through 1957.
Moreover, indications are strong that such difficulties will continue
through 1958. 105
Financial allocations for construction have been insuf-
ficient to insure fulfillment of plans for construction and commission-
ing of additions to capacity. -Part of this is attributable to the
frequent disparity between construction plans and allocations as such
and part to the fact that costs of constructing enterprises for pro-
ducing precast concrete have considerably exceeded initial estimates.
Thus initial estimate costs frequently are revised upward, and actual
costs frequently exceed the revised estimates. 106
* Estimated from the announced increase of 52 percent in 1957 com-
pared with 1956. 102/
** P. 26, above.
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Late deliveries of designs and specifications to construc-
tion organizations, errors in the designs delivered, late confirmation
of the lists of projects to be built in a given year, all these have
hampered construction organizations in their work. 107 .On the other
hand, construction organizations commission many enterprises even
though construction-installation work is not completed. 108
Incomplete deliveries of equipment to construction sites
of enterprises for producing precast concrete have been one of the
greatest handicaps to completion of construction as.scheculed. In
the first half of 1956, for example, only 2,709 of the 4,170-units
of equipment scheduled for delivery were delivered. -In the midst of
such shortages, appreciable amounts of equipment have been delivered
to particular construction sites only to remain unused for periods
of a year or more because of lags-in construction of the given pro-
jects. 109 -
Construction and commissioning of enterprises for produc-
ing prestressed concrete apparently lagged tremendously behind rates
planned during 1955-57.* Although construction organizations have
been at fault for some of this lag,'the greater part has resulted
from highly inadequate deliveries to construction organizations of
the production equipment required for installation in plants and
casting yards. 111 There is some indication, however, that de-
liveries of prestressing equipment may have improved considerably
during 1957. 112
3. Prospects for 1960. .
The draft Sixth Five Year Plan stipulated that production
of precast concrete components would be increased to 28 million cu m
in 196O,.of which 7 million cu m would be in the form of prestressed
concrete components. Although the production goals for 1960 for some
other building materials have been revised downward, the goals for
precast and prestressed concrete have not been changed. !L V.
The capacity of the precast concrete industry, planned
and achieved in selected years, was as follows:
* Less than 20 percent of production planned for 1956 and'about
25 percent of production planned for 1957 were fulfilled. 110
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Capacity
(Million Cubic Meters)
1955 4.3-
1957 15.5 115 12.5
1958 17 11 N.A.
Failure to achieve the commissioning of capacity planned during
1955-57 left the industry with less capacity than planned at the
beginning of 1957 and probably also at the beginning of 1958.
Fulfillment of the plan to produce 16.9 million cu m of precast
concrete in 1958, therefore, will require at the very least that
commissionings planned, but not achieved, in 1957 be achieved early
in 1958. 117
In conjunction with the capacity of 12.5 million cu m
of precast concrete achieved by 1 January 1957, it was stated that
new capacity of 21 million cu m must be constructed and commissioned
during the 4 years 1957-60. 118 Little more than 2.5 million cu m
was commissioned during 1957, 119 however, leaving an average annual
requirement of approximately 6million cu m to be completed in 1958-60.
Although the construction program may be.overplanned to permit some
shortfall without jeopardizing the goal for production in 1960, the
amount of overplanning does not appear to be large enough to provide
a buffer to shortfalls in construction (especially if the trend con-
tinues toward production in greater compliance with the planned
assortment of components).* Fulfillment of commissioning of the
capacity planned in the remaining 3 years of the Sixth Five Year Plan,
therefore, is a necessary condition for fulfillment of the goal for
production in 1960.
In 1955 the cost of constructing enterprises for produc-
ing precast concrete was already considerably higher than anticipated.
Two factors contributing to even higher cost per ton of additional
capacity are (a) a trend, since the beginning of 1956, of emphasizing
construction of precast concrete plants as opposed to casting yards 120
* With a capacity of 12.5 million cu m on 1 January 1957 and the com-
missioning of 21 million cu m in addition during 1957-60, capacity
would total 33.5 million cu m by the end of 1960. (Increases in capac-
ity during 1957-60 other than by commissioning are not expected to be
significant.) In comparing the production goal of 28 million cu m
with the capacity commissioned, however, production capacity effec-
tive for 1960 must be prorated from.the capacity commissioned by the
end of 1960.
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and (b) the need for accelerating construction (beyond rates pre-
viously planned) in the remaining 3 years to compensate for short-
falls in 1956-57. Attainment of the goal for 1960 for production
of precast components, therefore, would seem to require accelerated
completion of a large construction program in the remaining 3 years,
1958-60. Such a program could be carried out only at a total cost
much greater than estimated in the draft Sixth Five Year Plan, en-
tailing additional demands for construction resources already in
short supply in making up for shortfalls in construction in other
sectors.*
Data on construction of enterprises in the USSR for produc-
tion of other important building materials is meager compared with -
that available on cement and precast concrete components. Enough
is available, however, to suggest the persistence of many failures
in construction similar in kind, and at times in scale, to those in
construction for the cement and precast concrete industries. In
spite of a chronic shortage of lumber, for example, construction of
sawmills has been dragged out for 3 to 7 years instead of being com-
pleted in the planned 1 to 3 years. 121 Completion of productive
facilities for the construction materials industry in general has
lagged behind plans during 1955-57.** 122 Although the effect on
production of other construction materials has been less immediate
than in cement and precast concrete, continuation of such lags can-
not fail to affect production.
The goals for production of cement and soft roofing in 1960
have been revised downward by 5 and 16 percent, respectively, from
the goals stipulated in the draft Sixth Five Year Plan, whereas the
goals for window glass, asbestos-cement shingles, and bricks have
been raised by 6 to 9 percent. 123 As detailed above, evidence is
voluminous that persistent shortfalls in construction and commission-
ing of additional productive facilities in cement entailed a reduc-
tion in the goal for production of cement in 1960. Requirements for
soft roofing obviously have not fallen below the level indicated by
the production goal for 1960 of the draft Sixth Five Year Plan. 124
Reduction of the original goal for 1960, therefore, suggests that
* Practically no chance remains of attaining the goals for either
construction or production in the prestressed concrete industry for
1960, except at a cost very much greater than justified by economies
which would be effected by the use of prestressed concrete.
** Specific lags have been indicated in construction of enterprises
producing lumber, brick, tile, asbestos-cement shingles, building
blocks, and rock products.
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serious shortfalls also have occurred in construction of productive
facilities in soft roofing. The presumption is strengthened by the
directives of the draft Sixth Five Year Plan, which had provided that
73 percent of the planned increase in production of soft roofing was
to be obtained from additional facilities commissioned during 1956-60.
In respect to revisions of the original goals for production of con-
struction materials in 1960, the draft plan had provided that approxi-
mately 70 percent of the increases planned in the production of both
cement and soft roofing were to be obtained from construction of
additional facilities, whereas construction had been assigned a con-
siderably smaller role in assuring the planned increases in produc-
tion of asbestos-cement shingles and window glass.
Although the most glaring failures to achieve planned con-
struction and commissioning of productive facilities have occurred
in the cement and precast concrete industries, the situation in the
construction materials industry in general is scarcely favorable.
At the very least, the situation is such as to preclude significant
shifts of the allotted construction resources within the industry
itself without concomitant sacrifices of practically equal scale in
those branches of the industry from which the shifts are made.
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The ferrous metallurgical industry of the USSR is one of the
high-priority branches of the economy, the rapid development of
which has been a clear and consistent aim of the Party and the
government. Approximately 8 percent of the total volume of state
capital investment was directed into the ferrous metallurgical in-
dustry during the period of the Fourth Five Year Plan (1946-50),
about 6 percent during the period of the Fifth Five Year Plan
(1951-55), and an estimated 7 percent under the draft Sixth Five
Year Plan (1956-60).
Within the industrial sector,. according to the draft Sixth Five
Year Plan, an estimated 12 percent of state capital investment in-
industry was planned to be allocated to ferrous metallurgy. More-
over, of the more than-400 billion rubles which were to be directed
into investment in given.heavy industries -- that is, in electric
power stations and. in the ferrous and nonferrous metallurgical,
chemical, petroleum,. coal, timber, and construction materials in-
dustries -- an estimated 18 percent was to be allocated to ferrous
metallurgy.*
The role of construction in the ferrous metallurgical industry-
during 1956-60 is a considerable one.. As outlined by the-draft Sixth
Five Year Plan, 65 percent, or 12.8 million.tons, of the planned
-increase in production of pig iron; 53 percent, or 12.2 million tons,
of the planned increase in production of steel; and 60 percent, or
10.4 million tons, of the planned increase in production of rolled
metals were to be obtained from additional productive facilities
commissioned during the period. 126 To these ends., new production
capacity was to be constructed and commissioned, amounting to 16.8
million tons of new capacity for pig iron, 15.8 million tons. of new
capacity for steel, and 16.3 million tons of new capacity for rolled,;
metals. 127 Thus the planned increases in. capacity are greater than
the contributions. to production which are required from the newly
commissioned facilities in order to meet the.production goals of. the
Sixth Five Year Plan.** The apparent excess capacity could thereby
provide a buffer between underfulfillment of the. construction pro-
grams and fulfillment of the production goals for. given products.
* The above estimates-were computed from data given.in the tabula-
tionon p.. 34, below; and source 125 .
** The excess capacity so derived, however, must be..discounted.to
some extent to reflect the fact that the goals for commissioning of
capacity are for the end of 1960, and thus would not. be effective_
capacity on.1 January 1960.
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The real extent of any built-in buffers is questionable. At the
Twentieth Party Congress, A.G. Sheremetyev, then Minister of Ferrous
Metallurgy, warned that the projects planned for commissioning dur-
ing the Sixth Five Year Plan should be completed on schedule if the
goals for production in ferrous metallurgy were to be met. He indi-
cated more specifically that even if the huge construction program
planned for facilities to mine and process iron ore were fulfilled,
there would be no reserve capacity in 1960. The fact is that through-
out the years since the end of World War II the weakest spot in fer-
rous metallurgy has been and remains capital construction.* 1L8/ The
volumes of state capital investment and construction-installation
work performed for the ferrous metallurgical industry** during the
periods of the Fourth and Fifth Five Year Plans and the draft Sixth
Five Year Plan (in prices of 1 July 1955) are estimated as follows***:
Fourth
Five Year Plan
Fifth
Five Year Plan
Draft Sixth
Five Year Plan
(1946-50)
(1951-55)
(1956-6o)
Capital investment (billion rubles)
24
36
Construction-Installation work (billion
rubles)
18
26
Share of construction-installation in
capital investment (percent)
76
73
Fulfillment of capital investment plan
(percent)
UnderflAfllled
82
Fulfillment of construction-installation plan
(percent) , -
Underfu2.fllled
80w* ?
* Capital construction, the more descriptive term, is the same as
capital investment.
** See the footnote on p. 11, above.
*** Capital investment during the period of the Fourth and Fifth
Five Year Plans was derived from the volume of state 'investment dur-
ing 1956 12 and an index of investment, presumably'in prices.of
1 July 1955, given in source 130 . Percentage shares of construction-
installation during the Fourth and Fifth Five Year Plans were stated
in source 131 . The volume of capital investment in ferrous metallurgy
under the Sixth Five Year Plan was to be increased by almost 100 per-
cent. 132 The estimated share of construction-installation is an
approximation based on the reported shares during the two previous
plans. The data on fulfillment of plans are from source 133
**** Under the Fifth Five Year Plan the volume of construction-
installation work performed for.the Ministry of Ferrous Metallurgy
by the Ministry for Construction of Metallurgical and Chemical Indus-
try Enterprises was only 77 percent of the plan. 134
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Failure to fulfill plans for capital investment in ferrous metal-
lurgy continued through 1956 and 1957. Although no specific state-
ments have been released, the plan for investment in ferrous metal-
lurgy probably was considerably underfulfilled in 1956.* The national
economic plan for 1957, generally geared toward moderation and re-
trenchment of rates of growth, called for the volume of state capital.
investment to be increased by 9 percent in the economy as a whole,
but investment in the ferrous metallurgical industry was to'be in-
creased by 20 percent. Later in 1957 the investment plan for the
ferrous metallurgical industry was revised to an increase of 30 per-
cent above that for 1956. Neither of these goals was achieved. In
fact, the actual increase certainly was less than 6 percent.**
The initial national economic plan for 1958 provided for capital
investment in the ferrous metallurgical industry to be increased
37.5 percent, in contrast with the 7.5 percent increase planned for
the economy as a whole. 137 Other plans for construction in fer-
rous metallurgy during 1958-59 have been stated specifically, giving
some indication of the magnitude of development planned for later
years. The effect of previous persistent failures to achieve planned
capital investment and of other problems in construction for ferrous
metallurgy are examined in physical terms for the separate branches
of ferrous metallurgy in the following sections.
A. Iron Ore.***
1. Construction Under the Fifth Five Year Plan (1951-55).
Development of the iron ore industry of the USSR during
1951-55 was provided almost solely from building up capacity at
* The inadequacies of construction iii ferrous metallurgy during
1956-were criticized severely in the report on the national economic
plan for 1957. Moreover, the volume of capital investment in ferrous
metallurgy showed little, if any, increase above the volume performed
during 1955. 13
** A total of 8.3 billion rubles was invested in 1956, and an in-
vestment of 8.8 billion rubles in 1957 was anticipated in the state-
ment of the plan for 1958. These data, although in prices of 1 July
1955, are not strictly comparable. The figure for 1957 is in the new
regional unit valuations, so that the comparative increase is some-
what overstated. It might also be noted that the report on plan'ful-
fillment during 1957 indicated that capital investment in metallurgy
as a whole was increased by 9 percent. 136
*** In addition to construction of nonproductive facilities such as
housing, the role of construction in developing facilities for mining
and processing iron ore concerns chiefly the building of productive
facilities for (1) the mining of crude [footnote continued on p. 367
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established ore-mining enterprises. Four Lew mining enterprises were
constructed during the period, as follows:
a. The iron ore mine imeni Gubkin of the Kursk
Magnetic Anomaly (KMA), commissioned at the end of 1952, which has
a capacity of 0.5 million tons of raw iron ore per year and has
magnetic-concentrating and agglomerating plants;
b. The Dashkesan iron ore mine in Azerbaydzhan SSR,
commissioned at the end of 1954, which has a capacity of 1.2 million
tons of raw iron ore per year and has a magnetic-concentrating plant;
c. The Olenegorsk iron ore mine in Murmansk Oblast,
put into operation in 1955, which has a capacity of 2.7 million tons
of raw iron ore per year and has a magnetic-gravitational concentrating
plant; and
d. The Southern Ore-Concentrating Combine in the
Krivoy Rog Basin, commissioned in 1955, which has a capacity of 9
million tons of ferrous quartzites per year and has magnetic-
concentrating and agglomerating plants. 138
At these four new enterprises a total capacity for 13.4 million tons
of raw iron ore was commissioned under the Fifth Five Year Plan.
The total picture, however, is much less favorable. Under
both the Fourth and the Fifth Five Year Plans the goals for commission-
ing ore-mining and agglomerating facilities were not met. The Fourth
Five Year Plan for commissioning of capacity in the extraction of iron
ore was fulfilled by only 64.2 percent. Under the Fifth Five Year
Plan, only 60.4 percent of the plan for commissionings was achieved. 139
Capacity for mining 41.2 million tons of raw iron ore was commissioned
during 1951-55, although the plan had called for 67 million to
68 million tons; therefore, the shortfall in commissionings amounted
to about 26 million tons. 141
2. Draft Sixth Five Year Plan (1956-60).
In contrast with the period of the Fifth Five Year Plan,
the further development of the iron ore industry under the draft
iron ore, (2) the separation or concentration of crude ore into an ore
concentrate of higher ferrous content, and (3) the agglomeration of
the finely ground concentrate into larger sizes more suitable for use
in blast furnaces.
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Sixth Five Year Plan was to be attained chiefly from new deposits put
into operation during 1956-60. The timely construction and completion
of ore-concentrating facilities is also an important factor in the
Sixth Five Year Plan because the new deposits generally contain poor
iron ores and ferrous quartzites. Soviet authorities anticipated that
in 1960 it would be necessary to mine 167 million tons of raw iron ore
in order to obtain 119.6 million tons of usable ore, a ratio of 1.4
to 1 compared with the ratio of 1.2 to 1 in 1955. 142
Capital investment to be made in the iron ore industry
during 1956-60 was to provide for construction and commissioning of
new productive capacity amounting to 84 million tons of raw iron ore
per year, an increase of about 104 percent above the capacity com-
missioned during 1951-55. (Commissioning of ore-concentrating capac-
ity apparently also is to be increased by more than 100 percent.) it
has been stated that even if this goal is met, the iron ore economy
would have no reserve capacity in 1960.* The importance of meeting
this goal can be seen also in that an estimated 60 percent of the
planned increase in production of usable ore in 1960 above that in
1955 is to be obtained from new deposits and new sections of estab-
lished deposits which are put into operation during 1956-60.**
* In his speech to the Twentieth Party Congress, Sheremetyev stated
that new mining capacity of 91 million tons of iron ore would be com-
missioned during 1956-60 (and that even with such new capacity the
iron ore economy would not have reserves in 1960). The directives on
the Sixth Five Year Plan, however, set a goal of only 84 million tons.
In Zhelezorudnaya baza chernoy metallurgic SSSR (The Iron Ore Base of
Ferrous Metallurgy in the USSR), published in mid-1957, the goal of
84 million tons is stated in conjunction with the other goals for con-
struction in ferrous metallurgy, goals identical with those given in
the draft Sixth Five Year Plan. Nevertheless, it is also stated in
Zhelezorudnaya baza chernoy metallurgic SSSR that the plan worked out
by the Ministry of Ferrous Metallurgy, USSR, for the Sixth Five Year
Plan called for commissioning of capacity to mine 119.4 million tons
of raw iron ore, an increase of 190 percent above the capacity com-
missioned during 1951-55. 143/ A clear explanation for the various
goals is not available. It is possible, however, that the higher goals
represent investment programs which were sought by the Ministry of Fer-
rous Metallurgy in order to support the production goals in ferrous
metallurgy, investment programs considerably higher than that finally
approved for the Sixth Five Year Plan. (It is also possible, as ex-
plained in the footnote on p. 38, below, that the 91 million tons is
simply an error.)
** This was derived from data on the relative shares of old and new
deposits in the output of usable ore in 1955 and planned for 1960.
The data on usable ore is employed in the absence of relevant data on
raw ore.
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Capital investments in the iron ore industry were planned
at 20 billion rubles for 1956-60, more than 180 percent greater than
the volume performed during 1951-55. Investment in the iron ore in-
dustry is estimated to have comprised 20 percent of capital invest-
ment in the ferrous metallurgical industry under the Fifth Five Year
Plan and is to be nearly 30 percent under the Sixth Five Year Plan.
This increase is a corollary of planning a greater increase in in-
vestment in iron ore mining than in ferrous metallurgy as a whole,
but it also reflects the greater costs per ton of additional iron ore
capacity under the Sixth Five Year Plan compared with that experi-
enced under the Fifth Five Year Plan. The investment costs per ton
of additional capacity for raw iron ore under the Sixth Five Year
Plan will be 30 to 40 percent higher than during 1951-55.* The
higher costs, in turn, are connected with the need for greater em-
phasis on new construction in ore mining than under the Fifth Five
Year Plan.
* Sheremetyev reported to the Twentieth Party Congress that capital
investments in ore mining were 7 billion rubles in 1951-55 and were
planned to be 20 billion rubles in 1956-60. In Zhelezorudnaya baza
cherno metallurgic SSSR (The Iron Ore Base of Ferrous Metallurgy in
the USSR it was reported that investments in ore mining were 8.3
billion rubles in 1951-55 and were planned to be 23.4 billion in
1956-60 (in prices of 1 July 1950). !4L5/ So far as is known, in-
vestment data given at the Twentieth Party Congress were reported in
prices of 1 July 1955. Thus the data on investments in iron ore
mining during 1951-55 indicate that investments (in iron ore mining)
may be converted from prices of 1 July 1950 to 1 July 1955 with the _
use of a reduction coefficient of 0.84. In respect to the Sixth Five
Year Plan, Sheremetyev had spoken of planned commissionings of raw
iron ore capacity totaling 91 million tons, whereas Zhelezorudnaya
baza chernoy metallurgic SSSR referred to a goal of mi$s.
Several factors impart a strong suspicion that the statement of 91
million tons may be in error. Conversion of the investment goal of
23.4 billion rubles (in prices of 1 July 1950) to prices of 1 July 1955
yields an estimated planned investment of about 20 billion rubles for
the-Sixth Five Year Plan -- identical with that stated by Sheremetyev.
Moreover, the investment data from both sources yield practically
identical increases planned for 1956-60 compared with 1951-55 (that
is, increases of 182 and 186 percent). Because Zhelezorudnaya baia
chernoy metallurgic SSSR is the more reliable source and does not
state a planned goal of 91 million tons, it may well be that the goal
of 91 million tons, as stated by Sheremetyev, is simply an error.
With reference to the increasing costs per ton of additional capacity
for raw iron ore, the investment data in Zhelezorudnaya baza chernoy
metallurgic SSSR indicates an increase of 0 percent under the Sixth
Five Year Plan, whereas the data Cootnote continued on p. 397
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Thus the draft plan for 1956-60 provided for construction
and commissioning of new, large-scale iron ore deposits as follows:
a. Novo-Krivoy Rog, Skelevatsk (northern part) and
other deposits of ferrous quartzites in the
Krivoy Rog Basin -- to supply concentrates of
iron ore to metallurgical plants of the south-
ern USSR;
b. Sokolovsk-Sarbay in Kustanay Oblast -- for the
Chelyabinsk plant and the Magnitogorsk
Metallurgical-Combine;
c. Karadzhal'sk (Atasu) in Karaganda Oblast for the Karaganda plant;
d., Abakan and Teysk in Siberia -- for the
Kuznetsk Metallurgical Combine;
e. Lebedinsk and Yuzhno-Korobkovsk (in the KMA)
in?Belgorod Oblast --..for the Novo-Lipetsk
plant;
f. Akkermanovsk -- for the Orsk-Khalilovo
Combine;
g. Yensk-Kovdorsk in Murmansk Oblast -- for the
.Cherepovets plant;
h. Kachkanar in Sverdlovsk Oblast -- for the
Novo-Tagil plant; -
i. Korshunovsk in Siberia -- for the West.
Siberian plant; and
J. E1'tigen-Ortel'sk on the Kerch' peninsula --
for the Azovstal' plant.
reported by Sheremetyev (if the statement of planned commissionings
amounting to.91 million tons is used) indicates an, increase of 30.per-
cent.
