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Team Prepares Plan for Rescuing Tractor Factory

August 6, 1991

WARSAW, Poland (AP) _ A government-appointed ″intervention team″ announced Tuesday it will work with Western experts to help the state’s Ursus tractor enterprise emerge from bankruptcy.

Ursus, a factory long linked to the Solidarity trade union, was forced to lay off practically all of its 12,000 workers Monday because of financial problems. It became the first big state enterprise to fail under Poland’s strict economic reform program, but dozens more are believed to be in similar straits.

The intervention team will devise a business strategy by early November, although the government, as Ursus’ owner, will make the final decision on the factory’s fate, said Wojciech Kostrzewa, director of the Polish Development Bank.

″All options remain open, including liquidation,″ he said.

He cautioned that ″the solution cannot involve just giving money. If money is found (for Ursus) it is because there is potential for some return, at least in the long-term.″

He said Ursus’ assets are reasonably modern but used inefficiently, and the plant could likely lower its production costs to sell more tractors abroad.

Ursus’ troubles were revealed last week when the company said it owes $106 million to the state treasury and to banks, which refused to extend further credits to continue production.

Henryk Szczygiel, the factory’s recently dismissed director, said the plant was hurt when sales dried up last year because of hardships on the nation’s farmers. Others said the factory couldn’t adjust swiftly enough in Poland’s new market economy.

The intervention team, in its first days, has already concluded that there must be a dramatic reduction in Ursus’ work force, probably at least 30 percent, members said.

In addition, the huge enterprise must be broken into smaller units that can maneuver competitively and seek cheaper raw materials and new markets, the team said in its action plan.

Built on the socialist model, Ursus has subsidiary plants supplying parts and other services and employing up to 100,000 people. It also operates holiday hotels, canteens, worker housing and other services, all of which are to be sold.

Designed to produce 100,000 tractors annually, a goal it never met, Ursus built 35,000 tractors last year and may manage to make 20,000 this year. A reasonable production target for next year would be 18,000 to 20,000, team members said.

Ultimately, Ursus may remain a state-owned company, be sold entirely or in part to private investors, or be liquidated, the plan said.

″Obviously the company can no longer function in its current shape. A dramatic strategic reorganization is needed,″ said Grzegorz Skarzynski, director of the Polish Development Agency and co-leader of the intervention team.

Other team members include experts from an international accounting firm, the U.S. agricultural equipment maker John Deere and from Massey Ferguson Tractors and Perkins Engines, for which Ursus produces tractors under contract.

Massey Ferguson and Perkins are subsidiaries of the Varity Corp., a leading worldwide manufacturer of farm and industrial machinery, headquartered in the United States.

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