MTM Program Evaluation

Executive Overview

From January 22 to February 7, 1999, representatives from the Center for Economic Initiatives (CEI) Leland M. Cole and Bruce L. Vaillancourt visited Kharkiv, Ukraine as a part of the MTM Productivity Study Tour program under USAID grant # 121-0005-G-00-7189-00. The purpose of this trip was to follow up with the tour participants to determine how they had applied the information they had learned on the study tours. The first week was spent visiting companies and their factories in order to see the company in operation and to discuss the changes that have been implemented. The second week was spent conducting three seminars and in meetings with various other organizations. One seminar was held for each of the two tour groups and one joint seminar was held for Kharkiv City and Oblast officials.

The CEI evaluation has been an on-going activity. It started with daily discussions with participants while on the tour members at meals and in the evening discussion periods. On this follow-up trip, discussions were held with participants from 100% of the active factories.

The objective of the MTM Productivity Study Tour program was to have a positive impact on the standard of living on the local population. Despite the short time since the end of the program, CEI believes this was accomplished. High level Ukrainian food processing managers from key companies, with an average employment of 276, visited their counterparts in the US. They learned new techniques of marketing, distribution, productivity and product development. Each evening, the tour group met under the direction of the group Leader to discuss the significance of the day's visit(s). These new ideas were brought back to Ukraine and are now being implemented.

The program participants were selected in Kharkiv by CEI and industry experts. The ability to speak English was not a requirement since that would have eliminated all high level managers. At the selection seminar participants were provided with industry specific technical, accounting and marketing information. The additional information about the companies gained from this seminar helped CEI design the program to meet the specific industry needs of the participants - a clear benefit to Ukraine.

At the end of the program CEI conducted a program evaluation. Again, industry experts visited the companies and this enabled CEI to provide additional follow-up at the request of the participants. This valuable assistance is not provided by lower cost programs.

The MTM program focused on the food processing industry. Many of the companies are located in rural areas where the company is the only source of employment in the area and it is critical to these communities that the plant managers learn how to survive and expand in a market economy. Improved efficiency and expanded markets are the significant outcomes from this program.

It is our collective judgement that:

1. The companies were exposed to many new value-added products they could undertake with a minimum of investment. As a result of the study tour, over 58 new products have been developed and will soon be on the market. Several of these products are significant since they significantly lengthen the plant operating period from 2-3 months to as many as 9 months per year.
2. Plants are making better use of their raw materials. For example, molasses, which would otherwise be discarded, is being used to make brown sugar. Other companies plan a number of new storage and processing techniques which will substantially reduce spoilage and increase the shelf life of fruits and vegetables.
3. At plants where cost savings have been installed long enough to be measured, the savings range from 15 to 30%.
4. Almost every plant is expanding its marketing operation. This is evidenced in a number of different ways. Many companies are adding marketing personnel. Others have become aware of company image and have designed new company logos and packaging. This will enable them to build brand loyalty which will help them compete against local and imported products.
5. Markets for US products have been opened. The most significant are the use of soya based products and an introduction to the use of flavorings.
6. Plant productivity has increased with a resultant increase in profitability. Managers learned how to make more efficient use of their manpower and equipment to ensure the survival prospects of their firms. Productivity gains of up to 30% are reported.
7. New packaging equipment and methods are being introduced at many of the firms. One example is the introduction of a small 1 kg bag of sugar. This will provide greater convenience to the consumer and the customer can be assured of receiving an accurate weight. In another example, new attractive packaging for margarine has been introduced which competes well with imported brands.
8. If the information learned on the study tour is retained only by the participants, the overall community does not stand to benefit. Each participant on the study tour has given talks and presentations to local company and community leaders. This ensures that others not on the study tour itself will also benefit from the program. The significance of this point was not lost on local Rayon officials who were anxious to meet with CEI and express their support of the program.
9. Each study tour included one technical writer who was responsible for preparing the team report. These Russian language reports were completed and published. They are now being distributed by the Regional Business Assistance Center in Kharkiv to other companies and oblasts throughout Ukraine. CEI believes this is the only program to disseminate information in this form. The report distribution to large and medium sized companies in the Kharkiv Oblast alone is planned to be: Dairy - 25 companies, Meat - 18 companies, Edible Oils - 10 companies, Sugar - 11 companies, and Fruit & vegetable - 14 companies.
10. The companies on the study tour have been cooperating and working together. They are selling products to each other and lessons learned at one company are used at another.