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According to the draft Sixth Five Year Plan, production
of usable ore in 1960 was to be approximately 48 million tons greater
than in 1955, and about 29 million tons, or 60 percent, of this in-
crease was to be obtained from new deposits and new sections of
established deposits to be commissioned during 1956-60. Nearly 25
million tons of the 29 million tons were to be produced in 1960 at
new ore-mining enterprises, as follows:
Krivoy Rog
9.6
Sokolovsk-Sarbay Ore-Concentrating
Combine
5.6
Atasu
2.4
Kuznetsk Metallurgical-Combine
2.4
Combines of the KMA
2.1
Orsk-Khalilovo Combine
1.6
Kovdorsk -
1.0
Of the above-mentioned enterprises,-particular priority was to be
given to construction and commissioning of the Sokolovsk-Sarbay,
Kachkanar, Abakan, and Teysk deposits in the east; the Yensk-
Kovdorsk deposit in the northwest; the Lebedinsk deposit in the
Moscow area; and the Novo-Krivoy Rog deposits in the Krivoy Rog
3. Plans, Achievements, and Failures, 1956-58.
.a. 1956.
The serious lags in construction of enterprises for
mining iron ore experienced under the Fourth and the Fifth Five Year
Plans persisted through 1956. The plan for commissioning new capac-
ity for the extraction of iron ore was not fulfilled in the first
half of 1956, and by the end of that year the plan had been fulfilled
by only 50 to 52 percent. Of 17 new mines and quarries which were to
have been commissioned, only 2 were actually put into operation. In
the very important Krivoy Rog Basin, 6 new iron ore mines were to have
been completed in 1956, but only 1 was realized. As a result, the
plan for commissionings during that year was fulfilled by 46.5 per-
cent. 147
- Construction of ore-concentrating facilities con-
tinued to lag in 1956. The Southern Ore-Concentrating Combine, with
an annual capacity of 5.2 million tons of fluxed agglomerates
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(presently the largest in the country), was to have been completed
in its entirety in the fourth quarter of 1955. Its final section,
however, was not put into operation until mid-1957. 148 Construction
plans for the Sokolovsk-Sarbay Ore-Concentrating Combine, the largest
mining construction site in the USSR, received priority in 1956 be-
cause the Combine was to yield more than a million tons of raw iron
ore in 1957. Nevertheless, the year's building program for the Com-
bine had been less than half completed by the end of November 1956.
The Sokolov Ore Construction Trust completed only 123 million rubles'
worth of,construction-installation work in 1956, or 61 percent of
its plan. I4Lqj In 1956, construction of the Kachkanar Ore-Concen-
trating Combine (next largest to the Sokolovsk-Sarbay) was in the
first stages of construction only, and yet the work was lagging. 150
Other reports indicate that construction lagged also at lesser ore-
concentrating facilities. 1 1
Similarly, construction organizations performed very
poorly in the construction and completion of sintering lines.* The.
draft Sixth Five Year Plan had provided that 58 new sintering lines
would be constructed and put into operation, whereas 39 lines were
completed during 1951-55. In 1956, even though the plan called for
commissioning 10 lines (presumably in the Ukrainian SSR), only 1 was
put into operation. 152/
In an attempt to make up for some of the lag in com-
pleting facilities to mine and process iron ore, the plan for 1957,
called for commissioning new capacity of more than 20 million tons
of iron ore. The first and second units of the Abakan mine with a
total capacity of 1.6 million tons of iron ore per year were to be
completed, as were mines in the Krivoy Rog Basin with a total capac-
ity of 1.65 million tons. Mines at Atasu, Lebyazhinsk, Goroblagodatsk,
and other locations also were to be completed, along with the crushing
and sorting mill at the Sokolov Mine and the Southern Ore-Concen-
trating Combine. A considerable volume of work was to be performed
at the Sokolovsk-Sarbay Ore-Concentrating Combine, among others.
Moreover, work was to be started on the Novo-Krivoy Rog and the
Central Ore-Concentrating Combines and on construction projects at
the Belgorod deposits of the Kursk Magnetic Anomaly (KMA). 153
By the end of the first 5 months, it was clear that
construction at a number of sites (including mining projects) was
not progressing at rates which would insure the goals planned for
1957. Thus it was stipulated that capital investment in ferrous
* Sintering is one of the methods by which ore concentrates are ag-
glomerated.
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metallurgy would be increased 800 million rubles more than was
planned earlier, of which about 190 million rubles, or 24 percent,
were to be allocated to the iron ore industry. Of the 190 million
rubles, 20 million were allocated to the Sokolovsk-Sarbay Ore-Con-
centrating Combine, 30 million to the Kachkanar site, 10 million to
the Teysk site, 7 million to the Abakan site, and 5 million to the
Lebedinsk ore mines. 154 Because of the generally more extensive
lags in construction of iron ore facilities, compared with lags in
other branches of ferrous metallurgy, the direction of only 24 per-
cent of the increased allocations into iron ore facilities seems at
odds with the clear need to accelerate more than proportionally the
buildup of the iron ore base. (As indicated above, investment in
ore mining enterprises was estimated to be 20 percent of investment
in ferrous metallurgy during 1951-55 and was planned to be nearly
30 percent under the Sixth Five Year Plan.)
By the end of 1957, 8 iron ore mines and quarries and
7 sintering plants had been commissioned in the Ukrainian SSR. The
Southern Ore-Concentrating Combine was completed, and the first ore
had been produced from the Sokolov quarry of the Sokolovsk-Sarbay
Ore-Concentrating Combine. 155 In spite of these achievements,
however, there were significant shortfalls. Construction and com-
missionings lagged throughout the year at such ore-mining sites as
Atasu, Abakan, Teysk, Lebyazhinsk, and ore enterprises in the KMA,
in Gornaya.Shoriya, and in the Tagilo-Kushva area. Although extrac-
tive capacity of 1 million tons of ore was commissioned at the Sokolov
quarry in 1957, only 16.2 million cu m of overburden had been stripped
by the beginning of 1958 instead of the 26 million cu m planned, and
stripping operations at the Sarbay quarry were barely started. 1 6
The plan for commissioning new capacity for the ex-
traction of iron ore was not fulfilled in the first half of 1957, end
again for the year as a whole, notwithstanding the revised plan for
investment. In the Krivoy Rog Basin, for example, the plan for com-
missionings was fulfilled by 69.5 percent. 157/ Capacity for mining
approximately 14 million tons of iron ore per year was commissioned
in 1957 in the USSR as a whole, or an estimated 70 percent of the plan.*
* At the end of 1957, builders of mining enterprises were assigned
the task of?commissioning new capacity for mining 10,140,000 tons of
raw iron ore in 1958. Because a number of projects were not com-
missioned according to plan in 1957, the plan for 1958 was raised to
16,120,000 tons. 158 Estimates are that commissionings in 1957 fell
6 million tons short of plan.
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The initial plan for 1958 provided that capital in-
vestment in the iron ore industry of the USSR was to be increased
734 percent above that of 1957, a figure considerably greater than
the planned increase of 37.5 percent-in the ferrous metallurgical
industry as a whole. For the RSFSR, the plan called for a 64-percent
increase in capital investment in the iron ore'industry compared with
a 36-percent increase planned for the ferrous metallurgical industry.
Development of facilities to produce iron ore was to be accelerated
in the KMA by capital investment nearly 100 percent greater than in
1957.
The special characteristic of the plan for 1958_was
said to have been the increased attention to-the iron ore "indu"stry
and the buildup of the construction carryover (zadel*) which would
permit a sharp increase in capacity in the entire metallurgical cycle
during 1959. Thus the plans for 1958-59 stipulated that new capacity
for about 10 million tons of raw iron ore was to be commissioned dur-
ing 1958 and about 24.7 million tons in 1959, or almost 35 million
tons in the 2 years, 1958-59. Of the new capacity to be commissioned
during 1958, more than 5 million tons were to be in the Ukrainian SSR,
more than 3 million tons in the RSFSR, and approximately-2 million
tons in Kazakh SSR. More than 9 million tons of the planned 10 mil-
lion tons in 1958 were to be commissioned at the following loca-'
tions 160 :
Million Metric Tons
KrivoyRog Basin 2.1**
Kamyshburunsk Combine (in the Crimea) 2.5
Ore mines of the KMA 1.1
Sokolovsk-Sarbay Ore-Concentrating
Combine 1.5
Atasu deposits' 0:4
Ore-mining enterprises of the Kuznetsk
Metallurgical Combine 0.6
Iron ore mines of the Urals 1.0
* The Russian term zadel has two meanings: (1) the accumulation of
materials and equipment as the operative base of a construction or-
ganization and (2) the volume of construction put in place at projects
not yet put into operation (the opposite, therefore, of the volume of
construction remaining to be put in place in order to commission the
project). In this report, the term will be used only in the latter
meaning and is most simply expressed by construction carryover.
** Also reported as 1.2 million tons. 1 1 The 2.1 million tons'
probably is the correct figure in view of the plan for the Ukrainian
SSR as a whole.
-43-
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Progress in construction at some of the above pro-
jects during the first quarter of 1958 is shown in Table 3.* The
monthly plans for construction-installation work during both February
and March were considerably underfulfilled at one-half of the projects
listed and were fulfilled or considerably exceeded at the other half:
In terms of the degree to which the annual plans had been fulfilled
in the first quarter, construction was proceeding satisfactorily at
one-half of the projects, including the three largest listed.
Construction was accelerated at several projects in
the second quarter, and the pattern of progress in construction
through the first 7 months of 1958 is more favorable. The Krivoy
Rog mine, "Kamenistaya," is due to be commissioned several months
ahead of time. The first section of the Chernomorsk iron ore mine
of the Kamyshburunsk Combine, with a capacity of 1.5 million tons,
was commissioned in March. The second section (with a capacity of
1 million tons), however, is proceeding much less satisfactorily.
At the Sokolovsk-Sarbay Ore-Concentrating Combine, construction of
the project which is to be commissioned in 1958 is progressing
satisfactorily, but construction at the combine as a whole is lag-
ging seriously. As of 1 August 1958, construction was still consider-
ably behind schedule at one-half of the projects listed and ahead of
schedule at some of the others. 162
The problems in construction of enterprises in the
iron ore industry during 1958 and following years are even more
burdensome than indicated in the above discussion. The initial plan
for 1958 called for commissioning 10 million tons of capacity for
the extraction of raw iron ore, but the plan was raised later to
16 million tons because of failure to meet planned commissionings
during 1957. This upward revision was explained later in terms of
greater opportunities which were open to construction organizations
because of unfinished construction (construction carryover). 163
The record in construction of iron ore enterprises through 1957 is,
however, a strong denial of the reality of such opportunities.
Builders of iron ore enterprises apparently are still
charged with fulfilling the directives of the draft Sixth Five Year
Plan, with little or no significant changes in the construction pro-
gram as far as the terminal goals for 1960 are concerned. Construc-
tion and commissioning of iron ore mining, concentrating, and ag-
glomerating facilities, however, has been and continues to lag behind
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FOR OFFICIAL USE ONLY
Table 3
Fulfillment of Selected Planned Construction-Installation Work
on Iron Ore Construction Projects to Be Commissioned in the USSR
in 1958W
Fulfillment of Planned Conetnctioa-Inetellation Work
(tereent)
Ks[ Cast
Total btim,te
of of Work
For 1958, from
For 1958, from
Cost of Project D
for 1958
For Feb-
1 January to
For
1 January to
Approxfmnte Planned ante
Mining 'terpriaco
Mullen Rubles
(Million Rubles)
mar, 1958
1 March
lhrch 1958
1 April
of commleelmning
Rokolovak-Sarbay Ore-Concentrating
Combine
116.3
110.1
no.6
19.0
100.0
32.0
4 December
Yumhno-Korobkovak Iron ors mine of
the Kursk MW;netie Anamnly
84.7
39.7
72.5
10.8
103.0
20.5
22 November
Krivoy Rog mine "Kamenisteyn"
24.1
16.0
N.A.
16.1
111.5
19.8
31 December
Krivoy Rog mine "YUrhnaJu"
23.3
11.5
58.0
5.4
82.3
10.4
31 December
Atoms inn ore mine
26.3
10.7
93.0
N.A.
80.0
5.0
1 October
Chernmorek Iron ore also, second
line (of Knmychbunmsk c?Dine)
22.3
8.8
N. A.
N.A.
35.0
2.5
16 December
Molten Inn ore mine (of the Kuxnetek
Metallurgical combine)
31.2
6.0
132.8
23.8
140.0
33.5
31 December
Taahtagul Isk Inn ore mine (of the
Kusnetak Metallurgical combine)
5.8
4.9
48.8
4.0
78.0
13.2
31 December
S ieregeshet iron ors also (of the
Kuznetsk metallurgical Combine)
8.3
2.9
101.5
12.5
54.0
14.7
31 December
9ralymak inn ors alm (of the
Kusnetek Metallurgical Combine)
1.5
o.6
262.5
N.A.
200.0
11.8
31 Decmber
"Third Mngnitka" quarry (everdlovsk
sovnarkhos)
4.5
4.5
88.0
N.A.
100.5
40.0
1 October
All to an from source 1
b. The difference between the total estinete cost of the project and the estinnte met of Work for 1958 1s the plume of Work put in place up to 1 January
1958. The total estimate cost in this table refers only to the total coat of the given project which is to be c?ieeloaed in 1958 rather than to the total
toot of the entire t?plex, such as the entire Sokolovek-DnrDW combine.
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the tempo required to fulfill the goals of the Sixth Five Year
Plan.* 165
In the Krivoy Rog Basin, construction of the Southern
Ore-Concentrating Combine was completed in 1957, and starts were
made on the Novo-Krivoy Rog and Central Ore-Concentrating Combines.
Construction of the Second Southern Combine is to be started in
1958, and three more combines are to be commissioned by 1965. The
entire group of ore-concentrating combines is to have an approxi-
mate capacity of 72 million tons of raw iron ore per year, or more
than 30 million tons of dry concentrates with a ferrous content up
to 62 percent. By the end of the Sixth Five Year Plan, commission-
ings of the first sections at the Novo-Krivoy Rog, Second Southern,
and Central Ore-Concentrating Combines together are to provide a
total annual capacity of 12 million tons of concentrates. The first
section of the Novo-Krivoy Rog Ore-Concentrating Combine must be put
into operation in 1959, yet construction of the principal industrial
projects at the Combine had barely been started as of the beginning
of 1958. First sections of both the Central and Second Southern Ore-
Concentrating Combines are to be put into operation in 1960. (The
estimate cost of both projects, when completed, is more than 1 bil-
lion rubles each.) Construction work at the Central Ore-Concentrating
Combine is lagging seriously behind the tempo required for commission-
ing in 1960, and 1958 will be the first year of work at the Second
Southern Ore-Concentrating Combine.. The past pattern of serious lags
in construction of concentrating facilities in the Krivoy Rog Basin,
therefore, had not been corrected as of early 1958, and urgent
measures are required to accelerate the tempo of construction. Such
measures require greatly increased allocations of construction re-
sources, yet the construction combine of the Basin had less than half
of the resources required for the construction program of 1958. 166
Even if the planned rate of development in the Krivoy Rog
area is achieved, the rapidly increasing requirements of steel mills
in southern USSR will not be met through 1960; therefore, the new
iron ore base in the KMA is to be developed to supplement the Krivoy
Rog base. Although its development is clearly a long-term orientation
of 8 to 10 years, the KMA already is of considerable importance. Con-
struction appears to be proceeding satisfactorily at the new Yuzhno-
Korobkovsk iron ore mine (see Table 3**) which is to be put into opera-
tion in 1958, but conditions are less than satisfactory at other
* The bases for determining lags in construction and commissioning
of enterprises of the iron ore industry at this point in the report
are the construction and production goals through 1960 rather than
those for individual years such as 1957 or 1958.
** P. 45, above.
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mining projects in the KMA. Construction is behind schedule at the
Lebedinsk open-pit iron ore mine, which is to be put into operation
in 1959. The first section of the open-pit mining enterprise at the
Mikhailovka deposit, with an annual capacity of about 2.5 million
tons of iron ore, is to be put into operation in 1960. The project
is a large one, and serious lags in much of the preparatory construc-
tion (including construction of ancillary facilities) are being en-
countered as well as a number of other problems involving subcon-
tractors. Development of the KMA must have received a considerable
setback after a decision was made, apparently in formulating the
revised plan for 1957, to postpone completion of the open-pit mines
in the Kursk and Belgorod areas until after the Sixth Five Year
Plan. The plan for 1958, however, calls for accelerated completions.
Clear warnings have been issued by qualified engineers in the KMA
Iron Ore Construction, Trust and organizations of the KMA Iron Ore
Combine that the construction resources (materials, equipment, and
manpower) commanded by their organizations are inadequate to fulfill
the planned programs of construction in the KMA during 1958-60.
Urgent measures are required to accelerate construction in order to
overcome the lags in development of the KMA. Acceleration of con-
struction requires, in turn, building up the productive bases of the
construction organizations themselves, and this effort requires time
and additional allocations of physical as well as financial re-
sources. 167
In the Urals the considerable lags in construction of ore
mining and concentrating facilities of the Tagilo-Kushva and Bakal'sk
areas presently are holding back the smelting of pig iron at the
Nizhniy Tagil and other metallurgical plants. Acceleration of lagging
mine construction is required also at the Goroblagodatsk, Vysokogorsk,
and Lebyazhinsk iron ore mines. The draft Sixth Five Year Plan
stipulated that the Kachkanarsk Ore-Concentrating Combine, which is
to become the principal source of iron ore for ferrous metallurgy of
the northern Urals, was to be put into operation. Although a minimum
of 4 to 5 years is required to build such a combine, the preparatory
work on it has barely started. Very small financial allocations have
been provided so far, and even these have not been used fully because
the construction organization is still too small. 168
Farther east, construction is lagging seriously on the
Atasu iron ore mine and the Sokolovsk-Sarbay Ore-Concentrating Com-
bine as a whole. Construction of ore mining enterprises in Gornaya
Shoriya and Khakassiya, which are to provide ore for the Kuznetsk
Metallurgical Combine, is behind schedule. The financing of the
Kuznetsk Iron Ore Construction Trust was in complete disorder recently,
and many operations on projects to be commissioned in 1958 were com-
pletely, though temporarily, curtailed. Moreover, the criticism has
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been made that the construction organizations of the mining adminis-
tration of the Kuznetsk Metallurgical Combine, which have a greater
volume of construction work to perform than the Kuznetsk Iron Ore
Construction Trust,. are even less responsive to the urgent need to
accelerate construction. Finally, confusion apparently continues
as to when, where, and what facilities are to be constructed for
mining and concentrating iron ore at Korshunovo, which are to sup-
port the West Siberian metallurgical plant. 169
An analysis of the causes and contributing factors un-
derlying the persistent shortfalls in construction and completion
of iron ore enterprises is essential to assess the prospects for
accelerating development of the iron ore base.. The principal
reason for shortfalls in construction is the inadequate capacity of
construction organizations: that is, the construction materials,
equipment, and manpower at the command of the organizations build-
ing iron ore facilities have been insufficient to insure fulfill-
ment of construction schedules. Thus financial allocations for
given projects often are not fully utilized. Frequently, situations
occur in which construction workers and equipment are in short sup-
ply or are idle because of serious shortages of building materials.
Errors in planning complicate the problems. Decisions
on important projects as to when and where to build, the designs for
the project, and the volume of work to be performed are delayed so
long as to jeopardize the long-term construction schedule of the
project. Allocations of investment, even for the most important
projects to be commissioned within the year, are set too low to per-
mit fulfillment of schedules or are revised upward even though the
organizations concerned do not have the capacity to meet the in-
creased volumes of work. Both Gosplan and the Ministry of Ferrous
Metallurgy have been accused of erroneously limiting capital invest-
ment for a number of years in the development of large iron ore
enterprises in given areas and of dispersing investment resources
elsewhere on construction of small- and medium-size iron ore mines
and concentrating facilities. In the Krivoy Rog area, All-Union and
republic Ministries of Ferrous Metallurgy failed to provide for the
timely construction of ore-concentrating plants in anticipation of
depletion of the rich ores. Plans for such construction were greatly
accelerated after the fact, but the construction organizations in the
area are neither large enough nor numerous enough to cope with the
accelerated program.
Ineffective organization, management, and execution of the
construction effort have been a considerable handicap in many situa-
tions. Construction of many of the ancillary facilities at iron ore
mining enterprises is performed by numerous small construction organi-
zations under the jurisdiction of ministries or administrations other
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than the client or construction ministry. The control exercised by
the general contractor over the entire construction operation also
seems quite inadequate. Decisions on many subprojects are made by
other ministries and administrations, or their confirmations of
decisions are delayed, so that the whole operation is coordinated
ineffectively in respect to meeting the construction schedule of the
major project. Moreover, complaints are made that because the large
construction organizations are not sufficiently specialized in the
construction of iron ore enterprises, they must distribute too much
of their inadequate fund of resources to construction of other enter-
prises and nonproductive facilities. A number of proposals have
been made to concentrate the management of construction of iron ore
enterprises in large specialized construction organizations respon-
sible for building only iron ore enterprises. In the presence of
generally inadequate capacities of construction organizations, how-
ever, such proposals frequently are only paper solutions -- the
specialized organizations are formed, but with highly inadequate
resources in equipment, manpower, materials, and subordinate organi-
zations as, for example, at Krivoy Rog, Kuznetsk, and Sokolovsk-
Sarbay.
Finally, tardy deliveries of designs and specifications
and the inadequate capacity of designing organizations have been
handicaps to meeting construction schedules for ore-mining enter-
prises. 170
The above factors are the principal reasons for the poor
performance in building iron ore enterprises in the years since World
War II. The record to date and plans through 1960 are summarized in
Table 4.* There are numerous indications that the lags in develop-
ment of facilities for mining and processing iron ore have been hold-
ing back the swift building up of capacity and production of pig iron,
steel, and rolled metals. 171 The draft Sixth Five Year Plan had
provided that new capacity in the extraction of raw iron ore totaling
84 million tons was to be constructed and put into operation during
the period. Even this great construction program would not provide
the iron ore economy with reserve capacity in 1960. The impact of
the failure to construct adequate facilities for mining and process-
ing iron ore under the Fifth Five Year Plan will still be felt by the
end of 1960. It is estimated that about 60 percent of the planned in-
crease in production of usable ore for 1960 above that of 1955 was to
be obtained from new capacity to be put into operation under the
Sixth Five Year Plan. The considerable shortfalls in putting capac-
ity into operation during 1956 and 1957 have already seriously compro-
mised the production returns previously anticipated for 1958-60.
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Commissioning of New Capacity for the Extraction of Iron Ore
in the USSR
Under the Fourth, Fifth, and Draft Sixth Five Year Plans
1946-60
Million Metric Tons
Fulfillment
Period
Plan
Achieved
Shortfall
of Plan
(Percent)
Fourth Five Year Plan
(1946-5o).
N.A.
64.2 a/
Fifth Five Year Plan
(1951-55) b
67 to 68
41.2
26
60.4
1956 c/
20
10.0
10
50 to 52
1957
20
14.0
6
70.0
1958 J
16
1959 !
25
1960
N.A.
Sixth Five Year Plan
(1956-60) E/ 84
a. 172
b. The achievement of 41.2 million tons, the shortfall of 26 million
tons, and the fulfillment of 60.4 percent, reported in source L73/,
establish the plan at a range of 67 million to 68 million tons..
c. The only specific data available on 1956 are reports that the
plan was fulfilled by 50 to 52 percent. 174 At most, new capacity
to process 10 million tons of ore per year is believed to have been
commissioned in 1956, but it may well be that capacity for not more
than 7 million tons was commissioned. This estimate is based on the
following considerations. It seems quite unlikely that more than
20 million tons were planned for 1956. The average annual require-
ment under the draft Sixth Five Year Plan was only 17 million tons.
