Created: 12/22/1964

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Mr. TJicodoreu, CnsJisna.



Kciroonao touiry on the Autonotlve Machine -SbOl Situation la th: Soviet

Attached are two copiesn Trends ic the SovietIr.du.trj', vhlch vos prenrrpense to your Included in the report is an appendix vMch it>*vjec^SriDiterer* to such specialist- io tho Offico'bf Experttatfcony louxas* au-

Tu IflpMrtlng IB grindingrelieved ef forte xitlieo Irroit US

tools for tho Soviet wAor vehicle ImHatry. Interest in IC nocMno to^ln on) outavrtla lines Iioc Veci lens-otnivUnstunbor of U3 fima filed ooplicotlonaac.seo voiced ot (A3 rdlUea vith tho Hup*rtafat of Ccrxrcc to exportlcctiivM for thetor try. In ultimately Ocuyliij; fiU Of theco er.:cs,crcu ototcd that "equipnKilto ria^ltudc ond ndxnticcd typo vould have contributes rln-iif lorntly to the outccxjtl/u ity ofCC."

Tho folloving revolt pttcspto to cxnnlno tho Lqoct of the dc-nlcl ln Ujgit of tbo perfouuinco of tho Covlet enter vehicle Inttu&try fubscque.itaclgrocnd recent ovcrrll trends in Covjrt BneMnery production *rc vtcvcC. next, tlie epc-Jificnd cools of tie rvjtor vehicle Industrycet forth alongnnlycla of tlieond difficulties. Cacountcruc' ly this inductry finally, loncstlanporta of DOCbine toolscnvith particulartypes of

IX. Piano urwl Perfornor-C'i of_tlic Kotor Vehicle In'.uotry

oviet Bevcn fenr Pirn called for on wcr-ellpr*luction cf notor vehicles0nncic&no of fronf truckao increase byercent, corn iyend busesercent. tbe llbul illou

belt*.', Soviet output of niitor vehicles heo logged ccrlourly behind tho forccnot of tlie Seven Year Floo




Including trucks for tbo tillltarv.

Output of trucks, ttic li-ygest component of Soviet notor vcbiclo narrufocturing,irtually ctogwtcdvlll not even cone cloao to fulfilling tho flovtnPlan goal. Output of trucks hoa improved only negligibly;f tho routine increment to production of ootor vehicle: la tho first three quartersH va* accounted for by improved output of passenger core. Production of bufies orel passenger enrs should fulfill or coco near to fulfilling tho goals of tbe Devon Veer Firm.

ao onncunc-rAjil'inon tho output of motor vohicloe for tho rcnclninQ yenm nf this decode end beyond, although there may bo tone suchhenconomic targets ara released nest year. However, in view of the higher pi-ioritlea currently pressing tho-Soviet Cconoay, it is doubtful If tbo nutosotivoholo will receive increased priority In the next fev yearo, although there nay veil be considerable effort to develop and produceuipoee vehicles for tbo military and, perhaps, for agriculture.

HI. Knri:od Slowdown InncHncry Cutout

Sven as the Soviet rioter vehicle industry hot node little roarecs ln recent years, therearked slowdown in the growth of virtually nil other branches of the macliino building industry cs well. viet ocososry hoc found It increasingly difficult to neot all tho rcc.uire-'cnts of the militaryheavy industry, the space program, and tha consumer. The average annual incrcaoc So tho Soviet output of civilian machinery declined fromercentoercent3ercent Ofnjor types of mcbinery, mora tfcnn ene-bslf increasedercent or morea, but3 lens thancurth incrcsced ot cuch rctes. hen production of motor vehicles increased 2tho output of equijracnt for petroleum refineries and of netal-lurgicol equipment actually dccrofflcd,ho output of tractors end mnin-line dieccl loccootivec increased,ercentno better than the increase achieved in production of rotor vehicles. Therefore, ln attempting to identify the causes for the slowdown in production of motor vehicles, it is nee OA Gary to keep in olnd that the Soviet machine building industries in general liave beenarked oloudown. Tho Soviet leadership hasow priorities on Industries thct traditionally >iavo been incapable of "citing mptd edjuataente to new situations. These problems, conMnod with poor planning, snarled cupply flows, and inoderoate .incentives moko it especiallydifficult -to pinpoint any single factor'that lo rccponfllbln for tha poor pcrform-ance of tho Soviet notor vehicle industry in recent yen re.

