REVIEWS 2 YEARS OF RUMANIAN ECONOMY PRIOR TO FIVE-YEAR INVESTMENT PLAN

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80-00809A000700060387-5
• Release Decision: RIPPUB
• Original Classification: R
• Document Page Count: 16
• Document Creation Date: December 22, 2016
• Document Release Date: October 6, 2011
• Sequence Number: 387
• Publication Date: May 29, 1952
• Content Type: REPORT

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v:,il
Cu+~~ION~c' , ? ? ? LLGGt~l//
t ENTRAL INTELLIGENCE AGENCua~~rY REFOR
INFORMATION FROM
FOREIGN DOCUMENTS OR RADIO BROADCASTS CD NO.
COUNTRY Rumen!.,
SUBJECT Economic ?? Planning
HOW
PUBLISHED Monthly periodical
WHERE
PUBLISHED Bucharest
DATE
PUBLISHED Mar 1951
LANGUAGE
Tm. DxONDN1 CONTAIND IuUNA"oN DTICTIAN TIII NATIONAL fungi
o/ "N VN"tf tuAft VITNIN INN NIANINI OP N$MONAU ACT II
!. I. C.. I I AND IN, U ADtuIN. m T1Alluwmll ON TN! IuDATIYN
oT III CONTnTO III ANT NAIAD! TO AN UNAITNODTII PINION IN TIC"
NINU* IT IAN. IIPIof0RTON OP TOO PODS II PIONIIITU.
DATE OF
INFORMATION 1951
DATE DIST. k y 1952
SUPPLEMENT TO
REPORT NO.
THIS IS UNEVALUATED INFORMATION
REV=S 2 EEARS OF R MANIAfl OM--
PRIOR TO F V -NEAR IIPVESTM
-AN
The investment plan constitute- one of the most important parts of the Five-
Year Plan. The plan provides for the investment of 1 330, 000,000,000.lei in the
entire economy of the RPR (Rumanian Peoples' Republic] during the period 1951 -
1955. As a result of these investments, the basic funds of industry will be
nearly doubled. This means that, as progress in the realization of the plan con-
tinues, an increasingly larger share of production will be supplied by new enter-
prises created during the period of the Five-Year Plan.
In 1949, investments amounted to only 110 billion Lai, but in 1950 they ex-
ceeded 161 billion. In 1951, they will exceed 193 billion and, in the last year
of the Five-year Plan, they will reach 320 billion lei (computed on the basis of
1950 prices).
the Thus it becomes obvious that the realization of the production plan and of
necessary cultural activities will be increasingly conditioned by the execu-
tion of the investment policy prescribed by the Five-Year Plan.
This is why it is a mistake to attach more importance to the production plan
than to the investment plan, which is unjustly assumed to be of only "secondary
importance." It should not be forgotten that tomorrow's production is dependent
on the realization of the investment plan today.
Gains During 1949 - 1950
Airing 2 years of planned labor, the labor force of Rumanian eco
creased. Our workers have learned to n~ has ia-
wna our socialist enterprises by v,-
quainti
ng themselves with the achievements and advanced working methods of the
Soviet Union. Proof of this was the 100 percent increase in the industrial pro-
duction of 1949 and 1950 (over that of 1948) which easily exceeds the highest
level of industrial production ever achieved in Rumania prior to 1938.
CLASSIFICATION
NAVY NSRB
AIR FBI
DISTRISW -"
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!Tew branches of industry, each as mach_ne building and the electr" :_l. i:~:t.t,??
try, were create. Large quantit. ;s of machinery of high qu,lity ha-re :;ee-: =
ufactur.-.
STAT
The techrologjca1 exhibit in the fall of 1950 demonstrated the raria devel-
opment of the r,a imi,.ustries. New types of machine tools manufactured for the
first time in the tPR, such as large parallel lathes, horizontal boring machines,
machines for manufacturing bearings, polishing machines, sheet-metel cutt--rs,
electric motors and transformers, compressors, tractors, trackless trolleys, and
equipment for the mining and oil industries were displayed. Large investments
were made to assure the manufacturing of such machinery by industry. During 19#9
and 1950, over 270 billicn lei were invested in the national ec"nomy.
The 1949 investments have tripled and the 1950 investments are 4.5 times
as large as those of 1948. The continuous expansion of the national iii-ome
(which during 1949 increased by 25 percent) has permitted the a cumulations
and in-mstment of large amounts of capital.
Need for Modernization of Enterprises
One of the most important and urgent tasks is the completion and moderniza-
tion of existing enterprises. The older factories were equipped with antiquated
machinery. One of their worst features was the almost complete lack of coordi-
nation between the productive capacities of the various sections of the same en-
terprice. Hence, the need for investments :.o bring about the alignment of the
productive capacities of the various sections with that of the most advanced one,
thus eliminating, to a considerable extent, the deficiencies in production which
prevented a general increase in the productivity of our socialist industries.
Another bad feature of nationalized industry was the large number of small,
nonspecialized, scattered, and poorly equipped industrial enterprises producing
miscellaneous items and suffering from low labor productivity. To correct these
features, especially in 1949, a part of the investment was devoted to the consol-
idation of these small enterprises into medium-sized or large industries. The
situation in the electrotechnical industry where 50 small. semiindustrial enter-
prises were consolidated into 15 large factories, whose ever-all production in
1950 exceeded that of the individual enterprises in 1946 by 700 percent, is
characteristic.
