THE CEMENT INDUSTRY IN THE EUROPEAN SATELLITES 1950-60

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• Document Creation Date: December 23, 2016
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• Sequence Number: 2
• Publication Date: June 1, 1959
• Content Type: REPORT

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SECRET
a
ECONOMIC INTELLIGENCE REPORT
N? 38
THE CEMENT INDUSTRY
IN THE EUROPEAN SATELLITES
1950-60
CIA/RR 59-19
June 1959
CENTRAL INTELLIGENCE AGENCY
OFFICE OF RESEARCH AND REPORTS
SECRET
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WARNING
This material contains information affecting
the National Defense of the United States
within the meaning of the espionage laws,
Title 18, USC, Secs. 793 and 794, the titans-
mission or revelation of which in any manner
to an unauthorized person is prohibited by law.
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ECONOMIC INTELLIGENCE REPORT
THE CEMENT INDUSTRY IN TBE EUROPEAN SATELLITES
1950-60
CIA/RR 59-19
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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Summary
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CONTENTS
Page
I. Supply of Cement ? 0 ,S ? ?
A. Production and Plan Fulfillment
B. Quality and Labor Productivity
II. Consumption of Cement
2
5
7
A. Consumption and Construction
7
B. Foreign Trade
10
III. Investment and Expansion
?
12
IV. Prospects
13
Appendixes
Appendix A. Statistical Tables
15
Tables
1. Estimated Production of Cement in the European
Satellites, 1950-60
2. Estimated Consumption of Cement in the European
Satellites, 1950-57
3. Estimated Net Foreign Trade in Cement of the
European Satellites, 1950-57
4. Estimated Per Capita Consumption of Cement in the
European Satellites and Western Europe, 1950
and 1957
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9
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Page
5. European Satellite Trade in Cement with the USSR,
1955-57 17
6. Estimated Number of Cement Plants and Average
Production per Plant in the European Satellites,
1958 18
Chart
Following Page
Estimated ProdUction of Cement in the European
Satellites) 1950-580 and Net Exports and Con-
sumption, 1950-57 2
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Ehh CEMENT INDUSTRY IN THE EUROPEAN SATELLITES*
1950-60
Summary
Production of cement in the European Satellites increased consider-
ably during 1950-58 and is expected to increase at an even greater rate
during 1959-60. In spite of this increase in production and an expected
decline from the high level of Satellite exports of cement) the Satellites
still will be unable to meet the increasing demand for this basic construc-
tion material. During 1959-60, increases in production of cement have been
planned to meet the expanded demand) particularly for housing, but, even
with substantial increases in the availability of cement) past failures to
fAlfill planned goals suggest that some underfulfillment of current plans
will continue and that the supply of cement will remain a limitation on the
construction program.
Primarily because of output obtained from new plants) production of
cement in the European Satellites in 1958 increased 112 percent above the
level of 1950 to 17.7 million metric tons** annually. Although the rate
of increase in production of cement during 1950-58 was greater than that.
in the US, it was less than that in the USSR) and the Satellites still
produced only about one-half as much cement as the USSR and one-third as
much as the US. During 1950-56 the individual Satellites genernlly failed
to fulfill production plans because of the tendency to formulate unreal-
istic goals, the failure to introduce new plants and capacities on schedule,
and inadequate maintenance of existing facilities. In 1957 and 1958) how-
ever, more realistic planning was evident, and most of the countries ful-
filled their annual production plans.
In 1957, consumption of cement in the European Satellites increased
23 percent above the level of 1956 because of the growth in production and
the reduction by one-half of net exports in 1957 compared with 1956.***
Net ekports for 1957 amounted to 9 percent of production, whereas net ex-
ports during 1950-57 had averaged 15 percent of production. The signifi-
cant decrease in net exports in 1957 reflects a basic change in the policy
* The estimates and conclusions in this report represent the best
judgment of this Office as of 15 April 1959.
** Tonnages are given in metric tons throughout thiS report.
*** For estimated production of cement in the European Satellites,
1950-58, and net exports and consumption, 1950-57, see the chart,
following p. 2.
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of the Soviet and Satellite regimes. In that year the USSR decreased
its demands on the Satellites for cement, permitting the Satellites to
increase their housing construction :programs.
