Russians Seek US Defense-Conversion Help Program Is Part of $94 Million Project That Brings Ex-Soviet Union Executives to US for Training in Areas Such as Agriculture, Politics

By ShelSiems, writer of The Christian Science Monitor | The Christian Science Monitor, September 1, 1994 | Go to article overview

Russians Seek US Defense-Conversion Help Program Is Part of $94 Million Project That Brings Ex-Soviet Union Executives to US for Training in Areas Such as Agriculture, Politics


ShelSiems, writer of The Christian Science Monitor, The Christian Science Monitor


`THERE seems to be no Russian word for `entrepreneur,' " says business consultant John Conway. It took "about two minutes," he recalls, for three translators to convey the word's meaning to a delegation of Russian executives visiting the United States recently.

That just about tells it all.

Three years to the day after antireformists tried to overthrow Soviet President Mikhail Gorbachev's government by detaining him on vacation, the 33-member delegation was touring M/A-Com Inc., of Lowell, Mass., a leading producer of microwave technology; Boston's Teradyne Inc., a major manufacturer of semiconductor test systems; and the Bank of Boston to learn how to convert Russian state-run defense-manufacturing plants to commercial use.

Soviet market reform has made much progress since the failed coup. But the fact that Russia would seek help from the US - its cold-war enemy - to transform its economic base to capitalism was, until recently, unthinkable.

But it is happening today, thanks to a unique program that is part of the New Independent States Exchange and Training Project. Over four years, the $94 million project will bring thousands of Soviets to the US for training in a variety of areas including agriculture and political-party development, says Susan Lenderking, spokeswoman for the Academy for Educational Development in Washington, which is managing the project. `Killer barriers'

The challenges facing US executives trying to convert to civilian work are big enough. But Russians, who do not have a successful market-based system in place, face three "killer barriers": ignorance of a company's marketing function, lack of financing, and a complex bureaucracy, says Mr. Conway, a vice president at Gemini Consulting in Cambridge, Mass., one of the program's organizers.

"Any of these would bring a company to its knees," he says. "Fifty percent or more of the Soviet economy is at a standstill. This will be a slow turnaround. But the Russians have to make it, because the alternative is chaos."

Conway says the first step is identifying the customer need and mapping out a plan to meet that need. The Russians must then find financing, through partnerships with European and US firms and tapping mineral reserves, for example. Finally, the executives must cut through Russian politics, which is "almost like having to get an act of Congress to get a box of pencils approved."

Conway says he sees reason for hope, though. Just 10 percent of Russia's defense business will likely be lost, 40 percent (electronics and communications) could be converted to commercial use, and a sizable portion could stay in defense, selling to third-world nations that can't afford to buy US-made arms.

At M/A-Com, the Russians learned how the $340 million company has converted in five years from 90 percent defense business and 10 percent commercial to 50-50, says M/A-Com spokesman Richard Smith. "It became clear by the late '80s that defense work would fall off," explains Victoria Dillon, M/A-Com's vice president of corporate communications. "And from 1991 to 1993, it fell off 35 percent for us. We had to understand our commercial market and expand it - reapply an existing technology to another use." Conversion strategy

So M/A-Com devised a multiyear restructuring plan. Since 1992, when implementation largely began, the firm has spent more than $30 million reducing its work force by 15 percent, merging 23 divisions into four, hiring and retraining marketing people, investing in automation and manufacturing processes, and offering new training, Mr. …

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