RUSSIAN PODOLSK PMZ FACTORY
CHILD'S SEWING MACHINE TOY
Singer Buys Back Its Former Factory
By Julie Tolkacheva
Jan. 24 1995
PODOLSK, Moscow Region.
Singer, the most famous name in sewing machines, is returning to Russia after an absence of eight decades as part of a move to rescue the country's sewing-machine monopoly.
Kontsern Podolsk, the only producer of the machines in the Commonwealth of Independent States, has announced that
Canada's Semi-Tech Corp., owner of Singer, bought a 70 percent equity stake in the Russian company.
Grigory Komarenko, the factory's president, said in an interview that the move will provide the company with at least $10 million in new investment, help to upgrade the quality of the machines, diversify production into other appliance lines, increase employment and open foreign markets to Russian sewing-machine exports for the first time since the Bolshevik Revolution.
"If we had not done this, sewing-machine production in Russia would die in 1995", he said. "Foreign companies would have razed us to the ground."
He said sales of home sewing machines have dropped from 1.6 million in 1992 to 190,000 last year, when Kontsern Podolsk produced 335.000 units, many of which are gathering dust in the company's warehouses. Much of the loss was caused by a shift to pensive but higher-quality foreign machines, Komarenko said.
Production of industrial machines also fell by more than 60 percent. The company released 4,500 of its 12,500 workers and the factory was idled for two months, Komarenko said.
The investment by Semi-Tech, which also owns Pfaff and Sansui, will bring back to Kontsern Podolsk its historical name of Singer -- the founder of the company who set it up in Podolsk, 60 kilometers south of Moscow, in 1900.
The Russian operation, with 40,000 employees and 3,600 shops selling Singer machines, became one of the biggest in the worldwide Singer empire, established by Isaak Singer in New York in the middle of the 19th century.
Pre-revolution Singers can still be found in Russian homes, and many say they work better than models produced after the 1917 Revolution, when the company fell on hard times due to poor management and a ban on exports.
The company lost the name Singer after the revolution: It was renamed Zavod imeni Kalinina to commemorate a two-hour visit to the factory by Politburo member Mikhail Kalinin.
The company became Kontsern Podolsk in 1990 and went private in 1991, with 100 percent of stock going to the working collective. Last August, 99.6 percent of the shareholders voted to sell a controlling interest to Semi-Tech, Komarenko said, adding that the deal was completed late last year.
He said the company made a new emission of shares, increasing its charter capital to 28 billion rubles (about $7 million) from 10 billion rubles. Semi-Tech bought 70 percent of the stake for $10 million, the minimum amount of foreign investment required by Russian law to obtain a five-year profit tax exemption.
"Our directors should shed their arrogance and sell controlling shares in their companies to foreign investors," said Komarenko, now a Singer vice president. "Only when foreigners are here on all four paws will we get economic growth, better quality and new jobs."
Under the deal with Semi-Tech, Singer would export 30 percent of its 1995 production of home sewing machines, including 150.000 new generation Singer machines that the company would assemble from imported spare parts, Komarenko said.
Under an order from Pfaff, the factory would have to almost double production of industrial machines to 24.000 from 12.600, according to Komarenko. He said the company would have to hire 2.000 more workers to fulfill the order.