Moreover, only 41 million tons had been commissioned during the entire
previous 5 years. From the data presented on persistent lags in con-
struction at projects for mining ore, it is evident that the construc-
tion carryover embodied in the shortfall of 26 million tons was well
below the level which would have justified a plan for commissioning
26 million tons in 1956. Of the 17 iron ore mines planned for 1956,
only 2 mines were commissioned. The commissioning of 10 million tons
in 1956, therefore, implies that the 2 mines put into operation
averaged 5 million tons in capacity, a generous estimate. On the
other hand, it has been stated that the Ministry of Ferrous Metal-
lurgy scattered resources on the construction of small mines in which
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Commissioning of New Capacity for the Extraction of Iron Ore
in the USSR
Under the Fourth, Fifth, and Draft Sixth Five Year Plans
1946-60
(Continued)
the capacity of each does not exceed 00,000 to 00,000 tons of ore
per year. 17 If, as a rough estimate, it is assumed that the 17
mines planned for 1956 averaged 800,000 tons capacity, the plan for
1956 can be approximated at 14 million tons of new capacity, with
about 7 million tons achieved.
d. Estimated from data that the plan for 1957 called for commission-
ing mines with a total capacity of more than 20 million tons U61
and that the initial plan for 1958 was'raised by about 6 million tons
because the plan for 1957 was not fulfilled (see footnote e, below).
e. The initial plan of 10,140,000 tons was later raised to 16,120,000
Future prospects for ferrous metallurgy, both short-term and long-
term, depend heavily on the success of the program for 1958-59 in
constructing adequate facilities for mining and processing iron'ore.
Assuming the estimated maximum commissioning of capacity
to produce iron ore in 1956, approximately 24 million tons of new
capacity were commissioned during 1956-57. Even if the plans for
1958-59 are fulfilled, a sizable task remains for 1960 -- new capac-
ity approximating 19 million tons will have to be commissioned if
the goal of the Sixth Five Year Plan is to be met. Numerous factors,
however, complicate the realization. Commissionings in 1956 probably
were significantly below the estimated maximum of 10 million tons.
Fulfillment of the plans for 1958-59 is doubtful, judging directly
from indications of continued lags in construction in 1957 and 1958.
Indirect factors also challenge the plans for 1958-59. The setting
of the initial plan for 1958 at 10 million tons and the plan for
1959 at 25 million tons was clearly a cutback in the plan for 1958
(compared with that of 1957) in order to permit at the same time
building up the construction carryover to a size required for com-
missioning 25 million tons of new capacity during 1959. The revised
plan for 1958, which seeks to make up the shortfalls in commission-
ings which occurred in 1957, seems bound to handicap the buildup dur-
ing 1958 of the construction carryover which is required to meet the
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plan for commissioning in 1959. The further requirement for com-
missioning 19 million tons in 1960 would seem to entail an impos-
sibly large buildup of construction carryover in the short space
of 2 years.
Although the iron ore industry possibly will be assigned
the necessary additional resources to fulfill the present construc-
tion plans for 1958-60, this action would result in a very sizable
drain on available construction resources. Past experience has shown
that something more than increased financial allocations is required.
The production bases of construction organizations which build for
the iron ore industry must be developed at accelerated rates, which
requires time as well as construction resources, both of which
presently are at a premium in the Soviet economy.
Although the commissioning of new capacity for producing both
coke and pig iron was greater under the Fifth Five Year Plan than,un-
der the Fourth Five Year Plan, the planned tasks reportedly were con-
siderably underfulfilled. 180 A total of 20 blast furnaces was
built during 1951-55, so that 10.3 million tons of new capacity in
pig iron were commissioned. This capacity was only 87 percent of the
plan; the shortfall in commissionings amounted to 1.5 million tons. 181
The shortfall in construction of blast furnaces, although significant,
was less than that in construction of facilities for iron ore and
crude and finished steel.
The draft Sixth Five Year Plan stipulated that 45 coke bat-
teries* and 26 blast furnaces were to be commissioned during 1956-60.
New capacity to produce 16.8 million tons of pig iron was to be com-
missioned. About 65 percent of the planned increase in production of
pig iron in 1960 above that in 1955 was to be provided from the new
capacity. 182
During 1956, 5 coke batteries and 4 blast furnaces were
constructed and put into operation by the Ministry for Construction
of Metallurgical and Chemical Industry Enterprises. The plan for
* These 45 to be built by the Ministry for Construction of
Metallurgical and Chemical' Industry Enterprises are a minimum esti-
mate of the total number to be built. The total planned probably
was not more than 50, because the other metallurgical aggregates to
be.built by the Ministry for Construction of Metallurgical and
Chemical Industry Enterprises were within 1 to 3 units of the respec-
tive totals for ferrous metallurgy as a whole.
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commissioning new capacity for production of coke, however, was ful-
filled by only 48 percent, and the plan for pig iron by "less than
60 percent." Commissionings in pig iron capacity fell 1.4 million
tons short of the plan,* 183 so that the pattern of performance in
construction of blast furnace capacity during 1956 was as follows:
The shortfall in commissionings in the first year of the Sixth Five
Year Plan was nearly as large as the shortfall during the period of
the Fifth Five Year Plan. Of the total commissionings planned for
the 5-year period 1956-60, only 12 percent of the 21 percent planned
for the first year was commissioned in 1956.
2. 1957.
The plan for 1957 stipulated that 8 coke batteries with
a total capacity of 3.9 million tons of coke per year were to be
constructed and put into operation by the Ministry for Construction
of Metallurgical and Chemical Industry Enterprises, but the plan
for commissioning new capacity to produce coke was not fulfilled in
the first half of 1957. Not more than five coke batteries are esti-
mated to have been commissioned by the end of the year. Thus the
considerable lags in construction suffered in 1956 persisted through
1957. 185
The plan for 1957 provided that new capacity to produce
2.1 million tons of pig iron per year (40 percent below the plan
for 1956) would be completed and put into operation. The plan for
1957 also stipulated that three blast furnaces were to be com-
missioned. In contrast with accomplishments in 1956, it was an-
nounced that the plan for commissioning new capacity in pig iron
was fulfilled and that the three blast furnaces were completed.** L86J
Therefore, it is estimated that new capacity totaling 2.1 million
tons was put into operation in 1957.
* The blast furnace at the Voroshilovsk plant, 1 of 2 not com-
missioned in 1956, was put into operation early in January 1957. 184
The shortfall reported for 1956 may overstate somewhat the serious-
ness of the lag in construction of blast furnaces.
** If the Voroshilovsk blast furnace is included (see the footnote
above), the number of blast furnaces, both planned and completed,
would total four.
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3. Prospects for 1958-60.
In 1958, 9 coke batteries with a total capacity of 4.7
million tons per year are to be constructed and put into operation.
Such an accomplishment would require considerable acceleration in
construction because only 5 coke batteries were commissioned in each
of the preceding 3 years. !L7/
The plan for commissionings is in danger of being
seriously underfulfilled again in 1958 because of the small amount
of construction-installation work put in place during the first 5
months. Performance up to 1 June 1958 is summarized in Table 5.*
One of the principal factors in the threat to realization of the
plan for 1958 is the negligible volume of construction carryover
which had been. achieved by 1 January 1958 at the following coke
batteries: Yasinovsk No. 6, Now Lipetsk No. 4, Bagleysk No. 8, and
Voroshilovsk No. 4. This lack of construction carryover is, in ef-
fect, another indication of the failure to fulfill the plan for 1957,
which had called for appreciable volumes of construction to be put
in place at these very batteries. 188
The degrees to which the plans for construction-installa-
tion work in 1958 were fulfilled, in conjunction with the planned
dates of commissioning, indicate that construction schedules at
nearly all the projects are due to be disrupted seriously unless
work is greatly accelerated during the remaining part of the year.
Reasons for the various delays are shortages of construction ma-
terials and construction equipment, long delays in the delivery of
equipment for the coke batteries, delays in or absence of designs
and specifications, and inadequate financial allocations for the
volume.of work to be done. 189 Thus responsibility for the poor
performance in construction is not that of the construction organi-
zations only.
Unless a tremendous acceleration occurs in constructing
coke batteries during 1958-60, the prospects for commissioning the
45 or more coke batteries called for in the draft Sixth Five Year
Plan are distinctly unfavorable., Even if the 9 coke batteries
planned for 1958 are completed, a total of 26 or more batteries
would have to be commissioned during 1959 and 1960. Commissioning
of this number of batteries would be no small task in view of the
strong tendency, concomitant with persistent disruptions of planned
schedules for commissioning coke batteries, to undercut the volume
of construction carryover to levels which cannot support plans for
commissionings in subsequent years.
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Table 5
Fulfillment of Planned Construction-Installation Work on Coke Batteries
to Be Commissioned in the USSR in 1958 J
Fulfillment of Plans for Construction-Installation Work
(Percent)
Total Estimate
Estimate Cost of
Monthly Plan
Annual Plan
(by the End of)
Cost of Project
Work for 1958 J
Approximate Planned Date
(Million Rubles)
(Million Rubles)
February
March
April
February
March
April
M~a
of Commissioning
Yasinovsk No. 5
51.1
14.6
61
53
115
23
57
82
103
Commissioned
Voroshilovak No. 3
35.4
33.4
15
19
19
112
27
50
70
81
30 June
Bagleysk No. 7
79.5
33.6
N.A.
62
36
55
15
17
26
34
31 August
Magnitogorsk No. 11
100.0
77.2
96
100
87
112
11
18
25
37
6 November
Cherepovets No. 4
28.7
19.8
N.A.
53
87
96
1
6
12
23
31 December
Voroshilovsk No. 4
18.7
18.2
1
2
3
83
4
5
9
20
30 September
Bagleysk No. 8
39.2
23.4
N.A
N.A.
66
40
4
4
10
14
30 November
Novo Lipetsk No. 4
122.5
114.5
1 1
2
4
2
3
4
9
31 December
Yasinovsk No. 6
66.3
50.2
0 77
51
10
0
1
2
3
31 December
a. Progress up to 1 June 19513. All data are from source 1 .
b. The difference between the total estimate cost of the project and the estimate cost of work for 1958 is the volume of work put in place
up to 1 January 1958 (that is, the volume of construction carryover). Data on costs have been revised for some of the projects. The
latest revisions are cited.
c. Late by nearly 3 months.
d. later postponed to late January 1959.
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The plans for 1958-59 stipulate that 7 blast furnaces
are to be commissioned in 1958 and still another 7 in 1959. (Six
of the latter are to be the largest in the USSR.) The newly com-
missioned capacity is to total 4.7 million tons of pig iron in 1958
and about 7 million tons in 1959.* 191 If the draft Sixth Five
Year Plan is to be fulfilled, the pattern of achievements. in 1956-57
and the plans for 1958-59, with the resultant requirements for 1960,
are as follows:
Years
Commissioning of
New Capacity
(Million Metric Tons)
Commissioning of
Blast Furnaces
1956 actual
2.1
4
1957 actual
2.1
3
1958 plan
4.7
7
1959 plan
7.0
7
1960 residual
0.9
5
1956-6o plan
16.8
26
Obviously the commissioning of 5 blast furnaces is not required to
provide less than 1 million tons of new capacity in 1960 -- a vivid
illustration of the decided trend toward building more blast fur-
naces with greater volumes than were envisioned in the Sixth Five
Year Plan. Thus completion of 26 furnaces is no longer a necessary
condition for meeting the plan for new capacity in pig iron. If the
plan for commissionings (in tonnage) is achieved in 1958, an average
of less than 4 million tons will be required in both 1959 and 1960.
Depending on performance during 1958, therefore, prospects for ful-
filling or exceeding the Sixth Five Year Plan for new capacity to
produce pig iron are favorable.
Construction of seven blast furnaces during 1958 is a
sizable increase above the volume of such work performed during
1957 and requires a well-coordinated program in the timely delivery
of construction materials and equipment for the furnaces from many
quarters of the economy. In recent years, Soviet builders have
achieved some considerable reductions below the norms for the time
required to construct many blast furnaces.** Thus, even though the
* New capacity commissioned in 1958-59 was to total almost the same
amount as had been commissioned under the First and Second Five Year
Plans together.
** Whereas in recent years, blast furnaces (of a given size) were
built in periods greater than 1 year, such furnaces are said to be
erected at the present time in 8 to footnote continued on p. 577
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volume of construction carryover into 1958 apparently was less than
anticipated in the plan for 1957, the reduced time presently required
to build blast furnaces may be more than compensatory. Moreover,
data available on construction through the first 4 months of 1958
indicate that construction is proceeding satisfactorily and that no
serious problems are indicated. 123J (See Table 6.*) Prospects
thus are favorable for fulfilling or exceeding the Sixth Five Year
Plan for commissioning new capacity to produce pig iron.
C. Crude Steel.
Under the Fifth Five Year Plan, 44 open hearth and 13 elec-
tric furnaces were constructed and put into operation. As a result,
new capacity for producing crude steel amounting to 8.9 million tons
per year was commissioned during 1951-55, the same as under the
Fourth Five Year Plan. Because the Fifth Five Year Plan was ful-
filled by only 72 percent, the shortfalls in commissionings of capac-
ity for crude steel are estimated to have been 3.5 million tons.
The draft Sixth Five Year Plan provided for commissioning
38 open hearth furnaces, 44 electric furnaces, and 9 converters dur-
ing 1956-60.' Moreover, 18 oxygen plants were to be constructed and
put into operation at metallurgical plants, whereas only 2 had been
built under the Fifth Five Year Plan. New capacity for production
of crude steel amounting to 15.8 million tons was to be commissioned,
an increase of 78 percent above the total capacity commissioned dur-
ing 1951-55. About 53 percent of the planned increase in production
of crude steel in 1960 above that in 1955 was to,bne~ ~obtained from
new capacity to be commissioned during 1956-60. :ZG/
1. 1956-57.
Soviet builders have achieved some success in reducing
the time required to build open hearth furnaces. Nevertheless, con-
struction schedules at other open hearth furnaces have not been met.
One of the flagrant examples is that of the first open hearth fur-
nace at the Orsk-Xhalilovo Metallurgical Combine, which was scheduled
to be put into operation during 1956. The lag in construction was
such that the furnace was scheduled for operation by the end of the
first quarter of 1958. 196/
9 months. Although much of the data on reduction of construction
periods are given with less than desirable precision, there is' nc,o.,~
doubt that significant reductions in time have been achieved. 192
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Fulfillment of Planned Construction-Installation Work on Blast Furnaces
to Be Commissioned in the USSR in 1958 a/
Fulfillment of Plans for Construction-Installation Work
(Percent)
Annual Plan
Total Estimate
Estimate Cost of
Monthly Plan
(by the End of)
Cost of Project
Work for 1958
Approximate Planned 11ate
Blast Furnace
(Million Rubles)
(Million Rubles)
February
March
April
February
March
April
of Commissioning /
No. 3, of the Plant
imeni Petrovsk
107.3
62.9
109
120
112
16
28
40
30 September
Chelyabinsk No. 5
113.4
97.2
104
io4
103
13
25
37
5 November
Yenakiyevo No. 4
70.5
54.0
89
log
113
13
24
34
15 September
Azovstal' No. 5
119.2
103.2
81
88
100
9
18
32
15 September
Krivoy Rog No. 4
114.0
74.3
105
92
Ill
6
18
32
25 September
Orsk-Khalilovo No. 2
57.0
53.7
N.A.
122
112
7
17
30
15 September
No. 3, of the Plant
imeni I1'ich
N.A.
79.0
l04
120
143
4
13
17
25 December
a. Progress up to 1 May 1958. All data are from source 197 .
b. Except for Chelyabinsk No. 5 and Orsk-Khalilovo No. 2, the above schedules are approximately 1 week later than those planned earlier.
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During 1956, 3 open hearth furnaces were commissioned,
but 2 other open hearth furnaces and 2 converters were not completed
in spite of the plan. As a result of these and other failures in
construction during 1956, the plan for commissioning new capacity
for the production of crude steel was fulfilled by only 50 percent. 198
During 1957, 6 open hearth furnaces and 2 converters
were commissioned. (The plan for 1957 called for 8 open hearth fur-
naces.) Although some facilities for producing steel apparently
were commissioned somewhat ahead of schedule in the first half of
1957, the plan for commissionings in the year as a whole was not
fulfilled.
In the report on the national economic plan for 1957 the
Ministry of Ferrous Metallurgy and the Ministry for Construction of
Metallurgical and Chemical Industry Enterprises were critized for
permitting consistent lags in construction and commissioning of oxygen
stations. Nevertheless, 7 oxygen stations were commissioned during
1956, and 6 more were planned to be commissioned during 1957, account-
ing for 13 out of the 18 planned for 1956-60.*
2. Prospects for 1958-60.
The plan for 1958 provides that it open hearth furnaces,
2 converters, and 14 electric furnaces, with new capacity totaling
2.5 million tons of crude steel per year, are to be commissioned. 201
Although this figure is an increase of almost 20 percent above the
estimated level of commissionings during 1957, it is 500,000 tons
less than was called for by the plan for 1957. The record of com-
missioning of new capacity for production of crude steel during
1956-57 and the requirements for 1958-60 are as follows:
Fulfillment of Plan
Year Plan Actual** Shortfall (Percent)
1956*** 2.8 1.4 1.4 50
1957**** 3.0 2.1 0.9 70
1958 2.5
1959-60 N.A.
1956-60 15.8
It is possible, however, that 3 of the 6 oxygen stations planned
for 1957 are only expansions of existing stations rather than new
ones. 200
** Estimated.
*** The data for 1956 are derived from the stated shortfall of 1.4
million tons and the 50-percent fulfillment of the plan. 202
**** The plan for 1957, 3.04 million tons, was not fulfilled. 203
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After the considerable failures encountered under the
Fifth Five Year Plan, poor performances in 1956 and 1957 only em-
phasize the need for accelerated construction during 1959-60 if
the Sixth Five Year Plan is to be fulfilled. The new capacity esti-
mated to have been commissioned during 1956-57, in conjunction with
the plan for 1958, leaves a requirement of nearly 10 million tons
for 1959-60, or nearly 5 million tons in each of the last 2 years
of the Sixth Five Year Plan. Even if the plan for 1957 had been
fulfilled, nearly 9 million tons would be required in 1959-60.
Thus not only should 2.5 million tons of new capacity be commissioned
during 1958, but a considerable volume of construction carryover
should be put in place during the year in preparation for the large
increase in commissionings required in 1959.
The situation as of 1 July 1958 at the various furnaces
and converters which are to be commissioned during 1958 is sum-
marized in Table 7.* The status of the five electric furnaces at
the Zlatoustovsk Steel-Smelting Shop No. 3 is considerably less
satisfactory than is apparent from Table 7. The scheduled com-
missioning during September was said to be dependent on performing
the major volume of work in the first half of the year. Yet the
financial allocations for the year were distributed erroneously in
even shares over the first three quarters. Moreover, having estab-
lished the schedule for commissioning in September 1959, Gosplan
established the supply periods for much of the production equipment
in the third and fourth quarters, while other production equipment
is promised. only for the first quarter of 1959. The shop was not
commissioned, in spite of the fulfillment by the end of June of the
work planned for the year, because the funds allocated were insuf-
ficient. 204
Open hearth furnace No. 1 at Cherepovets, which was to
have been commissioned during 1957, was rescheduled for the end of
April. Although this project suffered serious shortages in such
things as production equipment, cranes, and construction materials,
it was commissioned on schedule. 20
In addition to lagging construction at the Voroshilovsk
Open Hearth No. 10 and the Zaporozh'ye Electric Furnace No. 6 dur-
ing the first half of 1958, the situation was hardly favorable at
the two electric furnaces of the Now Lipetsk Steel-Smelting Shop,
where serious problems in supply had arisen. 206 At several pro-
jects, therefore, much the greater part of the work scheduled for
the year remains for the last half of 1958. (See Table 7.)
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Table 7
Fulfillment of Planned Construction-Installation Work
on Crude Steel Facilities
to Be Commissioned in the USSR in 1958 a/
Fulfillment of Plans for Construction-Installation Work
(Percent)
Annual Plan
Total Estimate Estimate Cost of Monthly Plan (by the End of)
Cost of Project Work for 1958 J Approximate Planned Late
Steel Snelting Furnace (Million Rubles) (Million Rubles) February April May June February April MU June of Commissioning
Orsk-Hhalilovo Open Hearth 38.0 0.4 100.0 100.0 Commissioned J
Cherepovets Open Hearth No. 1 122.4 22.7 86.o 59.0 Commissioned
Zlatoustovsk Steel-Smelting Shop No. 3
(5 electric furnaces) 89.0 27.0 76.0 160 130 161 24.0 61 78 100 15 September
Krivoy Rog Converter No. 3 0.5 0.5 N.A. J J e 43.0 J 30 September
Krivoy Rag Converter No. 4 1.3 1.3 N.A. e J e 43.0 , 2/ J 31 December J
Chelyabinsk Steel-Smelting Shop No. 3
(6 electric furnaces) 91.8 32.0 100.0 101 107 117 22.0 43 54 68 25 December
Novo Lipetsk Steel-Smelting Shop
(2 electric furnaces) 102.8 102.2 3.0 3 5 118 4.0 10 14 18 31 December S/
Cherepovets Open Hearth No. 2 22.6 18.5 0 100 170 118 2.0 9 25 37 31 December
A,
Voroshilovok Open Hearth No. 10 56.3 25.7 0.5 5 63 100 o.6 8 21 26 12 November J
Zaporozh'ye Electric Furnace No. 6 32.0 21.8 0 N.A. 51 5 0 4 11 17 31 December
a. Progress up to 1 July 19 . All data are from 2011.
b. Data on costs have been revised for some of the projects. The latest revisions are cited.
c. Commissioned on schedule in late March.
d. Commissioned on schedule in late April.
e. No work was performed.
f. Later revised to 4 January 1959.
g. Later revised to 4 January 1959.
h. Later revised to 31 December.
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A strong probability exists that even the modest plan
for commissioning 2.5 million tons of new capacity for crude steel
will not be met in 1958, unless extreme measures are taken to ac-
celerate construction in the remaining months of the year.
Under the Fifth Five Year Plan, 28 rolling mills were con-
structed and put into operation. As a result, new capacity in the
production of finished steel which was commissioned during 1951-55
totaled 6.4 million tons. This was, however, a fulfillment of only
56 percent of the plan for cbmmissionings, the lowest percentage
fulfillment of plans in the 4 basic branches of ferrous metallurgy.
