Steel mill turns up clues to Poland's problems

A Polish steel mill that even the Russians said was unnecessary stands as a memorial to the ambitions of the Gierek regime -- and illustrates how the country came to the brink of bankruptcy.

True, the new steel mill in Katowice has been producing 4.5 million tons of steel a year, but planners had promised its capacity would be 9 to 10 million tons of high-grade steel annually.

The mill, which at present turns out semifinished steel, cost five times more than original estimates, and adding a rolling mill to upgrade quality would cost another half billion dollars. Meanwhile, the recession in the West makes it questionable whether even the high-grade product would find a ready export market.

The story of the steel mill came out in the aftermath of last summer's political turmoil and the ouster of Edward Gierek. The new leadership had to explain how the country had come so near industrial collapse.

Soon after Mr. Gierek and company came to power in December 1970, they initiated an ambitious capital investment program. One item they were determined to have was a new steel mill -- and it quickly became clear it was going to be in Silesia, Mr. Gierek's power base.

Experts and environmentalists pointed out that the location chosen for the plant was troublesome: It lacked sufficient transport and water. Records showed the prevailing wind there would carry all the plant's emissions toward Krakow, the showcase city of the region. It threatened to destroy a richly forested "green belt" that was full of game.

Even the Russians, whose technical assistance was needed, dubbed the project unnecessary and "romantic."

But the Polish government went ahead with the project.

Those who spoke out too loudly against the project lost their jobs. Others kept quiet for fear of losing theirs.

Now, one of the experts who worked at the region's old steel mill while the new one was being planned has spoken up. Zbigniew Loreth, an engineer and investment director at the Lenin steel mill who is now retired, told his story to Zycie Warszawy, an independent Warsaw daily.The paper calls him "the Pole who dared say 'no.'"

Plans were laid in 1970-71 for a "central steelworks" to replace old mills that, it was said, were uneconomical, polluted the air, and "forced people to work in difficult and harmful conditions."

"The slogan sounded beautiful -- there was no one who would not subscribe his name to it!" says Mr. Loreth.But the reality proved to be very different.

The site was chosen by computer from 17 possibilities. Somehow, the "optimum possible" was determined to be the forest area around Strzemieszyce. According to Mr. Loreth, that was where a vice-minister of metallurgy was born, and he "wanted to commemorate his youth with a giant steelworks." When the chief architect from the region protested, "She was fired," Mr. Loreth said.

Not only Mr. Gierek but also his prime minister, Piotr Jaroszewicz, and another Politburo member, Zdzislaw Grudzien, were involved in the Katowice scandal. All three lost their posts last summer. (Mr. Jaroszewicz was expelled from the Communist Party, and his investment policy and alleged corruption are the subject of an official inquiry.)

Water for the plant was to be taken from the Sola River. But that was the last source of pure drinking water in Silesia, and demand for it was growing rapidly because thousands of families were moving from tenements to new housing that had running water. Officials told Mr. Loreth the plant would divert water from the river only temporarily, "but the Katowice works still take water from there," he says.

It was said that only 2 million cubic meters of earth would have to be cleared from the chosen site. In fact, 28 million were moved.

After four years of operation the new plant is turning out less steel than the old full-cycle plant. Staggering extra costs were incurred for such unforeseen items as a special rail terminal (about $1.3 billion). Some 25 miles of gas piping cost nearly as much.

The project epitomizes other Polish problems. "Everything we produce at Katowice," says Mr. Loreth, "except rails, are semifinished and sold below cost. Exporting coke and energy would earn us more. This is the export of the poor."