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Ukraine: U.S. Entrepreneur Puts Kyiv Plant To Work

By Vitaly Sych

Kyiv, 26 October 1998 (RFE/RL) -- In an old equipment plant in the Podol district of Kyiv, a portrait of Lenin still hangs on a workshop wall. A Soviet-style slogan written in red proclaims: "Through work, product quality is guaranteed."

Were these Soviet times, Lenin himself would have been proud of what he saw in the factory today. Bulky metal presses hum around the clock, manned by diligent steel-workers on 12-hour shifts. The factory's management sees to it that all its workers are sober and hard-working. Output has never been higher.

But these are not Soviet times. The chief foreman at NeiCo, the company that is putting the long-idled machines back to work, may be an ex-KGB agent. But his boss is as far as one can get from being the sort of Communist Party functionary that once ruled the roost at all such work-places.

NeiCo's boss is David Neisingh, a U.S. entrepreneur born and bred in California during the Cold War. And Neisingh has taken a strictly capitalist approach to putting the factory back in action.

Like many other factories in the former Soviet Union, the Kyiv equipment plant could not hold its own when the Soviet Union collapsed. The factory fell into disuse, its technicians left to scrape out a living in other jobs.

Then along came Neisingh, a one-time match-maker for Ukrainian women and U.S. men. Last year, Neisingh quit the match-making business and began looking for other ways of getting rich in Ukraine.

With $14,000 from investors in Kyiv, Neisingh rented out 500 square meters of factory space at the Podol equipment factory. He then set about finding workers who could operate the metal presses.

According to NeiCo director --and ex-KGB agent-- Yuri Semikin, Neisingh's first group of workers turned out to a disappointing lot. He says they were accustomed to receiving a fixed salary of a mere 100 hryvna (about $25) a month, and by and large the effort they put in was commensurate with that amount --even though they got a raise from NeiCo.

"It was very hard to change their mentality," Semikin told RFE/RL. "But David (Neisingh) taught us an entirely new way of working."

Semikin also said the first four groups of workers who were caught drinking on the job were fired immediately. In addition, management began posting a list with the names of those who produced faulty equipment and deducted the cost of the defective products from their salaries. .

Eventually, the workers caught on. Neisingh now praises all of his 33 employees for their diligence and the skill they bring to the work table. He explains bluntly: "The first reason they work hard is that I pay them well. The second is that I pay them (regularly). They know that if a product (is defective), I don't get paid. And if I don't get paid, they don't get paid, either."

NeiCo's workers concur. "We are interested in making quality products," said metal worker Anatoliy Kostyuk. "We're well paid."

NeiCo workers now earn $250 to $300 per month. Their salaries, together with low transportation costs and rock-bottom raw material prices, allow Neisingh to sell his products abroad at prices that are hard to match.

At present, NeiCo's chief products are metal studs and tracks of the sort typically used by Western construction companies. Not only is there a strong Western market for such products, but demand has also increased in Ukraine with the spread of Western construction techniques.

Neisingh says that about half of his produce is sold domestically, with his company being the only metal studs and track supplier in Ukraine. NeiCo's low prices have helped it penetrate the export market. Neisingh recalls that many people told him he could never produce a quality product using Soviet machines. But Neisingh says it was the Soviet system, not the machines, that held down product quality during the Communist era.

Today, only a year after NeiCo was founded, the company turns over in just a few days the equivalent of Neisingh's initial $14,000 investment. And he hopes to buy his own 30,000-square-meter factory in the near future.

(Vitaly Sych is an occasional contributor to RFE/RL based in Kyiv.)