Thus the pattern established in construction of new capacity for
production of rolled metals under the Fifth Five Year Plan was as
follows 208
Fifth Five Year Plan
11.2
Achieved
6.4
Shortfall
4.8
Fulfillment (percent)
56.0
The draft Sixth Five Year Plan stipulated that 40 rolling
mills (excluding shops of cold-rolled metals) were to be constructed
and put in operation during 1956-60. New capacity to be commissioned
during the period would total 16.3 million tons, an increase of
36 percent above the capacity commissioned under the Fourth and Fifth
Five Year Plans together. By the end of the Sixth Five Year Plan,
60 percent of the increase in production of rolled metals (1960 com-
pared with 1955) was to be obtained from new capacity commissioned
during the period, whereas approximately 42 percent of the increase
in production achieved under the Fifth Five Year Plan was obtained
from capacity commissioned in.1951-55.* 209
The poor performance in construction of rolling mills
which characterized the period,o? the Fifth Five Year Plan persisted
through 1956 and 1957. The plan for commissioning new capacity in
* The under the Fifth Five Year Plan applies to the total
increase of 12.6 million'tons achieved by plants under the jurisdic-
tion of the Ministry of Ferrous Metallurgy.
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rolled metals was not fulfilled during the first half of 1956, and
by the end of the year the plan had been fulfilled by less than 60
percent. Of the 9 rolling mills which were to have been commissioned,
6 had not been put into operation by the end of 1956.
The plan for 1957 called for commissioning new capacity
totaling 1.9 million tons, little more than had been achieved dur-
ing 1956. Moreover, only six rolling mills were planned to be com-
missioned during 1957,* thus providing no net increase above the
number previously planned for 1956. As in 1956, the plans for com-
missionings were not fulfilled both for the first half of 1957 and
for the year as a whole -- only 4 of the 6 rolling mills planned
were put into operation. 210
Although the claim has been made that the time required
for constructing and commissioning rolling mills has been reduced
from the previously required 3 to 4 years to 1 year, 211 this
period hardly can be considered the present average for Soviet
builders. For example, the Stalinsk Light Section Mill was to be
commissioned in 1954 but had not yet been completed as of 1 March
1958. 212 Both the blooming mill and the continuous billet mill
at Krivoy Rog were to have been commissioned during 1956; construc-
tion of-both has stretched on into 1958. Some other rolling mills
have been completed up to a year late. 213
Plans for construction of rolling mills during 1958-60
should be examined in the light of the above-mentioned prolonged
construction periods. The performance in construction of new
capacity for rolled metals during 1956-57 was as follows:
* Apparently a downward revision of an earlier plan for 1957, which
had stipulated that nine rolling rolls were to be put into operation.
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Fulfillment of Plan
Years Plan Actual Shortfall (Percent)
1956* 2.8 1.7 1.1 60
1957**- 1.9 1.5 0.4 8o
1958 1.4***
1959-6o N.A.
1956-60 16.3****
Even if the plan for 1958 is fulfilled, a tremendous increase in
the construction and commissioning of rolling mills will be re-
quired in 1959 and 1960 if the goals of the Sixth Five Year Plan
are to be fulfilled. The plan for 1958, however, has its own not
inconsiderable obstacles.
Only 10 rolling mills were commissioned during 1955-57,
yet a total of 7 are to be commissioned during 1958 alone. The
equipment for a number of the projects was designed, produced, and
delivered to the sites 6 to 7 years ago. Part of this equipment is
outdated, and part has deteriorated. The necessary revisions, re-
designing, and repairs to such units will require a great deal of
work within the year. 218/ This requirement only highlights the
fact that shortages and late deliveries of production equipment have
been and continue to be much greater handicaps to meeting schedules
for constructing facilities for finished steel than for any of the
other branches of ferrous metallurgy.
The seven rolling mills to be commissioned during 1958,
and the progress of construction-installation on the projects up to
1 June 1958, are itemized in Table 8.t Shortages of production
* Because of the shortfall of 1.1 million tons, the plan for 1956
was fulfilled by less than 60 percent. 214/ The data on plan and
actual, therefore, are maximum estimates.
** Data on the plan are from source 21 . Even though only 4 of
the 6 rolling mills planned were put into operation, as indicated
above, it is estimated that approximately 80 percent of the planned
new capacity was fulfilled.
*** This may understate the plan for 1958 to the exclusion of two
intermediate processing mills, and the Krivoy Rog Blooming Mill (com-
missioned in March 1958). 216
**** This goal of the draft Sixth Five Year Plan was restated in con-
junction with the plan for 1958. 21L7/
t Table 8 follows on p. 65. The plan for 1958 is said to call
also for commissioning eight rolling mills. This number probably in-
cludes the Krivoy Rog Blooming Mill, commissioned in March 1958,
which is not included in the seven listed in Table 8.
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Table 8
Fulfillment of Planned Construction-Installation Work on Rolling Mills
to Be Commissioned in the USSR in 1958 a, ,
Fulfillment of Plans for Construction-Installation Work
(Percent)
Annual Plan
Total Estimate Estimate Cost of Monthly Plan (by the End of)
? Cost of Project Work for 1958 J
Rolling Mill (Million Rubles) (Million Rubles) February April !LaZ February April Sx
Approximate Planned Bate
of Commissioning
Krivoy Rog Continuous Billet Mill 50.9 19.0 68 75 10 39 Commissioned J
Nizhniy Tagil Heavy-Section Mill
"650" 124,0 113.5 d, 100 101 100 8 25 34 20 December
Cherepovets Blooming Mill 83.6 62.1 79 70 75 10 16 24 31 December
Ashinak Sheet Mill (Chelyabinsk)' 45.8 28.0 95 195 70 8 20 33 5 December
Magnitogorsk Slab Mill 128.0 68.6 75 90 78 5 15 23 5 December
Krivoy Rog Light-Section Mill
No. 2 65.7 N.A. J 5 December J
Dneprodzerzhinsk Rolling Mill 17.5 N.A. g/ 5 December
a. Progress up to 1 June 1958. All data are from source 21
b. Data on costs have been revised for some of the projects. The latest revisions are cited.
c. Planned for 30 April; actually commissioned on 18 June.
d. Because this is a substantial upvard revision of the initial plan of 80 million rubles, the percent of fulfillment of the annual plan by the end of
February and April have been adjusted from those given in relation to the initial plan.
e. Work was not being performed.
f. Previously scheduled for 30 September.
g. Work was not being performed.
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equipment and construction materials handicapped construction of the
Krivoy Rog Billet Mill and the Cherepovets Blooming Mill. The situa-
tion at the Dneprodzerzhinsk Rolling Mill was even worse than at the
other projects; the investment allocated for work to be done in 1958
was less than one-half of that required. Similarly, financing had
not been provided for the Krivoy Rog Light Section Mill (see Table 8).
Inadequate supplies of labor, construction equipment, and structural
metal handicapped construction at the other projects. 220 In sum,
by the end of the first 5 months of 1958, insufficient progress in
construction at the majority of the projects was threatening fulfill-
ment of the plan for new capacity in 1958.
Although the amount of new capacity planned for com-
missioning in 1958 is low, the volume of construction-installation
work required in support of the plan is quite large. This require-
ment has been attributed to mistakes in planning -- many of the
rolled metals projects were still in the stage of designing or had
little construction work put in place by the beginning of 1958. 221/
That there has been no significant increase in the volume of con
struction put in place on projects not yet commissioned is strongly
supported by the fact that the underfulfillment of the Fifth Five
Year Plan was accompanied by a steady decline in the plans for
commissioning new capacity set for 1956, 1957, and 1958. The dif-
ficulties already encountered in construction during 1958 are not
conducive to a reversal of this situation, and a serious compromise
of the plans for new capacity in 1959-60 and under the Sixth Five
Year Plan appears likely.
Many of the causes and factors contributing to the persistence
of shortfalls in construction of ferrous metallurgical facilities in
general are similar to those outlined above in respect to construction
of iron ore facilities. Late deliveries of production equipment to
construction sites, however, have been a considerably greater hindrance
to meeting schedules for construction of facilities for pig iron and
.crude and finished steel than they have to meeting schedules for con-
structing facilities for iron ore. Construction organizations, in
most of such cases, are not responsible for the delays in construction
engendered by tardy deliveries of production equipment. During 1957,
14 ferrous metallurgical projects were not commissioned, because of
late deliveries of production equipment, yet 8 of these were fully
completed as far as construction work was concerned. On the other
hand, equipment has been known to accumulate at a number of projects
over periods of 6 or 7 years without being installed. The responsi-
bility may lie with the planning, client, or construction organiza-
tion. 222
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Construction is frequently held up through the fault of design-
ing organizations. Specifications, designs, and working drawings
often are delivered late to construction organizations, principally
because the designing organizations of the Ministry of Ferrous Metal-
lurgy and of the Ministry for Construction of Metallurgical and Chemical
Industry Enterprises were inadequately staffed with skilled personnel.
The Ministry of Machine Building and other ministries concerned also
were responsible in part for delays in designing construction pro-
jects such as rolling mills and electric furnaces because of their
failure to provide the initial data on equipment, data which were
required in the drafting of working drawings. One of the most serious
and pervasive handicaps to construction organizations has been the
long delays encountered in the delivery of designs and specifications
for those subsidiary construction material enterprises required in
the buildup of operative bases for construction organizations. The
accelerated output of designing organizations necessary to support
the planned acceleration in construction of ferrous metallurgical
facilities under the Sixth Five Year Plan and under the initial plans
for 1956 and 1957 has not materialized. Upward revisions in the con-
struction programs during both 1956 and 1957 have entailed additional
lags between the required and actual dates of deliveries of designs
and drawings. 223 Although it is perhaps too early for firm conclu-
sions, there have been some indications that the realignment of de-
signing organizations carried out under the reorganization of indus-
try and construction has complicated rather than resolved many of the
problems implicit in the inadequate staffs available to designing
organizations. 224
Closely allied with delays in providing construction organi-
zations with the required designs and specifications is the frequent
practice of starting construction on projects and putting them well
under way without drawings, specifications, or cost estimates. Many
projects are included in the annual plans for construction without
having met the standing requirement that cost estimates and specifi-
cations be approved by 1 October of the preceding year. Both the
former Ministry of Ferrous Metallurgy and the State Economic Commis-
sion have been accused of engaging in such practices. 225 Although
these conditions have improved somewhat of late, they apparently still
handicap the efficient organization of the construction effort in the
ferrous metallurgical industry.
The duration of construction of both new plants and expansions
of established plants is considerably longer than necessary. Soviet
designers have established the duration of construction of a metal-
lurgical plant with the full cycle of production at 5 to 7 years.
Yet from start to finish construction of such metallurgical combines
as the Transcaucasian (in Rustavi) and the Cherepovets, Orsk-Khalilovo,
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Novo Lipetsk, and Karaganda will have spanned 10 to 15 years or
more. 226 The simple relationship between the actual cost of con-
struction of these projects and the estimate cost is seriously in-
adequate in expressing the cost to the economy of prolonged construc-
tion periods. (For example, the actual costs of at least the first.
three of the above-mentioned combines are diverging insignificantly
from the estimate costs. 227/) What is important is the degree to
which investments are made and thereby tied up in inoperative fixed
assets longer than necessary, contributing to increasing capital
cost per ton of added capacity. .
Prolonged periods of construction can be said to result
generally from two factors: (1) the annual investments made in the
given project are too low in relation to the estimate cost of the
project (which results from the inability of the construction or-
ganization to perform a greater volume of work and/or from the fact
that annual financial allocations for investments are too low), and
(2).the volume of construction and/or financial resources available to
ferrous metallurgy as a whole is dispersed among too many projects.
One of the. most startling examples of low investments made annually
on a given project is the Karaganda Metallurgical Plant, at which
work amounting to less than 15 percent of the estimate cost had been
put in place 11 years after construction began. 228 A measure of
the dispersion of resources in ferrous metallurgy as a whole is
available in the volume of unfinished construction.
The volume of unfinished construction is defined as the
volume of investment allocated to projects not yet put into opera-
tion.* The index of growth in the volume of unfinished construction
in ferrous metallurgy, as of 1 January of the respective years, is
as follows:
1947
100
1951
227
1955
303
1956
303
1957
More than 333
* As such, it has its positive side in that it also represents the
volume of construction carryover. Generally, however, the term un-
finished construction is used in its negative sense, and the term
construction carryover (zadel) is used in the positive connotation.
See the first footnote on p. 43, above.
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Over the 10-year span the volume of unfinished construction more than
tripled. Although only a rough comparison can be made; it is clear
that increasingly smaller shares of annual capital investment in fer-
rous metallurgy have been devoted to putting unfinished facilities
into use.* From time to time, annual plans apparently have called
for some reduction in the volume of unfinished construction. The
temporary holding of the line during 1955 (unfinished construction
increased a mere 36 million rubles) indicates some success in con-
centrating resources in the last year of the Fifth Five Year Plan,
in contrast with the quite unsuccessful attempt in the last year
of the Fourth Five Year Plan. 22 Unfinished construction rose
again in 1957, and there have been some initial indications that
dispersion of construction resources is continuing in spite of the
reorganization of industry and construction. 230
At the root of the continuing shortcomings in construction
for ferrous metallurgy, however, are the inadequate resources of
construction organizations and the poor organization and planning
of capital construction. Labor turnover is high because the struc-
ture of wages for construction workers in ferrous metallurgy is
still unsatisfactory. The burden of the inadequate productive bases
of construction organizations is increased by late deliveries of
the required designs, production equipment, and construction ma-
terials. Among the branches of industry, construction for ferrous
metallurgy no longer holds a most favored position in the allocation
of construction resources. In many instances the construction or-
ganizations for the ferrous metallurgical industry are more poorly
supplied than are those construction organizations of other branches
which do not require as large an input of metals and cement (per
million rubles of construction-installation work performed). Another
indication of declining priorities is the fact that the Ministry for
Construction of Metallurgical and Chemical Industry Enterprises de-
voted over the years less and less of-its total volume of construc-
tion-installation work to construction for ferrous metallurgy. In
short, the buildup of the resources of construction organizations
which was required to fulfill the accelerated construction program
for ferrous metallurgy during the Sixth Five Year Plan has not taken
place. 231 In fact, the construction materials base, labor force,
and construction equipment at their disposal are of a size which
would prejudice fulfillment of construction plans even if those re-
sources were brought to an optimum concentration.
* This fact is deduced from data indicating that the rate of in-
crease in unfinished construction considerably exceeded the rate
of increase in annual capital investments over the period.
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Improvements in the organization and execution of construc-
tion undoubtedly would alleviate some of the strains engendered by
the gulf between plans for capital construction and the capabilities
to fulfill those plans. Many ferrous metallurgical construction or-
ganizations are charged with building candy factories, schools, and
other such structures outside their special capabilities, thus de-
pleting the already insufficient resources available for building
metallurgical enterprises and the required housing. On the other
hand, construction of complex metallurgical units is at times charged
to organizations obviously not geared for such specialized types of
industrial construction. Construction organizations frequently are
guilty of ignoring time schedules for putting facilities into opera-
tion in favor of engaging their resources in "profitable" construc-
tion ,lobs: that is, types of work which have a high reporting value
and require fewer inputs than "unprofitable" jobs. Unprofitable
jobs, such as finishing work, require large inputs of time and labor
with little return in terms of the reported volume of construction-
installation work performed. The general contractor apparently
exerts little control over such manipulations on the part of sub-
contractors, primarily because he is not obliged to. 232
Greater concentration of construction resources on the most
important projects and those which are nearing completion would do
much to improve the organization of the construction effort. The
dispersion of construction resources among too many projects, how-
ever, is a corollary of planning a construction program much larger
than warranted by the resources made available to construction or-
ganizations building for the ferrous metallurgical industry. Mis-
takes in the planning of capital construction, therefore, are most
basic to the persistent failures to construct and commission projects
on time. The errors in planning take several forms. For example, in
many cases the initial estimate costs of projects which are to be
commissioned within a given period are subjected to considerable up-
ward revisions after construction has been started, thus delaying
commissioning of the projects from year to year while the increased
volume of work is being performed. There also are frequent instances
in which priorities for given projects and plans for construction-
installation work are raised in spite of the demonstrated inability
of the responsible construction organizations to perform even the
volumes of work previously assigned them. In the midst of a general
scarcity of investment resources, there has been a strong tendency
to postpone necessary investments much longer than is wise. For
example, in the Krivoy Rog area, construction of ore-concentrating
plants was postponed much too long, with the result that the deple-
tion of the richer ores was not accompanied by a simultaneous de-
velopment of the concentrating facilities required to process the
poorer ones. The great acceleration of construction is prevented by
the small number of large construction trusts in the area. 233
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Some of the defects in the planning of capital construction
undoubtedly are explained by the fact that estimates of investment
costs in the ferrous metallurgical industry frequently require re-
vision especially with respect to facilities for mining and process-
ing ore. 234 At the center of the problem, however, is the dis-
agreement as to the volume of investment required to support short-
and long-term goals for production of iron and steel. This dis-
agreement was explicit in the speeches made at the Twentieth Party
Congress by M.Z. Saburov (then Chairman of the State Economic Com-
mission) and A.G. Sheremetyev (then Minister of Ferrous Metallurgy).
Saburov criticized the Ministry of Ferrous Metallurgy for
requesting both excessively large capital investments and low pro-
duction targets. In attempting to prove that the Ministry was not
taking full cognizance of its possibilities for expanding produc-
tion at established enterprises, Saburov noted that although the
plan for commissioning rolling mills was underfulfilled by 4.8 mil-
lion tons under the Fifth Five Year Plan, production of rolled metals
exceeded the plan by 0.7 million tons. Sheremetyev, on the other
hand, insisted that the planned assignments in production for 1956-60
could not be met unless the projects planned were commissioned on
schedule. He emphasized that the weak spot of the ferrous metal-
lurgical industry in all the postwar years had been capital con-
struction; that construction organizations were not large enough --
that is, their resources were inadequate -- to perform the assigned
tasks; and that as a result of failure to commission 26 million tons
of iron ore capacity under the Fifth Five Year Plan, the swift building
up of capacity to produce pig iron, steel, and rolled metals was being
delayed. 23 The lines thus were drawn clearly, with the central
planners on one side and the technologists administering the iron and
steel industry on the other.
Events in 1956 and 1957 have substantiated the position of
Sheremetyev. The failure to meet time schedules for important fer-
rous metallurgical projects has been a strong deterrent to meeting
production plans in the short run of 1956 and 1957, and most assuredly
is limiting production increases over the long run of 1958-60 and sub-
sequent years. 236
The feasibility of correcting the imbalance between produc-
tion goals and construction achievements in the near future depends
heavily on the status of the volume of construction carryover in
ferrous metallurgy. The fulfillment of planned commissioning of pro-
ductive capacity in ferrous metallurgy in recent years is summarized
as follows:
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Fulfillment of Plans
(Percent)
Product
Fifth Five Year Plan
1956
1957
Iron ore
60
50
70
Pig iron
87
60
100
Crude steel
72
50
70
Finished steel
56
60
80
The persistent failure to fulfill the plans for commissioning new
capacity is the strongest indication that the volume of construc-
tion carryover has not been large enough to support the annual plans
for completion of new productive facilities. Thus, in spite of the
growing volume of unfinished construction, it is seriously doubted
that that part which is in the usable form of construction carry-
over is large enough to permit the construction industry to achieve
its goals by concentrating resources on the completion of projects
well under way.
The plan for 1957 had called for limited increases in produc-
tion while concentrating construction resources on eliminating the
imbalance between production and construction. Except for construc-
tion of pig iron facilities, however, the attempt was largely un-
successful, and the prospects are the same for 1958. The important
characteristic of the initial plans for construction in 1958-59 is
that they were integrated with the long-term program envisioned for
1959-65, but the long term development envisioned for the industry
is again being prejudiced by the threat of continued serious failures
in construction during 1958. The present problem in construction is
one which can be corrected only by initiating and continuing larger
scale allocations of both physical and financial resources to fer-
rous metallurgy or by substantial reductions in the planned construc-
tion programs.
In fixing responsibility for the failures in construction for
the ferrous metallurgical industry, the central planning organiza-
tions have displayed a distinct tendency to blame the Ministry of
Ferrous Metallurgy and the Ministry for Construction of Metallurgical
and Chemical Industry Enterprises for weaknesses in building practices;
the Ministry of Ferrous Metallurgy to blame the central planners for
serious errors in planning investments and the construction organiza-
tions for weak performance; and the Ministry for Construction of
Metallurgical and Chemical Industry Enterprises to blame both the cen-
tral planning organizations and the Ministry of Ferrous Metallurgy for
erroneous planning practices. In the well-reasoned report on the
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national economic. plan for 1957, however, M.G. Pervukhin was careful
to spread the blame among the Ministry of Ferrous Metallurgy, the
Ministry for, Construction of Metallurgical and Chemical Industry
Enterprises, Gosplan, and the State Economic Commission. 237
Up to the time of the theses on the reorganization of indus-
try and construction, the organizational remedies proposed were
similar. Sheremetyev advised either strengthening the construction
organizations of the Ministry of Ferrous Metallurgy and the Ministry
for Construction of Metallurgical and Chemical Industry Enterprises
or creating a special ministry for construction of ferrous metal-
lurgical enterprises. I.P. Bardin trenchantly observed that the
separation of production and construction in ferrous metallurgy was
erroneous and that merging construction of ferrous with nonferrous
metallurgy and the chemical industry only complicated matters. 238
Both proposals, however, were important not for the explicit sug-
gestion of the need for reorganization but for the implicit fact
that such reorganization of construction would award greater bar-
gaining power to the ferrous metallurgical industry in the scramble
for scarce investment resources. It is doubtful that the reorgani-
zation of industry and construction which has taken place will re-
solve any of the major shortcomings in construction, and it may even
handicap construction by reducing the size of organizations build-
ing for the ferrous metallurgical industry.
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The volume of investment resources accorded the coal industry
of the USSR is even greater than that for the ferrous metallurgical
industry. Approximately 11 percent of the total volume of state
capital investment was directed into the coal industry* during the
period of the Fourth Five Year Plan (1946-50) and about 8 percent
during the period of the Fifth Five Year Plan (1951-55). The draft
Sixth Five Year Plan (1956-60) called for about 10 percent.
Within the industrial sector, according to the draft Sixth Five
Year Plan, about 16 percent of state capital investment in industry
was planned to be allocated to the coal industry. Of the more than
400 billion rubles of state capital investment which were to be
allocated to the heavy industries previously listed,*-* approximately
one-fourth was to be allocated to the coal industry.
Capital investments under the Fourth Five Year Plan enabled the
commissioning of new productive capacity in the extraction of coal
totaling 107.3 million tons, of which approximately 101 million tons
were commissioned for the Ministry of the Coal Industry.
. Under the Fifth Five Year Plan, new productive capacity amount-
ing to 116.1 million tons was commissioned (approximately 112 mil-
lion tons for the Ministry of the Coal Industry). The Fifth Five Year
Plan of construction-installation work for the Ministry of the Coal
Industry was fulfilled by 107 percent, yet the 5-year plan for com-
missioning new capacity was fulfilled by only 85.4 percent, a short-
fall of 20 million tons.*** 241
The draft Sixth Five Year Plan provided that new mines and
pits with a total capacity of approximately 240 million tons would
be commissioned for the Ministry of the Coal Industry during
* The data refer to the former Ministry of the Coal Industry, which
accounted for 96 percent of total coal production in 1955 and was to
account for 96 percent in 1960. 23 The reported volume of 46.7 bil-
lion rubles of capital investment during 1951-55 and the increase of
108 percent planned for 1956-60 are presumed to refer to state capi-
tal investments. Percentage shares were estimated from data in
source ?Lo/.