The number of industrial units completed and put into operation was even
higher in 1950 than in 1949. They include: the Ovidit. I and Crain?eel-?7ali::g
central electric power stations with total power of 11,300 kila,?atts, the Galati-
Braila and the Cluj-Oampia Turzii high-tension electric cables systems, ltbe Arad
Victoria Machine-Tool Factory, oil refining installs++n"e the Saros rhimba gas
pipeline, a blast furnace (reconstructed) and four 8iemene -Martin furneges, a
steel rolling mill, a processing station for nonferrous minerals, an independent
section for the manufacture of machine bearings at the Rasnov Machine4ol Fac-
tory, tiro plants for the manufacture of electrolytic caustic soda, a plant for
the manufacture of phenol and synthetic resins and one for sodium bichromate, a
cement factory, four spinning mills with 26,500 spindles, six sawmills, silos
and'granaries for the storage of cereals with a total cauu:ity of 160,000 tons,
the Piatra Neamt-Pangarati railroad line, and the Arges River Dam for the
Bucharest waxer supply.
Investment Plan Weaknesses
Although the investment year plans were surpassed by 22 percent in 1949 dad
by 5 percent in 1950, they were not always carried out in accordance with pro-
visions.
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Certain construction exceeded the prescribed volume
ects were air t, (in cases Where the yroj-
.d.? in _orogress). other indu6trial units ?? rare completed an. ,
into ut
operation Tither on or ahead of schedule. There were also instances iu
which the prescribed voh.ume of eonetruction Max not fulfills' cr in whi the
ch
industrial units were not put into Operation in accordance with the tablished by the plan. schedule es-
In certain instances, these failures prevented certain branches of R.mian
industry from fulfilling the requirements set by the plan. An example is the
case of coal-mining operations and the construction of homes for coal miners in
which the production plan was only 96 percent fulfilled. Another was the delay
in conatru, tang the lignite processing plants (due to the failure of the Steaua
Roaie (Red Star) Works to deliver the necessary machinery on time) which resulted
in failure to fulfill the production plan f..r processed coal.
The failure to accomplish on time the scheduled construction at the Textila
Grivita (Grevita Textile) Factory resulted in the nonfulfillment of the plan for
uncombed wool, and the failure ?o complete the construction of the electric power
station at Baia Mare was responsible for the decline in production of several in-
dustries for lack of electric energy.
Several industrial units constructed were defective, due either to the com-
plexity of the project or to Arrors in nl
effects: (1) long delays in. pug th64,~ units into operation due to the
necessity of rebuilding the defective sections; (2) additional expenses: for re<
construction work; (3) increases in the cost of investments,and"iiTalftj ge
(4) difficulties in fulfilling the requirements of the production plan.
The metal hoist tower at the Baia Sprie mines, manufactured by the Vulcan
Factory, had to be repaired before it could operate at maximum efficiency.
There were also deficiencies in the execution of several less important &.o~-
ects whose construction would, nevertheless, have been of assistance to the
Proper functioning of the respective enterprises. Such was the case of the aban-
doned Project for supplying the Otelul Rosu (Red Steel) Works with drinking water.
Both in 1949 and in 1950, investment plans showed a continuous rise from
the first to the last quarter, as follows:
Year 1st a 2d
Qu 3d Qu 4th Qu mom
1949 6s9 16.4
1950 12.2 22.5 2823.0 .5 53.7 1.0
36.8 100.0
This chart shows the seasonal charact* of the construction industry. For exam-
ple, the slowness of construction work during the first quarter was due to the
absence of projects and the lack of continuity in the execution of the investment
plan.
The abrupt decline in the number of projects completed during the fix-at
quarter of 1950 (in comparison with the fourth quarter of 1949) indicated that
greater efforts were required during the next three quarters to make up for the
as during the first. Since the requirements of the investment plan were ex.-
ceeded during 1950, this indicates that a larger number of projects could have
been executed had the deficiencies responsible for the al_reciable quart,-:??1v dis-
crepancies been remedied in time.
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STAT
However, prg'ess in 1950 was better than in 19k9, and this is i dica'ite
of the succe^^'b?. efforts of the construction industry to overcome its scc;:,nzl
character. There fore, it maybe concluded that these efforts have achieved
least a limited, if still insufficient, degree, of success.
It is necessary, however, to make a detailed analysis of the deficiencies
observed in the planning and execution of investments during the first 2 years
of our planned economy in order to avoid their recurrence during the Five-Year
Plan.
Need for Changes
One of the reasons for changes in the investment plans was the failure of
certain enterprises to submit plans and estimates for their construction projects
at the time the investment plans were first drawn vp.
Occasionally large sums for construction work were allocated to enterprises
prior to the submission of specific projects. At a later date, when the specific
need of an industry became crystallized, it often happened that the allocated
funds were insufficient for the execution of the projects, or that they were-too
plentiful, in which case the enterprise tried, within the limits of the ftearplus"
funds, to execute ether projects which, frequently, were neither urgent nor es-
sential. Occasionally, materials, labor, and funds were invested in certain
branches of industry when they could have been used more effectively in others.
For instfnzce, in 1949, the former Petrolifera Muntenia requesting an allo-
cation of 13 million lei, submitted estimatesf6ft1ne separate projectsemountingto
15.5 million lei but hoped that sufficient economies might be made to assure the
completion of all of the projects under the 13 million lei appropriation,
In other instances, projects were submitted which could not possibly have
been completed within a year, either because they were too elaborate, or because
the plants involved were not yet completed or organized. Thu., the General Iron
and Steel Directorate submitted' a pro4tet !or classifying and stocking minerals
at the aunedoara Iron and Steel Combine, which had to be removed from the plan
as premature.
Certain enterprises showed a tendency willfully to underestimate the magni-
tude of the construction projects they submitted.
A number of changes had to be made in the plan for 1951 because certain en-
terprises did not submit plans and estimates Car their projects in time.
The failure to submit specific estimates and plans when the plan was drawn
up resulted, in 1951, in overestimating the magnitude. of certain projects and
in underestimating certain others necessitating subsequent corrections in the
plan which generally increased the number of investments as well as the number of
prospective projects.
