Reason of Bankruptcy

 The future of Chudov's Kuznetsov Porcelain Plant is unclear. In the Soviet time it had a loud name "Krasny Farforist" (red porcelain-maker) and produced various consumer goods. In 2003 the Standard company from Saint-Petersburg bought the plant's property and leased it to Kuznetsov Porcelain Plant headed by Vasiliy Bolyuk. However there wasn’t much success. Mr Bolyuk obviously adopted the less attractive management traits from his great predecessor.

It is known that Matvei Kuznetsov notwithstanding colossal profit he gained from his factories paid very little to his workers and only by the job: from 8 to 45 rubles per item. Kuznetsov was also saving on elite orders. Thus once being impressed by Russian modern painting Matvei Kuznetsov ordered a sketch of decorative dish from artist Mikhail Vrubel and the mother of Valentin Serov, artist V.S. Serova. However regardless of the contract terms (as rumors say) Kuznetsov made replicas of the item. Vrubel, who tried to clarify the situation, was sent out. After that Serov challenged him to a duel. The businessman did not take it seriously at first, but when he understood that it is not a joke, tried to burke the matter and never deal with creative intellectuals again.

But the modern manager Bolyuk, unlike Kuznetsov, went farther. He did not pay his workers at all. During Bolyuk's short management the most active workers went on hunger-strike three times, the last one took place last August, where 20 people refused to take food. By that time people had not been paid for 8 months. The plant turned full bankrupt and regional government decided to sell it thinking that part of money will go as offset of debt. In June 2004 Bolyuk was kept a file on for non-payment of wages, which from January to March 2004 summed up to 210,000 rubles. But the accused ignored the subpoena and was put on the state wanted list. On May 23^rd 2005 Bolyuk was "found" and arrested and during that year of search another criminal fact was discovered – tax machination.

 Following the Example

 The new owner of the Kuznetsov Plant turned to be Transnaphta, an oil-and-gas company, which bought the plant last December for 10 million rubles.

– "Kuznetsov's porcelain" is one of the few Russian brands known in Europe. Its tea pairs were sold for as much as 50,000 pounds at auctions. Just the brand of this plant costs more than we paid for it, said Vladimir Kondratchuk, the co-owner of the company and the Deputy Head of the Novgorod Region Administration to journalists.

Yury Kruglikov, the Director of the plant, acknowledges poor state of the plant and the debt of 9 million rubles. Despite this he plans to revive the brand "I.E.Kuznetsov Plant on Volkhov".

The example of pre-revolutionary development of the partnership can show that the right management tactics accounted for profit and that there is no fundamental difference between the former management and promotion methods and the modern ones. The famous businessman did the following:

1. Built new production facilities close to the sources of raw materials, peat and wood, as well as to the places with cheap labour power.

2. Transferred specialists from Moscow and Petersburg to the provinces. Created infrastructure for them and for plain workers: hospitals, schools, churches and libraries. Besides he prohibited alcohol use, established fixed prices in the shops and arranged teaching of draughtsmen in workshops on the territories of settlements.

3. Bought competing factories: porcelain and faience plant of Andrey Auerbakh in Kuznetsovo Village (now Konakovo Faience Plant) and the largest Gardner plant (now Dmitrov Plant) – its main rival in mass and elite segments.

4. Spared no expense for re-equipment of factories and improvement of production.

5. Studied foreign design patterns (for example, caught early XX-th century fashion for decals and introduced it in Russia), attended all major exhibitions, including those in Paris, Reims, Liege.

6. Worked with consumers, or, as it could be said now, carried out the marketing policy.

7. Arranged sales: the Kuznetsov's enterprise owned 15 trade centers all round Russia and along with that sold its production at 12 Russian fairs.

What could be applicable today? First of all, certainly, the update and extension of product range. The new director has already presented the renewal program: the elite line will feature thin cast porcelain with hand painting, mass production will feature cheap molded porcelain. Next – sales. This year they plan to open sales section for the plant production in the large stores of Moscow and Saint-Petersburg. Kruglikov expects that in 2005 the plant will produce about 500,000 tableware items, where the share of cast products will be 60%; each set will cost 1,000 rubles, grand sets – 150,000-200,000 rubles.

 A Professional’s Verdict

 There are people who do not share these optimistic forecasts. According to Nikolay Gordeev, the General Director of the Lomonosov Porcelain Plant, his plant also considered the possibility of buying the Kuznetsov Porcelain Plant, but gave up the idea. Gordeev calculated that modernization of the plant will cost not the 10-20 mln rubles as the new management thinks, but 1-5 million US dollars, and payback of investments will extend to 20 years.

In Russia in the last three years the porcelain industry has been suffering crisis due to domination of western products. If in 1806 there was a prohibitive tariff for the import of foreign products thus stimulating Russian manufacturers, now the situation is quite opposite – only export benefits from tax policy. Russian porcelain makers cannot afford organization of good distribution network and the quality of their production is inferior to that of foreign analogs. And if in 1910 Matvey Kuznetsov exported his products to Asia, now we import goods from China. To conclude, Gordeev estimates the purchase of Transnaphta as pure patronage of art with no economic growth prospects.

It is difficult to imagine the future of the "Kuznetsov Porcelain". We can only assume that since the new director of the plant is directly connected with the administration of the region, he has the comprehensive information on the state of purchased "goods", and the local authorities will not throw obstacles in his way. It is possible that the experience of the great founder of porcelain industry will also help the new owners manage the upcoming tasks.

 Natalia Droshneva.