During 1951-57 the index of the volume of construction in the Euro-
pean Satellites (reportedly measured in constant prices) generally in-
creased faster than that of consumption of cement (measured in tons).
This trend is counter to that in the US and the USSR and, combined with
the increasing use of precast concrete as a building material in the
Satellites, suggests that the indexes of the volume of construction in
the Satellites are inflated.
Production is planned to increase to 23 million tons in 1960, at an
average annual rate of 14.0 percent during 1959-60 compared with a 9.8-
percent rate achieved during 1951-58. Past difficulties in completing
new plants on schedule, however, coupled with the overambitious long-
term plans for 1960, suggest that a number of the production goals of
the European Satellites will not be fulfilled, so that an average annual
rate of 10.7 percent and an over-all plan fulfillment of 94 to 95 per-
cent are estimated., With only a small increase in exports above the
1957 level expected in 1960, somewhat more than 20 million tons of ce-
ment will be available for domestic use in the European Satellites in
that year. This amount will permit considerable expansion in construc-
tion, but the supply of cement still will be short of the demand.
I. Supply of Cement.
A. Production and Plan Fulfillment.
The annual production of cement in the European Satellites has
increased 112 percent, from 8.4 million tons in 1950 to 17.7 million
tons in 1958 (see Table 1*). Although this increase was considerably
less than that achieved in the USSR in the same period (almost 230 per-
cent), it was significantly higher than that achieved in the US (slightly
more than 40 percent). 50X1
* Table 1 follows on D. 3.
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ESTIMATED PRODUCTION OF CEMENT
IN THE EUROPEAN SATELLITES, 1950-58,
AND NET EXPORTS, AND CONSUMPTION, W50-57
MILLION METRIC TONS
27647 4-59
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Table 1
Estimated Production of Cement in the European Satellites
1950-60
Thousand Metric Tons
Country
1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960
Albania 2/ 15 18 19 13 15 45 65 70 78 A30 85
Bulgaria IL/ 602 627 672 701 780 812 859 880 934 1)200 1,350
d
Czechoslovakia 2/ 1,998 2,064 2,209 2,320 2,562 2,892 3,148 3,672 4,100 4,300 4,600
1,412 1656 2,023 2,448 2,635 2,971 3,269 3,46o 3,558 4,200 4,900
East Germany
Hungary) 4
/ 797 948 1,057 1,060 947 1,175 995 989 1,302 1,390 1,450
'
Poland f 2,514 2,695 2,652 3,294 3,455 3,813 ,035 4,487 5,041 5,300 6,1010
Rumania g/ 1,028 1,148 1,514 1,906 1,518 1,991 2,186 2,421 2,687 '2,900 3,200
Total . 8,166 9,156 10,146 11,742_ 11,912 13,699 14,557 15,979 17,703 19,370 21,685
Index of total (1950 = 100) 100 109 121 140 142 164 174 191 212 232 259
a. 1950-52, 3/; 1953-56, 12/; 1957, 2/; 1958, 6/; 1959-60, based on the estimated underfulfillment of the 1960
plan; // .
b. 1950-57, ?../.; 1958, 9/. No plan 'for 1960 has been announced. Production in 1959 and 1960, therefore, is esti-
mated on the basis of past performance and expected new plant completions. .
c. 1950:.57, 12/;.1958, lti, 1959-60, estimated on basis of past performance and the 1960 plan. 12/
d. 1950-56, 1.3./; 1957, 1_/; 1958, 12/; 1960, based on the same percentage fulfillment of the 1960 plan as was
achieved in 1958 (95 percent) 1g; 1959, based on an annual rate of increase of 17.3 percent between the figures
for 1958 and 1960.
