Factory Occupations in Kuzbass

Factory Occupations in Kuzbass

Konstantin Burnyshev and Simon Clarke[1]

Factory occupations in Kuzbass affected two enterprises, the giant KMK metallurgical complex and the Chernigovskii open cast coal-mine which had recently been placed under the management of a Moscow investment company, MIKOM, but on which, as in Vyborg, the regional administration was now trying to impose new owners. In both cases the trade union actively supported MIKOM and set up workers’ militias to defend the plant from threats to seize it by force. Neither KMK nor Chernigovskii had a history of militancy. Although Mikhail Kislyuk, a leader of the Kuzbass Workers’ Committee and Yeltsin’s appointed Governor of the oblast, had been chief economist of Chernigovskii at the time of the 1989 miners’ strike, the pit did not strike in 1991. Like the other open-cast mines, it prospered with the transition to a market economy and did not play a significant role in subsequent miners’ strikes.

KMK

A wave of conflicts overwhelmed the largest metallurgical combine in Russia (KMK), which still employs over 30,000 people and has 20,000 pensioners dependent on it, in the middle of the 1990s. Originally these conflicts were essentially struggles between different factions of the management for power in the combine which ran through the processes of corporatisation, privatisation and the redistribution of shares. During this period there was a regular turnover of management teams and the enterprise became overgrown with a network of intermediary firms. The apogee of the struggle for power was a series of contract killings of some of the chiefs and an unsuccessful attempt at the armed capture of the KMK office building. The special attraction of KMK was that it was the only producer in Russia of heat-hardened rails, which enjoyed a guaranteed home market, and the bulk of its production was for export.

The labour collective took a fairly passive position through all these events, gradually selling the shares that they had received in the course of privatisation. The KMK trade-union organisation did not carry out even itsbasic functions. The trade union committee ceased even going through the motions of preparing and concluding collective agreements from 1996. The only factor which led to a growth in the social activity of the KMK collective was the growth in wage debts, which reached a peak in the summer of 1998, whenthe labour collective of the combine gave full vent to its feelings.

At the beginning of 1998 the general director Braunshtein was expelled from the combine and Yunin was nominated as temporary manager of KMK. At this particular time a Labour Collective Council (STK) was created on the initiative of the administration. The legal base for the existence of the STK was the USSR Law ‘On the Enterprise’. The purpose of creating this body was to re-establish at least a minimal interaction between the the workers and the managers of the combine. The members of the STK were half nominated and half elected, but nevertheless it involved quite active people who soon freed themselves from the control of the administration and began to take on the basic trade union functions of protecting the interests of the workers of the combine. Following a conference of the labour collective at which the members of the STK submitted themselves for election, they began to represent the collective in all negotiations with the administration.

The economic situation of KMK, which Braunshtein’s team had brought to the verge of bankruptcy, did not permit the company to pay wages to the workers, who were owed more than four months’ pay. The social situation deteriorated sharply at the end of May and the beginning of June, 1998, when there was a spontaneous strike in the rail rolling shop, the key shop of KMK which produced a product which was in demand. The key brigades of workers (about 140 men), working the mill, went on strike, their main demand being the full payment of the wages owed. The strikers decided to stay out to the end: the mill would only be put back into operation when all the wages due had been paid. Initially the administration of KMK and the STK had an identical view of the strike, that the strike was suicide since the only ‘live’ money received by the combine comes from payments under the contracts to sell rails, and if they are not rolled, there is nowhere else for the money to come from. All the other production of the combine was sold through non-monetary (barter) channels. However, attempts of the STK to persuade people to go back to work ended in failure. Only one brigade gave in to them and worked one shift over the weekend. The STK based their arguments on the attitude of the rest of the KMK collective and the representatives of other shops and workshops who were demanding of the administration: ‘Give us a chance to work’.

The situation was repeatedly discussed at meetings of the STK of the combine. The administration just sat on its hands: the next payment of money for wages was postponed to the indefinite future. Everything that was happening had an immediate impact on all the workers of the enterprise. Under the pressure of the majority an appeal was issued to the mill operators of the rail rolling shop. The STK asked each worker to sign a document accepting responsibility for stopping the combine. In the appeal it was stated that KMK would stop if the strike in the shop continued any longer because as a result of it the customers had not even been sent the metal for which advance payment had already been received. Neither the appeal of the STK, nor the statement of Yunin that a governmental telegram had been received about an order for 58 thousand tons the next month (June) had any effect on the strikers. In the shop spontaneous meetings began.

