Operations and Economic Critique

The Krakow plant and district managers have frequently remarked to author Manczyk that it is difficult to obtain and maintain a supply of maintenance and repair parts for the plants, despite the original manufacture of the equipment in Poland. While parts might be purchased abroad, Poland's lack of hard currency has made this option virtually unavailable. Sophisticated monitoring and process control devices and instrumentation that might improve process efficiency are simply not available. The Leg plant does, however, operate a full machine shop to perform repairs or manufacture many of its own replacement parts. While this offers a partial solution to the supply problem, the overhead costs of personnel and of short-run production are very high and it is difficult to fabricate items to original manufacturer specifications; major items, such as turbine blades, cannot be produced locally.

The hot water distribution system, which is 40 to 70 years old, has pervasive, major leaks. Jerzy Socha, chief application engineer for MPEC, calculates that the water lost from the system could cover the Rynek, the center of downtown Krakow, with a lake 72 feet (22 meters) deep (Socha 1989). Rather than invest in costly construction projects to repair the leaks, however, the district in the past has compensated for the line losses with excess production to meet user demand. Recently, efforts have been begun to locate leaks and assess the extent of the need for repairs and associated costs. Early results indicate that as much as half of the line loss may be due to unauthorized taps into the system.

System response to demand changes in the distribution loop is very slow. There are no remote sensing wits in the loop to monitor conditions. It takes up to six hours to accomplish major changes, resulting in poor service and unnecessary nonpeak demand costs.

The hot water system has no temperature controls on the building services nor controls in the housing wits. Consumption is not metered. User charges are based instead on the area of the housing or commercial units. This system fails to provide users with the means or incentive to monitor and reduce their consumption, and it fails to provide district personnel with a way to identify locations of excessive consumption or line losses.

Energy pricing policy presents equally difficult problems. Despite doubling and tripling rates for electricity, district beating, and gas, the charges still do not reflect the cost of energy production. At current prices, projected savings from system repairs and improvements do not provide the payback to justify the necessary financial investment by the district.

The Communist economic system exacerbated the problem. It provided no incentives to encourage and maintain high or even moderate worker and managerial productivity. Polish authorities are well aware of these difficulties and are attempting to develop and implement reforms. Current changes, however, in the political and economic systems and in district management personnel add confusion and uncertainty about the entire operation, which makes improvements in operating practices difficult, if not impossible.


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