e. 1950-55, fl/; 1956-57, 1g; 1958, 12/. Plans for 1959-60 are revised, and it is estimated that they will be
fulfilled. 20
f. 1950-52, 21 ; 1953-54, ggh 1955_57, g3/; 1958,1111; 1959-60, estimated on the basis of underfulfillment of the
1960 plan. 2
g. 1950-57, 2Y; 1958, gli; 1959-60, estimated on the basis of the underfulfillment of the 1960 plan. 28/
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The average annual rate of growth in production of cement in
the European Satellites was 9.8 percent between 1950 and 1958, but this
growth was uneven over the years. The highest increase occurred in
1953, with production at 15.7 percent above the 1952 level, when new
plants in both Rumania and Poland began producing and considerable new
capacity was added to existing plants in East Germany. In 1954, how-
ever, production increased by only 1.4 percent, as Hungarian and Ru-
manian production decreased by one-half million tons largely because of
the excessive downtime of kilns at a'number of plants. In addition, the
average annual rates of increase between 1950 and 1958 among the indi-
vidual countries have varied considerably. These rates of increase, along
with the share of the total Satellite production in each country in 19581
are indicated below (in percent):
Country
Average Rate
of Increase
1951-58
Share of Total Satellite Production
of Cement in 1958
Poland
9.1
28.5
Czechoslovakia
9.4
23.2
East Germany
12.2
20.1
Rumania
12.8
15.2
Hungary
6.3
7.3,
Bulgaria
5.6
5.3
Albania
22.9
o.4
Total 100.0
The extremely high rate of increase in Albania is the result of
the completion of a second plant which has more than twice the capacity
of the only plant existing in 1950. The low rates in Hungary and Bul-
garia resulted from the limited investment in the cement industries of
the two countries. In both, only one plant was expanded and one new
plant completed. The new Hungarian plant had considerable difficulty in
production, and the Bulgarian plant was not completed until December 1958.
In spite of the significant increases in production during 1951-58;
the individual Satellites have generally failed to fulfill annual produc-
tion plans, and, in particular, long-term plans have been underfulfilled,
although recently annual plan fulfillment was improved. Out of a total of
42 annual and long-term plans which are known,* only 16 were fulfilled or
overfulfilled, and only 3 out of 7 plans which were revised were fulfilled.
* This total includes the plans for 1950-58 for the three largest pro-
ducers: Poland, Czechoslovakia, and East Germany.
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The eight long-term plans which terminated during the period (gener-
ally 5-year plans) were fulfilled in only East Germany and Bulgaria.*
The primary reason for the failure to fulfill production plans was that
these plans were unrealistic. This situation was particularly true in
the less industrialized countries (Albania, Bulgaria) Rumania, and
Hungary), where persons skilled and experienced in planning and plant
operations were not avialable. In addition, even in the more indus-
trialized countries the plans were generally politically inspired
rather than economically justified. For example, in Poland the Cen-
tral Office of the Cement Industry submitted production plans to the
Ministry of Light Industry based on a plant operating rate of 79 per-
cent. The Ministry) however, revised the plan upward, basing the
annual plans on an operating rate of from 85 to 88 percent. The de-
gree of fulfillment of the plans indicates that actual operating rates
were very close to 79 percent. 22/ In addition) Polish) Bulgarian,
and Rumanian plans were inflated because the USSR was prodding these
countries into establishing higher goals so that the Soviet demand for
a high level of imports from these countries could be satisfied. Other
reasons for the failure to produce at planned levels were the failure
to complete new capacities on schedule; to achieve a satisfactory de-
gree of utilization of the new capacity within a reasonable length of
time; and to allow sufficient time for preventive maintenance, which
resulted in frequent breakdowns and accelerated wear on equipment.
Plan fulfillment improved in 1957, and the improvement con-
tinued in 1958. In 1957, production of cement increased by 9.8 per-
cent above the level of 1956, and the annual plans were fulfilled in
at least four countries, although Hungary and Bulgaria had revised the
original plans downward. Again in 1958, plans were fulfilled in at
least four countries, as production increased by 10.8 percent above the
level of 1957. The success in fulfilling the plans and the downward
revisions suggest that, beginning in 1957, the European Satellites had
begun adopting more realistic annual plans. This change was facili-
tated by decreased pressure from the USSR for exports of cement from
the Satellites and a lessening of Soviet control, as well as improved
planning capabilities in the Satellite governments together with a
more realistic approach to planning future production.
B. Quality and Labor Productivity.
The quality of cement is designated in the Bloc countries by
a "mark," or grade number. This number indicates the average 28-day
* Another Bulgarian 5-year plan which terminated in 1957 was under-
fulfilled.