** See III, P. 33, above.
*** The initial announcements of results of the Fifth Five Year Plan
indicated a fulfillment of about 83 percent in commissionings and a
shortfall of 21 million tons. 2L2/
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1956-60,* an amount greater than that commissioned under the Fourth
and the Fifth Five Year Plans together. Average capacity of the
mines and pits commissioned during 1956-60 was to be 2.4 times that
of the average size during 1951-55. The changing regional shares
in commissioning of new capacity during 1946-55 and the projected
shares during 1956-60 are as follows:
Total Commissionings
(Percent)
Basin or Area
1946-50
1951-55
1956-60
Donbas
53
34
36
Moscow Basin
N.A.
N.A.
10
Kuzbas
7
16
13
Urals
9
9
9
Karaganda
3
9
11
East Siberia
N.A.
7
8
One of the most important tasks set for mining construction
under the Sixth Five Year Plan was the goal of reducing the period
required for construction of coal mines by 33 to 50 percent, generally
to a duration of 2 to 4 years. The tempo of shaft-sinking was to be
approximately doubled in order to facilitate reduction of construc-
tion periods. 2L4/
In contrast with the 45 coal concentrating plants commissioned
during 1951-55, the Sixth Five Year Plan called for 82 plants with a
total capacity of 113 million tons, or 2.6 times the capacity com-
missioned under the Fifth Five Year Plan. Fulfillment of the Sixth
Five Year Plan for production of coke was said to depend to a con-
siderable extent on completion of the new plants on schedule: for
* In a pamphlet published several months after the ratification of
the draft Sixth Five Year Plan, the former Deputy Minister of the
Coal Industry stated that under the plan commissionings of coal min-
ing capacity were to total 254.4 million tons, but this figure in-
cluded the capacity of reconstructed mines. The itemized plans for
basins and areas total 239 million tons and presumably exclude ap-
proximately 15 million tons of capacity in the form of reconstruction.
The draft plan for 240 million tons of conmlissionings, therefore,
apparently was not changed. In a review of achievements on Miners' Day
the issue of UgolT for August 1957 stated that mines and pits with
an annual designed capacity of almost 200 million tons were to be
constructed during 1956-60. In a review of achievements on the 40th
anniversary of the Soviet regime, however, the same journal for Novem-
ber 1957 again stated the goal of 240 million tons. 243/
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example, the concentration of coal for coking at the new plants was
to constitute, in respect to the share of the volume of concentrated
coal in the given regions in 1960, about 30 percent of production
in the Donbas, 20 percent in the Kuzbas, and 60 percent in Kara- -
ganda. 24
The former Ministry for Construction of Coal Industry Enter-
prises commissioned 80 percent of the new capacity put into opera-
tion in the Ministry of the Coal Industry during 1951-55. Its share
under the Sixth Five Year Plan was to rise to 88 percent. Thus,
during 1956-60, it was assigned the task of commissioning 330 new
mines and pits with a total capacity of 210 million tons (of which
136 with a capacity of approximately 75 million tons -- nearly 3
times the new capacity put into operation there during 1951-55 --
were to be built in the Donbas). In open pit mines the Ministry
for Construction of Coal Industry Enterprises was to start the con-
struction of 30 new pits with a total annual capacity of more than
75 million tons compared with 13 which were put into operation dur-
ing 1951-55 with an annual capacity of 18.6 million tons.* 246
The directives on the draft Sixth Five Year Plan had stipu-
lated that 35 percent of the planned increase in production of coal
in the USSR in 1960 above that of 1955 was to be obtained through
better organization of production and more efficient utilization of
existing production capacity. Conversely, approximately 65 percent
of the increase in production of coal was to be obtained from new
capacity put into operation during 1956-60. This interpretation is
substantiated by the following data on the Ministry of the Coal In-
dustry. Extraction of coal in 1955 by the Ministry of the Coal In-
dustry was 128 million tons greater than in 1950. More than 74 mil-
lion tons, or 58 percent, of the increase was obtained from mines
and pits commissioned during 1951-55. Timely construction and com-
missioning of new capacity during 1956-60 was to be even more im-
portant in meeting production goals because 130 million to 135 mil-
lion tons of the planned production increase of 194 million tons in
the Ministry of the Coal Industry was to be obtained from capacity
to be put into operation during the period. The commissioning of
about 240 million tons of new capacity for the Ministry of the Coal
Industry was to be the means of obtaining from 67 to 70 percent of
the planned increase in coal extracted by the Ministry of the Coal
Industry under the Sixth Five Year Plan. 2L
* Apparently 24 pits were commissioned during 1951-55 (capacity un-
known), including the 13 built by the Ministry for Construction of
Coal Industry Enterprises.
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The urgency of the construction program for the coal indus-
try under the Sixth Five Year Plan was appraised accurately by the
Minister of the Coal Industry at the Twentieth Party Congress. He
noted that planned commissionings of new mining capacity were con-
siderably underfulfilled during 1951-55, whereas utilization of
designed capacity of mines rose from 84 percent in 1950 to 95.8 per-
cent in 1955. Utilization of capacity in 1960, including mines to
be constructed under the Sixth Five Year Plan, was expected to rise
to 97.5 percent. The anticipated declines in reserve mining capac-
ity made manifest the need for a review of the program for mine con-
struction already drawn up under the Sixth Five Year Plan. The
Minister expressly criticized Gosplan and the State Economic Com-
mission for setting the scales and rates of mine construction too
low, especially in the Donbas. 248
The Chairman of the State Economic Commission, on the other
hand, accused the Ministry of the Coal Industry of submitting an un-
justifiably low draft production plan for 1956 and accompanying it
with greatly inflated requests for capital investment which were in
keeping neither with the existing resources of the economy nor with
the actual needs of the Ministry. He emphasized that the possibili-
ties of expanding production at existing enterprises were being
underestimated by noting that although the target for commissioning
new extractive capacity in the coal industry during 1951-55 was un-
derfulfilled by about 20 million tons, the target for production was
exceeded by 18 million tons._2/ As in the case of the ferrous
metallurgical industry, therefore, the speeches at the Twentieth
Party Congress clearly indicated a basic disagreement between adminis-
trators and planners as to the amount of construction required to
support the targets for production.
The Fifth Five Year Plan for construction-installation work
for the Ministry of the Coal Industry was exceeded by 7 percent,
whereas that for commissioning new capacity was fulfilled by only
85 percent. This disparity is clarified somewhat by an examination
of performance during 1954-56, as follows 2 20 :
Fulfillment of Plans
(Percent)
Construction-Installation
Work
Commissioning of New
Capacity
1954
91
78
1955
89
47
1956
99
56
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The Ministry for Construction of Coal Industry Enterprises
performed even worse. Its plans for construction-installation were,
fulfilled by 84 percent in 1955 and by 86 percent in 1956 (the poorest
record of fulfillment of any of the 7 construction ministries). 221/
The Ministry should have commissioned 92 mines with a total capacity
of nearly 40 million tons in 1956, but only 48 mines with a total
capacity of 18.5 million tons were completed, or about 46 percent of
the plan. Matters were scarcely any better in the Ukrainian SSR,
where the Ministry for Construction of Coal Industry Enterprises,
Ukrainian SSR, fulfilled its plan for construction-installation by
88 percent and commissioned only 14 of the planned 38 mines. ?2/
As a result, the decided shortfalls in planned commission-
ings in 1954-55 were not reversed in 1956. Although the Ministry
of the Coal Industry used nearly all its investment allocations un-
der the state plan and virtually fulfilled its planned volume of
construction-installation work, only 28 million tons of the planned
50 million of new capacity were put into operation -- a shortfall of
22 million tons.*
In the first year of the Sixth Five Year Plan, therefore, the
judgment of the Minister of the. Coal Industry proved to be correct.
Before the year was out, the Central Committee and the Council of
Ministers, USSR, had issued a decree on "Urgent Measures for Over-
coming the Lag in Mine Construction in the Ukrainian SSR." One of
its most important measures stipulated that construction of an ad-
ditional 35 mines, with a total annual capacity of 6 million tons,
was to be started immediately, and all 35 were to be commissioned
in the fourth quarter of 1957.
C. 1957-58.
In view of the failures in 1956, the plan for 1957 was di-
rected toward accelerating the rate of commissioning of new mines
and pits. A target of 42.7 million tons of new capacity was set
(54 percent to be in the Donbas), in contrast with the average of
23 million tons achieved during 1951-55 and the 28 million tons put
into operation in 1956. The goal for 1957, however, was several
million tons less than the plan for 1956.**
* A fulfillment of 49 percent was announced initially, and 54 per-
cent has been stated elsewhere. The fulfillment of 56 percent and the
shortfall of 22 million tons, however, constitute the most consistent
statement. 253/ The corresponding data for the Ukrainian SSR repre-
sented a fulfillment of 50 percent of the planned new capacity. ?j4/
** Some time later in 1957 the plan for commissioning new capacity
apparently was raised to 46 million tons. .256/
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Capital investments in the coal industry were to be raised
by 15 percent from the 15.3 billion rubles made in 1956 to 17.6 bil-
lion in 1957, with two goals in mind: (1) to facilitate fulfillment
of the plan for commissioning new capacity and (2) to increase the
construction carryover for commissioning new capacity in subsequent
years. As an additional insurance for fulfilling the plan for new
capacity, the Industrial Bank of the USSR (Promyshlennyy Bank --
Prombank) reviewed the construction schedules of above-limit* pro-
jects in the coal industry for 1957, reduced the funds for starting
new projects, and concentrated these funds instead on completion of
projects. As a result, the average assignme'n~t per mine was raised
by 20 percent above the average in 1956. j5
The plan for construction-installation work in the coal in-
dustry was exceeded both for the first half of 1957 and for the year
as a whole. The plan for capital investment was exceeded also, so
that investments were increased by 17.9 percent above those made in
1956,** with an increase of 33 percent in the Ukrainian SSR. Al-
though some difficulties were experienced in constructing the 35
Komsomol mines in the Donbas, 19 of'them were commissioned ahead of
time (on the 40th anniversary of the October Revolution), and the
remainder were commissioned by the end of December.
The unhappy combination of fulfillment of plans for construc-
tion-installation work and serious underfulfillment of plans for
commissioning new capacity emerged again in 1957. In the first half
of 1957, instead of 18.9 million tons of new capacity, only 36 per-
cent of the plan was commissioned.*** By the end of the year, al-
though new capacity commissioned amounted to about 35 million tons,
an increase of 24 percent above the commissionings achieved in 1956,
the revised plan for 1957 had been fulfilled by only 76 percent (or
82 percent of the initial plan for 1957). 260 In the Ukrainian SSR,
new capacity totaling 15.5 million tons was commissioned, compared
with 11.2 million tons in 1956. The plan had been to commission new
capacity of 21.9 million tons in 1957,**** however, so that the plan
for the Ukrainian SSR was fulfilled by only 71 percent. 261
* In Soviet planning an above-limit project is defined as a pro-
ject which is expected to cost more than a certain amount, ranging
from a minimum level of 5 million rubles for an administrative pro-
ject to 25 million rubles for most projects in heavy industry.
** The 21-percent increase stated in the report of plan fulfill-
ment for 1957 is not strictly comparable. 258/
*** The source, however, also stated that 7 million tons were
commissioned, which would imply a 25-percent fulfillment.
**** This figure is several million tons below that implied for the
Ukrainian SSR in the national economic plan for 1957: that is, the
national economic plan called for 23 million tons in the Donbas com-
pared with 20.6 million tons stated in the Ukrainian plan for 1957.
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Capital investments in the coal industry are to be increased
only slightly in 1958, but the volume of work strictly for mining
construction is to be increased by 12 percent above the work per-
formed during 1957. The commissioning of new capacity is to be in-
creased by 10.5 percent to about 39 million tons -- an increase of
only 4 million tons above the new capacity commissioned during
1957.* (Twenty-one open-pit mines with a total capacity of 44.3
million tons are to be under construction in 1958, more than 9 mil-
lion tons of which are to be commissioned during 1958, or approxi-
mately one-fifth of the total new capacity to be commissioned.)
Along with the considerable shortfall in new capacity during 1957,
it appears that the construction carryover fell noticeably short
of the goal in spite of careful stipulation to the contrary in the.
plan. for 1957.
This fact is substantiated further by the plan for 1958,
which acknowledges the strains to be imposed during 1958 by an
acceleration in the buildup of construction carryover. During
1958, mines and pits scheduled for commissioning in 1959 are to
have more than 68 percent of the estimate cost of the given projects
put in place by 1 January 1959, in contrast with 1957, when approxi-
mately 63 percent of the estimate cost of the mines and pits which
were to be commissioned during 1958 had been put in place by 1 Jan-
uary 1958. 263
D. Problems in Construction.
1. Shortages of Construction Resources and High Costs.
Severe shortages in construction materials and labor and,
to a lesser extent, shortages in construction equipment and in hous-
ing have been and continue to be among the most serious handicaps to
meeting schedules for construction of coal mines in the USSR. Short-
ages in construction materials have been experienced throughout the
USSR, especially in the Ukrainian SSR. In Voroshilovgrad Oblast,
for example, construction organizations building coal mines received
25 to 30 percent less than the required quantity of bricks, rock
products, and other local building materials during 1956, and the
problem apparently persisted through 1957. In regard to the Donbas,
the perhaps extreme claim has been made that 40 percent of the work-
ing time in construction of mines is lost because of late deliveries
of building materials, including mine props and concrete. 264
* A 1958 plan of 37.1 million tons was mentioned in late 1957, and
another of 35.7 million tons in March 1958, although the latter goal
may have applied only to "large" mines. 262
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At least through 1956, organizations responsible for con-
struction of coal mining facilities either were inadequately provided
with construction equipment or were utilizing poorly the equipment .
available, with the result that mechanization of mining construction
lagged behind plans. 26
Shortage of labor in mining construction is still a
serious handicap. A shortfall in commissioning of new capacity oc-
curred again in 1957 and was, to a considerable extent, the result
of a shortage of construction workers on projects which were to
have been put into operation during 1957. During the first half of
the previous year, 1956, mines to be commissioned in the Ukrainian
SSR had had 4,500 to 5,500 fewer construction workers than were re-
quired. Another measure of the severity of the labor shortage is
implicit in the decree on accelerating construction of mines in the
Donbas in late 1956, to the effect that 25,000 young construction
workers were to be recruited in the fourth quarter of 1956 and the
first quarter of 1957 -- a sizable addition to the 150,000 workers
then constructing mines in the Donbas. Again in the Donbas, idle
time of construction workers is excessive, frequently reaching 2 to
3 hours per shift, and productivity is low. Much of the idle time,
of course, is caused by the severe shortages and late deliveries of
construction materials noted above.
The shortages of both unskilled and skilled construction
workers, including engineering and technical workers, suffered at
mining construction sites throughout the USSR are complicated fur-
ther by the high turnover of such personnel. Much of the excessive
turnover is the result of a shortage of adequate housing facilities,
low wage and salary scales, and insufficient provision for increas-
ing the skills of workers through training. Although some provi-
sions were made for accelerating construction of housing for mine.
construction workers and increasing the wage and salary scales, at
least in the Donbas, labor shortages and high turnover continued to
handicap the scheduled completion of mines throughout 1957.* 2L6/
In view of the prevalence of shortages of construction
materials and labor, it is not unexpected that costs of construction
have been considerably higher than planned. For example, in the
Ukrainian SSR costs of construction exceeded estimates by approximately
* Fulfillment of the general plans for construction-installation
work in the face of severe shortages of materials and manpower is
not as strange as it may seem. Overexpenditure of materials and labor
(and thus higher costs than planned), redirection of available re-
sources into the more "profitable" type of work, and the fact that
resources were not more concentrated on projects nearing completion
are among the chief reasons.
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14 percent. Another cause of high costs is the frequent revision of
designs and specifications for many mines, even in the finishing
stages of construction, usually with sharp increases above the pre-
viously approved estimates. High construction costs continue to be.
a hindrance to completion of planned new capacity -- much of the
shortfall in commissioning new capacity during 1957 is explained by
the need for considerably greater volumes of work to be performed
than envisioned in the plans. 267
2. Prolonged Construction Periods and Misallocation
of Resources.
Construction organizations in the Donbas and in the USSR
at large have been criticized sharply for'beginning construction of
mining facilities and sinking of shafts before housing has been pro-
vided for their workers and even before the required spur tracks and
access roads have been constructed. Poor organization and super-
vision of the construction effort also contribute to lagging con-
struction. Mines are customarily built by several construction
trusts which carry out their individual assignments of tunneling,
installation, road construction, and the like, with little or no
coordination of the various activities. 268 '
The Sixth Five Year Plan had called for an approximate
doubling of the tempo of sinking of shafts as one of the most im-
portant means for reducing the periods for construction of mines.
(Sinking of shafts is said to take up roughly 70 to 80 percent of
the total time required for construction of mines. 269/) of all
kinds of shaft-sinking, the sinking of vertical shafts is presently'
the most mechanized, yet progress has been less than satisfactory.
The tempo in the sinking of vertical shafts by coal construction
organizations in the USSR as a whole has been raised over the years
as follows:
Year
1951
1952
1953
1954
1955
1956
1957
Average Monthly Tempo
Maximum Monthly Tempo
12.5
43.3
17.4
94.4
18.2
100.7
24.5
150.0
26.7
202.1
27.8
150.6
30.0
241.1
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Although the average monthly tempo by 1956 was more than double that
of 1951, the rate of increase has slackened noticeably since 1954.
The plan for 30 meters in 1956 was not achieved. The average rates
of advance in tunnel heading, in both horizontal and inclined mining,
were said to be-completely unsatisfactory as of the beginning of 1958.
The plan for 1958 calls for further improvements in underground mining
construction as one of the most important tasks for. construction
workers. 270 The present average rates of advance are additional
factors which continue to contribute to prolonged periods of con-
struction.
Probably the most important reasons for excessive delays
in completion of coal mines.are the practices of dispersing con-
struction resources among too many projects and of low yearly alloca-
tions of investments. In the first year of construction of many
mines and pits, capital investment is provided at the rate of only
5 to 7 percent of the total estimate cost of the given projects. In
the following 2 to 3 years, investment is frequently limited, and,
conversely, in the year in which commissioning is planned, excessively
high levels of capital investment are stipulated. Thus the assign-
ment of investment entails overlong periods of construction and pro-
vides investment goals in the later years which construction organiza-
tions are incapable of fulfilling. Construction of coal mines, there-
fore, is spread over 7 to 10 years instead of 2 to 4 years.
In the construction of many mines for which the estimate
costs range from 170 million to 230 million rubles, for example, the
investment resources allocated yearly have been at rates which spread
construction over 8 to 12 years. In these cases the funds allocated
in the first 3 to 4 years scarcely furnish 8 to 10 percent of the
estimate costs yearly. In recent years the allocations have been in-
cieased, but the volume of work has been increased less than planned
because construction organizations did not have the necessary capacity.
Thus from the start of construction of such mines to 1 January 1957,
20 to 40 percent less than the planned volume of work had been
achieved.
The Sixth Five Year Plan was to provide for,considerable
improvement in yearly allocations of investment. Capital investment
was to be planned at not less than 10 to 15 percent of the estimate
cost in the first year of construction. Investment in the inter-
mediate years was to be raised considerably and, for the years of
commissioning, generally was to be planned at levels less than those
in the year immediately preceding commissioning. In the majority
of cases, apparently, 90 percent or more of the estimate cost of the
project was to have been put in place by the beginning of the year
in which the project was to be commissioned. 271 In fact, however,
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this plan is far from having been achieved, as indicated above in the
discussion of the plan for 1958.
The persistence of the dispersion of investment among too
many projects and low yearly allocations of investment, uncoordinated
with plans for putting productive facilities into operation, is shown
in the following data on performance in construction for the Ministry
of the Coal Industry during 1954-56 272 :
Million rubles 9,196 9,335 10,218
Percent of plan 91.0 89.1 99.1
Capacity of mines and pits commissioned
Percent of plan 78.2 47.0 55.7
Capital stock commissioned
Actual (Million rubles) 11,900 10,349 11,501
Shortfall (Million rubles) 1,516 3,109 2,947
Fulfillment (Percent of plan) 88.7 76.9 79.6
As of end of respective year
(Million rubles) 13,087 14,046 15,755
Increase during respective year -
(Million rubles) 1,180 959 1,709
If the resources which went into the increased volume of
unfinished construction during 1954-56 had been concentrated instead
on projects which were to have been commissioned during the period,
the commissioning of capital stock would have been improved consider-
ably, and the commissioning of new capacity would not have been so
far below the plan. From all indications the volume of unfinished
construction increased again during 1957 -- the plans for construction-
installation and capital investment for the coal industry were ful-
filled or exceeded, but the plan for commissioning new capacity was
not fulfilled.
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The cumulative effects of low allocations of investment
year after year have been discussed by a Soviet mining engineer,
I.K. Stanchenko, in a study published in 1957. His study covets
data on the planning and appropriation of investments for mining
construction during the previous 8 to 9 years,* with reference to
254 mines and pits with a total capacity for production of about
150 million tons of coal per year. His sampling covers more than
60 percent of the total new capacity to be commissioned under the
Ministry of the Coal Industry under the Sixth Five Year Plan. The
254 mines and pits were divided into 5 groups, each group contain-
ing those mines and pits which were planned to be commissioned in
each of the 5 years 1956-60. Construction of these projects would
be prolonged because of the inadequacy of the annual capital in-
vestment and of the volume of construction-installation work which
were planned. Of the 254 mines, 176, or approximately 70 percent,
would be commissioned later than planned, as follows:
110 mines
41 mines
25 mines
1 to 2 years late
3 to 4 years late
5 to 7 years late
In the group of mines which were to have been commissioned
during 1956, the annual allocations of investment and consequent
achievements were at low levels for a number of years after the start
of construction. Only in the last 3 years of construction, when the
mines were entering the precommissioning stage, were the yearly al-
locations and performance appreciably increased. Yet the volumes of
construction at these mines were still below the norms in 1954 and
1955. In fact, the norms were achieved only in 1956 (the year of
commissioning), with much work still remaining to be made up from
previous years.
In the first 4 years the total sum allocated for con-
struction of a number of mines in the group to be commissioned dur-
ing 1957 amounted only to the sum which should have been allocated
in the first 2 years. Subsequently, from 1953 through 1956, annual
allocations never achieved the volumes envisioned by the'norms.
For the group of mines to be commissioned in 1958, the
annual allocations per mine were also low in the early years, and,
* The study excludes a comparatively small number of projects on
which construction was prolonged extraordinarily and small mines
constructed by the high-speed method in 1 to 1-1/2 years.
