Janine Wedel - Collision and Collusion - The Strange Case of Western Aid to Eastern Europe

But appearances of bustle were deceiving: the factory, which sold nearly 60,000 tractors in Poland in 1986 and more than 40,000 tractors in 1989, sold only about 15,000 in 1991.66 (Nationwide, during the same recessionary period, Poland’s production of agricultural machinery dropped nearly 30 percent.67)

The workers now concerned themselves with keeping their jobs in the face of threats of mass layoffs, frozen wages, high inflation, and cutbacks in social security benefits. Many workers at Ursus had risked their livelihoods in 1976 during worker unrest, and again in the early 1980s for Solidarity, which had grown to encompass nearly two-thirds of Poland’s labor force and promised to deliver on socialist guarantees of a better life for all. Following the collapse of communism, the union part of Solidarity continued the fight, this time against the radical economic reforms of the postcommunist era, and Ursus became a special outpost of radical and nationalist elements of the movement. The government wanted to see Ursus privatized, sold to foreign investors, or shut down. But because shutting down the factory or significantly reducing its workforce could cause mass dislocation and worker unrest in Warsaw, the political center, this was politically unfeasible. So while sales plummeted, Ursus continued to operate and to retain employees.

The managers of Ursus, suffering their own leadership problems, were wedged between the workers and the various government ministries and successive governments, characterized by chaos, indecision, and near bankruptcy. They wanted to find partners who could help locate new markets and put together a restructuring program in preparation for a joint venture with a Western company.68

In August 1991, amid allegations that the previous government had mismanaged Ursus and other state-owned giants, Henryka Bochniarz, a middle-aged no-nonsense businesswoman, was installed as minister of industry in the new government. She promptly dropped the reorganization plan that had been developed by Ursus management and the previous government. The new restructuring plan for Ursus would divide up the plant, shed labor and capacity, and put to work an international team of experts—with more clout than a Polish team or the ministry. (The new plan also disbanded the Ursus Workers’ Council, which was elected by workers to represent their concerns to management and had been created following a hard-fought concession won by Solidarity.)

In September 1991, Bochniarz enlisted several companies, each of which was billed as possessing different financial and legal skills. One of them was the International Team for Company Assistance (ITCA), founded and run by Kevin McDonald, an American in his 30s with an MBA degree who had been introduced to Poland by Harvard’s Jeffrey Sachs and had become known in the community of consultants advising the Polish government. With funding from the EU, the United Nations Development Program (UNDP), the German Marshall Fund, and other sources, and with a team comprised of volunteer retired executives and young, enterprising MBA graduates from Harvard and Northwestern universities, McDonald appeared at Ursus and offered his services.69 In addition, Bochniarz hired Price Waterhouse, one of the Big Six accounting firms; Massey Ferguson, a tractor factory headquartered in the United Kingdom (Ursus had long manufactured tractors under a Massey Ferguson license); and a small Polish-owned consulting firm. The consortium leader was Larry Doyle, an Irishman. Although the government wanted to appear to be on the reform track and to use aid for this purpose, other parties to the process, such as Ursus workers and management, were not as enthusiastic.

The problems with consultants’ recommendations were more than a case of some Central and Eastern Europeans reacting in a knee-jerk fashion against foreigners’ advice. Rather, they represented a real fear that the consultants would say something that many of the players in the privatization process did not want to hear: that workers’ jobs and their pensions were no longer secure and that the bedrock of their existence was now a pool of quicksand.

Remarking that “lots of folks want to solve Ursus’s problems,” Andrzej Polakowski, a deputy manager at Ursus and a charming, portly man in his mid-40s, said the managerial team put aside their misgivings and cooperated with the foreigners. Managers opened the plant’s books and, according to Polakowski, turned over documents concerning sales networks, cost factors and suppliers, balance sheets, and inventories.70

Over several years, the consultants, whose contracts and obligations were to the outside sources that paid them, visited the enterprise. They wrote reports. The value of their reports—and the very role the consultants played—was subject to different interpretations by the many players in the enormously politicized environment. In one breath, manager Polakowski offered several criticisms frequently heard within Central European enterprises:

A lot of people came [to Ursus] and no one especially introduced himself.… We found out about a lot of things only by accident.… It’s not clear why these particular firms were chosen and what the agreements were, who pays them and how, and why Mr. Doyle was chosen [as consortium leader] above others.… Only some time later we found out it was Mr. Doyle … [who] doesn’t answer to us at all.… Ursus had no influence on any of this, nor was it informed after the decision was made.… While managers are looking for advice on how to solve problems, what we get very often is only a diagnosis of what’s going on in a firm, which is already known by management.71

Yet management often had its own problems and interests. Lisa Anne Gurr, an anthropologist who studied restructuring and labor issues at Ursus, thinks that enterprise managers sometimes simultaneously used Western consultants to accomplish their own goals and as scapegoats when restructuring plans proved to be unpopular.72 Still, there appears to be truth in management’s complaints. Polakowski and others recounted that some of the consulting firms that had come to help encountered problems of their own: Neither good management nor expertise were always in abundance, they said. McDonald’s volunteers—the “friendly retired Americans”—as Polakowski called them, were new not only to Ursus, but also to Poland. Pertinent details, such as why the various consultants were chosen and what was supposed to result from the project, were shrouded in secrecy, at least at the factory level. Further, although some consultants appeared to be very motivated, overall the aid was somewhat ad hoc. According to several sources, consortium leader Doyle drew a consulting fee, called a few meetings with the consultants when he visited Poland, and circulated in the international aid community.73

In the end, however, much restructuring of the plant occurred in conjunction with the presence of the foreigners. Some of what they recommended came to pass. McDonald recommended, in his report, that Ursus sell off most of its divisions and that “Those employees left should [be] reduced in number by at least 50 percent.”74 And close to that number was let go during the period that the consultants were active, but not as a result of liquidation.75 One of the consultants’ most important recommendations was foreign investment, which, as of this writing, has not happened.

In 1992, Ursus Solidarity took on the government of Prime Minister Hanna Suchocka for what it saw as anti-labor policies. The trade union branch at Ursus was a major instigator and player in the nationwide strikes of August and September of 1992 and helped hasten the demise of the Suchocka government, which eventually fell in May 1993. Amid the turmoil, the former head of Ursus Solidarity was named the new manager of the enterprise.