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compressive strength of the cement (in kilograms per square centimeter)
combined with a suitable aggregate and water under certain prescribed
testing conditions. All the Bloc countries produce several grades of.
the different types of cement.* The average quality of cement produced
(as measured by the average complex of grades in any country) is very
important, as the quantity of cement required to make concrete of a
given strength varies with the quality used -- that is, less high-grade
cement is required to produce a desired quality of concrete.** The
average quality of cement produced in the European Satellites is esti-
mated to have been slightly above that of the USSR in 1958.*** Because
of the extensive net exports of the better grades of cement from the
Satellites) xxxx however, the average quality of cement available for
domestic consumption was somewhat lower than the average quality pro-
duced, whereas in the USSR exports are negligible, so that the quality
of cement consumed is assumed to be about the same as the average qual-
ity produced. It is probable, therefore, that there is little difference
in the amount of cement required to produce a given quality of concrete
in the USSR and in the Satellites.
More than half of the cement produced in the European Satellites
is of a portland type. It is estimated that 50 to 60 percent of the
total production is of this type, that 30 to 40 percent is portland slag
or slag cement,t and that 5 to 10 percent is of special-purpose types.
The use of slag in the manufacture of cement is most widespread in East
Germany and Czechoslovakia, and Poland plans to expand considerably the
use of slag in the future. Largely because of the increasing use of
slag, which tends to lower the average quality of cement, it is unlikely
that any significant rise will be achieved in the average grade of cement
produced during the next several years.
* In the US, each type of cement has a single standard, and all cement
of any given type must adhere to the appropriate standard.
** There are a number. of other very important determinants of the
quality of concrete -- for example, the water-cement ratio and the quality
and proportions of the aggregates, but these are assumed to be constant.
*** Because of different testing methods, however, Soviet cement has a
grade number which is about 50 percent higher than that of the comparable
quality of Satellite cement.
xxxx Nearly all the Satellites are known to produce some high-grade
cements for export which conform to foreign standards (usually UK or US).
For example, during 1955-57 an average of 7 percent of Czechoslovak pro-
duction of cement conformed to the standards of Western countries. 22/
t The percentage of slag in these cements varies from less than 5 per-
cent to more than 95 percent and probably averages somewhat above
50 percent.
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This increasing utilization of slag is expected, however) to re-
sult in a lowering of the costs of production* and an increase in the
productivity of labor, which in 1957 was approximately 500 tons per
worker per year based on an estimated labor force of between 30,000 and
35,000 workers. Labor productivity in the cement industry of the Euro-
pean Satellites was therefore approximately 85 to 90 percent of Soviet
productivity in 1957, approximately three-fifths of Western European
productivity, and less than one-quarter of US productivity. In 1958)
labor productivity is estimated to have increased in the Satellites by
at least 5 percent, or to about 520 to 540 tons per worker per year.
Although substantial gains in Satellite labor productivity are probable
in the future, it is doubtful that the gap between productivity in the
Satellites and in the above countries will be significantly narrowed.
II. Consumption of Cement.
A. Consumption and Construction.
Cement is a basic input in almost all modern construction, but
it must be combined with an aggregate (such as sand, gravel, or crushed
stone) to become a usable building material. Most of it is used to make
concrete, but a small percentage of the total cement consumed goes into
masonry cement (mortar) or asbestos-cement products. In the European
' Satellites) consumption*** of cement doubled in 1957 compared with 1950,
* Slag requires little handling or processing and is therefore less
costly to produce than portland clinker. For example, in Poland in 1955
it was calculated that the cost of portland slag cement was between 72
and 91 percent of that of portland cement. 21/
** Among the several Satellites, output ranged from about 200 to about
800 tons per worker, with Albania, Hungary, and Rumania having the lowest
productivity and Czechoslovakia and East Germany the highest. The ex-
tensive use of slag in the latter two countries is an important factor
in the higher productivity.
*** The term consumption used in this report actually is apparent con-
sumption, which is the sum of production and imports, minus exports,
and does not take account of changes in stocks. These changes in stocks
are very slight, however, because of the limited storage facilities in
the Satellites and the bulkiness and semiperishable nature of cement
which make stockpiling impractical. In Hungary, for example, the average
annual difference between actual and apparent consumption of cement dur-
ing 1951-55 was 2.8 percent, and stocks were augmented and decreased in
alternate years. 22/
The discussion of consumption and trade in this report is limited to
1957 because this is the last year for which information-is available.
However, the trends as established in 1957 are not believed to have been
significantly changed during 1958.
