PROCEEDINGS
OF THE TOMSK POLYTECHNIC INSTITUTE
AWARDED THE ORDER OF THE OCTOBER REVOLUTION AND THE ORDER
OF THE RED BANNER OF LABOR
named after S. M. Kirov

Vol. 269 1976

INDUSTRIAL FIXED ASSETS AND WAYS TO IMPROVE THEIR UTILIZATION

G. V. SIMONOV

(Presented by the scientific seminar of the Department of Economics)

Speaking at the December (1969) Plenum of the CPSU Central Committee, General Secretary L. I. Brezhnev said that at present the principal task in the long-term development of our economy is to achieve a sharp, 2–2.5-fold increase in the efficiency of existing resources, as well as of new accumulations. We have no other path. This is not only the main path, but the only one. Only through the rational use of capital investments and fixed assets can further growth of social production be ensured. The better capital investments are used and the higher the return on fixed assets, the greater the country’s national income and, consequently, the consumption fund. Practice shows, however, that in the matter of further increasing the efficiency of capital investments and fixed assets—both for the country as a whole and at the industrial enterprises of our region—enormous reserves still exist.

One of the first causes in this matter could be named as the lengthy construction periods for industrial facilities, as well as the attainment of design capacities. Thus, using only the example of the construction of the cast-iron foundry shop of the Sibelektromotor plant, one can show specifically what this delay in construction costs the state. With an estimated cost of the facility of 5.4 million rubles, as of January 1, 1971, work amounting to 5.6 million rubles had been completed, while only 1.24 million had been put into operation, including construction-and-installation work amounting to 0.76 million and equipment amounting to 0.48 million rubles. Yet the facility has already been under construction for eleven years. Calculations carried out show that, because of the enormous delay in construction, it has already cost the state about 10.0 million rubles. A number of other facilities could also be named, whose construction periods have exceeded 10 years. All this leads to an increase in the amount of uninstalled equipment. If on January 1, 1965, it amounted to 4.8 million, then by 1965 it had become about 10.0 million rubles. All that has been said indicates that, even at the stage of utilizing capital investments, there are substantial reserves for increasing the efficiency of the national economy.

The fixed assets of the socialist national economy are the most important part of our national wealth. In the entire national economy in 1968, fixed assets amounted to about 500 billion rubles. If the United States was able to double its fixed productive assets in 22 years, England in 19 years, and the FRG in 10 years, then the Soviet Union doubled them in 8 years. Now our task is to use as effectively as possible

to use these assets. One of the general indicators of the efficiency of the use of production assets is the capital productivity coefficient, which characterizes how much output the state receives in a year from one ruble of these assets. Statistical data show that over a number of recent years it tended to decline. In Tomsk Oblast from 1965 to 1970 it decreased by 8%, i.e., amounted to only 92%. Approximately the same picture was observed during the preceding five-year period as well. Thus, we see that output is increasing at a slower rate than fixed assets are growing. From 1960 to 1968, assets in the oblast increased by 0.86 times, while output increased by 0.7 times.

The factors affecting the decline in capital productivity are quite varied, but we shall dwell only on those that depend mainly on the enterprises themselves.

The first of these factors may be called the still large quantity of surplus and uninstalled equipment. Thus, in the main line of activity from 1965 to 1967 the amount of uninstalled equipment increased from 1.0 to 2.7 million rubles, including surplus equipment from 0.85 to 1.24 million rubles. True, in recent years the rate of accumulation of such equipment has declined, but the quantity of this idle equipment is still very large.

The next factor on which attention should be focused may be called the long periods required to master new technology. Very often plants are simply not prepared for its rapid use. Numerically controlled machine tools at the mathematical-machine plant have not been used for almost a year, although the cost of such machines is many times greater than the cost of ordinary analogous equipment. Examples of delays in mastering high-performance equipment can also be observed at other plants in the city. All this indicates that factories do not always give due attention to accelerating the commissioning of new equipment.

An important factor in increasing the efficiency of the use of fixed assets, including their active part—working machines and equipment—is the shift coefficient. Thus, if the possible shift operation of equipment may be equal to 2, in fact it is considerably lower.

