A mechanical engineering view from Russia

This month, I would like to introduce Igor Actov. He is a mechanical engineer from Voronezh, Russia, working for me as an intern for six months. He is here to learn how business and engineering are done in the United States, but as you can see below he also has information for us.

"Russia is a faraway country. A long 10-hour flight would convince everybody, but the distances are even greater than the physical ones. In the past, these distances were even the source of a mystery that continues to inspire myths.

"Americans think of Russia as a 'former big competitor.' This attitude contains a second hidden meaning. The U.S. believes: 'Russia has a very uncertain future. Its economy is destroyed and industry is almost dead.' Let's see, is it real?

"In the last decade, the general economic situation in Russian industry has been similar to the emergency braking and U-turning of a heavily loaded truck. The Russian government absolutely demolished the old hierarchical command economy by instituting a private business structure without having an established structure to start from.

"In the previous communist economy, every enterprise did its best to make a plan. Nobody thought about quality or demands — the plan was first and always. Many enterprises produced goods nobody needed simply because it was according to the plan. It has been estimated that 20 percent of the gross national output consisted of such products.

"The process of retooling the economy, including changes to legislation and the general structure of the economy, has been extremely difficult but not fatal. Fortunately, most of the intellectual potential and experience was saved in the form of machine tools, capital equipment and technical expertise. Nobody bombed our enterprises; we just changed our form of government.

"Most changes involve the management of enterprises, not the core technologies. Russia is learning to adopt an economy influenced by market demands with no plans from the center. This has been difficult because we had little basis for understanding a market economy.

"Our new government did not have any experience in creating a market-based economy. In fact, Russia has been without a market-based economy for more than 300 years. As a result, much of the new legislation was far from perfect. It tried to maintain governmental services and infrastructures with 'draconian' taxation methods without thinking about the effects that they would have on the new economic model. This almost stifled and destroyed the new economic initiatives it was trying to create. Yet the Russian people are resilient and have a great desire to survive, so a 'shadow economy' was created.

"In 1999, it was estimated that about 25 percent of all Russian industrial output and economy came from this shadow economy. As a result, the recovery process of Russian industry went beyond the official reports. Russian industry was not ruined — it is overcoming the painful reorientation (U-turn) period and actively accelerating now. The last economic official forecast data predicts a 5.5 percent increase of the gross national output in 2001. Finally, 11 years after the final collapse of the USSR, our economy is coming back and Russians are starting to see a definite change to our lives," Igor concluded.

I have been to Voronezh three times in the last two years, and I can vouch for the changes that Igor is mentioning. Russia's economy is slowly coming back from its 'death bed.' There is much competent capability and technology. If it is nurtured correctly, it can make this world a better place, not just for Russians and Americans but also for everyone else.
What is needed for Russia and for other countries is cooperation and mutual development. Russia is changing how it operates and relates to the world, and so can we.

— Niel Leon
Committee on Engineering
Entrepreneurship
leonn@asme.org

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