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but in five of the Satellites the index of the volume of construction
(reportedly measured in constant prices) increased slightly more rapidly
than the index of consumption of cement (measured in the physical quan-
tity of cement) (see Table 2*). In both the US and the USSR the index
of consumption of cement has increased at a higher rate than the index
of the volume of construction because of the increasing utilization of
concrete in construction and specifically in the USSR because of the in-
creasing proportion of cement used in concrete. The most dynamic ele-
ment in the increasing use of concrete in the USSR is the emphasis being
placed on the precast concrete components program.** The European Satel-
lites, in imitation of the Soviet program, also have been radically in-
creasing the use of precast concrete. The indications point to a more
rapid increase in the index of consumption of cement than in the index of
the volume of construction in the Satellites and therefore suggest that
the indexes of the volume of construction in the individual Satellites
actually reflect a degree of inflation beyond the increase in the physi-
cal volume of construction.
Consumption of cement in the European Satellites, like produc-
tion, increased at about the same rate from 1951 through 1954, but, be-
cause of the large increase in exports, dropped below the rate of in-
crease of production in 1955-56. In 1957, consumption of cement increased
by 23 percent above the 1956 level, and production of cement increased by
10 percent. The significant increase in consumption in 1957 occurred par-
tially as a result of the halving of net exports in that year compared
with the 1956 level. The higher level of consumption in 1957 reflects a
basic change in the policy of the Soviet and Satellite regimes. In that
year the USSR decreased its demands on the Satellites for cement imports,***
permitting greater freedom for the Satellite regimes to fulfill nonindus-
trial domestic demand.
In line with the greater Soviet emphasis in 1957 on increased
living standards and increased housing, the European Satellites accel-
erated state housing progranm and allocated higher priority to private
housing. This trend is reflected in the increased allocations of cement
not only to state housing but also to the private sectors and in the de-
creased prices for cement in private sectors. For example, in Hungary,
consumption of cement in the private sector increased from 18,000 tons
* Table 2 follows on p. 9. In East Germany the index of consumption
increased slightly faster than the index of construction, and in Hungary
the fluctuations in both were so great that no trend is discernible.
** Precast concrete is poured into forms and cured in some central
location and is then lifted into its permanent position. Precast com-
ponents include stairways, walls, and reinforced structural components.
*** For a more complete discussion of trade, see B, p. 10, below.
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Table 2
Estimated Consumption of Cement in the European Satellites
1950-57
Thousand Metric Tons
Country
1950
1951
1952
1953
1954
1955
1956
1957
Albania/
75
78.
79
73
65
85
66
90
Bulgaria a/
424
447
478
519
613
653
631
689
Czechoslovakia b/
1,998
2,064
2,209
2,312
2,461
2,901
2,991
3,632
East Germany a/
1,221
1,456
1,448
1,979
2,032
2,286
2,699
3,261
Hungary ?
798
1,012
1,055
1;057
757
883
815
980
Poland c
2,152
2,310
2,421
2,930
3,068
3,236
3,614
4,539
_y/
Rumania LI
513
648
764
1,406
768
891
1,086
1,421
Total
7,181
8,015
8,1451#
10,276
2,764
10,935
11,916
114,612
Index of total-(1950 =
100)
100
112
118
143
136
152
166
203
a. Difference between production and net trade figures (see Table 1, p. 3, above, and Table 3, p. 11,
below).
b. 1950, 1952-57, 33/; 1951 (see footnote a, above).
c. 1950-51 (see footnote a, above); 1952-514, 3111; 1955-57 (see footnote a, above).
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in 1953 to 212,600 tons in 1957, and in Czechoslovakia; where consumption
in the private sector increased from 90,000 to 360,000 tons in the same
years, the retail price of cement to the private sector declined from
5,000 crowns* per ton in 1952 to 520 crowns per ton in December 1956. 35/
Prices to the private sector, however, remained considerably above those
to the state sector,** as in the case of Hungary, where in 1957 the aver-
age price to the private sector was 5.7 times greater than that to the
state sector, and in the case of Poland, where in 1957 it was 3.3 times
as high.