In a survey of a number of plants by the Oblast Statistical Administration, out of 7,800 units of installed equipment, 1,180 units, or more than 15%, were completely idle. In particular, at the mathematical-machine plant 41.8% were idle that day; at the Sibelektromotor plant, 22.3%; and at the electromechanical plant, 23.4% of the equipment was idle; i.e., the shift coefficient at Sibelektromotor was 1.28, and at the electromechanical plant, 1.16. Analysis data for recent years (1970–1971) show that the shift coefficient still remains quite low and does not exceed 1.4–1.5. For the twelve enterprises analyzed, in main production it ranges from 1.06 to 1.76.

Intra-shift losses of equipment working time are also large. If utilization of intra-shift time at 90–95% is considered possible, then in fact this value at many plants does not exceed 80–85% (according to the analysis, fluctuations range from 73 to 93%). Losses of equipment operating time in various kinds of scheduled repairs are also large; this likewise reduces the efficiency of its use and requires substantial labor and material expenditures. In the repair of metal-cutting equipment alone, across the country as a whole, 3.5 times more workers are employed than in the machine-tool-building industry itself, and about three billion rubles a year are spent on it.

An analysis of the use of machine tools in terms of machine time at a number of machine-building plants in the city has shown that, instead of the possible level of 65–70%, it often does not exceed 45–50%. Large reserves for increasing efficiency can also be found in raising the coefficient of utilization of machine tools by capacity. Nationwide, a saving of 1% of electric power is equivalent to the additional production of 6.5 billion kWh. For comparison, it may be recalled that in 1928 all the country’s power stations generated 5 billion kWh of electric power.

In recent years, in our view, machine-building enterprises have begun to pay less attention to questions of modernizing existing equipment. Renewal of the machine-tool stock has become the main direction. Yet it is quite clear that, given the limited quantity of new equipment, economically justified modernization can substantially increase the efficiency of the use of productive fixed assets. The problem of the rational use of fixed assets applies not only to equipment, but also to other groups of fixed productive assets: buildings, structures, instruments, and so on.

The problem of increasing efficiency becomes especially important for enterprises under the conditions of the economic reform, when increasing the responsibility of enterprises for the use of productive assets is directly linked with economic incentives and the creation of enterprise incentive funds. The indicators of charges for productive assets, accounting profit, and profitability, and credit as a method of expanding production, compel enterprises to take a more careful approach to calculations of the volume of productive assets at their disposal for ensuring normal operations. Thus, in 1970, from a balance profit of 3.9 million rubles, the bearing plant paid 1.7 million rubles for productive assets; the electric-lamp plant, 0.7 and 0.3; and the Sibelektromotor plant, 5.4 and 1.1 million rubles, respectively.

The creation and strengthening of a permanent body of skilled personnel, improvement of their qualifications, and cultivation in them of a communist attitude toward labor—all this has an important influence on the better use of productive assets in industry. Among Tomsk enterprises that have done much in this direction one may name the pressure-gauge plant, the cutting-tools plant, and the bearing plant.

Important factors aimed at increasing the efficiency of the use of fixed assets are the efficiency of the use of working capital, an increase in the regularity of enterprise operations, and other factors. For example, accelerating the turnover of working capital in 1970 compared with 1969 from 88 to 76 days increased the indicator of sales of commodity output per unit of working capital at the pressure-gauge plant from 1.01 to 1.12, and at the Tomkabel plant from 0.96 to 1.25; while an increase in the turnover period at the electric-lamp plant—from 117 to 155 days—reduced the return on fixed assets per unit of working capital from 0.69 to 0.58. Thus, improvement in the use of fixed assets is achieved through the most diverse, interrelated factors.

As recommendations for the city’s enterprises regarding further improvement in the use of new and existing assets, one may propose both the measures considered above and certain others. In our opinion, when considering questions of introducing new equipment, all enterprises should without fail calculate its economic effectiveness. It is also necessary to prepare in advance for the earliest possible introduction of this equipment into operation. This may be accomplished both through prelimi-

thorough familiarization with the operation of similar equipment at other plants, preparation of areas for installation, development of programs, and debugging of one group of machine tools under the conditions of special sections or laboratories.

For better utilization of existing fixed assets, plants should more widely practice the holding of month-long campaigns and one-time raids to identify hidden production reserves; maintain strict accounting of the use of production assets; create initiative groups; and involve representatives of specialized and economics departments, as well as university students, more broadly in this work. The successful implementation of this program—of how effectively the values already created will be used—will largely determine our progress forward.