Those who try to obtain funds by wtllful]yimderestimating the cost of a proj-
ect on the assumption that once started it will have to be completed, misunder-
stand the best interests of their enterprise or section, and hurt the interests
of our industry as a whole.
Fuch procedures were not infrequently used during the plan years 1949 and
1Q50. For example, the estimate submitted for the construction of two overhead
traveling cranes at Galati 7 Noembrie Plant,.indigFted a total construction cost
of 5 million lei although it was known even to the Central Directorate that the
estimate was much too low. Indeed, the actual cost of the overhead traveling
cranes amounted to 12 million lei, necessitating an increase in the funds
tially allocated for this project. "'?.
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The submitting of detailed plans and estimates for prospective pr.jectc be-
fore the plan is worked out in detail would eliminate the possibility of over-
estimating or underestimating the coat of the projects, and prevent all unfavor-
able consequences.
The need for -k--g frequent alterations in the plan, .or reasons ai+rcdy
indicated, or because of the necessity for incorporating certain new talks :ir._ch
become apparent only in the course of its excution, has prevented the completion
of certain construction projects.
Padding the investment plan forces a dispersion of construction and flea -.
cial efforts, of trained personnel, and of construction materials. Undertaking
the construction of more projects than is warranted by the supply of materials,
manpower, etc., will, naturally, result in shortages and delays in their execu+?
tion.
Soviet experience teaches that the construction effort must be concentrated
on a small number of important projects, thus expediting their execution. If too
many construction projects are undertaken at one time, the supply of labor and
materials will have to be dispersed, thus lowering the general productivity of
labor. it is necessary to resist the tendency to disperse our funds and supplies,
which bring about a senseless freezing of invested capital.
In connection with the question of concentrating construction efforts on a
limited number of objectives, an example may be cited from the work of the period
of implementation of the Five-year Plan. A certain department proposed the con-
struction of two schools which had to be completed in 2 years. It would have
been more sensible to have suggested beginning construction work on one school
only. This school could have been completed and o_:,ened at the end of one year.
The second could have been built in the next year.
One of our serious difficulties in the field of investment planning has been
the lack of experience in this field, and 'n the planning of the national econom.
The investment plan has not always yedel~spQciiic in assigning tasks. Sinci
the section of the plan providing scheduler for the completion of variaue prej-
ects was not prepared before the second quarter of 1950, substantial delays
occurred in the completion of several projects, at least in part due to the fail-
ure to assign deadlines.
An obstacle to the realization of the investment plan has been the failure
to classify investments according to their importance for the respective branches
of our industry. In addition, there is a lack of adequate legislation for es-
tablishing a system which would classify investme.te, according to methods of
financing, into centralized and decentralized investments, and further subdivide
the centralized investments according to their actual importance. There . is also
a need for legislation to establish methods for financing noncentralized invest--
ments, major repair projects, etc., and to provide competent organs for approving
these investments.
Due to the absence of a classification system, investments ranging from
severil thousand lei to several billion were indiscriminately included in the
plan.
This led to excessive centralization sir[ce every change in the plan, no
Matter how trivial, had to be approved by the Council of Ministers, because the
State Plan is a lau and no amendments can be made without the approval of the
Council of Ministers.
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At the sane time, the equal, listing all projects, big enf. sme11, mace it
impossible to give priority to the most important ones in every case. P.:aau?ng,
allotment of materials, contracting for construction and insta!.lations,etc., Was
not always done on the basis of priority for the most important projects. Often
Priority was given to a series of smaller projects to the detriment cf the :anger
and more important ones.
This deficiency will be remedied by establishing certain criteria based on
the importance of the projects and established for all branches of industry.
Projects fulfilling requirements will be listed separately in the plan; oti'ers,
which do not meat requirements will a listed collectively.
The delay in launching the plan also delayed the al'ocation of funds to var-
iou+ enterprises en it turn to e vaetove ti. themselves, which resulted in
delays in the beginning ef.vork,9e.~hf.1 D , in the or$ai5 on e!
the acquisition of materia*_-, etc. ;~ ~!
Daring the second half of 1950, the plan was launched on time. The State.
Plan for 1951 was approved by the Council of Ministers on 23 December 1950 allow-
ing the ministries and central organizations to make the necessary allocations
to the various projects early in January 1951.
Elaboration of the investment plan prior to the receipt of detailed plans
and estimates for prospective projects constituted the main deficiency in, the
work of investment planning.
The lack of detailed plans had a negative effect on the ful.lfill.ment of the
investment plan since it prevented or delayed the beginning of construction work.
This is the reason for the slow start in the execution of the investment plan in
the first quarter of the plan year.
In instances where detailed plans were submitted, work on projects proceeded
smoothly, and in the case of tong-range projects, the requirements of the invest-
ment plan were actually exceeded. Examples are the main construction work 4, the
Sovrommetal Resita Works, at the Morbeei HydreeleeJ*y "z* BZQti10a, Ite d ac-
tion of main natural gas conduits, etc.
In caseswhere insufficiently detailed plans were submitted, work was delayed,
as in the case of the Hunedoara Iron and Steel Combine, in certain branches of
the electrotechnical industry, and in other instances.
To cope with the tasks prescribed by the industrialization of the country,
it was necessary to establish institutes, directorates, and services for pre-
paring and elaborating projects.
Thus, at the beginning of 1949, the first IPI (Institute of Industrial Pie.r.-
ning) was established under the Ministry of Metallurgical and Chemical Industries,
to be followed, during the second half of 1949) by the IPC.(Institute of Zion,.
struction Planning) which whe placed under the guidance of the Ministry of Con-
struction. During the second half of 1949, there were also established the ISPE
(Institute of Energy Studies and Planning of the Minis" of Electric Energy)
and the IF? (Institute of 8breetcry.. Planningl of the Ministry of Silviculture.
