One unfortunate factory manager, and North Korea’s command economy

By Benjamin Katzeff Silberstein

These days, with much interest in changes in the North Korean economy, it’s easy to get the impression that under Kim Jong-un, the entire system has been changed beyond recognition. While that is partially true, particularly in realms such as enterprise management, the following story in Daily NK reminds us that the role of planning in the North Korean economy isn’t by any means altogether gone:

Following an on-the-spot visit by Kim Jong Un, the director of a military supplies factory was reportedly stripped of his position and demoted to a forest logger position. He appears to have been punished for the factory’s failure to meet its annual production quotas.

“Kim Jong Un recently made an on-the-spot visit to the Kusong Machine Tool Factory in North Pyongan Province’s Kusong City,” said a North Pyongan Province-based source on November 21.

“The director of the enterprise was stripped of his Party credentials and fired from his position a day later, (and) demoted to the position of a common logger at the Rimsan Enterprise in Rimsan County, Jagang Province.”

The source further noted that “[Kim Jong Un] expressed concern about the failure of the company to meet its annual production quotas by the end of the year” and “the managing secretary was punished the following day to show others what can happen when quotas aren’t met.”

The state-run publication Rodong Sinmun reported on November 16 that Kim conducted an on-the-spot visit to Sinuiju, North Pyongan Province, and visited the factory in Kusong City.

North Korea’s state-run media typically reports on Kim’s movements one or two days after they occur, so his visit to Sinuiju and Kusong likely happened on November 14 or 15, with the director’s firing occurring on either November 15 or 16.

Kusong Machine Tool Factory is the country’s second largest machinery factory and produces various machinery, tractor parts, and industrial hardware.

The factory also appears to be producing military supplies, given Kim’s criticism of the factory’s failure to meet annual military supply production quotas.

The factory has advanced computerized numerical control (CNC) equipment, allowing it to produce precision components and produces parts for the military, including for nuclear weapons and missiles.

On or around November 15, Kim oversaw the test of an “advanced tactical weapon” at the testing site of the Academy of Defense Sciences near Sinuiju.

According to a separate source in North Pyongan Province, Kim Jong Un said during the visit that “officials working in the military supply industrial sector must have a high-level of revolutionary belief and loyalty to the Party so that they do not bow down to the persistent attempts to isolate and destroy us.”

He continued, “[Officials] must show a high-level of loyalty and revolutionary enthusiasm toward the Party to achieve yearly quotas […] Failing to achieve state-set plans is evidence that [officials] are losing the fire in their enthusiasm toward the Party.”

Kim also emphasized that innovations must occur for the success of his centerpiece Nuclear Weapons and Economy Dual-track Policy

“Under the collective guidance of the Party Committee, we must eradicate the failure of this factory to unconditionally carry out the revolutionary duties that the Party has granted it, and ensure the great winds of innovation blow strongly so that the nuclear weapons and economic dual-track policy continues unswervingly along its present course,” he said, according to the source.

Full article:
Factory director dismissed after visit by Kim Jong Un
Mun Dong Hui
Daily NK
2018-11-29

What does this tell us about the North Korean economy?

For one, it reminds us that quotas are still very much in place and enforced, at least in some sectors of the economy. Arguably, munitions manufacturing is different and special because of its significance for national security. Still, we don’t actually know with certainty what spheres of North Korea’s economy that still operate under centrally planned rules and procedures. Likely, virtually all do to some extent, with enforcement and rigidity varying greatly between sectors.

It also reminds us of the strong link between economic production, productivity and political loyalty. In a system such as North Korea’s, economic production failures are never just economic in nature. If a factory manager doesn’t reach the quotas given by the state, it can’t be because conditions for production make it impossible. It has to be because of a lack of ideological rigor.

In other words, even with the decades of marketization, several central tenets of the old system still remains.