March 2, 2009 / 5:08 PM / 10 years ago

Crisis may break renowned Russia porcelain plant

DULEVO, Russia (Reuters) - A Tsarist-era porcelain factory that survived the Russian revolution and the end of the Soviet Union is on the verge of collapse, its plight typical of hundreds of outmoded industrial plants across this vast country.

A woman works on a clay figure that is to be used to cast porcelain sculptures in the Dulevo Porcelain factory in the town of Dulevo, 115 km (73 miles) from Moscow, February 20, 2009. REUTERS/Thomas Peter

Founded in 1832, the Dulevo Porcelain pottery once supplied the Russian court. In the 20th century, it produced special communist revolutionary pieces for the Bolshevik elite and their allies overseas.

Its antiquated and inefficient facilities, the result of years of under-investment, mean Dulevo, 115 km (73 miles) from Moscow, struggled to compete with cheap Asian imports even before the global downturn reached Russia late last year.

Throughout the country, more than 2 million people have lost their jobs since start of the crisis. Millions have had their salaries cut, prices are rising by 13 percent a year, the rouble has been heavily devalued and living standards are falling.

Dulevo’s general director Natalya Zacharova says the rising price of natural gas for the kilns at the plant, which employs 2,000 people, and more costly raw materials mean it is teetering on the brink.

“In 2008, practically all our costs went up and the prices they are charging us continue to go up,” she said in an interview. “This has already started to eat into our stability ... it has taken us to the edge of bankruptcy.”

Many other aging plants in Russia have been starved of investment despite a 10-year boom fueled by petrodollars that came to an abrupt end last year.


The Dulevo factory is a maze of run-down buildings, many of which date from the 19th century. Some are no longer used and most are now in need of renovation.

With domestic demand collapsing, the plants now face tougher competition from cheap imports, eroding their inherited advantages — prebuilt factories and a cheap workforce.

The town’s official unemployment rate is just over 2 percent, but if the factory collapses that figure will rocket.

“The majority of our workers are women. Just imagine, thousands of extra women looking for work. It’s also a tragedy for the families. For this number of women there is nowhere else to work,” said Zacharova.

Dulevo’s fame grew after the 1917 Bolshevik revolution when Soviet and world leaders were presented with specially made pieces and snow-white porcelain was custom-made for the Kremlin, decorated with the state emblem and trimmed in gold.

The plant also manufactures some lines for Swedish furniture and housewares retailer Ikea, but Zacharova says that if wages were not so low, the plant could not compete with cheaper Chinese imports.

Workers say they are each paid about 10,000 roubles ($277) a month but the factory spends 3 million roubles ($83,333) a month on gas for the kilns that fire the porcelain.

Zacharova said the plant could not afford the cost of replacing its ancient and gas-guzzling kilns with a new, energy-efficient 3-million-euro model.


Besides porcelain tableware, the plant produces items for wealthy collectors, with one popular model of women in a Russian banya (sauna) selling for 86,000 roubles ($2,388).

The expensive pieces are exceptions and most porcelain is priced modestly. For example, a typical Soviet-era tea set cost 640 roubles ($17.77).

“What if the factory collapses?,” said one female worker who declined to give her name as she stacked plates in a kiln.

“Of course it’s scary. Where else can we work ? We’ve got two children. There’s nothing for us in Moscow.”

Others said they loved their work, but share the same anxiety that the factory may not survive the downturn.

“Please God let the factory keep working. For me and for my co-workers, that’s the most important thing,” Olga Pavlova said, as she polished figurines of two women relaxing at a banya.

Unemployment is already affect some residents in the town.

A bust of Soviet state founder Vladimir Lenin stands in a workshop of the Dulevo Porcelain factory in the town of Dulevo, about 115 km (73 miles) from Moscow, February 20, 2009. REUTERS/Thomas Peter

“I’ll do anything, but there isn’t anything here to do,” said Maxim, 20, who used to work in the bus plant, as he checked for vacancies in the unemployment office.

Although he lives at home, Maxim scoffed at the minimal Russian unemployment payment he receives, 4,900 roubles ($136) per month, saying it did not buy much.

“The situation is very difficult, very difficult,” he said, apprehension written on his young face.

Reporting by Conor Sweeney; Editing by Andrew Dobbie

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