In the meantime, the main creditors of the combine started the bankruptcy procedure against the combine at the beginning of June. In such a critical situation the temporary director of KMK and the STK, on the one hand, and the representatives of the creditor firms, on the other, entered into negotiations behind closed doors, under the supervision of the first deputy of the regional governor, over who would pay money and who would take over the reins of power (until a decision of the Arbitration Court). Money was needed immediately, and the beginning of the bankruptcy procedure had destroyed the last vestiges of trust among the partners. Nevertheless, there were plenty of companies (15) wanting to give money, three of whom were identified as the main contenders: MIKOM, TEK Transkom and the consortium Konsoil.

Transkom offered the least – 15 million roubles and raw material worth 80 millions. They accepted the existing management and its stabilisation policy. Konsoil took a harder line: it offered 50 million dollars, but demanded the resignation of Yunin. MIKOM also offered 50 million dollars, but basically wanted to replacethe entire management of the combine.

MIKOM(the Metallurgical Investment Company) was a company based in Moscow oblast which had originally been introduced to Kuzbass by the former governor, Mikhail Kislyuk, to take over crisis-riven enterprises. It had established control of the giant Novokuznetsk Aluminium Factory and a number of coal mines at knock-down prices, with a promise to restructure and restore the enterprises to economic health. MIKOM specialised in taking over the management of bankrupt enterprises in metallurgy and related industries which had strong markets and making its own profits from the supply of raw materials and sale of finished products through its own intermediary companies. This activity depended on having good political connections. At the heart of its strategy lay the payment of good and regular wages to secure the loyalty and commitment of the workforce and the regular payment of taxes to the local authorities to secure their support.

At this stage KMK was in a state of complete anarchy. The STK took the initiative in its own hands and put forward two basic demands to the potential managers: first, to pay the full salary for June. Secondly, all applicant companies should present their anticrisis programmes and documents on their financial status. The STK would only make a final decision on the basis of these presentations.

The position of the third party, the regional administration led by the Governor, Aman Tuleev, was very clear. At one of the regional meetings with the law-enforcement bodies he declared: ‘KMK has virtually been looted, and we are forced to face the bankruptcy of the combine’. Tuleev defined the basic task of the external observer in relation to the bankruptcy procedure as being to ensure‘that in the end KMK is not looted’. He expressed his desire to bring criminal charges against those who were guilty and complained, that ‘there are not many wanting to invest money in the combine’.

The situation at the combine seemed so desperate that the executive management of KMK and the STK were reduced to deciding on the hot laying-up of the combine, i.e. complete stoppage of production of rolled metal products. A commission on the hot laying-up of KMK was established, whose tasks included maintenance of the gas balance at the combine and the maintenance of the trouble-free operation of units with a continuous cycle. According to the experts such a mode can be sustained for a week, or at most for ten days.

According to administration the situation had reached an impasse, since the demands of the 140 strikers could not be met. The stoppage of the rail rolling shop meant that there was very little chance of paying the wages for the second half of March to the whole combine, even if the strike were to stop immediately. The failure to deliver rails against the advance payment already made had completely stopped the receipt of money from the customers. In order to avoid a complete stoppage of production the administration threatened to bring in retired workers to replace the strikers.

On June 11, 1998 passionsoverflowed on the square in front of the KMK administration building, where a picket of representatives of the labour collective was going on. The workers of the railway transport department of KMK had called a 12-hour warning strike and the enterprise was practically paralysed. The STK hadtaken the initiative and organised the meeting, which was begun with the diesel hooters. There were a few written slogans: ‘Yunin, do not let the old management back into power’, ‘the board of directors are a bunch of gangsters (âîðû â çàêîíå)’. They were harmless enough against the background of the subsequent speeches at the microphone and responses from the floor: ‘Braunshtein and his team– to the cells’, ‘put them in handcuffs’, ‘Sell-off what has been stolen and distribute it to the people’. Such demands accompanied literally every speech.

Eyewitnesses remark that people would not accept any explanations, appeals or proposals to go back to work. The latter were usually not expressed directly, but in a veiled way ‘the combine must not stop’, to which the reply was ‘we do not want to work any more without being paid’. ‘Try this experiment for yourself: clear out your refrigerator and live on 500 roubles a month’. The situation at the combine had got out of control. The people only wanted to hear one thing from every speaker: when will there be wages and who will give guarantees of their future regular monthly payment? They were almost as strongly interested in the punishment of those who, in their opinion, had plundered the combine. The striking workers insisted on the acceleration of the procedure of bankruptcy and the introduction of external management. The Kemerovo arbitration court postponed the beginning of this procedure till August.