IV. fllovdoun In Motor Vehicle Industry

Tho poor perforaence cf Uie Soviet ootor vehicle Industry ennnot bo cttribute!to the denial of Qlllion vorth of U3 outocotlvu cquljticiit la cliff iculties hovo troubled thla industry during the post icvcral ycoro, vhlch, token together, for outvclgh the toportenco cf tr>i: dcr.lnl of the US equlpncnt. The cnoe of tbe problca ln the BcrSet mrtcciotlve Industry ic fourfold: (l) Adoinlctrutlvo nnd technical difricultlea hove honpercd tho Govieto oo they try to repineo vith fpcclcl.Ir.cxl production unite the vcrticolly Interpreted plnats tbot bevc been long typical of thottcnpto ore being node toOY generation of truck nodels into The Introduction of nev, coro efficient, outo-Botcd equipment liascvhot the norool producing routines under vhlch Soviet industry pcrforras best; ond (U) Bcqulrcncnto for cpecinllzed rotor vehicles to neat Co/ict nlcsllo end other allltary prograias hevo been increased, nnd although not large in tho nc^rcQntc, they dorag on the Ir.Sultry by diverting resourceo and pcroofinal. Althoughnre loos than originally envloloncd, spec loat Ion io not nov to Soviet cotcr vehicle Industry. Just beforo Vorld Vtir IJ, oyiecir.lir.'itionort took place until tho vor brought ouch plono to oa abrupt end* Aftor tho var tho need for JCTOdlotc output and tho Unite! e'/nilability of resources ocaino rcvouplng of the lnductry. It vce not until thoe and the beginning of tha Seven .car Plnn that specialisation vao scriounly connidercd. Socio progress has been rcadc tova id nstOVlAfl component product Ion fron vertically integrated plnnto of the Soviet automotive industry. Tbbe successful, hovevor, cpeciellnaticn of production requires tho construnt ion of ncv plnnto ond tho nodorniof other plnnto for -exponent mnufneturo* lleny of these necessary invostaents lwvc lagged.

Sovietrod to long production runs of standard nodels, has hod nucb trouble historically in introducing new nodels into production, ccpcclolly idwii tho never uodcla incorporated tnjor qualltotlve lnprovcciontfl. In the IdUiachcv plant, one of the tvo Inrgoot la tho industry, cc_or crpbaalo lies bean placed on getting tvo ncv bcavior duty trucks, thaon)nto -production. Bothon the iirowlnc boardsral fullvno to hove bc"cin. llovevor, the first Indications of case -production did not appear untilk- Tho Likhacbev plant has increased production codectly, but Instead of ncv trucks, tho plant continues to produco a* Inly into media to-capocity vehicles that aro

basically thoroduced for years.

Kearly tbotur.'iion Is iu effect at tho Gor'kty plant, where tho now5 ton) DOS been rchcdulnd to go into production. Piano /or tbto model vcro corplctodnd production vno to otart shortly thereafter. As ofb, however,ew prototype nolo Is hed been produced. ot Cor'kiy has been on tho dovngrolc. Thoutmodedby fioviet standards, is being phaocd out of production, end only Halted productionransitionrl oodcl, the, isunder vny. Cor'kiy, UtTiTfVTjiighly vcrticnlly integrated plont, has ottcrrptcd to subcontract epcclcllzod components. Kov-ever, those plants hava not provided Cor* Ply with tho necessary componentshereby havnied production difficulties.

V. Gov let production of Mf.cb.lnc Toolshe Kotor Vehicle Industry

Tlicro is no doubt tlujt IE nochlnc tools and tmncfor lines ore superior to their Goviot countci'pc.rts. It does not follow, however, that the Soviet machine tool Inductry is incapable ofucincuitcblo fords of Govlct industry. The attached appendix lists Kaahlne tools and lines produced in tho USSR during the poet ocvcrnl yonrc thftt ore generally ci-jilnr to the kinds of machines and equipment thst the USSRnto rooted In importing froa the U3 It ic veil establlnhed thot tho USSR io technl-colly capable of developing end supplying the notor veliiclc Industry with rnchlne tools and outonrtic Incorporating aGoquntosnd to support both present levels of production ond anticipated future growth. At present, tbe machine tool Industry is hard prcooed to handle all of its escig;runts.

The lcrgcot Known motor vchiclo transfer line built by the USSR Includedachlne tools. It ves designedoviet design bureau,nd wns built at tbe Ordr.honlfcidze HscMnc Tool Pl^nt ln Moocov. This lino reportedly lo capable of completely mscliinlngfiruck cylinder blocks per hourthe capecity of tbeo Is optimistically stated atlocks por year. Tho Soviets announced the installation of ibis line et LikhncheY ln', and Indications are that It started opercttonrial bools- The blocks node ot Ukhnchev probably era cost iron, although come's are planned. Although it con not bo raid that tltia linoubatltute for the proposed Crosst demonstrsteo Coviot abilityufranofor lineylinder blocks. This lino is only one ofutomatedsed to

produce the ZXL-ljOxic other lines and nnchlne tcolc have been rado for procOSPlocvehicle cronkolmf to, blocks, heeds, crjMbnfto, and other cccoclatod perta. It lo difficult to tvihe on accurate evaluation of thece lines, but It Ic cctiontcd that the Sovlcte will ococabletnearly all of thenxoeeticolly aanufneturod linos.

