By Anatoly Verbin

By Anatoly Verbin

Russian city ailing along with its textile plants

IVANOVO, Russia (Reuter): Two teenagers were killed in this central Russian city when a wall in an empty block of flats collapsed on them.

They had been scavenging bricks to sell. Residents had been moved out because the textile plant which owned the building was unable to maintain it.

To some in this city of 500,000 their deaths seem symbolic. Ivanovo is ailing, along with its textile industry, which used to account for 65 percent of the city's production.

The list of complaints is a familiar one in the Russia of 1994 -- soaring costs, shortages of raw material, outdated equipment, no investment and, above all, bad debts.

"We have cut ourselves off from the future," says Yevgeny Sokolov, director of the Samoilov plant, acknowledging bitterly that his efforts to survive had merely prolonged the agony.

"If in the Soviet days we were about 20 years behind the world, now it is about a century."

The Samoilov plant was founded 250 years ago and, like all other private businesses, was taken over by the Bolsheviks after the 1917 revolution.

Now it is a joint stock company with the state holding 28 percent of the shares and employees most of the rest. Annual capacity is 250 million metres (820 million feet) of cloth but it produced only 52 million (171 million feet) last year.

Sokolov says he tried to raise money through a tender last year but not a single investor turned up.

The average salary was 62,000 roubles ($42) in January, little more than a half the average national income. The plant employs 2,700 people. Sokolov has not sacked any workers. They have, he says, nowhere to go.

But, instead of working three shifts six days a week, they have one full shift and one partial shift. People are paid partial salaries and those are irregular.

Sokolov said he would introduce four-day weeks from April to allow workers time to plant potatoes and vegetables for next winter on their tiny plots.

Under the centralized Soviet economy, cotton was grown in Central Asia and brought to the textile mills in Ivanovo. The fabric was then sent for sewing, mostly to Belarus and Ukraine. No one cared about production or transport costs.

"Everything was fine. We had cotton and produced more fabric than was needed," says Mikhail Sidorov, who is in charge of industry in the city administration.

The system is largely defunct now. Uzbekistan, which is reducing its cotton area, keeps exports of cotton under state control and, without Russian government assistance, supplies to Ivanovo plants are irregular.

The ancient machinery, which is more than 20 years old, is incapable of processing anything but low-quality Central Asian cotton, which makes looking for other foreign suppliers useless.

The cost of energy and chemicals used by textile plants has soared, pushing production costs so high that Ivanovo fabric costs as much as imported textiles.

But the main problem is corporate debt, one of the most painful problems of the Russian economy.

Ivanovo plants owe 65.8 billion rubles ($38 million), while they are owed 67.8 billion ($39 million) by customers who are unable to pay, Sidorov said.

Even when partial payments are made, bank transactions take up to a month and high inflation then strips away their value. The impact on Ivanovo and its textile industry, which used to produce 25 to 30 percent of Soviet fabric, has been dramatic.

Production shrank by 40 percent in 1992 and another 12 percent in 1993. Plants are unable to finance kindergartens and maintain their apartment blocks. Tenants cannot pay the rent.

The plants, and there are more than 50 in the Ivanovo region, pay next to nothing to city and regional budgets, which in turn have no money for transport and other social spending.

So far Ivanovo's economic decline has been quiet and resigned despite a history of political activism.

In 1897 the local textile workers staged the first mass strike in Russia and in 1905 set up the first pro-Bolshevik Soviet of Workers' Deputies -- long before the 1917 revolution.

"She borrowed 5,000 roubles (less than $3) yesterday from me to buy bread for her family till we get paid," said Maria, nodding at her colleague in a nearly empty workshop of the Samoilov factory. "Who knows when we will get paid."

Maria has worked at the plant for 31 years.

The factory's huge workshops are nearly empty. In one, small groups of workers were happy to have something to do around the two units that were operating. Another 22 units stood idle.

"I have three children and we cannot make ends meet any more," said Nikolai Bykov, with the factory for 17 years.

Can anything save the Ivanovo textile industry?

"The state should pay more attention to light industry," said Sokolov, but his tone was devoid of hope.

Both he and Sidorov said any return to a centrally planned economy would mean a quicker death and was impossible. Bykov had a different opinion.

"There used to be at least some power in the country. What we need is a good master. As you know a fish rots from the head down -- and I mean Moscow and the local authorities equally," he said to approving nods from his colleagues.

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