These institutes, together with the Directorate of Studies and Planning of
the CFR (Rumanian Railroads), were entrgstMd with the task of drawing up plans
for the great majority of the large and small industrial projects called for by
our investment plan.
The plans had to be completed during the first few months of the year,
which accounts for the great amount of work performed by new planning .tnstitln:ee.
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The first ach;evement of the institutes, a schedule for the completi,~a of
projects on thr bans of the: nr ency as prescribed by the inve,tment sal co_.-
struction plane, was completed in Tebruarv 1950.
Decision of 20 U-tober 1950
The government of the Rumanian People's Republic, in order to meet new co-
mands arising from the necessity of fulfilling the tasks prescribed by the Five-
Year Plan, and to assure t;,e most propitious conditions for the performance of
planning activities and the improvement of their quality, has adopted a series
of concrete measures in its decision of 20 October 1950.
The decision provides for the establishment of comprehensive planning organ-
izations to iukta plans for new factories and the reconstruction of existing ones,
and also provides for the establishment of specialized planning organizations for
the construction of common projects, i.e., bridges, highways, railroads, tssw.
machines, public buildings; . others.
To avoid a lack of cot rdi_nation in inata ces where oeverel parts of a ppol-
ectare dremni up by different specialized planning organizations,the dileision
prescribes that a comprehensive planning organization'coordinate, verify, and
collect all the pu tial plans and assume the responsiblitity for the final drov-
ing up of the over-all plan for the project.
The decision also requires that ministries pay special attention to the
activities of the planning bureaus of the various enterprises, and especially
to the bureaus of the machine-bu=lding enterprises to encourage the individuvl
planning pf znchines by the plants in which they will be built, since planning
is much facilitated by the accumulated experience of the enterprises. To assure
an increased volume of plsnniing operations, the existing planning organizations
are strengthened and new specialized planning organizations are established for
the main industrial branches.
The important provisions of the decision of the Council of Ministers con-
cerning the improvement of labor in the planning section demonstrate the impa;_
tance attached by the government to this field of activity and give an opportun-
ity to appreciate the rapid progress in the field of planning.
In 1949, the drawing up of plans for the projects scheduled for execution
durtng 1950 w s postponed until December 1949. In contrast, the decisions of the
Count I of Ministers of 25 May 1950 and 2 June 1950 adopted the necessary meaa-
ures for financing and scheduling the prospective projects and, consequently, the
planing organizations started the preparation of plans for 1951 projects as
early -:z September 1950. The time thus gained was or great value to many enter-
prises as it enabled them to submit many major projects for the approval of the
Council of Ministers as early as January and Febrary. We now also have more
time to formulate projects scheduled for 1952; thus, the plan for 1952 will be
drawn up on the basis of detailed plums and estimates.
the im; enfant successes obtained thus far by planning organizations sho:?,;.d
not overshadow the fact. that their work has been deficient in many respects.
Sane of these deficiencies could have been, at least partly, avoided and some
of those e:.t:'us :ed with the formulation of the plans could have aae:used. a more
responsible attitude towards their work.
Thus the basic problems of certain projects are not ful'/ studied and there
are instants when 'tile prospective projects are submitted in a most sketchy man-
ner by the prospective beneficiaries. Occasionally the solution of the problects
of water and electric supply is neglected; in other instances, no solutions are
offered for the problems of transportation of raw materials and finished pro acts.
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For instance, _`?oject was submitted for the construction. of refrigeraaciol,
pluits ct Turn, - ---'-n, and Tul--ea (the Tulcea refrigeratior plants consti-
tuting a major piojc&.) but the luestion of electric supply was neglected and
the refrigeration plants remained inoperative ffor lick of electricity. The
Hezr_icia Oil Refinery is in the cress predicament. -
A garage for SATA (Motor vehicle Department) was constructed at D::va in 1949
but no provision was made for the installation of the necessary plumbing.
In certain cases, the nature of the terrain wus not properly studied.. For
example, the foundations of the workers' homes at Sovromietal and Ctel~ul Rosu
were laid in marshland. At the Hunedoara Iron and Steel Combine, an en;,_ne shed
was constructed on soft growfd. As a result, cracks were soon observed in the
structure of the construction. Similarly, the foundations of the workers' homes
at Otelul Rosu had to be abandoned and construction started elsewhere. Like-
wise, the Borsa-Balbeni Sawmill was located in a swamp area.
Also there were'a number of incomplete or incorrectly prepared plans for
projects. The latter situation is especially serious since deficient plans lead
to changes, revisions, demolition of construction, increased construction costa,
and delays in putting the completed projects into operation, thus upsetting the
schedule and arovisions of the prodi.ctiou plan, which requires completion of
approved projects within a definite time.
The case of the sodium bichromate plant planned by IPRO-CBIM (Institute of
Chemical Planning) is of interest. This plant was begun without first coordi-
nating the various plans submitted for its separate sections. This lack of co-
ordination resulted in defective construction which caused postponement of oper-
ations for 6 months. This delay upset the entire production plan and uecessif
tated increased imports of sodium bichromate.
Questions of economy are occasionally disregardbd in construction work.
Thus large constructions utilized scarce material instead of those more readily
available. Examples of unnecessarily massive constructions are the canteen of
the Ploesti 1 Mai Pler_t, and cultural buildings of the Arad and Tar
fligeration plants, where the buildings will be surrounded by concret te fencese-
despite the fact that brick or other materials could have been used to save ce-
ment.
