Crisis in Soviet Industry? An Examination of the Soviet Steel Industry in the 1980s

Abstract

The ferrous metallurgy industry is at present one of the main obstacles to Mikhail Gorbachev's plans to attain the acceleration of growth in Soviet industry in 1986-90. If one takes four major sectors of this industry and examines the extent of plan fulfillment during the Eleventh FiveYear Plan (1981-85), the dilemma becomes apparent. Total output in millions of tons, with the original planned totals in parentheses, was as follows: crude steel, 155 (169); rolled steel products, 108 (118); steel pipe, 19.3 (21.9); and iron ore, 248 (275). Even the revised annual plan for the USSR Ministry of Ferrous Metallurgy in 1985 was not fulfilled.1 The importance of this branch of heavy industry to the Soviet economy can hardly be overemphasized. Iron and steel have remained the predominant building materials for both machine-building and construction in the Soviet Union, and ferrous metallurgy is used as the foundation for the majority of branches of the national economy. Its current malaise, then, is a matter of the utmost concern to the authorities, who have long since left behind the Stalinist era of all-out development of heavy industry. In fact, between 1940 and 1975, growth in output was spectacular. Output of crude steel, for example, stood at 18.3 million tons in 1940; 65.3 million tons in 1960, and 98.7 million tons in 1975. The average annual increase in output between 1960 and 1970 was 17.7%. Yet it fell to 12.8% in the 'seventies, and stands at less than 1% thus far in the 1980s.2 Information given by the Soviet Central Statistical Administration reveals that the Soviets have struggled to meet planned targets in ferrous metallurgy for the past decade. Western analysts have commented on a number of occasions that steel output has stagnated, but this is only a partial truth. What has happened is that output in the Ukrainian SSR has stagnated, and acted as a drag on the industry elsewhere. It should be recalled that the Ukraine is responsible for more than 37% of Soviet crude steel production, 36% of rolled ferrous metals, 43% of cast iron, and about