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although increased somewhat from 1954 on, were still far from reach-
ing the norms. For this group of mines, the volume of construction-
installation work planned in the precommissioning year of 1957
totaled about 1 billion rubles, 230 million rubles less than re-
quired by the norms. Thus the low volumes of construction put in
place at the mines in this group were not expected to be overcome
during 1957. Finally, the misallocations and lags in construction
at the mines which were to be commissioned during 1959 and 1960 were
even more noticeable. 273
The above data raise the question of the appropriate
steps to be taken to correct the dispersion of resources and the
prolonged periods of construction. Correction may be sought (a) by
appropriately increasing the total volume of construction resources
allocated to mine construction or, (b) working within the given
volume of resources allocated, by reducing the number of projects
under construction and concentrating the released resources on the
remaining projects. The choice between alternatives, however, must
be governed also by the volume of construction carryover required
to support the plans for putting new capacity into operation.
By the beginning of 1957 the capacity of mines and pits
under construction was said to be nearly equal to that remaining to
be commissioned under the draft Sixth Five Year Plan, or approxi-
mately 200 million tons.* 274 The crucial question at that time,
therefore, concerned the approach to be taken during 1957-60. One
approach perhaps is best rendered in the complaint that although
320 above-limit mines were then under construction for the Ministry
of the Coal Industry (and not all of them were to be completed un-
der the Sixth Five Year Plan),-it was planned to undertake the con-
struction of 110 new mines. Prombank also was inclined to limit
severely new starts during 1957. 275 Stanchenko, on the other hand,
concluded that it was not possible to reduce the number of projects
under construction if the Sixth Five Year Plan were to be fulfilled.
Instead, it was necessary to start additional new mines and pits in
1957 and 1958 in order to provide the construction carryover for
commissioning new capacity subsequent to 1960. 276 The weight of
the evidence seems distinctly in favor of Stanchenko's position.
* Stanchenko had indicated that the Ministry for Construction of
Coal Industry Enterprises had approximately 180 million tons under
way, or a minimum for that Ministry under the Sixth Five Year Plan.
Other data justify the extension of the proportion to the plan for
the Ministry of the Coal Industry as a whole.
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Aside from the evidence already cited in regard to the
serious failures pending in meeting construction schedules during
1956-60, unless greatly increased allocations are made and matched
by equivalent physical resources, the precariousness of the situation
can be demonstrated as follows. The construction carryover as of the
beginning of 1957 (in terms of annual capacity) has been estimated at
approximately 200 million tons per year. New capacity under way but
not completed as of the beginning of 1956 is estimated at a maximum
of 100 million tons.* Thus the net new capacity put under construc-
tion during 1956 is estimated at approximately 100 million tons. The
undercutting of new starts during 1957 appears to have been consider-
able. Coal mines with a total capacity of 170 million tons per year
were said to be under construction early in 1958. 278 In conjunc-
tion with the new capacity of 200 million tons under way as of the
beginning of 1957 and the approximately 35 million tons which were
commissioned during 1957, it is implied that new projects totaling
about 5 million tons of new capacity were started during the year.
Several conclusions can be drawn from the above data.
Cutting back the carryover in new capacity to 170 million
tons at the beginning of 1958 strongly suggests that the required
buildup of carryover for 1959-60 is being seriously underestimated.
Assuming that no additional new capacity is started during the re-
mainder of 1958 and that the planned goal of commissioning new capac-
ity totaling approximately 39 million tons is achieved, the new
capacity under way by the beginning of 1959 can be estimated roughly
at 130 million tons. The total commissionings required in 1959-60,
if the Sixth Five Year Plan is to be fulfilled, amount to nearly
140 million tons.** Moreover, the net addition of about 100 million
tons of new capacity on which construction was started during 1956
means that nearly 100 million*** of the projected 130 million tons
to be under way at the beginning of 1959 will have been under con-
struction for only 2 to 3 years by that time.
* Under the Fourth and Fifth Five Year Plans, mines and pits total-
ing 286 million tons of new capacity were put under construction,
whereas the commissionings during the same period totaled 214 million
tons. 277 Thus it is estimated that a minimum of 72 million tons of
new capacity was carried over from the Fourth and Fifth Five Year
Plans into the Sixth Five Year Plan. A generous allowance has been
made for new capacity which might have been started before 1946 but
had not yet been completed by the beginning of 1956.
** See Table 9, p. 90, below.
*** The 6 million tons of new capacity in the form of 35 Komsomol
mines begun during 1956 have been deducted.
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Therefore, the acceleration in construction required to
commission the remaining 177 million tons of new capacity during
1958-60, even with no net carryover into the subsequent period, seems.
considerable. To provide for a reasonable carryover beyond 1960 will
only increase the demand for scarce construction resources. Concen-
tration of resources, at any rate, is not enough. Only the allocation
of a much greater volume of resources can provide the solution if the
goals of the Sixth Five Year Plan are to be retained.
The directives of the Soviet Sixth Five Year Plan called for
commissioning new mines and pits with a total capacity of about 240
million tons, or more than was commissioned under both the Fourth
and the Fifth Five Year Plans. Performance under the Fifth and the
Sixth Five Year Plans, as presented in Table 9,* was consistently be-
low the level planned during 1954-57.** Even if the plan for 1958
is achieved, only 43 percent of the goal of the Sixth Five Year Plan
will have been achieved by the end of the first 3 years of the plan.
Accelerated construction and commissioning of new capacity are re-
quired if the plans are to be met. Sufficient resources for the ac-
celeration can be obtained only with a greater total quantity of con-
struction resources -- materials, manpower, and equipment.
Resources at the disposal of organizations constructing coal
facilities have been and continue to be inadequate to perform the
construction programs planned. One of the results of planning con-
struction programs which are much greater than. warranted by the
available resources is a large-scale dispersion of those resources
among too many projects or low yearly allocations of investment re-
sources for the individual projects or both. Because the principal
handicap has been the inadequacy of construction resources, the
planners must assume chief responsibility for failures to correct
the dispersion of investments and to provide the resources necessary
to build up the capacity of construction organizations to levels co-
ordinate with the planned programs of construction. 280 The problems
of dispersion of investments and prolonged construction periods seem
to have been clear to all concerned, but disagreement prevailed as
to the proper correctives to be introduced.
* Table 9 follows on p. 90.
* Construction of coal-concentrating plants also had fallen behind
through 1956-57, and it is planned to double the work on such pro-
jects in 1958 in order to overcome some of the lags. L79/
89
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Commissioning of New Capacity for the Extraction of Coal
Under the Ministry of the Coal Industry in the USSR
Under the Fifth and Draft Sixth Five Year Plans
1951-60
Amount
(Million Metric Tons)
Period
Plan
Fulfillment of Plan
Actual Shortfall (Percent)
Fifth Five Year Plan
(1951-55)
132
112
20
85
1954
N.A.
N.A.
N.A.
78
1955
N.A.
N.A.
N.A.
47
1956
50
28
22
56
1957
46
35
11
76
1958
39
Average yearly re-
quirement, 1959-60 69 J -
Sixth Five Year Plan
(1956-60) 240
a. The average yearly commissioning required in the last 2 years of
the Sixth Five Year Plan was determined from the difference between
the goal of the draft Sixth Five Year Plan and the sum of com-
missionings in 1956-57, assuming that the plan for 1958 is fulfilled.
Also, existence of substantial disagreement as to the volume
and rate of construction required to support the goals for production
of coal under the Sixth Five Year Plan was implicit in the speeches
of the Minister of the Coal Industry and the Chairman of the State
Economic Commission. The years since the convening of the Twentieth
Party Congress have substantiated the appraisal of the Minister of
the Coal Industry that a greater construction program was required,
especially in the Donbas.
The relationship between failures to fulfill the goals for
commissioning new capacity and the goals for production is more dif-
ficult to determine for the coal industry than for many other indus-
tries because most of the large, newly built mines are brought to
their designed capacity only 5 to 6 years or more after they have
been-commissioned. 281 The low increase planned in mining coal in
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the Pechora Basin under the Sixth Five Year Plan, however, reportedly
resulted from lags in mining construction suffered in previous years.. 2L2/
The decree of October 1956 on the need for urgent acceleration of
mine construction in the Ukrainian SSR, and particularly the Donbas,
is further evidence that lagging construction was handicapping ful-
fillment of production goals in the first years of the Sixth Five Year
Plan. In any case, there is little doubt that the production returns
initially expected from completions under the Sixth Five Year Plan
have been seriously compromised.
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To supplement the discussion given above on Soviet construction
in the construction materials, ferrous metallurgical, and coal in-
dustries, a brief survey of construction in the electric power,
petroleum, nonferrous metallurgical, and chemical industries is
presented in the following sections. The principal question at
issue is the extent to which it might be feasible to free construc-
tion resources from employment in the latter industries, or cut
back on previously envisioned increased allocations, in order to
redirect the released resources into construction for the construc-
tion materials, ferrous metallurgical, and coal industries.
A. Electric Power Industry.
Under the Soviet Fifth Five Year Plan (1951-55), generating
capacity totaling 17.6 million kilowatts (kw) net* was commissioned
at electric power stations in the USSR, more than double the 8.4 mil-
lion kw commissioned under the Fourth Five Year Plan (1946-5o). 22L3/
The Fifth Five Year Plan had called for an approximate doubling of
the capacity of electric power stations, including a trebling of the
capacity of hydroelectric power stations.*** Expansion of established
thermal electric power stations was to provide for most of the planned
increase in thermal electric generating capacity. 28
For the Ministry of Electric Power Stations, however, the
Fifth Five Year Plan of construction-installation work was fulfilled
by 88 percent, and the plan for commissioning new capacity for elec-
tric power was fulfilled by 84 percent.*** 28 Therefore, a total
capacity of about 11.5 million kw of a planned 13.7 million kw was
commissioned during 1951-55, or a shortfall of 2.2 million kw in the
Ministry. Because the shortfall in commissioning hydroelectric
generating capacity is estimated to have been approximately 2.8 mil-
lion kw, or an underfulfillment of 52 percent, underfulfillment of
the Ministry's plan for commissioning new capacity for electric power
as a whole was more than accounted for by the shortfall in commissioning
* The capacity of electric power stations was raised 17.6 million kw
under the Fifth Five Year Plan. 284 The total of 17.6 million kw com-
missioned is a net increase which excludes the kilowatt capacity re-
placed or retired.
** It is undetermined whether these multiples referred to all elec-
tric power stations or only to those under the Ministry of Electric
Power Stations.
*** Under the Fifth Five Year Plan the Ministry of Electric Power
Stations administered stations with generating capacities totaling
60 to 62 percent of the capacity of all electric power stations in
the USSR and 84 to 88 percent of all hydroelectric power stations. 286
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of hydroelectric generating capacity.* It can be assumed, therefore,
that the Fifth Five Year Plan for commissioning thermal electric
generating capacity was exceeded.
Much of the generally favorable performance in construction.
of thermal electric power stations during 1951-55 probably resulted
from the primary emphasis on expansion of established stations, in
contrast with the concerted emphasis on completion of new hydro-
electric power projects, and from increased use of standard designs
in construction of large, regional thermal electric power stations.
Under the Fifth Five Year Plan, 24 hydroelectric power stations were
commissioned.** When all units were installed, these stations were
designed to have a total capacity of more than 5 million kw. By the
end of the Fifth Five Year Plan, only about half of the indicated
total capacity had been put into operation at these projects. 28
1. Draft Sixth Five Year Plan (1956-60) and Long-Term
Development.
Capital investment in electric power stations and networks
was to be increased approximately 90 percent under the draft Sixth
Five Year Plan (1956-60) in comparison with that achieved under the
Fifth Five Year Plan. The generating capacity of electric power
stations was to be increased by about 38 million kw (excluding atomic
electric power), of which 27 million kw were to be in thermal electric
power stations and 11 million kw in hydroelectric power stations. In
1960, total generating capacity in thermal electric and hydroelectric
power stations was to be 2.03 times that, of 1955. The total generating
* These estimates were made from data on the capacity of electric
power stations of the Ministry, including hydroelectric power sta-
tions, during 1951-55. Capacity in 1950 was estimated by assuming
that the Ministry administered 60 percent of all electric power
capacity in the USSR and 85 percent of all hydroelectric power capac-
ity. The Fifth Five Year Plan for hydroelectric power capacity un-
der the Ministry was estimated by assuming that the goal of trebling
the capacity of 1950 applied to the Ministry. If the approximate
doubling of electric power capacity and trebling of hydroelectric
power capacity called for by the Fifth Five Year Plan is assumed to
apply to the entire USSR rather than to the Ministry alone, the con-
clusion is unchanged -- the shortfall in commissioning hydroelectric
power capacity more than accounted for the shortfall in total electric
power capacity during 1951-55. In either case, the conclusion seems
to have been corroborated by the statement on the results of the Fifth
Five Year Plan, which noted that the task for commissioning total
electric power capacity was underfulfilled because of lagging con-
struction of hydroelectric power stations. 288/
** That is, at least the first aggregates TiE aggregate consists of
a turbine and a generator) of the given projects were commissioned.
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capacity of thermal electric power stations was to be 1.89 times that
of 1955 and that of hydroelectric power stations 2.7 times.* ?93
The draft Sixth Five Year Plan called for completion of
all aggregates of the hydroelectric power station (GES**) at Kuybyshev
and the one at Stalingrad, as well as the installation at Votkinsk
with a capacity of 540,000 kw. The Kremenchug GES (450,000 kw,
later raised to 675,000 kw) and the Dneprodzerzhinsk GES (250,000 kw)
were to be constructed and put into operation. Construction was to
be started on the Kama GES on the Lower Kama River (about 900,000 kw),
the Cheboksary GES on the Volga (800,000 kw), and the Saratov GES on
the Volga (about 1 million kw). Large hydroelectric power stations
were to be built in the eastern regions of the USSR. The Irkutsk
GES with a capacity of 660,000 kw and the Novosibirsk GES with a capac-
ity of 400,000 kw were to be commissioned. The first section was to
be commissioned at the Bratsk GES (full capacity of 3.2 million kw,
later raised to 3.6 million kw). Construction was to be started on
the Krasnoyarsk GES (3.2 million kw, later raised to 4 million kw)
and the Kamensk GES (500,00a kw) 224
The Sixth Five Year Plan emphasized construction of large
thermal electric power stations with power units of 100,000 to
150,000 kw, 200,000 kw, and even 300,000 kw, in contrast with the
smaller units installed in previous years. / A total of 10 ther-
mal electric power stations with a capacity of 1 million to 1.2 mil-
lion kw each are being constructed. 2261
Preliminary plans for construction of electric power sta-
tions over a longer period of time have been stated. In conjunction
with the production of electric power projected for 1972, commission-
ing of new capacity in thermal electric power should total 8 million
to 9 million kw per year during the period 1961-65. Another source
stated that by 1965 total installed capacity of electric power sta-
tions is to be 2.2 times that of 1957. The source also stated that
total installed capacity of thermal electric power stations is to be
2.1 times, and of hydroelectric power stations to be 3.9 times, that
of 1957.*** g
* One source stated that total generating capacity was to be 2.2
times that of 1955, ?,91/ and another indicated that thermal electric
power capacity was to be 2.2 times, and. hydroelectric power capacity
2.7 times, that of 1955. / These references may well have been
only to stations under the direction of the Ministry of Electric
Power Stations.
** Gidroelektricheskaya stantsiya -- hydroelectric power station.
*** The discrepancies in these long-term plans are explored on
p. 101, below.
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Annual commissioning of new generating capacity in elec-
tric power stations of the USSR, including hydroelectric power sta-
tions, has been as follows*:
1951,
2.5
0.1
1952
3.1
0.5
1953
3.4
0.7
1954
4.2
0.6
1955
4.4
0.9
1956
5.6
2.4
1957
5.0
1.5
1958 plan
5.6
0.6
In 1956, the first year of the Sixth Five Year Plan, more
than 50 hydroelectric power stations were under construction. Five of
these stations, including those at Saratov and at Dneprodzerzhinsk,
had been started in 1956. 300 Installation of aggregates was heavily
emphasized, with the result that the plan for commissioning new capac-
ity in hydroelectric power plants was exceeded, although only
slightly. 301 Even so, the 2.4 million kw commissioned in hydro-
electric power stations were less than the estimated shortfall in
commissionings of 2.8 million kw for the Ministry of Electric Power
Stations under the Fifth Five Year Plan.
The large volume of unfinished construction and disper-
sion of investment resources among too many construction projects re-
ceived much criticism in the latter half of 1956. A general policy
of concentrating resources on the most important projects and on those
nearing completion was stipulated in the national economic plan for
1957. This policy of concentration-of resources was also applied to
construction of electric power stations, in spite of the heavy con-
centration on installations during 1956. The Ministry of Electric
* Data for 1951-56 are derived from source 298/, which gives the total
generating capacity of stations for the individual years. As noted
above, the sum of the annual increases coincides with the reported
commissioning of electric power capacity totaling 17.6 million kw dur-
ing 1951-55. For 1956, it is assumed that the increase in capacity
does not understate the actual commissionings -- that is, that re-
tirement of capacity in 1956 was again insignificant. Data on 1957,
and the plan for 1958 are from source 222/.
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Power Stations planned to channel approximately 60 percent of its
capital investment during 1957 into completion of projects already
in partial operation. The Ministry was not to begin construction of
any new stations except the Yerevan GES. 302 Even so, total com-
missionings dropped to almost 5 million kw in 1957, with an even
greater drop in commissioning capacity at hydroelectric power sta-
tions.
The policy of concentrating resources on completing elec-
tric power projects during both 1956 and 1957 probably accounts for
much of the cutback in commissionings of hydroelectric capacity which
is planned for 1958 and suggests that the plan for commissioning a
total of 5.6 million kw of new capacity in electric power as a whole
may not be fulfilled in 1958. From 1954 on, however, commissionings
of thermal electric generating capacity apparently have been fairly
constant at a little more than 3 million kw per year, and it may be
possible to raise this figure sufficiently to meet the goal for total
commissionings in electric power in 1958. The plan to start con-
struction on 5 new, large thermal electric power stations during 1958
problably indicates some renewed emphasis on building up construction
carryover in electric power projects. 303
The principal problems in construction of electric power
stations are similar to those in construction for other heavy in-
dustries. Construction costs have been higher than planned and the
periods of construction prolonged, primarily because of dispersion
of financial and physical resources among too many projects, low
yearly allocations of investment to given projects, and inadequate
capacities of construction organizations. Other important handicaps
to efficient organization of the construction effort are late de-
liveries of designs and specifications and insufficient utilization
of skilled construction workers. Probably less important are short-
ages of some types of construction equipment and spare parts, the
dragging out of finishing work after the basic projects have been put
into operation, and the delivery of misfitting production equipment
which complicates the installation process.
Although costs of constructing thermal and hydroelectric
power stations probably are still higher than planned, considerable
progress in reduction of costs was made during 1951-57. Costs of
construction-installation apparently have been reduced with greater
success in construction of thermal electric power stations than in
hydroelectric power projects.* In 1955, costs in construction of
* This conclusion is based on a comparison of changes in costs of
construction-installation from 1950 to Oootnote continued on p. 97
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hydroelectric power stations were 5 percent greaterthan planned, with
more than 90 percent of the excess encountered at 8 of the largest
projects. More than 9 billion rubles in excess of plans had been spent
at 6 hydroelectric power stations which were still under construction
in 1955. -High costs of construction materials play a large part in
the high costs of constructing hydroelectric-power stations, mostly
as a result of the high costs of materials produced on site.* Over-
expenditure of building materials is also an important factor -- total
input of cement in construction of hydroelectric power stations dur-
ing 1956 was 10 to 15 percent greater than called for by the norms.
Overexpenditure of wages, on the other hand, has been a much less im-
portant contributor to high construction costs. In general, construc-
tion of hydroelectric power stations has been planned at a volume con-
siderably greater than warranted by the available construction re-
sources, resulting in high construction costs and prolonged periods
of construction. 304
Norms for the duration of construction of thermal elec-
tric power stations with installed capacities from 300,000 to
600,000 kw have been established at 41 to 43 months for commission-
ing of the first aggregate, and 55 to 60 months for commissioning at
full capacity. In recent years, several large thermal electric power
stations were completed in periods within the norms, but construction
periods of most stations evidently have exceeded the norms.
Of 60 months required for construction of a thermal elec-
tric power station with a capacity of 600,000 kw, the preparatory stage.
of construction usually takes 20 to 22 months; the basic stage, 23 to
25 months; and the finishing stage, 15 months.** In the US, on the
1957 in the Main Administration of Construction and Installation of
Thermal Electric Power Stations in the Central and South Regions with
those in the Ministry of Construction of Electric Power Stations.
* The need for constructing more enterprises to produce building
materials on site than is economically justified is adequate testimony
to the existence of shortages or interrupted' supplies of such materials
or both.
** The preparatory stage involves the construction of housing and en-
terprises to produce materials on site, the laying of railroads and
access roads, and the installation of power and water supply systems
for construction organizations; the basic stage involves the construc-
tion of the entire complex of industrial facilities necessary for
putting the first aggregates into operation and the construction of
the housing required for station personnel; the finishing stage in-
volves commissioning the remaining aggregates and housing, cultural
and educational and industrial facilities.
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other hand, the preparatory stage requires only 3 to 4 months. Be-
cause the time required for the basic stage in both countries is
approximately the same, the primary means to a considerable reduction
of the duration of construction in the USSR is a reduction of the
duration of the preparatory stage.
Another important factor in prolonged periods of construc-
tion and high costs of thermal electric power stations is said to be
the practice of designing stations in sections. Inadequate long-term
planning results in stretching out construction of power stations into
4 and 5 uncoordinated increments covering a total of 10 to 12 years
rather than phasing the entire project. Construction work is inef-
ficiently organized, and labor and equipment are poorly utilized. 30
Periods of construction of hydroelectric power stations
have been prolonged unduly. Norms for construction of small- and
medium-size hydroelectric power stations with capacities up to
200,000 kw have been established at 2-1/2 to 3 years, and for large
stations of more than 200,000 kw, 5 years. Although a number of
stations were built. within the norms under the Fifth Five Year Plan,
the pattern has been largely one of protracted periods of construc-
tion. 306 After 7 years of construction the first'aggregate of the
Pavlovsk GES had not yet been commissioned, and the first aggregates
at the Gor'kiy GES were commissioned only in the ninth year of con-
struction. 307 The first aggregates of the Novosibirsk GES were
commissioned in 1957, after about 6 years of construction. 08
The first aggregate at the Stalingrad GES will be commissioned by the
end of 1958 or the beginning of 1959, after about 8 years of construc-
tion. 30 Even the relatively favorable performance in construction
and commissioning of the first section of the Kuybyshev GES was quali-
fied by considerable lags in construction of several of its ancillary
structures. 310
A disruptive pattern in the use of teams of skilled con-
struction workers still persists in construction of both thermal elec-
tric and hydroelectric power stations. After completion of specified
stations or sections, teams of experienced workers frequently are dis-
banded rather than transferred to other electric power projects. The
process of assembling working teams of skilled personnel is needlessly
handicapped because of the absence of long-term plans which coordinate
construction schedules with anticipated releases of construction
teams. 311
A practice which contributes to the inefficient utili
zation of construction resources, especially in construction of hydro-
electric power stations, is that of prolonging the finishing stage of
construction for years after the last aggregate has been commissioned.