There is also the case of the Dorobanti-Tasaul railroad line couneetezd with
the construction of the Danube-Black Sea Canal . The cost of this line cocji have
been reduced by one million lei without affecting its operating capacity. This
economy could have been achieved, as suggested by the CSP /omnittee for Sclen-
tif'_c P_amaning?7 by curtailing service to two intermediate railroad stations, by
reducing the totalnumber of stations, and by adopting more economical types of
buildings, and finally, by adopting a simple but adequate system of traffic sig-
nals more suitable for the projected line.
It is necessary to oppose strongly the tendency of certain planners who,
for so-called aesthetic reasons, overload constructions with unnecessary and
expensive details which actually represent waste.
The lack of planning or the submission of plans in installamts has lad to
st,ppsges in construction work and to the inadequate construction of projects.
Thus the plans for the Turda Cement Factory, planned by the ICER (Institute
of Re,earch and Planning for Constructions), and for the Petrosani Merchandise
Depot, planned by IPSR (Institute for Soarom Constructions), were delivered after
great delay and, in the case of the former, in installments. Likewise, the plans
for the minerals sorting scation at the Galati Christea Nicolae Plant, planned
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by IPC (Institnte for Oonsttttction planning), and at the Bucharest dirtp~??:boi
Plant. planned by IPI (I~tY.t*t for Indus trial 'Manning), were slso -ted
in instafmdhta. Similarly, the plans for the Sofronie Abattoir, pled Eby-
CeL.trala Frigo ui (Central Refrigeration), and for the Campia Turzii Steel Rc..l-
ing Mill and Steblvorks were submitted late or in i 1's e?s. cue:itly,'
changes had to be made in the plans after construction work had st.
It must also bementionidtheti1rIft4coseolmajor projects alternative pre-
liminary plans are not always submitted regardless of the fact that there may
be more than ore solution to the same problem. It is essential to submit sev-
eral alternative plans in order to give the agencies charged with analysis of
the economic aspects of the projects an opportunity to evaluate the extent to
which the solutions submitted by the planners are in agreement with current
political and economic objectives.
Positive Achievements of Workers
Construction projects have been started in all parts of the country. The
efforts of the construction workers are characterized by several positide
achievements, e.g., economy brigades have been established at every construction
project; laboratories for testing materials have been installed at major proj-
ects; economies have been realized 'through the adoption of several new mecban-
ical uevices; new equipment, such as collapsible frames (X4olnar type), collaps-
ible scaffolding (Boser type), a more economical system of insulating water pipes
(Hayos), machines for bending pipes without heating, machines for straightening
nails, etc., are being used for the first time.
Previous construction norms were exceeded by using advanced Soviet methods;
the productivity of labor was increased, and reductions in construction costs
were obtained.
The experience gained in 19109 - 1950 shows that it will be necessary to
pursue energetically the struggle to elipdnate deficiencies, to adopt Soviet
working methods universally, to raise the productivity of labor and lower con-
struc+ion costs, to improve the quality of construction work and tc achieve eco-
nomies at all construction projects, and finally, to reduce operating expenses
by improving the organization of construction projects and shortening the period
of construction.
Attention most be devoted primarily to the fulfillment of the task of put-
ting the projects into operation on schedule, shortening the period of construc-
tion, and completing unfinished projects, to increase the sources of socialist
accumulation of our country.
No project on which work will be performed during the current plan year
should be started without the previous approval, of competent technical organs,
and without considering over-all plans for the entire project. In addition,
full estimate of costs must be prepared. Similarly, no construction project
should be started without a complete organization plan based on plans for the
entire protect.
It is necessary to fulfill the projects plan for 1951 and begin the pre-
paration of plans of pro.ects scheduled for 1952, so that by 1 November 1951
all 'plans of the important projects for next year will have been ccim_oieted.
Contribution of Construction Industry
The communique of the State Planning Commission on the achievements of the
State Plan of-the Rumanian People's Republic for 1950 reveals the magnitude of
the contribution made last year by the construction industry to the realization
of the investment plan. The communique follows:
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"Dtd-ing 195D. construction projects amounting to 62 billion lei (or 4,0 per-
cent of time total investment fund) were completed. The other 60 percent were in-
vested in equigaent and installations, means of transportation, etc. Although
the Ministry of Constructions has fulfilled its share of the plan for 1950, ex-
ceeding by 60 percent the volume of construction for 1949, the general construc-
tion plan for 1950 was not fulfilled because-of delays in the completion of con-
struction performed by individual enterprises for their own use."
Many important projects were not executed it accordance with the ruvi.siona
of the plan, or their completion was considerably delayed: for example, the con-
struction of.the cast-iron and steel prc.cessing plant, the moving of the forge
at the Bucharest 23 Augusta Works, the construction of the forge, workshops, and
other projects at the Targoviste metalworks.
The conclusion which must be drawn from these observations is that the ex-
ecution of construction projects must be entrusted to specialized construction
enterprises. This is especially true in the case of more elaborate and impoxr-
tent projects. Only the smaller projects should be executed by the interested
industrial enterprises themselves.
Moreover, specialized construction enterprises represart a superior type
of organization for they operate according to the principles of planned admin-
istration. These qualifications are not met by the industrial enterprises which
engage in their own construction work. Therefore, all major construction proj-
ects must be performed only by speciali,aed construction enterprises which have
adopted the principle of planned administration.
The experience of the years 1949 and 1950 has shown that construction proj-
ects executed by industrial enterprises are usually completed behind schedule,
and, occasionally, are even abar ned after their construction has begun. More-
over, the enterprises frequently violate the discipline of the plan by beginning
work on projects without approved plans or estimates and, in cases where finan-
cial difficulties are encountered, by transferring funds allotted for production
to construction, during the construction of the project.
