Soviet jeans maker sews a new style of economic success


Mikhail I. Krasik knows only a few words of English. Four of them are part of a rare Soviet economic success story: "stone-washed blue jeans."

Mr. Krasik is general director of Rabochaya Odezhda (Work Clothes), a 100 million ruble-a-year manufacturer of jeans and work garments with 1,700 workers at two plants in Moscow and two more in the nearby Vladimir region.

Now those workers have become owners. Rabochaya Odezhda is one of the first state-owned firms to, in effect, go private, by buying its plant from the state and making employees the stockholders.

"Everyone's an owner," said Mr. Krasik. "So every worker has more reason to work better and harder."

A member of the Communist Party for 30 years, Mr. Krasik doesn't talk like one.

"We have to find the best way of working -- capitalism or socialism. We have to increase production, so that people live better. That's what matters," he said.

As the stop-and-go reforms of Mikhail S. Gorbachev have eased controls on state enterprises, Mr. Krasik has moved swiftly to use the new freedoms. The results are impressive, but the improvised process of economic reform raises questions that cannot be answered easily.

Amid the political chaos that affects everything in the Soviet Union, the clumsy Stalinist economy is staggering slowly in the direction of a free market, making up rules as it goes along.

Rabochaya Odezhda's transformation shows how the Soviet Union is haphazardly grafting bits and pieces of Western-style business onto the ossified planning and distribution structures built in the 1930s.

The results are, at times, bizarre. The company, for example, has doled out stock to its workers. But typically, given the collapsing economy, managers haven't found anyone to print the stock certificates. And workers are forbidden to sell their stock -- an act described by Mr. Krasik as "speculation."

Until 1988, Rabochaya Odezhda was just another state operation, churning out what the Ministry of Light Industry of the Russian Federation demanded and selling it to stores at the price set by the State Committee on Prices.

"They commanded us," Mr. Krasik said. He was used to the system: he worked 25 years as chief engineer at a similar state factory before taking the helm at Rabochaya Odezhda 14 years ago.

But he was among the relatively few Soviet managers who stretched the possibilities of the old system, lobbying for the money to buy up-to-date equipment and trying to produce what was in demand, including jeans.

When perestroika came along, he was eager to break loose from the ministerial overlords.

In October 1988, Rabochaya Odezhda became one of the first state enterprises in the country to achieve a measure of independence by leasing its buildings and equipment.

Previously any profits had gone to the state; now the enterprise began paying 600,000 rubles a year to the state in rent and could keep what was left to reinvest or pay in bonus wages, Mr. Krasik said.

"There are all kinds of instructions applying to state enterprises -- what bonuses to pay, what an engineer gets, what a worker gets. They didn't apply to us anymore," he said.

So for every 1 percent workers produced above the planned targets, Rabochaya Odezhda began to pay a 5 percent bonus.

"People began to work," he said. "We have brigades that make 300 percent of the [state quotas]. There are inexhaustible reserves when a person feels he's free."

Some 600,000 pairs of Rabochaya Odezhda jeans are sold a year, for a retail price of about 100 rubles -- more than a week's wage for the average worker.

The jeans can stand a comparison with Lees or Levis -- even if fashion-conscious teen-agers still buy faked foreign labels and sew them onto Soviet jeans. The plant has helped make "dzheensi" a fairly available commodity here, no longer the sole province of black marketeers who buy the pants off tourists.

Each year, Rabochaya Odezhda produces about 600,000 pairs of jeans on Japanese equipment, purchased by the state several years ago for scarce hard currency. The workshops are clean and well-lighted.

A few years ago, these workers -- 90 percent of them women -- earned about 250 rubles a month and sewed about a dozen pairs of trousers per shift. Today, their pay has more than doubled to about 600 rubles, and each woman manages tomake 17 to 20 pairs per shift, depending on the type.

"We take fewer smoking breaks and work more intensively," said Galina N. Neumylvakhina, who manages 294 workers. "Our quality is better. Our production is up."

"We're interested now in how much we produce," Valentina Guseva, 34, said as she sewed belt loops onto jeans at an imported Juki sewing machine.

"I'm getting stock -- 3,000 rubles worth," she said. "I'll get a share of those -- what do you call them? -- 'dividendi.' "

Rabochaya Odezhda moved beyond the leasing arrangement last year when talk turned to a tongue-twisting Russian word: "razgosudarstvleniye," literally, "de-state-ization."

Mr. Krasik decided to brave these uncharted waters and told the ministry that he wanted the workers to take over the plant.

A commission decided the price of the takeover should be 5.1 million rubles. The price seems arbitrary, like the 600,000 annual lease payment -- perhaps inevitably, since there was no market to determine a price.

Accumulated profits were used to pay off the state, and the plant has doled out stock free of charge to the workers in values ranging from 800 rubles to 12,000 rubles, depending on tenure and qualifications.

But, as might be expected in a nation groping for capitalism, rules governing the stock are, from a Western view, unusual.

The stock's face value will not change over time, Mr. Krasik said. Dividends paid on the stock will change, "but they will never be less than 10 percent," he said. He did not explain how that can be guaranteed.

If a worker leaves "for respectable reasons," such as joining the army or following a spouse to another job, the worker will be permitted to sell his stock to the enterprise.

But if he leaves, say, to take a private-sector job that pays more, that's not a "respectable" reason, and he'll have to forfeit the stock, Mr. Krasik said. "He's abandoning us and betraying us," he said.

Likewise, sale of the stock between employees -- let alone to outsiders -- will not be permitted, Mr. Krasik said. "That would be speculation."

Mr. Krasik insists that Rabochaya Odezhda now acts free of the ministry's control or interference. But when asked for an interview, he insisted that the interview first be cleared with the deputy chief of the ministry.

The ministry, however, has itself changed; it is now the Association of Light Industry. Instead of giving orders, it will seek contracts with member-enterprises to provide marketing, consulting and other services, officials say.

If Mr. Krasik's job used to depend on the bureaucrats in the

ministry, now he technically is hired by the stockholders -- his own subordinates. Once a year, the stockholders will meet.

"If I work badly," he said, grinning, "they'll fire me."

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