In recent years there bee been lncrea_cd evidence that the Soviet Icfulcrobip reccgnireu that ito dencotic Industries alone arc notosition to eupply oil the needo fornd equipment of, especially in view of lncrcaccdbeing given touality o" output. Although tho Coviet rnchino tool industry in on efficient and lov-coot producer of irany general-purpose soiciilrct ia for fron boing on efficient producor of nony typen of speciel-purpoao machine tools, of nxxhinesighof precision nnd productivity, or a' linoo requiring cuotca research and aevclopraont. There can bo little doubt tliat faced vith the vast array of priority taol'x the ICSP. "in nuncrous areas would prefer todvantage of tho ycers of experiencecccrehas gone into edvnnccd 03 cstern equlpnmt. This jc rot to say that the UCSa ic incopo-ble of producing cquipaimt gcr-crcliy similar to the Kinds of US cachincs that vcro toqx>rtod It docs Bean, fcc-cver, that Soviet plcnnorc hove becccsoore of tliethat tho boSP can gnln through the JudlelOttS import of spcciulisod and tec:inolog*celly odvenced foreign nochlr.ery.

VI. Soviet Ujyortc of Hochlne'fools


specific intoiiiQcncouiuiiiuviyunovn purchases abroad includo- alino from Renaultcv typo of

Mric tons* capacity fronf Italy

..j: oontroctcd2 to5 Billion worth of outonatlc cranksheft grinders, nultlwhcel grinding Daehinos, ond .'* cylindrical grinders. Delivery of thoso fully autccoted nochinoo wao scheduled for6 An ngrenzicnt ucs signed with tho Frenchor nearly $'4 nixlion in cutccxtlc transfer Uneonother O'4 rilllicn in proclGioa cachlno tools (part of which vcro destined for cutcnotivco-mlcto plant for producing chock absorbers- The trodo protocol and tho USSR0 included provision forport ofralV.on ln tmr.cfcr lines to Eovlct notor vehicle and tractor Industrie- r/cll nuiber of linoo for machining purto for carburetorser automotive coaponoiits alao havo come frca nuuGary's Ccopel Kachino Tool Plant.

in the flrot three cuR.-tcrut. VII. Syjgy.iy eml Conclusion

Itiljit'SK vould bcvOBillion on Its rel/.tSvcly lov-prlerily rvtcnobtlo tijuctrjyeor. Thin cui woiilil beo nearlylf of ellof mchinc tools for'l'V'ifixn ellBloc end* Although there hoo been aln Soviet lit^orto of nocblnc tools frwa tbothe totnluneoJoyloc tuppilerocr_^ny, Holy, Fnuvo, Eultwrlnsid, ond) toittlo core thanmount In/olvcd ln tho prospective cutoscbllefroa the livlu=triel Hetrt hnvc thorn no uaucualthe fin;*

Output of tracks, tl* lt=-yol counesent of productiontho fevict notor vehicle Ir&UStsy, has rev.lncdIn recent years, jnitirgercentears of the Seven Yeer Plan. Chorlcgeo of conemchlan tools and autoar.tlcrl-arlly due toof higher priority Industrie*eneral elovdoun Inof grcr./th in fH thobuilding Industries,contributed to theihc Soviet cctor

vehicle industry. It is clear tliat denial of 1x1 eoulp-icnt mi not the coIqn orjor rerswi for the poor performance ofoviet notor vehicle tides! ry. Incro-'uctlon of ncv codele, terror;.ry upheavals caused ty limrcccd rpoclslltatlon, disruptions ofproduction beeeuse or Um LstroCuotloe of core rutcnited, and indorsedfor npeeielisod nllitery vehicles oil hava boon eager contributing fr.ctor*. he Soviet IftfluGtry le bes fcuVi it lmrccaisgly difficult to coct ell tbo requirements of tho allltf.iy cste.bllr.hunt, ho ivy Industry, tho spreehe cornuacr- In tho ca=pctl>loa for productive resources the Soviet notor vehicle Industry haselatively levhere ore no Indications at -present that Its priority is lncrecr>lpg.

Elnco the tn denial tbe USCH bes loported cocojpes of anchlna tools fron Western Europe, althoughn ouch lirports ia occnt and trcenploto- otal SovleV lnporto ofools fras V'estcm Europe end jnpan anountct to onlyulllion, about one-balf of tbo propoced purchases inthe U3 yurtheircoi'e, there has been no nojcr increoaenports of raehlna tools by Viefc. Tlio proposedtcaU32 vers'.uch creator than proviouo'

recent imports of nachiiw tc?le frca the inductvlol Vest that it is poooiblo that oony of2 ccccg never would have reached, tho fira contract otnec.

Iu ell likelihood the USSK will continue to place ordero for notor vehlcln equipnent vith the Vest ln spite of the feet -that it hen demonstrated theapability toequipment adequate for its ootor vehicle industry. The USSR believes tlmt tho cone or better rcculto can be achievedower cost by tho lnport of certain types of equlpaent fron tho Vest, especially whenalted iiuabcr of ecch typo of ncchino la required-

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