Experience has also shown that it was unwise to entrust the large corstruc-
tion enterprises of the Ministry of Constructions or Sovromconstructia with the
execution of inumerable small projects. This forced these enterprises to devote
their efforts and construction capacity to a large number of sma11 construc:lion
projects scattered all over the country and resulted in delays in the completion
of certain projects and the noncompletion of others.
The small projects must be entrusted to local construction companies or to
the interested individual industrial enterprises, while the large construction
companies should concentrate only on major projects thus avoiding the dispersion
of their construction capacity.
The excoerience of 1950 has taught us that Sovromconstructia and the General
Directorate of Labor of the Ministry of Constructions have exceeded the require-
ments of their plans largely due to the fact that they executed only important
construction projects. The General Directorate of Constructions and Installa-
tions of the same ministry was unable to fulfill the requirements of its plan
dice to the fact that it had to disperse its labor force and equipment over a
large number of small construction projects. This also prevented the General
Directorate from properly supervising the execution of the projects.
The execution in 1950 of construction work amounting to 62 billion lei
(more than 60 percent higher than in 1949) represents a great achievement.
Nevertheless, in the construction field, work has met with obstacles and suffered
from deficiencies which must be eliminated.
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The lack of complete plans for certain
efetiveg
of construction work on the basis of partial Plane only important
resulted and the
organization of construction Projects. The k of a c reheneive a defoie
organization of construction projects leads to the defect eorggave atndi._ for the
on of
labor and to the haphazard location of barracks ous, o
for materials which must later be removed or rebuilt. Thus, on the
construction project of the important Bicaz I. V. Lenin Hydroelectric ' ric work on o
Sta-
tion was started before a comprehensive orna Power to stoppages and obstacles in the execution ofzthe? prel~~ nary wwork oork on. eh pr led
ect. n the proj-
The launching of any construction work, especially large projects, before
comprehensive plans have been worked out must be avoided. The lack of a plan
leads to delays in the execution of the project and to increases in costs.
The supply of materials to various construction projects was still defect-
ive in 1950, thus preventing continuous work on certain projects. The system
adopted in 1950, which provides for the allocation of construction materials on
a quota based on the nature and number of projects executed by or for individual
industrial enterprises, represents a step forward from 1949 Since this system
was not rigorously applied it was not uncommon to find certain construction en-
terprises hoarding materials while others were suffering
necessary to transfer materials from one construction erprise to another as
was the case at Construction Enterprise No 24 in Targu-Mures.
A frequent violation of the provisions of 'lie plan is the reallocation of
materials allotted for projects listed in the plan to projects which are not in-
cluded therein.
During 1950, when the shortage of cement and timber was well known, certain
departments requested permission to build new construction projects, or actually
began work on them, on the grounds that their supply of cement and timber was
ample to carry out the construction successfully. Thus, during the third quarter
of 1950, the Ministry of Health requested certain projects amounting to 100
million lei (the Comanest-Bacau Hospital, the Colentira Hospital, the Targu-Mures
Polyclinic and Medicopharmaceutical Institute, etc.) on the grounds that it
possessed the necessary materials for construction, while other construction proj-
ects,, even some of the same ministry, were suffering from shortages of materials.
By allotting materials to projects not listed in the plan serious violations
of the discipline of the plan are committed., and obstacles are laid in the path_
of socialist construction.
The supply field is generally most vulnerable to the attacks of the class
enemy wishing to sabotage the construction of socialism in our country. We must
therefore be very cautious in this field. Lack of understanding and negligence
in the distribution of materials to the consumer are inexcusable offenses.
A fairly serious deficiency, which led during 1950 to a shortage of con-
struction equipment, was the irrational use of available equipment. For example,
in Construction Enterprise No 9, at Cluj, a large number of oscillators remained
vapacked for several months for the alleged reason that they were of no use to
the enterprise; at the same time, several construction enterprises suffered a
shortage of this equipment.
Similarly, Construction Enterprise No 3 used five trucks at the Cluj El c-
trc,;arbon Plant to transport materials over average distances of only 500 meters,
thus clearly using the vehicles in an irrational meaner.
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The equipment received by enterprises from equipment-manufacturing in ur-
tries in our country and abroad should be entrusted only to competent workars to
prevent it from being damaged or rapidly worn cut, as was the case in certain
metal and textile industries. The equipment should be distributed fairly among
the various construction enterprises in accordance with the needs of each con-
struction project, giving priority to the most important projects.
It is necessary to assure, through the fair distribution of equipment, the
completion of the most important projects listed in the investment plan for 1951
so that the completed projects may be put into operation on schedule.
Defects To Be Avoided
Insofar as the quality of construction is conderned, there were certain
defects which could have been avoided. For instance, at the Livezi Harnioia Oil
Refiinery, built by Construction Enterprise No 6 (Craiova), the basement of the
building is invariably flooded. Likewise, the concrete chimney of the Turda Ce-
ment Factory constructed by Construction Enterprise No 3 settled on a slant and
had to be straightened.
A serious deficiency is the failure to deliver equipment on time. This may
have serious consequences in view of the close coordination between production,
investment, and construction plans. Because the Steaua Rosie Enterprise failed
to deliver the equipment required by coal-processing stations on schedule, the
General Directorate for Coal was unable to open the new coal-processing station
at Filipesti in 1950 as provided in the investment plan. Therefore, as a further
consequence, the production plan for coal could not be fulfilled. This means
that coal from other parts of the country had to be delivered to the CFR thus
reducing the supply for other industrial enterprises. This reduction in the
supply of cos:;. in turn, adversely affected the production of these enterprises.
This demonstrates the close correlation between the various compone.ita of
the general state plan. It is therefore essential to devote as much attention
to the realization of the investment plan as to the production plan, since in-
vestments represent the most important element for assuring the growth of in-
dustrial production.