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Construction organizations have been responsible for such delays be-
cause of their reluctance to perform jobs which remain after the for-
mal commissioning of new capacity, but financial organizations also
have been at fault for their failures to allocate sufficient funds for
completing the remaining work with dispatch. 312
4. Prospects.
The lags in construction of facilities to produce electric
power have been and apparently will continue to be less urgent than
those in the construction materials, ferrous metallurgical, and coal
industries when measured against the estimated needs for electric
power. Commissioning of capacity to produce electric power under the
draft Sixth Five Year Plan as such,.however, probably will fall short
of the goals. The record in commissioning new capacity during 1956-57
and the requirements to fulfill the Sixth Five Year Plan are approxi-
mately as follows:
1956
1957
1958 Plan
Average annual re-
quirement, 1959-60**
Sixth Five Year Plan***
Thermal
Electric*
Hydro-
electric
Total
3.2
2.4
5.6
3.5
1.5
5:0
5.0
0.6
5.6
7.6
3.2
10.9
27
11
38
There would seem to be little chance of fulfilling the
Sixth Five Year Plan for commissioning new capacity in electric power
stations unless the volume-of resources directed into construction of
electric power facilities is increased very considerably during 1958-60.
Fulfillment of the plan for 1958 will require a greater volume of con-
struction resources. Fulfillment of the Sixth Five Year Plan would
seem to be less urgent at this time because of the reduced need to
serve industrial facilities, the construction of which also is lagging.
* Derived as the residual figure from data on capacity of hydro-
electric power stations and total commissionings, so that the estimated
commissionings of thermal electric generating capacity are maximum
estimates,
** Assuming fulfillment of the plan for 1958.
*** The total figures for the data on the Sixth Five Year Plan have
been rounded to the nearest million kilowatts.
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The question then is raised of present plans for construction in the
electric power industry.
As indicated above, some authorities in the USSR have
stated that 8 million to 9 million kw of new capacity for thermal elec-
tric power should be commissioned yearly during 1961-65 to achieve the
output of electric power projected for 1972. Plans call for building
a greater number'of large thermal electric power stations (with capac-
ities of 1 million to 2 million kw and larger and power units of
150,000 to 200,000 kw and larger), which would permit a reduction in
the volume of construction-installation work required per kilowatt of
new capacity on the order of 15 percent. 313 Such a construction
program in thermal electric power stations,' however, also would re-
quire a greater volume of construction resources than has been allo-
cated in the past.
Another statement of long-term plans for the electric
power industry indicated that in 1965 total installed generating
capacity of electric power stations was to be 2.2 times that of 1957:
specifically, capacity of thermal electric power stations was to be
2.1 times and that of hydroelectric power stations was to be 3.9 times
their respective capacities in 1957.* Such a plan implies a construc-
tion program for thermal electric power stations considerably less
strenuous in the years after 1958 than that implied by the goal of
commissioning 8 million-to 9 million kw annually in 1961-65** and thus
would seem to require at most only modest increases in the construction
program.
Increasing the capacity of hydroelectric power stations in
1965 to 2.9 times that of 1957, on the other hand, would be a consider-
able task and implies a total increase in capacity of approximately
The multiple of 3.9 times in hydroelectric generating capacity is
inconsistent with the other data and appears to be more correctly stated
as 2.9 times rather than 3.9.
** Two discrepancies appear in the respective announcements. First,
multiplication of estimated installed capacity of thermal electric
power stations as of 1957 by 2.1 yields a total planned increase in new
capacity of 42 million kw over the 8-year period in contrast with the
annual average of 8 million to 9 million kw elsewhere stated as planned
for the 5-year period, 1961-65. Second, the total increase in new
capacity planned in hydroelectric power stations, derived in like man-
ner and added to the increase of 42 million kw planned for thermal elec-
tric power stations, yields a total planned increase in electric power
capacity which is about 14 million kw greater than that indicated if
the total capacity as of 1957 is multiplied by 2.2. In this latter
respect, see the footnote above.
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19 million kw during 1958-65. An average annual commissioning of
about 2.4 million kw would be required. In contrast with the 1.5 mil-
lion kw commissioned during 1957 and the 0.6 million kw planned for
1958, a considerable increase in construction resources for hydroelec-
tric power stations would be required. Moreover, total costs of cori=
struction per kilowatt of capacity are greater for hydroelectric power
stations than for thermal electric power stations. Therefore, the
total drain on construction resources would be considerably greater
than that seemingly implied by the smaller share of hydroelectric
power in the total capacity of electric power stations.
In accounting for feasible reductions in costs and in-
creases in the productivity of labor in construction, the conclusion
seems warranted that greater volumes of resources for construction of
electric power facilities are required over the next several years if
such long-term plans are to be met.
In his speech delivered at the opening of the Kuybyshev GES
in August 1958, Khrushchev stated that it was necessary to give rela-
tively greater priority to construction of thermal electric power sta-
tions than to hydroelectric power stations. Although the costs of
operating hydroelectric power stations are lower than for thermal elec-
tric power stations (other things being equal), the cost of construct-
ing hydroelectric power stations is greater and the time required for
construction is longer. With the same outlay of investment, there-
fore, commissioning of new capacity in electric power can be greater
and can be achieved in a shorter period of time if construction of
thermal electric power stations is given-greater priority. Khrushchev
indicated that this reassessment of the most rational pattern for
allocation of resources for constructing new capacity to produce elec-
tric power was necessitated by the need for greater investments in
other branches of heavy industry. It was not clear from his speech
whether the new policy amounted to one in which some amount of the in-
vestment resources previously earmarked for development of electric
power would be saved and diverted into construction for other branches
of heavy industry or one in which the amount of investment resources
previously earmarked for development of electric power would remain
unchanged but which a greater proportion would be directed into con-
struction of thermal electric power stations. It is doubtful (other
things being equal) that either alternative would ease substantially
the burden already placed on the scarce supply of investment resources
by the lags in construction of electric power stations or would enable
fulfillment of the goals for commissioning new capacity in electric
power under the draft Sixth Five Year Plan.
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B. Petroleum Industry.*
1. Fifth and Draft Sixth Five Year Plans, 1951-60.
The draft Sixth Five Year Plan called for construction
and commissioning of refineries and installations with a total capac-
ity for primary distillation of at least 45 million tons of crude
petroleum and for cracking at least 26 million tons.** The capacity
to handle such tonnage was said to be approximately double that com-
missioned under the Fifth Five Year Plan, when the capacity for pri-
mary distillation had been raised 62 percent and that for thermal
cracking, 72 percent.
The volume of work performed by construction-installation
organizations in the petroleum industry was 2.6 times greater in 1955
than in 1950. Statements on the draft Sixth Five Year Plan have indi-
cated that the. volume of construction-installation work performed by
the Ministry for Construction of Petroleum Industry Enterprises was to
be raised'to 11.8 billion rubles in 1960, or to 2.3 to 2.4 times the
volume performed in 1955. The Ministry performed about 5.1 billion
rubles of construction-installation work in 1955. The volume of work
to be put in place under the Sixth Five Year Plan was to be raised
yearly by an average of 1.3 billion rubles. (The Ministry performed
6 billion rubles of construction-installation during 1956, an increase
of about 0.9 billion rubles from 1955.) 314
The volume of construction-installation work performed in
the petroleum industry under the Fifth Five.Year Plan was 2.5 times
that performed under the Fourth Five Year Plan (with the work in re-
fineries being 4 times that performed under the Fourth Five Year
Plan). Preliminary estimates for the Sixth Five Year Plan indicated
that the volume planned was to be nearly 1.78 times that performed
under the Fifth Five Year Plan. 315
Although'the volume of construction-installation work was
increased considerably under the Fifth Five Year Plan, the volume
planned was underfulfilled by 12 percent. In addition, the plan for
commissioning capacity for primary distillation was underfulfilled by
33 percent and that for cracking capacity apparently by an even greater
extent. 316
* This survey is pointed primarily to the construction of refineries
rather than to construction problems in the petroleum industry as a
whole.
** Strictly speaking, the goal of 26 million tons includes all forms
of refining conversion.
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In the years after World War II, construction of new re-
fineries was intensified. Capital investment in reconstruction and
expansion of established refineries and construction of new refineries
was increased steadily up to 1954. In conjunction with the reduction
of capital investment in construction of refineries during 1954-55
and the prolonged periods of construction, a gap arose between the
quantity of petroleum extracted and the capacity for refining it.*
This gap has not yet been overcome. 317
Approximately 2 billion rubles have been allocated yearly
for construction of new refineries, but these investments have been
distributed ineptly. The former Ministry of the Petroleum Industry
in the USSR began construction of 3 large refineries in 1951, 2 of
which were at Novo-Gor'kiy and at Perm'. After 7-1/2 years, only
20 to 30 percent of the estimate costs of the projects have been ful-
filled.** In 1952, construction was started on another refinery at
Ryazan'; in 1953, on refineries at Yaroslavl' and at Novo-Ishimbay;
and in 1954, on the refinery at Irkutsk. In order to begin construc-
tion of the Irkutsk refinery, 20 million rubles were diverted from
other construction jobs in 1954 (with the approval of Gosplan), but
only a little more than 1 million rubles actually was invested in
1954. In fact, during the 4 years 1954-57, work amounting to only
9 percent of the estimate cost of the refinery was completed. Even
in 1958 the construction organization which is building the Irkutsk
refinery is not prepared to carry on much work. As a result of the
low yearly allocations and dispersion of investments, not one of the
above-mentioned seven refineries had been commissioned by the begin-
ning of 1958. 319
The prolonged periods of construction of refineries are
illustrated by the Fergana refinery, construction of which began in
1949. Now in its tenth year of construction, the first section is
planned to be put into operation in the fourth quarter of 1958. On
the other hand, when material and financial resources were concen-
trated properly, refineries have been built within the established
norms for the duration of construction. For example, the first sec-
tion of the Omsk refinery was commissioned within the period estab-
lished by the construction schedule. An average of 270 million rubles
From all indications, the gap is not a matter of a total refining
capacity which is inadequate to refine all the petroleum extracted, but
rather a matter of having a total refining capacity which is less than
that required for the most efficient refining of the petroleum extracted.
** Another source stated that after 7 years of construction only 52
percent of the estimate costs of 5 refineries had been allocated. 318
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FOR OFFICIAL USE ONLY
of investments were allocated annually, and the refinery, with a capac-
ity of several million tons of refined petroleum, was completed in its
entirety and commissioned in 6 years. 320
The practice of dispersing investment among too many pro-
jects, which leads to prolonged periods of construction, apparently
has not been corrected in the plan for 1958. Capital investment in
the petroleum and gas industries is to be increased by 4 billion
rubles (0.7 billion of the increase was for the gas industry), or
30.5 percent above that of 1957. More than 10 large refineries were
under construction at the beginning of 1958. New capacity is to be
commissioned at refineries at Gor'kiy, Stalingrad, Perm', and Fergana.
The plan nevertheless provides that construction of three more large
refineries is to be started during 1958. Moreover, the investment
allocated for starting construction was less than 1 percent of the
estimate cost of each of the projects, in spite of the established
norm calling for 15 percent to be allocated in the first year of con-
struction. 321
3. Prospects.
The considerable lags in construction of refineries en-
countered under the Fifth Five Year Plan continued through 1956 and
1957. In spite of the fact that, with very little investment, capac-
ity for primary distillation and cracking was increased at established
enterprises during 1957, the plan for commissioning capacity for re-
fining petroleum was not fulfilled. 322
The basic solution for eliminating the gap between the
quantity of petroleum extracted and the capacity for refining it
is acceleration in the rate of construction of new refining capac-
ities. In attempting to achieve this solution at minimum cost, a
great deal of emphasis in recent years has been placed on revisions
in designs of refineries so as to accommodate new equipment and tech-
nologies, reduce costs and periods of construction, and at the same
time raise the capacity of refineries being built. As a result of
revisions of designs of 7 refineries, the estimated capital invest-
ment per ton of refined product was reduced 22 percent at the same
time that the total capacity of the enterprises was raised 50 percent.
At 4 other plants for which designed capacities were not changed,
capital investment estimated to be required in their construction was
reduced by more than 1 billion rubles. 323
Similarly, much attention has been accorded the solution
of constructing very large refineries and reducing the periods of
construction. The Sixth Five Year Plan contained the general direc-
tive that, in order to fulfill the plan for constructing new capacity
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in petroleum refining, it was necessary to reduce the periods of con-
struction of refineries to not more than 3 years, in contrast with the
5 or more years previously required. Refinery units, previously built
with a throughput capacity of 500,000 to 1 million tons per year, were
to be built in consolidated units with a capacity between 2 million'
and 3 million tons per year. 324 It is now said to be expedient to
design and build in the next 2 to 3 years refineries with a capacity
of 6 million tons per year. In addition, design institutes claim to
have shown that the cost of construction per ton of refined petroleum
can be reduced 14 percent if the capacity of the refinery is increased
from 6 million tons to 12 million tons. 325
The norms for duration of construction of refineries with
a capacity of 6 million tons (established in 1956) are said to be too
long. The first section, with a capacity of 2 million tons per year,
is planned for commissioning only after 5-1/2 years, with another 2
years allowed for commissioning the remaining 4 million tons of capac-
ity. From the start of construction to the completion of all units,
therefore, the norms envision a construction period extending through
7-1/2 years. Experience has shown that a refinery with a capacity of
6 million tons can and should be constructed in 3 to 4 years, but to
achieve this goal it is necessary to change the existing procedure
for financing construction, build up the construction bases of con-
struction organizations, and reorganize the base for equipment and
supply. 326
In spite of savings anticipated from changes in designs,
reductions in cost, reductions in the period of construction, and re-
fineries with larger capacities, the lags in construction suffered so
far seem to warrant the conclusion that greater volumes of construc-
tion resources will be required by the petroleum industry in the com-
ing years -- certainly in 1958. The minimum goals for new capacity
for refining petroleum stated in the draft Sixth Five Year Plan appar-
ently are still in effect, and longer term plans call for even greater
construction programs. 327
The draft Sixth Five Year Plan stipulated that the volume of
state capital investment in the nonferrous metallurgical industry
during 1956-60 was to be.increased 130 percent above the volume of
investment made during 1951-55. 328 A general idea of the importance
of meeting the goals of the Sixth Five Year Plan for constructing and
commissioning productive facilities in the nonferrous metallurgical
industry is given by the following data on the draft plan 329/:
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Share of Planned
Planned Increase Increase in Pro-
Planned Increase in Production duction from
in Production, Capacity, 1960, Facilities to Be
1960, Compared Compared Commissioned Dur-
Product with 1955 with 1955 ing 1956-60
Refined copper
60
50
58
Zinc
77
80
53
Lead
42
54
66
Aluminum
110
170
80
Nickel
64
70
40
Construction and commissioning of enterprises in the nonfer-
rous metallurgical industry in the eastern regions of the USSR were
to aid greatly in meeting the plans for increasing production capacity
during 1956-60. 330 Difficulties in such construction were forecast
by the fact that the directives of the Fifth Five Year Plan calling
for establishment of large construction organizations and bases for
producing construction materials in the eastern areas of the USSR
were not fulfilled by the Ministry for Construction of Metallurgical
and Chemical Industry Enterprises. 331
In the USSR as a whole the annual plans for commissioning
production capacity in nonferrous metallurgy were not fulfilled in
1954, 1955, and 1956 and probably not in 1957 (although the plan
for commissioning facilities to produce aluminum was fulfilled in
1957). 332 Various reports indicate that annual plans for construc-
tion-installation work in the nonferrous metallurgical industry also
have been underfulfilled, frequently by 20 to 30 percent. 323
Lags have been reported in construction of important produc-
tive facilities in the copper and aluminum industries, mining of
bauxite, mining and processing of lead and zinc, and mining of sul-
fur, particularly up to the end of 1956. The basic reason for the
repeated failures to meet construction schedules and to fulfill con-
struction programs is that construction organizations building for
the nonferrous metallurgical industry have not had the capacity and
have not been allocated sufficient resources to fulfill the plans.
Construction workers, especially skilled workers,. have been in short
supply. Building materials produced off site have been allocated
in insufficient quantities, and subsidiary enterprises producing ma-
terials on site have been developed inadequately by construction or-
ganizations. These basic problems-have been complicated further by
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tardy delivery of designs and specifications for projects to be started
or already under construction, low yearly allocations of investment,
dispersion of investment among too many projects, and the consequent
increasing volume of unfinished construction 334
The report on the national economic plan for 1957 stated that
expansion of facilities for nonferrous mining and concentrating has
lagged behind the development of plants producing metals, thereby
handicapping the development of a number of branches of nonferrous
metallurgy, particularly the copper, lead, and zinc industries. 335
Judging from the plan for construction in the nonferrous metallurgi-
cal industry for 1958, it is doubtful that the gap between capacity
for mining and concentrating ore and capacity for producing metals
was overcome during 1957. 336 Furthermore, it is doubtful that the
lags in construction of facilities for smelting and refining in the
nonferrous metallurgical industry were overcome during 1957.
The plan for 1958 called for a sharp increase in capital in-
vestment in the nonferrous metallurgical industry. 337 In the
absence of a sharp cutback in the construction program, therefore,
greater volumes of construction resources will be required in this
industry in subsequent years, entailing greater pressure on the volume
of resources available.
As in the nonferrous metallurgical industry, the annual plans
for commissioning production capacity in the chemical industry were
not fulfilled in 1954, 1955, and 1956 and almost certainly not in
1957 (although the plan for commissioning facilities for producing
synthetic rubber was fulfilled in 1957). 338 Reports on lags in con-
struction and prolonged delays in commissioning many important pro-
jects give additional support to indications that the shortfalls in
commissionings were substantial through 1957. 33
The basic cause of failures to fulfill plans for construction
work and to meet construction schedules for the chemical industry was
the failure to allocate sufficient investment resources. Allocations
of capital investment were not related to the periods established for
constructing and commissioning chemical enterprises, and frequently
even the small investment assignments were not fulfilled. For example,
expansion of the Nizhniy Tagil plastics plant was started in 1951.
During 1951-57 the total investment allocated amounted to only 44 per-
cent of the estimate cost of the project, and the capital construction
completed amounted to only 34 percent. In the expansion of the
Sverdlovsk Plastics Plant, begun in 1955, allocation of investment
during 3 years amounted to only 13.5 percent of the estimate cost,
and the capital construction completed amounted to only 6.7 percent.
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Shortages and tardy deliveries of machinery for the chemical industry
have also contributed to protracted construction work. As a result of
such problems, construction of plants and shops in the chemical indus-
try stretched out to 8 to 10 years instead of the intended 2 to 3
years. 340
The draft Sixth Five Year Plan stipulated that capital invest-
ment in the chemical industry was to be increased 150 percent above
the level of the Fifth Five Year Plan. 341 The high priority for
construction of chemical plants was reemphasized in the announcement
of the preliminary plan for development of the industry during 1958-65?
The announcement stated that more than 100 billion rubles of capital
investment were to be allocated for construction and expansion of
chemical enterprises and enterprises producing equipment for the in-
dustry. 34P_/
Capital investment in the chemical industry is to be ac-
celerated sharply in 1958. The initial statement of the plan for
1958 indicated that investment was to total approximately 7.2 billion
rubles, an increase of 53.6 percent above the level of investment
anticipated for 1957. The volume of work on construction* of plastics
enterprises was to be increased 150 percent; of synthetic fiber plants,
75 percent; and of synthetic rubber plants, 48 percent. 343
In his report calling for accelerated development of the chemi-
cal industry, Khrushchev stated that capital investment in 1958 was
to be increased 68 percent above the volume actually fulfilled during
1957. 344 The difference between the planned increases of 53.6 per-
cent and 68 percent could be the result of an upward revision of the
initial plan for 1958 or of some underfulfillment of the investment
plan for 1957 or of both. In'any case, the plan for 1958 will require
strenuous efforts if it is to be fulfilled.
During the previous 5 years the average annual increase in capi-
tal investment in the chemical industry did not exceed 22 percent. 345
The increases planned for 1958 and subsequent years require the trans.;
fer of large construction organizations to building for the chemical
industry, the development of productive bases of the construction or-
ganizations, the creation of new construction organizations and the
.staffing of these new organizations with skilled construction workers,
and more construction equipment and transport facilities. 346 A
much greater volume of construction resources is required for develop-
ment planned in the chemical industry than was employed in building
for it in the past.
* This probably refers to capital investment rather than only to
construction-installation work.
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Serious difficulties in construction have persisted in spite
of the higher priority assigned the chemical industry. Construction
is lagging at many projects, including some which are to be com-
missioned during 1958. Several councils of national economy, minis-
tries, departments, and construction organizations are reported to have
reduced the investment assignments for projects of the chemical indus-
try and diverted the funds to other uses. Accelerated development is
also being held back by an apparent incapacity on the part of construc-
tion ministries and organizations to match the funds allocated with
the physical resources required. 347
Data on construction for the machine building industry are
much less extensive than might be expected from the fact that machine
building has one of the largest investment programs in heavy industry.
The information available, however, indicates that the problems and
difficulties experienced are much the same as those in construction for
the other heavy industries. Plans for construction-installation work
were not fulfilled and construction periods were prolonged because of
inadequate construction resources, low allocations of investment, and
dispersion of investments among too many projects. Tardy deliveries
of designs and specifications and subsequent revisions also prevented
meeting construction schedules.
The volume of construction-installation work performed during
1951-55 fell short of the plan. The former Ministry of Construction,
USSR, fulfilled its assignment under the. Fifth Five Year Plan for
construction-installation work on projects of the former Ministry of
Machine Building and Instruments Industry by only 86.3 percent; the
former Ministry for Construction of Metallurgical and Chemical Indus-
try Enterprises, by 80.4 percent; and the former Ministry of Urban
and Rural Construction, by 65.6 percent.* 348
Reports on numerous construction projects indicate consider-
able lags in construction under the Fifth Five Year Plan. For example,
the Tashkent and the Uzbek agricultural machinery plants -- under con-
struction since 1948 and 1953, respectively -- were only 65 percent
completed in terms of the combined estimate costs as of early 1956. 34
Also in 1956, at the end of about 8 years of construction, a diesel
plant near Troitsk was less than one-third completed. 3 0 After 8 years
* These shortfalls by the construction ministries were said to be
equivalent to the cost of constructing 6 to 8 machine building plants
which would have yielded a gross output of more than 1 billion rubles
per year.