With the large increase in consumption in 1957 above the level
of 1956 and with the doubling of consumption compared with 19501 the
per capita consumption of cement in the European Satellites in 1957 was
90 percent above the 1950 level, compared with an increase of 68 percent
in Western Europe. Yet in 1957 per capita consumption in Western Europe
was 249 kilograms (kg), and in the Satellites it was only 152 kg.***
B. Foreign Trade.
The European Satellites as a group were large net exporters of
cement during 1950-56, but in 1957 exports decreased substantially (see
Table 3xxxx ). From 1950 through 1957, net annual exports from the Satel-
lites as a group averaged 15 percent of the total annual production, with
the highest percentage of annual production (20 percent) exported in 1955.
During the same period, net annual exports from Western Europe averaged
8 percent of production, with a high of 11 percent in both 1951 and 1952.
The USSR has been the principal importer of Satellite cement during the
period, taking 36 percent of net Satellite exports during 1955-57t and a
higher percentage in the earlier years.
* Crown (koruna) values are expressed in current crowns and may be
converted to US dollars at the official rate of exchange of 7.2 crowns
to US $1. This rate of exchange, however, does not necessarily reflect
the true dollar value.
** Prices to the state sector in the Satellites are usually suffi-
cient to cover the costs of production. Export prices, however, are
determined both by bargaining with the customer and by the level of
world prices and frequently have been below the costs of production in
the exporting country.
*** See Appendix A, Table 4, p. 16, below.
**** Table 3 follows on p. 11. Albania has been the only exception,
with net annual imports fluctuating between an estimated 15,000 and
60,000 tons during the period.
t Derived from Table 5, Appendix A, p. 17, below.
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Table 3
Estimated Net Foreign Trade in Cement of the European Satellites 2/
1950-57
-Thousand Metric Tons
,Country
1950
1951
1952
.1953
1954
1955
1956
1957
Albania bi
+60
+60
+60
+60
+50
+40
+15
+20
Bulgaria 2/
-178
-180
-194
-182
-167
-159
-228
-191 .
Czechoslovakia 4/
Negl.
Negl.
Negl.
-8
-101
+9
-157
-40
East Germany e
-191
-200
-575
-469
-603
-685
-570
-199
Hungary f
+1
+64
-2
-3
-190
-292
-180
. -9
Poland
g
. -362.
-385
-231
-364
-387
-577
-421
+52
Rumania
-515
-500
-750
-500
-750
-1,100
-1,100
-1,000
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Total net exports sy
-1,185
-1 141
-1,692
-1 466
-2 148
-2,764
-2,6k].
-1,367
Index of total net exports (1950 = 100)
100
96
143
124
181
233
223
115
Total net exports as a percentage of
production
14
12
17
12
18
20.
18
9
a. Net imports (+); net exports (-).
b. 1950-51, estimated to have been the same as in 1952-53; 1952-57, estimated on the basis of numerous
fragmentary reports.
c. 1950-51 and 1953-57 exports, 3g. Imports from the USSR in 1955-56 were deducted (see Appendix A,
Table 5, p. 17, below). Very small imports of special types of cement probably were received from the
USSR also during 1950-54. This is the only country from which Bulgaria is believed to import cement.
1952, estimated to be in the range between the 1951 and 1953 figures.
d. 1950-53, net balance of trade appeared to be negligible. 1954-57, difference between production and.
consumption (see Table 1, p. 3, above, and Table 2, p. 9, above).
e. 1950, 3_71; 1951-57, 3.W. These figures represent exports only. Imports during the period are be-
lieved to be :risible.
f. 1950-55, 3 ; 1956-57, 120/.
g. 1950-51 imports,11-1/; 1950-51 exports, 11-2/; 1952-54 imports and exports see footnote d, above);
1955-56 imports and exports, 2-1-2/; 1957 imports, IS; 1957 exports, 125/.