This is why each enterprise must consider its plan as an integral component
of the general state plan and realize that the nonfulfillment of its plan, in
all particulars, will lead to the nonfulfillment of the plans of other industries.
The decision of the Council of Ministers, discussing the necessary organi-
zational measures for assuring the successful accomplishment of the 1950 State
Plan of the RPR, declares that:
"It must be clearly understood by everybody that the State Plan is a col-
lective entity and that any delay, letdown, irregularity, or negligence in any
of its components will bring about difficulties, delays, and deficiencies in
another component and thus constitute an impediment to the realization of the
State Plan."
Place of Contracts
The relationships and obligations among various enterprises participating
in the realization of the State Plan are established by contracts. Contracts
are a weapon in the struggle to assure the quantitative and qualitative fulfill -
ment of the economic plans in their entirety, since they assure the strengthen-
ing of socialist management as a means of directpng our planned socialist eco-
nomy. Contracts also contribute to the fflbMgthenin 6 of the discipline of the
plan.
12 -
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The strict observance of all contracts will automatically lead to the elim-
ination of the deficiencies, and thus contribute to the effective realization of
the investment plan.
Importance of Control
An important principle of planned management is the establishment of a con-
trol apparatus for supervising the execution of the plan.
The principal task of the organs of control is the prevention of shortages
by anticipating the factors which may cause work stoppages. During the execution
of control activities, attempts must be made to discover new reserves which will
con.?ribute to the development of the national economy, and practical methods must
be originated to assure the completion before schedule of the tasks set by the
plan, in order to accelerate the production rhythm.
In addition to planning organs, to financial organs which control the finan-
cial aspects of the plan, and to ministries and institutions, party and trade-
union organizations, as well as the people's councils, play an important part in
the control activities of the plan.
The control apparatus must concentrate its activities on those fiches
which most directly influence the development of the national economy, i.e., the
branches producing raw materials and fuel, the metallurgical branch, the electric
energy branch, etc.
The problems of control are toy acute in Rumania where the absence
of a fully developed control apparatus occasionally makes it difficult to super-
vise all branches of industry. Therefore, it is necessary that the control appa-
ratus concentrate its activities on the basic branches of industry which deter,
mine the successful development of the national economy.
Control mast be performed on the basis of statistical data, as well as by
studying the progress of the project in the field.
One of our main shortcomings, during the execution of the investment plan
of 1949 - 1950, ins the inabi]f' ' to form an adequate control apparatus.
In certain instances, planning directorates of the ministries, or the in-
vestment services of the central directorates of departments, were unable to
control the execution of the investment plan at the site because they were in-
sufficiently staffed. Had the Ministry of Light Industry bean able to supervise
properly the execution of one of its main projects -- the Botosani textile
mill -- the high-caliber technical equipment sent to the mill would not have
been left to rust and the coustructiun defects, which now hamper the work of the
mill, could have been avoided.
On the other hand, the Ministry of Metallurgical and Chemical Industries has
adopted a series of control measures the enforcement of which was entrusted to
the managing staff and to agents of the investment services. The Ministry of
Metallurgical and Chemical Industries has revealed that, as a means of clung
the progress of the execution of the plan, detailed charts, shoving the achieve-
ments at various stages of construction, were prepared by all control sections.
It also revealed that certain general directorates (iron and steel, machine con-
struction, heavy industry) had prepared individual charts recording the progress
of in~{?~Ana.l nrn.jects insofar as supp'.y with equipment and actual construction
and installation wsik,is1.s eai=e j..
STAT
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The technical control apparatus of the Ministry of Constructions was com-
p
for osed of only a handful of technicians, which was clearly as insufficient staff
performing control functions properly. The laflk of control activities was
noticeable even in the case of certain organs of the State Planning Commission
entrusted with the supervision of the execution of the plan. The In tment
ves
Division, which should have supervised the execution of the construction pro~-
ecte' of the most important industries, or at least of the most important proj-
ects,. performed but very few inspections in the field during 1950.
Statistics constitute another important method of control and are used both
as a means for supervising the progress of the executic-i of the plan for each
industry, for the various branches of our industry, ana also for the entire
national economy. Statistical data must also be used as a guide for future
planning.
For this reason, statistical data must truly reflect the activities of in-
dustry. Such data must be compiled faithfully and accurately, but we "re still
weak in this respect. Collection of accurate data -- the basis of statistics`
operations -- is still ineptly and slowly performed.
The central organs do not receive sufficiently accurate data since certain
industrial enterprises frequently release data in such a manner that different
figures actually represent the same information. The situation is aggravated by
the fact that industries release data at very infrequent intervals.
This lack of accuracy must be corrected since it deprives the guiding or,
central organs of a means of control, and often causes difficulties in planring.
For instance, the formulation of quarterly plans is hampered by insufficient
knowledge of the stage of construction at a given time.
The analysis of statistical data should lead to the discovery of the reasons
which prevent the realization of the plan and to the adoption of measures for
eliminating deficiencies and shortages which occur during construction.
The control apparatus entrusted with the realization of the investment plan
must concern itself with the following tasks: (1) assure the proper supply of
materials and equipment necessary for the execution of construction projects; (2)
take the necessary steps to assure an even progress of work. In this way, the
fluctuation between the fourth quarter of one year and the first quarter of the
next will be reduced and the necessary arrangements will be made for preventing
disruption of work during the winter months.
The control agencies must also take the necessary steps to bring about (1)
improvements in the quality of labor, (2) reduce actual construction costs below
the estimates, (3) more efficient socialist competitions, and (4) the general
adoption of the working methods used at leading construction projects.
Special importance must be paid to the task of increasing the speed of con-
struction thr,s putting the completed projects into operation ahead of schedule.