Even the information that it had been agreed at a meeting with the regional administration that the combine would receive a certain amount of money to complete the payment of wages for the first half of March was lost in the passions of the meeting. The receipt of the money was conditional on the ending of the strike in the rail rolling shop and the receipt by Transkom of the rails for which it had paid in advance. The basic problem as seen by the managers was that KMK could receive money only ‘against rails’.

Some of the speakers (representatives of the heating plant and of the railway transport department) condemned the spontaneous strike in the rail-rolling shop. They argued that actions should be agreed upon, that it was necessary to carry out decisions of the conference of the labour collective and its elected STK. However, some people also expressed their full support for the position of the mill workers. Nevertheless, participants in the picket voted almost unanimously in support of the proposal of the STK that the mill should resume work from June 12.

In the resolution of the meeting it was also proposed to appeal to the shareholders’ meeting to review the activity of the board of directors which had brought the combine to crisis. The participants in the meeting asked the regional administration and arbitration court to speed up the introduction of external management. The proposal was also adopted to carry out a city congress of workers and specialists in July or August to decide on tactics of united action for the protection of the rights of the workers.

The strike stopped and on June 25 the regular third conference of representatives of the KMK labour collective was held. The STK and the administration of the combine presented reports on the implementation of decisions of the two previous conferences. The then chairman of the STK, Sosnovskikh asserted that the main points of the resolutions, on the payment of March’s wages within a determined period, had not been fulfilled. As a result, one of the points of the resolution adopted at the third conference was that if March’s wages had not been paid in full by 7 July to the workers of all subdivisions of the combine then an indefinite strike would be declared.

At this conference for the first time the firms applying to manage the combine openly declared themselves and their representatives addressed the representatives of the collective. The most warmly received was Mikhail Zhivilo, who was introduced as the president of the MIKOM group of companies, a member of the supervisory council of the Sberegatel’nyi bank and chairman of the directors’ council of the Novokuznetsk aluminium factory.[2] The hall clearly liked his proposals. He said that external management needs to be introduced as soon as possible and that MIKOM had a candidate for the post of arbitration manager – S. A. Kuznetsov, the son of A.F. Kuznetsov, a former general director from the Soviet period, whose name was nostalgically associated with the heyday of KMK.

Transkom was another company which had applied to manage the combine. It supported the acting general director Yunin: ‘his and our visions of the way out of the crisis coincide’. It was thanks to this company, one of KMK’s main customers, that the KMK workers had received their March wages. Yunin considered a positive feature of the possible assumption of power by this company would be the acquisition by the combine of a monopoly on the sale of railsto the Railways Ministry. The deputy head of the regional administration, Bereznev, promised that the introduction of external management would be brought forward.

There were also radical demands at the conference for the immediate beginning of an indefinite strike (from the representative of the chemical-recovery section) with the demand for the payment of unpaid wages, but they were not included in the resolution of the meeting. The representatives of the collective simultaneously expressed their distrust in the board of directors of KMK, having expressed confidence in only two candidates from the list – Yunin and Bulanov. The meeting also supported the insistent demand of the chairman of the council of veterans, Milovatskov, concerningthe preparation of documents to request thenationalisation of the combine. This was combined rather uneasily with another item of the resolution: to invite all interested firms to participate in the tender for the management of the combine (MIKOM was named separately). Finally, it was also decided to transfer 0.67% of the wages fund of the enterprise to support payments to the non- working pensioners of the combine.

Two weeks after the conference the Kemerovo regional arbitration court nominated MIKOM’s representative, Sergei A. Kuznetsov, to the post of temporary manager of KMK, a post that he would combine with that of general director of KMK during the period of the implementation of the bankruptcy procedures and the new temporary manager was submitted to the collective. Thus, the main requirement of MIKOM, namely the nomination of their man as temporary manager, was fulfilled. MIKOM undertook to realise its stabilisation plan and to attract the necessary financial resources. At this stage both the regional administration and the STK of KMK supported MIKOM. Within two weeks of the nomination of Kuznetsov the MIKOM group promised to pay 50 million roubles in wages and henceforth to pay them monthly.