Philip Morris in Ukraine

[Robert Weissman <rob@essential.org>]

The English version of the Ukrainian "Day" from July 24 offers its
perspective on Philip Morris in the Ukraine.

Robert Weissman
Essential Information			|   Internet:	rob@essential.org

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US Capitalism at a Former Domestic Enterprise
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By Mykhailo Bidenko, The Day

<Picture>

At a conference of the Philip Morris corporate leadership in Lausanne, 
Switzerland, the Kharkiv Tobacco Factory was named the best of its European 
subsidiaries in terms of job safety and labor protection.

US interest in the statutory fund of the Kharkiv Tobacco Factory is over 
99.5%. Is this good or bad for Ukraine? The Day's correspondent visited KTF 
to answer this question.

American capitalism becomes apparent right inside the gate. A visitor is 
issued a badge attesting to his status and is politely asked to part 
company with any Kharkiv-made cigarettes in his possession.

Every shop is kept spotlessly clean. Liudmyla Polishchuk, head of the 
quality control laboratory, says that previously every employee has to 
shake out his/her gown after leaving the shop. Now tobacco is supplied 
through pipelines and whenever exposed due to production specificities, all 
tobacco dust is removed by powerful ventilation systems and dust 
collectors. The tobacco dust is not wasted. It is packaged and sold to 
agricultural producers to combat certain plant diseases. Every employee is 
also issued what is termed "individual protective gear", just in case, as 
required by standing orders. And standing orders are upheld in a typically 
Western way, very different from the traditional approach in Sovdepia. Not 
only production facilities, but also those for recreation, showers, and 
everything else is up to US standards. Most of us would have to spend our 
lifetime savings to have our bathrooms designed and equipped like at this 
factory.

And the people. The factory employees act and look somehow different from 
the rest of us. They are calm and efficient. No back wages, of course. 
Every payday is kept on schedule ($250 on the average, which is very good, 
considering local prices and living standards), along with special ration 
tickets for the factory canteen and two cartons of cigarettes per capita as 
a monthly bonus. They have two resorts. All this is in black and white in 
the collective bargaining agreement signed between management and the local 
union. The latter is not waging any socialist competitions, of course. 
Instead, it monitors the agreement's performance, meaning that all 
vacancies are quickly filled and people are anxious to have their jobs and 
do them well. And the local job market competition is severe.

Philip Morris invested $2 million in personnel training (out of $22 million 
put into the tobacco factory project). Engineers and workers were sent for 
on-the-job-training missions to company-affiliated enterprises in 
Switzerland, the Czech Republic, and St. Petersburg. Refresher courses are 
encouraged even now (e.g., an employee wishing to improve his/her English 
receives a bonus).

Hence, what has American capitalism brought this inherently Ukrainian 
enterprise? Well-paid jobs for 400 residents of Kharkiv, sizable state 
budget revenues (last year the factory paid Hr 56 million in taxes and 
duties, making up approximately a quarter of the city budget income). Oleh 
Diomin, head of the City Administration, called the factory the most 
law-abiding taxpayer. Last year, 492 Ukrainian enterprises worked under KTB 
contracts, meaning another several thousand jobs. And the factory sponsors 
Kharkiv's Metalist soccer team.

A journalist remembering the old Soviet cliche about Soviet people having 
their own special pride to uphold is hard put to eulogize things Western. 
Is this an outdated stereotype? Most likely, for the time has come to 
consider ours not those with a Ukrainian passport and Swiss bank account, 
but those doing business in Ukraine and paying Ukrainian taxes. Using this 
criterion, KTB is very much the domestic producer. Not a single kopiyka   
from its incomes has been sent overseas illicitly. So far all revenues have 
been invested in production and upgrading technology. Thus, another $15-20 
million will be added this year.

Philip Morris is to build another tobacco factory in Ukraine, worth 
$150-200 million. The Board has not as yet decided on the particular city, 
but even now it is clear that another thousand Ukrainian citizens will 
receive well-paid, secure jobs.

So is Philip Morris good or bad for Ukraine? The answer is clear, even 
though the Health Ministry's warning about the potential hazard of smoking 
remains valid...

Photo:
In the Kharkiv Tobacco Plant they not only make money but work the American 
way.