In 1970 the industrial establishment (excluding the private sector, information on which is not available) consisted of 1,827 state enterprises and 644 collective enterprises, employing about 1.02 million and 129,000 people, respectively. More than one-half of the enterprises in the state industry employed over 200 people, and almost one-fourth employed more than 1,000 people. Enterprises with large numbers of workers predominated in metallurgy; in the glass and china industry; in clothing manufacture; and in the leather, shoe, and fur industry. Beginning in 1971 previously independent enterprises were transformed into branches of countrywide trusts organized along functional lines (see ch. 12).
The territorial distribution of industry during the 1950-70 period was determined in large part by the priority development of heavy industry, the location of which was dictated mainly by the sites of raw material sources and the location of major consuming centers. In this process several cities and districts, including Sofia, Plovdiv, Varna, Burgas, and Ruse, experienced a large population influx from rural areas and attendant shortages of housing and public services. At the same time many villages were deprived of their inhabitants, and homes and public facilities were abandoned.
In 1970 the Central Committee of the BKP laid down guidelines for a program of regional economic development, with a view to attaining an optimal distribution of productive resources (capital and labor). The aim of the program was to arrest excessive urban growth and the associated demands on the country's resources for new housing and other amenities and, at the same time, to help develop backward rural areas. Within these guidelines, decentralization of industry has been undertaken, and plans are being worked out for the socioeconomic development of individual districts under the Seventh Five-Year Plan (1976-80) and until 1990.
In this context the construction of new industrial plants in heavily populated areas has been restricted. Further production increases in these areas are to be attained through modernization of existing facilities and the introduction of more advanced technology. Special measures have also been adopted to promote economic growth in the relatively underdeveloped districts. In part, this program is implemented through the transfer of industrial activities, equipment, and labor from the congested cities and districts to rural areas. Transfers of this kind decreed by the Council of Ministers Bureau in December 1971 and July 1972 involved 195 production units and 25,000 workers and an annual output of 225 million leva (for value of the lev—see Glossary). Under existing plans lasting until 1975, however, industry and employment will continue to expand in some of the most heavily congested cities.
The organization of a smoothly functioning materials and equipment supply system for industry has been an elusive goal of the leadership ever since the inception of the controlled economy. Various approaches to the problem over a period of years have not succeeded in accomplishing the basic task of ensuring a dependable supply of material resources to industrial producers. As a result, the economy has been officially reported to suffer enormous losses through production shutdowns, substitutions of materials that lower quality and increase costs, and hoarding of scarce materials. Heavy losses have also been incurred through improper storage of materials, careless use that entails excessive waste, and pilferage.
Adequate information on the organization and functioning of the industrial supply system has not been available. The latest reorganization of the supply system was undertaken at the end of 1971 with a view to providing a normal flow of supplies for the economic trusts beginning in 1972. Until 1971 the supply organizations had dealt almost entirely with individual enterprises. The reorganization was accompanied by extensive consultations with producers of raw materials, importing organizations, and industrial consumers. The consultations were held in order to clarify the needs of consumers, ensure the availability of the needed supplies, and agree upon specific measures for timely deliveries of materials and supplies.
Particular attention in the reorganization was paid to the problem of reducing the inventories of materials in enterprises and concentrating them in the supply organizations. Decisive measures were taken to halt the former practice of making deliveries of materials large enough to cover requirements for three months or longer. Under the new system, supply organizations are required to make periodic deliveries to consumers on guaranteed time schedules, at short intervals, and in quantities that do not exceed one month's requirements. Adherence to the regulation is to be used as a standard in evaluating the performance of supply organizations.
One of the basic elements in industrial consumer-supplier relations has been the annual contract for estimated material and equipment requirements needed to complete the annual production quota. For a variety of reasons both suppliers and users have often failed to honor these contracts, and the penalties provided for breach of contract have not been sufficient to deter this practice. Breaches of supply contracts have been an important cause of economic difficulties. Supply difficulties have been particularly disruptive because of the traditionally stringent nature of the production plans and the limited availability of resources.
In 1972 the Ministry of Supply and State Reserves planned to take energetic measures to strengthen contract discipline and to use contracts as legal and economic instruments for exerting pressure on both parties to fulfill their obligations. The minister considered it particularly important to put an end to the practice of contract cancellation, either under provisions of official regulations or by mutual agreement of the parties concerned—a practice that, according to the minister, caused huge losses to the national economy.