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Reorganizing Enterprises in an All-round Way and Laying a Better Foundation for the Future

During the "great cultural revolution" , aviation industry had been heavily damaged, enterprise management was brought into chaos and product quality was greatly worse. It was, therefore, an urgent task for the aviation industry to rectify and reorganize enterprises in an all-round way and to improve production and technology etc. after smashing the " gang of four" . On the 5th December 1977, the Central Committee of the Communist Party of China decided to appoint Lu Dong as the Minister and Secretary of the Party Group of the Ministry of Aviation Industry and, the leading body of the Ministry was soon reshuffled.

On the 6th December, Deng Xiaoping met with Lu Dong and other newly appointed leaders of ministries of defense industry, asking them to expose and criticize the "gang of four", to reorganize leading bodies at each level, to make great efforts on product quality in connection with actual task and to raise management and science and technology level. The aviation industry started work of reorganizing enterprises in an all-round way in accordance with the above requirement, which was divided broadly into two stages: First stage was from 1978 to 1981 centered on the overall inspection of product quality and the reorganization. Second stage was the acceleration of overall reorganization and improvement of enterprise management in connection with economic system reform since 1982.

In 1978, the whole industry concentrated on deepening the exposure and criticism of the "gang of four" , checking faction systems of the "gang of four", rehabilitated a large number of fabricated, false cases, completely reorganized leading bodies of enterprises and administrative organizations, implemented the policy of intellectuals and restored production order. Some large and backbone enterprises which were spoiled by group and faction elements had quickly changed their situation after reorganization. Shenyang Aero Engine Factory once achieved good results of quality reorganization under direct concern of Premier Zhou Enlai in 1972 and 1973. But group and faction elements in the factory stirred up troubles and threw the factory into chaos, causing serious product quality problem.

During four years with them in power, 48 severe quality accidents had happened and more than half of 4,400 engines produced had been returned to factory for repair because of bad quality. People said with grief and hatred: "factory will not have a single quiet day without eliminating those group and faction forces." After smashing the "gang of four" , the original Party Committee Secretary Wu Xia was transfered back again to be in charge of the factory work after approval of the Central Committee of the Communist Party of China. After more than one year's work of reorganization, the bad persons were removed from their power, production and management orders were restored and the new atmosphere of happiness was felt by everybody, quality improved and production fulfilled on schedule, which helped the factory enter into the rank of advanced enterprises both in the city and the province. Similar situations were occurred in Chengdu Aircraft Factory and Nanchang Aircraft Factory etc. The whole industry had enjoyed political unity and stability.

An overall product quality inspection was carried out to check and analyse the outstanding quality problems and hidden troubles so as to give workers and staff further understanding of the extreme importance of aviation product quality and to switch the production onto the right track of quality first. Cadres and masses of the industry earnestly summed up their historic experiences and lessons of flight accidents and quality problems which caused batches of products returned to the factory for repair. The sense of 100% responsibility for aviation products was fostered. At the same time, quality problems in the process of product design, manufacture and field service was carefully checked and analysed. The 110 problems voiced by the Air Force in the service were dealt with one by one technically on the spot.

Upgrading of quality of products and parts were unfolded within enterprises. In order to lay a good foundation for product quality and to reorganize and restore management system destroyed in the ten years turmoil, chief engineer technical management system was matured, centralized product quality inspection system was re-established, production management system was strengthened and especially the fundamental work of technical quality management was enhanced. In the course of reorganizing disciplines, employees were educated to understand that "even the smallest negligence in manufacturing aircraft can lead to severe accident" , therefore the working discipline of strictly observing regulations, working style of being scrupulous about every detail and keeping improving to quality were firmly established. High standard and strict requirement were insisted on for tight quality control. A lot of factories launched mass activities of "good quality and four satisfactions", every worker was required to produce good quality product so that the operator, inspector, leader and the customer would be all satisfied.

Good result was achieved thanks to these reorganizations. Enterprise management was recovered gradually and product quality was greatly improved. Compared with 1978, in 1979, the average acceptance ratio of flight test was raised from 79.1% to 94.2%, engine first test bed acceptance ratio raised from 58.7% to 78.4% and airborne equipment first fixed time inspection acceptance ratio raised from 85.3% to 93.8%. The whole industry had put an end to the passive state of affairs of not fulfilling the state plan in continuously five years due to bad quality and completely accomplished the state plan in 1979.

During the two years of 1980 and 1981, the industry's main task was still the reorganization, on the basis of enhancing achievement of overall quality inspection. Reorganization was also implemented in scientific research institutes and product design institutes. Some technical specialists with strong management capability were promoted to leading posts, five sixth working time in a week were ensured for technical work and logistics was improved. The Ministry of Aviation Industry had promulgated management methods in fundamental research and application research, institute regulations (for trial implementation), working regulations of project engineers (for trial implementation), science and technology achievement management provisional regulations and provisional methods of technology transfer, which led scientific research management gradually to standardization.