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In 1955 and 1956, net annual exports of cement from the European
Satellites were 133 percent and 123 percent, respectively, above the 1950
level. These increases resulted primarily from a significant increase in
exports to non-Bloc countries (mostly the countries of the Near and Far
East). For example, Rumanian exports outside the Bloc were 38,000 tons
in 1953 and 183,000 tons in 1954 and rose to 542,000 tons in 1955.*
A significant downward trend occurred in 1957, however, when net exports
were almost halved in comparison with 1956 and accounted for only 9 per-
cent of total production. Poland became a net importer of cement for the
first time since World War II, while net exports from East Germany and
Hungary dropped significantly.** The change in 1957 resulted from the
easing of Soviet pressure on the Satellites for exports to the USSR and
other countries, an attempt by the Satellite regimes to satisfy more fully
domestic demand for housing,*** and the greater difficulty in exporting to
the underdeveloped countries which are becoming increasingly capable of
supplying their own needs. The causes for the lower level of exports are
not expected to diminish in the near future, and, therefore, the level of
exports by the Satellites will not increase substantially above the 1957
level in the next several years,xxxx although Rumanian and Bulgarian ex-
ports probably will continue to increase gradually because the industry
in these countries has been developed partially for export trade.
III. Investment and Expansion.
The expansion of production in the cement industry entails a con-
siderable outlay of capital investment, as it has one of the highest
* In every year (1950-57), Rumania has been the largest net exporter
of cement in the European Satellites. In 1955, estimated net exports
from Rumania equaled 55 percent of production, and about 50 percent in
L. other years. Cement is one of the few commodities (other than timber
and petroleum products) which Rumania produces in sufficient quantity to
export and for which markets can be found. The cement industry is an
old industry in Rumania (a number of plants were operating before World
War II). The country is capable of manufacturing the equipment necessary
for cement manufacture and is even exporting plants to all the Far Eastern
Communist countries as well as India and Indonesia.
** The drop in Hungarian exports was largely due to the disruption in
production as a result of the uprising. In addition, from November 1956
to March 1957, almost 39,000 tons of cement were received as aid from
other Communist countries.
xxx The use of precast concrete particularly for multiple-unit dwellings
is increasing in the Satellites, thus requiring more cement per unit.
xxxx Polish exports of cement in the first half of 1958 were only 45,000
tons, which was 62 percent of exports in the first half of 1957. L.IY
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costs of capital investment in relation to the total output costs of
any industry and receives a major share of investment funds for the
construction materials industry. In Czechoslovakia, 46 percent of the
investment funds allotted to the whole construction materials industry
during 1954-56 were utilized by the cement industry. Most of the funds
allotted to the expansion of the cement industry in the European Satel-
lites are expended on construction of new plants, and the primary source
of the substantial increase in production during 1951-58 was the output
obtained from new plants completed during the period. For example,
61 percent of the increase 'in production in Poland during 1951-55 came
from new plants, almost 80 percent of the investment funds expended on
the cement industry in Czechoslovakia during 1951-56 were allocated for
construction of new.plants0 and 10 out of 16 new kilns completed in
Rumania during 1951-58 were installed at new plants.
Emphasis on construction of new plants occurred in spite of a rela-
tively low average output per plant of 242,000 tons in 1958)* which was
about three-fifths of the average Soviet output per plant in 1958. In
addition, the investment costs of adding capacity by constructing new
plants are higher than the costs of expanding existing plants. For ex-
ample, in Poland the cost of building new plants is expected to average
67 percent more per ton of added capacity than the cost of expanding ex-
isting plants. The higher investment costs, however, generally tend to
be more than compensated for by lower transportation and operating costs
at new plants.
Because construction of new plants accounted for the major source
of increased production during 1950-58, the usual failure to complete
new plants on schedule and the extended time necessary to attain opti-
mum utilization of the facilities have been a serious deterrent to
production plan fulfillment. For example, in Czechoslovakia, construc-
tion of a cement plant has taken as long as 8 years; in Bulgaria a plant
scheduled for operation at the end of 1956 began trial operation at the
end of December 1958; and in Hungary a new plant completed in 1952 pro-
duced only 53 percent of its planned production in 1954.
IV. Prospects.
The cement industry of the European Satellites is expected to ex-
pand considerably in the future, as an attempt is to be made to satisfy
more adequately the increasing domestic demand for cement which will be
* See Table 6, Appendix A, p. 18, below.
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accelerated by the higher priority being given to housing and to the
usage of precast concrete. As in the past, the Satellites probably
will continue to rely primarily on the construction of new plants to
expand production capacity. In.addition) the growing use of slag will?
permit increasesin production with a minimum of investment) although
this may tend to lower the average quality of the cement produced.
Planned Increases in the use of slag probably will be achieved, but
past failings in completing new plants on schedule, as well as the slow
utilization of new capacities, probably will continue to cause underful-
fillment of some production plans.
