INFRASTRUCTURE

James Larimer

INTRODUCTION

A dictionary definition of "infrastructure" refers to the underlying foundation of basic facilities and institutions upon which the growth and development of a community depend. This definition brings to mind broad categories of institutions and facilities. These include roads, schools, transportation systems, utilities, banking and finance systems, markets, labor, a system of laws and enforcement mechanisms, basic and applied research facilities and expertise, manufacturing tools and facilities, indeed, all of the elements that make society and commerce possible. This certainly is too broad a scope for a discussion of the flat panel display infrastructure within the countries of the former Soviet Union (FSU). However, in order to understand the state of the infrastructure in these countries and how it relates to the display industry, it is necessary to at least acknowledge the sweeping changes that they are currently undergoing.

It is important to acknowledge that the data upon which these observations are made are very limited and not systematic. The process by which these observations were collected was not designed to answer questions about infrastructure. However, information about the state of the infrastructure within Russia, Ukraine, and Belarus was revealed as the panelists interviewed individuals in the display industry. The WTEC panel visited several institutions and emerging companies in these countries. There is no assurance that the panel has not overlooked or completely missed a major component of the display industry in the FSU. Nonetheless, the panel's brief and limited visit gives insight into how a new infrastructure is emerging from the old system, and how that relates to the display business.

The process that dominated business practices in the Soviet Union prior to its dissolution was central planning of the economy (see Figure 6.1). The command economy of the Soviet Union was perhaps the world's largest monopoly. What is happening now in the FSU can partly be understood as the breakup of this monolithic monopoly.


Figure 6.1. The flow of resources and decision making in the planned economy of the FSU.

In the former system, there were design bureaus, prototyping bureaus, and manufacturing facilities linked to a specific product arena, such as electronics or avionics. The bureaus were coupled within single industries to form a giant enterprise. One example was the production of avionic control system interfaces (i.e., aircraft cockpit instrument panels and controls) for small aircraft. There was an institution that would design the interface, a second linked institution that would develop engineering prototypes, and a third institution that would scale up and manufacture the system based upon the design and prototype.

There was no market infrastructure that supported these various functions. The management of these facilities would plan in advance the number of units that they would manufacture, and would develop a list of components and budgets required at each stage -- from design to prototyping to manufacturing. These plans were presented to a central planning bureau that would approve the plan and production goals or change them.

The central planning bureau provided the required components and resources to meet the manufacturing goals. The bureau arranged for and scheduled the delivery of materials required for manufacturing. The dissemination of the manufactured goods was also the responsibility of the planning bureau. The designers, prototypers, and manufacturing engineers operated independently from the logistics of manufacturing. Manufacturers were not burdened by the challenges of defining and creating markets, estimating, meeting, or creating consumer demand for new and old products, or the logistics of taking the end product to a market. All of these functions were performed by the planning bureaus.

In the emerging market economies of the FSU countries, many managers are faced for the first time with elements of the market economy and the western business process with which they have had no previous experience. They are learning to find multiple sources for components, to arrange for transportation and timely delivery, and to set up channels for marketing their products. In many cases, marketing and sales departments are being added to company structures for the first time. Many of the alliances that had existed previously are beginning to dissolve. Prototyping or development facilities find themselves disconnected from design bureaus and both of these from manufacturing. The WTEC panel saw an economic system in great flux, a system changing from a command economy to something more like a western market economy, but clearly quite different.


Published: December 1994; WTEC Hyper-Librarian