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of construction, from 1950 to 1957, 4 machine building plants-in
Ivanovo were approximately 30 percent completed. 3 1 Available data
indicate that, under the Fifth Five Year Plan, construction lagged
at plants producing press and forging equipment 352/ and at several
other machine building plants. 3 3
The prevalence of prolonged periods of construction and dis-
persion of investments in machine building can be judged from the
following situations. At 57 machine building and instruments plants
which had been under construction or reconstruction for a number of
years, investment amounting to only 46~percent of the total estimate
costs had been made (presumably, up to the beginning of 1957). At
the plants of the electrical industry . which' were under construction
as of 1 January 1956, investment amounting to only 54 percent of the
total estimate costs had been made (presumably, up to the beginning
of 1957). In spite of these relatively low levels of completed work,
the Ministry of Machine Building and Instruments Industry and the
Ministry of the Electrotechnical Industry had proposed to start con-
struction of many new plants in 1957 before providing for completion
of work on others started earlier. Such plans were criticized as
needless dispersion of investment and as contrary to the policy of
concentrating resources. 354
In addition to these factors, there are other indications
that the difficulties in construction suffered under the Fifth Five
Year Plan continued during 1956 and 1957 and into 1958. Construc-
tion reportedly lagged considerably during 1957 at many important
projects of the machine building industry. For example, the
revised target date for completion of the South Urals armature
plant -- the third quarter of 1957 -- could not be met, because in-
stallation of equipment was held up by unfinished construction of
the foundations for the equipment. Earlier the plant had been
scheduled for completion in 1956. 3561 Construction of the Pavlodar
combine plant also was behind schedule; only 60 percent of the plan
for 1957 for construction-installation work on ancillary facilities
and the construction base had been fulfilled. 3J7
Finally, there
have been indications that dispersion of investments among too many
projects in the machine building industry was being continued in
1958. 3 8
In view of the above-mentioned difficulties, it is doubtful
that the situation in construction for the machine building industry
was significantly better than that in construction for other heavy
industries during 1956 and 1957. From all indications, construction
resources have continued to be inadequate to meet construction
schedules.
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The above survey indicates that construction for the electric
power, petroleum, nonferrous metallurgical, chemical, and machine
building industries suffered from much the same pattern of problems
as construction in the ferrous metallurgical, coal, cement, and pre-
cast reinforced concrete industries. The basic problem has been
that construction programs planned have been too large for the avail-
able construction resources, with the result that planned volumes of
work are not fulfilled and construction schedules are not met. In-
vestments have been dispersed among too many projects, yearly allo-
cations of investment have been too low and at odds with the planned
construction periods -- frequently even these low allocations of in-
vestment have not been fulfilled. Tardy deliveries of designs and
specifications and frequent revisions of designs have handicapped
efficient organization of the construction effort. Delays and short-
ages in the supply of production equipment to be installed also have
handicapped construction in heavy industries.
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VI. Construction as a Limiting Factor in Short- and Long-Term Develop-
ment of Heavy Industry.
The impact of the persistent failures to fulfill construction pro-
grams under the Fifth Five Year Plan (1951-55) and during 1956-57 was
evident not so much in the years of the Fifth Five Year Plan as it has
been and will continue to be evident in the years since 1955. Because
the goals for production under the Fifth Five Year Plan generally were
fulfilled successfully, some officials high in the planning circles of
the USSR failed to understand the meaning of the clear signs of less
than adequate performance in construction for heavy industry.
In spite of the considerable underfulfillment of plans for commis-
sioning productive facilities under the Fifth Five Year Plan, plans for
production of important products of heavy industry were fulfilled or
exceeded. (See Table 10.*) This situation was at the center of the
disagreement expressed at the Twentieth Party Congress as to the volume
of investment required to support the production goals for 1956 and the
Sixth Five Year Plan (1956-60).
A. Underestimation of the Volume of Capital Construction and Con-
struction Resources Required.
In his speech to the Twentieth Party Congress, M.Z. Saburov
(then Chairman of the State Economic Commission) criticized the Minis-
tries of Ferrous Metallurgy, the Coal Industry, the Construction Materials
Industry, and several other ministries for having submitted production
plans for 1956 which were lower than the goals adopted by the government.
He claimed that the ministries had submitted greatly inflated requests
for capital investment which were not consistent with the available re-
sources of the economy or with the requirements of the ministries. In
support of his position that the ministries were not fully utilizing
opportunities for increasing production at established enterprises,
Saburov noted that the Fifth Five Year Plan for production of rolled
metals had been exceeded by 700,000 tons even though the commissioning
of new capacity in rolling mills had fallen 4.8 million tons short of
the goal. Similarly, the plan for production of coal was exceeded by
18 million tons, although the commissioning of mines and pits was 21 mil-
lion tons below the goal. Analogous situations were said to have occurred
in a number of other industries. (See Table 10.*)
The disagreement between the State Economic Commission on the
one hand and the ministries on the other as to the volume of capital in-
vestment required to support production plans is well exemplified by the
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Fulfillment of Goals for Construction-Installation Woik,
Commissioning of Capacity, and Production in Selected Heavy Industries
in the USSR Under the Fifth Five Year Plan J
(1951-55)
Ministry'and Product
Construction-
Installation Work
Capacity
Commissioned
Production
Ministry of Ferrous
Metallurgy
80
Pig iron
87
99
Crude steel
72
102
Finished steel
56
102
Ministry of the Coal In-
dustry
107
Ministry of Electric Power
Stations
84 e/
104
Ministry of the Petroleum
Industry
Ministry of the Construc-:
tion Materials Industry N.A.
a. Except where noted otherwise, all data are from source 359
b. 360
c.. 3 1
d. 3 2'
e. In electric power stations.
f. In primary distillation.
g. Estimated. See Table 1, p. 21, above.
h. 363
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fact that the ministries had demanded capital investment* for 1956
totaling 60 billion rubles more than the plan adopted for 1956, 3/
an overage of 38 percent. 365
Events during 1956 challenged the judgment of those who had
asserted the feasibility of greater production and less investment.
Production plans were not met in the ferrous metallurgical, coal, or
construction materials industries. According to I.A. Kulev, then
Deputy Chairman of the State Economic Commission, these failures
occurred chiefly. because the production plans in these industries were
dependent on new capacities which were not commissioned as scheduled
in 1956. The planning organs, particularly the State Economic Commis-
sion, had miscalculated the new capacities which could be commissioned
in these branches.*-* 366
In December 1956 a Plenum of the Central Committee was con-
vened to discuss, among other things, the report of Gosplan on comple-
tion of the work of drafting the Sixth Five Year Plan and the report
of the State Economic Commission on the economic plan for 1957. In
the process of drawing up more specific goals for the Sixth Five Year
Plan and the plan for 1957, the disagreement between central planning
organs and ministries again became apparent. The ministries and depart-
ments requested capital investment for 1957 which was 70 billion rubles
greater than provided in the plan, or an overage of 40 percent.*** For
the Sixth Five Year Plan they had requested 371.5 billion rubles more
than the 990 billion provided, an overage of 38 percent.
According to Kulev, the ministries and departments particularly
disputed the low investment plan for 1957. The underfulfillment of
plans for commissioning new capacity during 1956 had forced the task
of completing facilities too much into the following years, 1957-60.
Kulev stated further that construction periods in heavy industries,
from the start of construction to commissioning the first section of an
enterprise, generally run 4 to 5 years. He noted that if construction
of new enterprises had not been started in 1957, the installations could
not have been commissioned in time to achieve any significant produc-
tion from the new facilities in the period of the Sixth Five Year Plan.
Moreover, the ministries and departments argued that the plans for
* The following discussion concerns capital investment in the USSR
under the state plan as distinct from total capital investment or in-
vestment in heavy industry alone.
** This admission of error still underestimates the impact which
shortfalls in commissioning during preceding years had on performance
during 1956 and, as such, is only a partial recognition of error.
*** The plan for state capital investment in 1957 was confirmed at
175 billion rubles. 367
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commissioning new capacity under the Sixth Five Year Plan, as estab-
lished by the directives of the Twentieth Party Congress, could not be
met unless 70 billion rubles in addition were allocated for 1957. 368
Having examined the questions at issue, the Plenum of December
1956 criticized Gosplan, the State Economic Commission, and the minis-
tries in general for-having planned an excessive volume of construction
which resulted in dispersing funds over a great number of new construc-
tion projects, prolonged periods of construction, increased costs, and
disruption of schedules for constructing and putting facilities into
operation. Addressing itself to the shortcomings displayed in the
economy during 1956, the Plenum made the following resolutions:
1. The drafting of the Sixth Five Year Plan should be
completed, in line with the main tasks as set by the Twentieth Party
Congress, and should be submitted in the first half of 1957 for approval
of the Supreme Soviet of the USSR.
2. The goals of the Sixth Five Year Plan and the plan for
1957 should be made more specific so as to bring production goals and
capital investment into line with material resources available by'the
following means:
b. Reducing the number of construction projects,
particularly new projects;
c. Preventing the dispersal of funds and, instead,
concentrating materials and funds on the most
important projects and those nearing comple-
tion; and
d. Revising the goals planned for individual
ministries which have not been supplied with
sufficient materials.
3. Ways and means should be sought to allocate funds for
construction of housing. 369
In effect, the heart of the disagreement was resolved by de-
ciding that the volume of capital investment proposed by Gosplan under
the Sixth Five Year Plan, which the ministries disputed as too low,
was excessive and therefore to be reduced. _370/
The Sixth Five Year Plan was not submitted in its completed
version. Instead, on 25 September 1957, Soviet authorities announced
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that a Seven Year Plan for the period 1959-65 would be drawn up which
would link organically the last 2 years of the Sixth Five Year Plan
with the following 5-year plan. 37J1 Whatever the ostensible reasons
for scrapping the Sixth Five Year Plan, shortfalls in construction
for heavy industry and the expected ramifications must have been deci-
sive.
The returns in production which were to be obtained from facili-
ties to be commissioned under the Sixth Five Year Plan were to be con-
siderable in many heavy industries. Shortfalls in commissioning productive
facilities in ferrous metallurgy (except pig iron), cement, and coal,
however, were substantial under the Fifth Five Year Plan and again in
1956 and 1957. Performance during 1958 seems little improved. Because
the national economic plan for 1958 was tied in with the preliminary
plans for 1959 and subsequent years, the consistent record of shortfalls
in commissionings threatens not only the goals for new capacity under
the draft Sixth Five Year Plan but also the groundwork for the new Seven
Year Plan (1959-65).
If construction had been lagging* seriously in only 1 or 2 heavy
industries, the problem of overcoming these lags-would have been simply
a matter of establishing higher priorities in construction for those
industries and diverting resources from construction in other heavy
industries to the lagging branches without substantially handicapping
fulfillment of construction goals in all of heavy industry. With con-
struction for all heavy industries lagging generally, however, the gains
from redirecting construction resources entirely within heavy industry
can be only marginal. In the absence of a sharp cutback in plans for
commissioning new capacity in heavy industry, either a greater volume
of construction resources or methods of utilizing more effectively the
available resources are required.
Soviet authorities have made much of the malpractice of dispers-
ing investment among too many projects and of the corrective of greater
concentration of resources on the most important projects and those
nearing completion. The Plenum of December 1956 called for reduction
of the volume of capital investment and concentration of available
resources. Dispersion of investment can be corrected most simply either
by reducing the number of projects under construction and retaining the
* In this discussion the terms of reference for lags in construction
are the goals of the draft Sixth Five Year Plan. To the extent that
previous construction goals for 1960 might be reduced in the Seven
Year Plan, the lags become less serious to the new goals but no less
serious in their impact on the returns in production which can be ex-
pected from newly built facilities.
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size of the investment allocated or by increasing the size of the in-
vestment allocated and retaining the number of projects under con-
struction.*
Soviet authorities have a strong tendency to overestimate the
feasibility of reducing the dispersion of investment in heavy indus-
try by way of reducing the number of projects under construction in
order to hold the line on investment. In ferrous metallurgy, for
example, the exigencies of accelerating completion of productive fa-
cilities during 1957 brought forth an upward revision of the initial
investment plan for 1957, in spite of the fact that the volume of un-
finished construction in the ferrous metallurgical industry had out-
stripped the giowth of investment in recent years.*-* Similarly, a
comprehensive survey of the coal industry at the beginning of 1957
indicated that it was not feasible to reduce the number of mines and
pits under construction but that additional starts were required if
the plans for commissioning new capacity were to be met.***
The converse tendency to underestimate the necessity of in-
creasing investment allocations as a means of accelerating comple-
tions and reducing dispersion was indicated by upward revisions of
the initial plans for capital investment in the USSR as a whole dur-
ing 1956, 1957, and 1958.*-*** The national economic plan for 1957
had been pointed specifically toward bringing the construction program
into line with the available resources, toward postponement of new
construction starts, toward concentration of investment on the most
important projects and those nearing completion, and toward reduction
of the volume of unfinished construction'in order to accelerate com-
missioning of new capacities. 373 Although the plan for construc-
tion-installation work in the USSR as a whole was exceeded slightly
during 1957 and the plan for capital investment was practically ful-
filled, 374 the volume of unfinished construction rose by about the
same absolute volume as it did during 1956. 37 Plans for commission-
ing new capacities in heavy industries again were underfulfilled, par-
ticularly in the ferrous metallurgical, coal, cement, and precast re-
inforced concrete industries. These shortfalls in commissionings,
however, cannot be attributed to dispersion of investment so much as
to the inadequacy of investment allocated.
* Clearly, there are several possible combinations of these simple
alternatives.
* See III, E, p. 66, above.
* See IV; D, 3, p. 87, above.
**** The indications of upward revisions in investment plans are from
source 372/. The revisions of investment plans for 1956 and 1957,
however, were much less than the overages in requests by the minis-
tries.
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The widespread practice of dispersing investment by planning
yearly investments which are considerably less than those required to
insure meeting construction schedules for heavy industrial projects
is attributable in great part to underestimating the investment re-
quired. This practice also results from failure to direct sufficient
resources into construction, so that construction organizations fre-
quently are incapable of performing investment programs larger than
those allocated at given projects. Moreover, as indicated above,
construction organizations frequently do not have sufficient resources
at their command to perform even the low yearly investment programs
which are assigned.
A great deal of the blame for dispersion of investment has been
placed on the former industrial ministries. The ministries sought to
start construction of as many projects as possible in order to justify
requests for increased investment funds from the state at a later
date. 376 The practice of dispersing investment has not been im-
proved significantly under the reorganized management of construc-
tion. 377 Recent resolutions on measures to correct and prevent dis-
persion corroborate this fact.
The Party and the government have forbidden the start of con-
struction of new industrial enterprises and structures unless they
are provided with the capital investment and material and technical
resources which are necessary to construct and commission the enter-
prises within the periods established by the norms for duration of
construction. In the future, investment for new construction is to
be allocated only after the projects which are to be commissioned and
those which are already under construction have been provided for. 378
Resolutions and decisions concerning dispersion have been adopted in
the past, however, 37 and that effect the latest decrees will have
remains to be seen.
Another factor apparently contributing heavily to underestimat-
ing the volume of investment required in heavy industrial construction
is the designing process. Designs and specifications are revised fre-
quently, and estimate costs of heavy industrial projects, including
coal mines, electric power stations, and metallurgical, chemical, and
cement plants, generally are revised upward. 380 One of the primary
measures of the performance of design organizations is their success
in reducing the estimate cost of projects designed. This procedure
has not been changed, 381 so that the tendency of design organizations
to underestimate the cost of construction probably will continue.
In spite of the many criticisms of the destructive impact of
large volumes of unfinished construction, the volumes of construction
carryover under the Fifth Five Year Plan, during 1956, 1957, and ap-
parently 1958 have not been large enough to insure fulfillment of
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plans for commissioning new capacity in heavy industry within the in-
vestment allocated. A study of projects under way in the construction
materials, ferrous metallurgical, and coal industries indicates that
the greatest problem in overcoming the persistent shortfalls in com-
missionings is not that an unduly large number of projects were under
way but that greater investment would have been required in order to
commission them as planned in 1956 and 1957.
B. Priorities in the Allocation of Construction Resources.
In the first year of the Sixth Five Year Plan, there was not
.only a considerable shortfall in construction for heavy industry but
also a substantial failure to fulfill the plan for commissioning state
housing. In addition to calling for a reduction in the volume of
capital investment, the Plenum of December 1956 stipulated that ways
and means were to be sought to increase investments in construction
of housing. 382
In a decree issued in July 1957 the Party and the government
raised the plan for construction of housing above that specified in
the draft Sixth Five Year Plan and stated annual goals for 1957-60.
Although the plan for commissioning individual housing space was
raised substantially and the plan for state housing was increased only
nominally, construction of housing clearly had been given a higher
priority than in previous years. 383 This increased priority was con-
firmed during 1957, when the plan for commissioning state housing was
exceeded. 384
The priority of housing construction was reaffirmed in a pre-
liminary announcement of the Seven Year Plan for construction of state
housing which incorporated the decree of July 1957 on construction of
housing during 1957-60. 38 The impact of the program for construc-
tion of housing on the availability of resources for construction in
heavy industry is considerable. As a result of the increased priority
for construction of housing, pressure on the supply of resources will
increase and will be especially heavy during 1958-60 in contrast with
that expected during 1961-65.*
As in construction in heavy industry, Soviet authorities
seriously underestimate the volume of capital investment and con-
struction resources required to fulfill goals for construction of
housing. The draft Sixth Five Year Plan had called for construction
costs of state housing** to be reduced by 20 percent during 1956-60, 387
* This is because the annual increases in state housing to be com-
missioned (in terms of housing space) are substantial for 1958-60,
whereas the average annual commissioning remaining for 1961-65 is
only a little greater than the plan for 1960. 386
** Costs are stated here in terms of costs per square meter of liv-
ing space of state housing.
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and the Seven Year Plan calls for the average cost in 1965 to be ap-
proximately 21 percent lower than the average cost in 1957. 388 The
plan for 1958 implies a reduction of 9 percent, compared with the cost
in 1957. 389 Planning such reductions in cost simultaneously with
planning substantial annual increases in commissioning of housing (at
least through 1960) is a questionable procedure. In fact, average
costs continued to increase rather than decrease in 1955, 1956, and
1957. 390
In addition to the underestimation of investment and resources
implicit in the unrealistic plans for reducing costs, the Seven Year
Plan Tor capital investment in construction of state housing appears
to have been determined by an erroneous method which considerably un-
derstates the investment required.* 391/
Before 1957, lags in construction for heavy industry could be
mitigated to some extent by sacrificing fulfillment of plans for con-
struction of housing, but, with the increased priority given construc-
tion of housing, much less freedom remains for diverting a greater
volume of resources than planned into construction for heavy indus-
try. Yet, unless the annual increases in the programs for construction
in heavy industry are cut back from the levels planned in 1956, 1957,
and 1958, heavy industry will require even higher priorities than those
effected during 1956-57 if shortfalls in commissionings are to be pre-
vented.
The returns in'production from facilities of heavy industry to
be commissioned during 1956-60, which were anticipated by the draft
Sixth Five Year Plan, most certainly have been compromised by the per-
sistent shortfalls in commissionings under the Fifth Five Year Plan
and in 1956 and 1957.
Production goals for many products of heavy industry had been
fulfilled or exceeded under the Fifth Five Year Plan in spite of sub-
stantial underfulfillment of the plans for construction-installation
work and of plans for commissioning new capacities. An analogous
situation was said to have occurred in previous Five Year Plans. 392
Influential officials in higher planning levels in the USSR overesti-
mated the returns feasible from intensified utilization of existing
* The program laid out for construction of housing in the prelimi-
nary announcement of the Seven Year Plan is consistent with the pro-
gram stated in the theses of the Seven Year Plan. The above con-
clusions as to the underestimation by Soviet authorities of the re-
sources required to fulfill the program remain valid.
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capacities under the Sixth Five Year Plan and, as a result, under-
estimated the capital investment and resources required and the
necessity for meeting construction schedules if production plans
were to be met.
The Plenum of December 1956 achieved little in the way of
correcting this miscalculation. Instead, it provided for a reduction
in the volume of capital investment. Gosplan maintained that produc-
tion goals of the draft Sixth Five Year Plan could be met, even with
some reduction in the planned volume of capital investment and the-
consequent reduction in commissioning new capacities, by greater
utilization of existing capacities and modernization of production
technology. 323J
The national economic plan of the USSR for 1957 set moderate
production goals after the failures of 1956, but the plan for com-
missioning new capacity in heavy industry in 1957 was hardly more
realistic than that of 1956. Although the initial plan for capital
investment by the state during 1957 was exceeded and the revised
plan practically fulfilled, commissionings in heavy industry fell
substantially short of plans.
The national economic plan of the USSR for 1958, the year of
transition to the Seven Year Plan, was coordinated with the rough
outlines of the plan for 1959 and for subsequent years. In spite of
the sharp increases in capital investment planned for most heavy in-
dustries, several branches failed to achieve plans for commissioning
new capacity in the first quarter of 1958, 394/ and some underful-
fi]lment of plans can be expected for the year as a whole.
The tendency of Soviet authorities to underestimate the
volume of capital investment and resources required to support their
plans may well work to the detriment of the new Seven Year Plan.
The unrealistic program for construction of housing in conjunction
with the higher priority now accorded housing already has prejudiced
the availability of resources for construction in heavy industry,
particularly during 1958-60. Unless the program for construction in
heavy industry is set at modest rates of growth, the drain on con-
struction resources which unquestionably would accompany fulfillment
of plans for construction of housing cannot help having a negative
impact on construction for heavy industry. '
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APPENDIX A
METHODOLOGY
1. Lags in Construction.
Because reports of lagging construction in the editorials of such
politico-economic journals as Pravda and Izvestiya frequently are ex-
hortations for greater and better performance rather than considered
judgments concerning lags in construction in respect to plans, use of
such sources in support of the occurrence of lags was restricted in
this report to cases where independent data also indicated lags.
Patently exhortative complaints of lags in construction were excluded
altogether.
No methodology is available to resolve the question of whether or
not the planning authorities deliberately establish goals higher than
expected to be achieved as a socio-psychological tool for maximizing
incentives and performance. The degrees to which construction goals
might thereby be overplanned is unanswerable. The size of shortfalls
in construction during recent years, however, is a strong indication
that the factor of overplanning has played only a small role, if any.
Moreover, the speeches at the Twentieth Party Congress and the revela-
tions of the disagreements expressed about the goals of the draft
Sixth Five Year Plan (1956-60) indicate that the high planning offi-
cials wanted and expected to fulfill the goals for production in
heavy industry at the low cost implicit in the capital investment plan.
The concept of production capacity is an integral part of the method-
ology of this report. The definition and scope of capacity varies from
industry to industry, but within each industry the concept is meaning-
ful. Soviet construction schedules do specify the amount of capacity
which is to be commissioned as a result of commissioning a given pro-
ject. Although there undoubtedly are marginal differences in the in-
terpretation of capacity even within a given industry, the data on
capacity-commissioned and not commissioned reliably reflect the capa-
bilities in production which were or were not turned over by'the con-
struction organization on completion of its contract. The extent to
which the capacity is utilized and the time involved is a more tenuous
step in the analysis and is discussed in Appendix B.
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4. The Negative Approach.
This report approaches analysis of performance in construction
in the Soviet economy from the point of view of performance in rela-
tion to plans. Perhaps it is unnecessary to point out that the con-
clusion that goals for constructing and commissioning productive fa-
cilities in heavy industry generally have been substantially under-
fulfilled does not preclude the conclusion that the achievements in
construction have played a large part in the substantial rates of
growth achieved in the Soviet economy.
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FOR OFFICIAL USE ONLY
FOR OFFICIAL USE ONLY
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