Engines of Industry Sputtering in Iraq

At the State Company for Woolen Industries, big power generators can keep the machines running even when Baghdad's electricity supply shuts down, according to the director general of the seven plants, Muqbil Barrak. Two of the factories were looted or bombed, but the five functioning plants are running only one shift out of three, he said. Barrak juggles schedules to try to keep his 3,700 employees working at least a few shifts a week; all are being paid their full salaries.

The problem, he said, is that the U.S.-led Coalition Provisional Authority arbitrarily doubled salaries to reduce unrest when it took over in April 2003. That huge increase in operating costs makes the company's wool blankets, tents and clothing much more expensive than imports.

"We can't sell our products on the local market. Our prices are too high," Barrak said. "It's good to have better salaries for our workers. People need to feed their families. But it's a disaster for the company."

With the product piling up unsold in warehouses, "we will pay out so much, the company will become zero," he said.

His plants used to run full throttle when they were filling orders from the army, Barrak said. Now, he is trying to sell on the open market. The government is no longer a guaranteed customer able to prevent foreign competitors from selling their goods in Iraq.

Modern Sewing Co., housed in a drab, 40-year-old building with peeling yellow paint in the suburbs of Baghdad, used to make cotton uniforms for the army. The company is unusual because it has been a private concern for 15 years. It is eking by on a contract to supply uniforms for the Iraqi police. But its workforce has shrunk from a high of 3,000 in 1989 to 500, according to Jaffer Shamkhi, the security chief guarding the building on a company holiday last week. A few years ago, the company sent its designers to study in Italy, but the fashions they created were a flop with the local market, he said.

"If we depended on the sales of civilian clothes, we wouldn't get anything," Shamkhi said.

At the state-owned battery company nearby, the problem is electricity. The generators are broken, and the intermittent electrical supply never provides the uninterrupted power needed to melt lead, according to workers there.

Other companies have no capital to get equipment or income to buy parts. Materials suppliers refuse to haul over Iraq's bandit-ridden roads.

But many Iraqi workers also have little motivation to go back to work if their salaries are still being paid, Hasani said. They worked little under the bloated government-run system during Hussein's rule and don't want to start now, he added.

"We inherited these factories with overwhelming numbers of people. Of the 150,000 workers in state industries, I probably need one-third of them," he said. "I have a lot of people who probably do nothing. A lot of military industries need to be switched to civilian production -- what do we do with a factory that produced guns? But I can't put these people out on the street. The security situation would get worse."

"Let me be honest," Hasani went on. "Productivity here is probably 20 minutes a day. The workers didn't like the government. They weren't paid well. They said, 'Why should I work my butt off?' The attitude is still here. How are we going to change it?"

"It's a beautiful thing to go to work. I want to work," insisted Armut, the aircraft engineer. "But there is no work for me to do. So I stay at home with my children. My wife wants me to get out of the house, but there is nothing else for me."