Although production plans Were fulfilled in a majority of the Euro-
pean-Satellites in both 1957 and 1958, a lower level of fulfillment is
to be expected for the 1960 goals, as the long-term plans for 1960 are
overambitious and new plant completions continue to lag. It is esti-
mated that production in 1960 will total 21.7 million tons, which is
23 percent above the level of production in 1958) although plans* re-
quire a 30-percent increase to 23 million tons. Thus plan fulfillment
is estimated at 94 to 95 percent. However; the estimated average annual
rate of increase of 10.7 percent is higher than the rate of 9.8 percent
achieved between 1950 and 1958, although it falls short of the planned
14.0-percent increase.
Net exports are expected to remain close to the level of 1957 -- that
is, from 1.5 million to 1.8 million tons -- so that approximately 5.5 mil-
lion tons of additional cement will be available for domestic consumption
in 1960. The availability of over 20 million tons of cement in 1960 (35 to
40 percent more than in 1957) will permit a considerable expansion of con-
struction in the European Satellites, but the expanding need for cement
in construction and the underfulfillment of cement production plans will
continue to cause some shortage of cement and require substantial in-
vestment to further.expand the cement industry long after 1960.
* Because the Five Year Plan in Bulgaria terminates in 1962 and no 1960
plans have been announced, the 1960 plan was estimated.
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APPENDIX A
STATISTICAL TABLES
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Table 4
Estimated Per Capita Consumption of Cement in the European Satellites and Western Europe
1950 and 1957
Country
1950 1957 Index
(Kilograms Per Capita) (Kilograms Per Capita) (1950 = 100)
Albania a/
61 h/
6o
98pJ
Bulgaria h./
58
89
153
Czechoslovakiy/
161 1/
273
170
East Germany a
66
186
282
Hungary
86
loo
116
Poland a
y
87
16o
184
Rumania Lt/
31
80
258
Average for the European Satellites 2/
8o
152
190
krersge for Western Europe h/
148
249
168
a. Consumption, from Table 2, p. 9, above; population, 1.2/.
b. 1952,
c. 1952 = 100.
d. Production (assumed to be the same as consumption). See Table 2) footnote d, p. 9, above.
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Table 5
European Satellite Trade in Cement with the USSR
1955-57
Imports from the USSR
1955
1956121
1957 IV
. Thousand
Metric Tons
Percent of Total
Imports or Exports
to the USSR
Thousand
Metric Tons
Percent of Total
Imports or Exports
to the USSR
Thousand
Metric Tons
Percent of Total
Imports or Exports
to the USSR
Bulgaria
1.3
0.5
4.7
1.7
1.0
0.4
Czechoslovakia
0
3.6
1.3
1.0
0.4
Total s/
8.3
2.0
0.9
Exports to the USSR
Bulgaria
101.6
10.2
143.0
7.2
132.2
6.0
East Germany
65.6
6.6
61.0
3.1
3.7
0.2
Hungary
69.4
3.5
Poland
63.0
6.3
318.8
16.1
18.8
0.9
Rumania
415.8
41.8
512.2
25.9
554.7
25.2
Totals!
646.0 '
65.0
1,104.5
55.8
709.4
3aL2
Percent of total
net exports
23.4
41.8
51.9
b. 2/
c. Totals are derived from =rounded data and may not agree with the sum of their rounded components.
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Table 6
Estimated Number of Cement Plants and Average Produdtion per Plant in the European Satellites
1958
Total. Production 21 Average Output per Plant
Country Number of Plants (Thousand Metric Tons) Thousand Metric Tons)
121
Albania 2 E/ 78 39
Bulgaria 4 g 934 234
Czechoslovakia 15 2/ 4,100 273
East Germany 14 f/ 3,558 254
Hungary 6 5/ 1,302 217
Poland 20 h/ 5,041 252
Rumania 12 ii 2,687 224
Total 73 17,700 242
a. See Table 1, p. 3) above.
b. Total production divided by the number of plants.
c. See I, Al p. 2, above.
d. 2e. Cement Plant No. 5 is mentioned, but it was not completed in 1958.
g?
h. 2//. The plant planned for completion in 1958 is believed to have been completed (Wiek III).
About one-third of these plants have only grinding facilities.
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