From 1982 to 1985, overall reorganization aimed at accelerating product replacement and improving product quality with the objective of raising economic result were launched in enterprises of aviation industry according to "Decision on staging overall reorganization in state run industrial enterprises" promulgated by the Central Committee of the Communist Party of China and the State Council in January 1982. The Ministry of Aviation Industry had set up an enterprise reorganization leading group headed by Vice Minister Wang Qigong to implement even larger scale and more comprehensive reorganization. The outstanding characteristics of this stage was the close combination of reorganization with reformation.

According to the requirement of the Central Committee, cadres should be revolutionized, younger, knowledgeable and professional, aviation industry reorganized leading bodies at each level in 1980. In September 1981, the Central Committee of the Communist Party of China and the State Council appointed Mo Wenxiang the Minister and Party Group Secretary of the Ministry of Aviation Industry instead of Lu Dong, and reorganized the leading body of the Ministry. This reorganization was accelerated in a much quicker pace after 1982. By 1985, the average age of managers and directors in aviation enterprises and administrative organizations dropped to 46.2 years from 53.1 years in 1981, cadres with high educational background increased to 72.2% from 20.5%. 70% enterprises tried director responsibility system in production management and administration management in succession.

A new development of quality management during the reformation was to extend quality control from the course of production to the course of product development and product support with special stress on the development of new aircraft. This development was achieved first of all due to good foundation of quality reorganization in production. Because of the fact that when the whole industry's working stress shifted to the development of new type of aircraft, a lot of quality problems occurred due to poor quality management. The typical example was the first J-8 all weather aircraft in June 1980. Because its hydraulic system had not been tested as a complete system and the breakoff of hydraulic pipe due to resonance on test bed, fuel leakage was happened and the aircraft was burned. In order to learn from this lesson, the first quality working meeting of new types of aircraft of aviation industry was held in Shenyang Aircraft Factory in October that year, presided over by Vice Ministers Duan Zijun and Wang Qigong.

The meeting decided to put stress of quality work on the new types of aircraft. "Quality management regulations in developing new types of aircraft and missile" and "Quality management regulations of new product of airborne equipments" were formulated soon after to eliminate severe accident during the course of development and ensure the safety flight of new types of aircraft of J-7III, J-8 II , JJ-7 and Z-8. At the same time, product support of aircraft was strengthened, maintenance personnel were trained for customers, spare parts provided. As for new aircraft which were already in batch production, the aircraft was taken as " dragon head" leading all the associated organizations in creating good quality products. Enterprise also implemented reorganization of planning, accounting and labor management according to the requirement of cost-effectiveness, hence the enterprise management fundamental work of original record, metrology, norms and statistics etc. was further strengthened and economic accounting was implemented.

Enterprise reorganization during this stage was closely connected with the reform of economic system. The center of the work was to simplify the administration and giving more power to enterprises by the Ministry of Aviation Industry, the purpose of which was to energize enterprises and solve the problem of enterprise eating from the "big pot" of the country and workers eating from the " big pot" of the enterprise. Aviation industry started to implement " enterprise profit contracting" , " Administrative unit expenses contracting" and " Scientific research fund contracting" in succession, starting from 1980.

When the profit contracting norm was completed by an enterprise with surplus, the 40% of the surplus could be kept by the enterprise, the same for institutions. After 1982, aviation industry speeded up changing structure from single military production to the combination of military production with civil production and actively and steadily pushed forward the management system reform. In 1984, greater pow¬er was given to enterprises for making self decisions in 10 aspects like planning, finance, labor, distribution, supply and sale and foreign trade etc.. Necessary reform was also implemented within each enterprise, which mainly included establishing and improving economic responsibility aimed at contracting, dividing into smaller accounting unit, establishing internal accounting center, strengthening product sale and turning the enterprise from pure production type to a type of scientific research, production and business combined.

During the enterprise overall reorganization and reform, political, technical and professional training of leading cadres and workers was carried out. There were 222 directors and deputy directors in aviation industry joined and passed national unified examination of training class from 1983 to 1985; 33,731 middle level cadres, 11,627 scientific and technological cadres and 60,537 professional management cadres of enterprises had been trained. All young workers finished supplementary classes of culture and technology and political training as well off their jobs. Hence, the political, cultural and technical quality of the workers had been improved.

Through this period of large scale reorganization in an all-round way, solid foundation had been laid for the good quality batch production, and the quality control in developing new aircraft began to set up. From 1979 to the end of 1986, aviation industry had 10 items such as the primary trainer CJ-6 etc. being awarded National Gold Medal for quality, 45 products be-ing awarded silver medal and 374 products being awarded prize for excellent products by the Ministry of Aviation Industry. Because of the stable product quality, improved enterprise management standard and the initiative of personnel, production in aviation industry still witnessed an increase even with decreased work load of the military products which was control¬led under a central plan. Compared with that in 1978, in 1986 the total output value of the industry increased 73.8%, profit and tax increased by 1.52 times and the average labor productivity of aviation industry increased 28.4%.