The control agencies must also look for deficiencies in the planning of prc.j-
ects and dl.scover superfluous construction included in the plan, so that they
may recc:msrnd their deletion from the project to the proper authorities. Thr..;,
by eliminating superfluous construction, control agencies will assure reductions
in inves cents.
All these facts lead to the conclusion that it is necessary to strengthen
our contrcl of the tasks set by the investment plan and to sp.s the efforts of
all agencies entrusted with control functions The control apparatus meat con-
centrate: its activities on the key branches or the national economy, on the key
STAT
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r
enterprises of these branches, and on the main construction projects perfcrmed
for the benefit of these enterprises. Finally, the control anparat , must :5sure
the strict enforcement of the discipline of the plan both in its fina.^.c:al and
construction aspects.
Violations of the discipline of the plan may assume various forms. ?io rat
ter which 'orm they assume, however, the result is always the same -- theyed~
versely affect the other branches of' economic activity and, consequently, the
entire national economy.
One of the frequent violations of the discipline of the plan is the oe,in-?
ning of construction work without first securing the approval of plans an! es._
timatec fr-r the proper authorities in accordance with existing regulations.
Sometimes, constriction work is begun even on the basis of incomplete pleas. In
certain cases this infraction has had serious repercussions.
Thus, the Geological, Committee started construction on a large workshop
project in Bucharest without first securing the necessary approval for its plans
and estimates. Had approval been sought first, it is likely that a better lo-
cation would have been chosen for the construction of the workshops.
The reque
ted approval 120 mUlLonPloleeisticanteen1 Mai
whi hsonly 40 million were and estimates for its -Lans 1950) only after the building thvidla in ore plan for nearly ect been submitted earliecertain ch completed. ave. bee plane for tl. uldt-
have brought about substantial reductionslinsconstruction bcosiss . which would
The CPR ?vegan the construction of the vatting room of its baggage station
in January 1950, although plans and estimates were not submitted for approval
until May 1950. Up to that time the construction was financed in direct vio-
lation of the financial provisions of the investment plan.
Work on the workers' homes at Filipesti de Padure, which was begun in 1950
without previous approval, had to be delayed for lack of sufficient funds.
Another form of violation of the discipline of the plan, and of the state,
is the ignoring of decisions of the Council of Ministers issued in conjunction
with the approval of certain projects. For example, a coal-burning central
heating system was authorized for the Comanesti Hospital, instead of an oil-
burning system originally requested by the Ministry of Health. Nevertheless,
the organs of the Ministry of Health ignored the order and installed a central
heating system which could consume only liquid fuel.
Another violation of the discipline of the plan is the system practiced by
certain enterprises which, at the end of the year, stock large quantities of
construction materials and make large advance payments to suppliers and con-
struction enterprises in order to include all these expenses in their achieve-
ment reports for the year.
T'''? qv-I om leads, in the first place, to the reporting of false data since
etoeked materials and ldvance payments do not represent actual construction achieve..
ments, and, in the second, to erroneous planning, since the advance pap eats are
subtracted from the general allocation fo:- the actual construction work wtich is
to be performed during the following year on the assumption that the work has al-
regdy been done .
Thus, a 9nr.ller number of constructions than are actually necessary are
Planned. This leads to delays in the completion of certain projects. such was
the case at the CSH (Hunedoara Iron and Steel School), the Bucharest Republica
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Woks, the potosani Moldova Taxtile Mills, etc., which at the and of 1949 in-
cluded as actual accomplishments several tens of million lei given as advance
payment to several construction enterprises, and consequently, submitted smaller
estimates for the completion of construction in 1950. As a consequence, the
plan provided only sufficient funds to complete a supposedly smaller number of
projects which led, in many instances, to delays and difficulties In their ex-
ecution. Violations of the discipline of the plan were accompanied by violations
of the financial discipline since many a ses started construction without
obtaining the necessary funds in accordancetth existing legal provisions, and
instead financed their construction from operating funds, or amortization funds
allocated for major repair and reconstruction work.
In certain instances this caused financial difficulties in the production
end of the enterprise since an important part of the operating funds were thus
blocked. This happened, in the beginning of 1950, at the Bucharest 23 Augusta
Works which constructed -- without prior approval and allocation of funds -- a
Sienena-eiartin furnace and other construction emounting to tens of million lei.
Knowing the negative effects which every violation of the discipline of the
plan has on the national economy, it will be necessary in the future to adopt the
most drastic measures for enforcing the discipline of the plan and the financial
discipline.
Experience to date has taught that violations of the discipline of the in-
vestment plan, committed with the intention of expediting the execution of con-
struction projects by beginning work before plans and estimates have been ap-
proved by the proper authorities, have invariably led to delays. Delays also
occur as a consequence of financial difficulties resulting from beginning work
without waiting for the proper allocation of funds, or, from changes made in the
projects when construction was undertaken on the basis of tentative or partial
plans.
There were instances where foundations had to be ab4mdonded or destroyed,
and even where a completed project could not be put into operation because it
was executed on the basis of deficient or hurriedly drx plans. The Tarnaveni
Sodium Bichromate Factory is a good example of the lat6Ar. All this leads to
long delays, and also to the expenditure of occasionally large sums.
Experience has shown that a project based on detailed plans, approved by
the proper authorities, constructed by a well-organic labor force, and ade-
quately, supplied with equipment and materials, can be completed without diffi-
culties or stoppages, put into operation on schedule or before, and usually at
a lower cost than anticipated.
In instances where complete plans for project were emitted, work proceeded
rapidly and, in the case of long-range, projects, the plan was actually exceeded.
Examples are the main construction pprrojects at the Sovrommetal Resits Works, the
construction of the Gozna Dam, the I M,nive1 Central Hydroelectric Power fltation,
and Moroeni Hydroelectic Power Station.
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