The Action Sampler that the Lomographic Society is selling has got nothing to do with Lomo. The Action Sampler is a cheap toy camera made in China. It says "Made in China" right on it. The Lomographic Society is trying to make a buck on it by wrapping it up in the Lomo's popularity and the factory's good reputation. If you look at their site I don't think you'll catch them actually saying it's made in Russia but they're perfectly happy to let everyone else think it is. They sure don't tell you that it comes from China in the description of the camera.

Some people say "Hey, whats the big deal? This renaming stuff happens all the time. Ford buys Mazdas and puts the Ford badge on them. Like the Ford Probe for example. What's wrong with that?"

Well there is something wrong when the dealer makes it's money at the expense of the true company's reputation and meanwhile the consumer gets stuck with an inferior product. I compare this more to something like Ford selling Hyundais while telling everyone that they're Mazdas. I think the difference is obvious.

If you come across dealers selling this thing as a Russian-made Lomo, I encourage you to ask them to stop contributing to this misconception and to stop shamming their customers.

If you do want to buy the camera, check out Porters.com. I asked them for the toy Chinese camera that puts a sequence of four pictures on a frame and here's what they said:

If you are talking about the action catcher 35mm camera, we do have them. The item number is 02-0156 and the price is $27.95 each plus shipping and handling charges.� If you need more information, please call us at 1-800-553-2001.� Thank you!

JUNE 9 - 15 // COPYRIGHT 1997 THE ST PETERSBURG TIMES

LOMO Plant Overcomes Legacy of Little Cameras

There's more to St. Petersburg's LOMO plant than the quirky little cameras that spawned an art craze. As Kapital's Sergei Zharkov reports, the giant optical-goods producer - which President Boris Yeltsin plans to visit Friday - is slimmer, exporting more and aggressively seeking new contracts.

EARLIER this decade, St. Petersburg's LOMO optical plant received a mixed blessing from abroad: In 1992, a small group of Austrian students discovered the factory's inexpensive, all-manual cameras and made the LOMO Compact into an underground art phenomenon.

The hobbyists placed direct orders for thousands of the company's Soviet-style cameras and helped to spread the LOMO name across Europe and beyond. But it also made the LOMO name nearly synonymous with cheap cameras and blurry snapshots - not a great image for Russia's top optical equipment manufacturer.

Cameras, however, are only a sideline for the Leningrad Optical-Mechanical Organization, formerly one of the Soviet Union's key producers of military and civilian optics. Most of Russia's eye clinics use LOMO equipment, and the government pressed the company's electronic ballot boxes into service during last summer's presidential elections.

LOMO is in the midst of active transition, an example of Western-style enterprise restructuring at work: It is refocusing its core business away from government contracts and shifting toward what it considers a more lucrative export market.

"In the old days, everything was done to plan - everything worked like clockwork," said Alexander Aronov, LOMO's deputy finance director. "But that system of management turned out to contradict the market."

To keep up in the market, over the last five years the company has cut its staff in half, shifted emphasis toward marketing and civilian production, and spun off or closed down unprofitable portions of the business.

But to the chagrin of some 22,000 international LOMO camera enthusiasts, the compact camera may be one of the first things to go. The factory has not been able to come to an agreement on the cameras' wholesale price with the hobbyists and is planning to cease production of the units in July.

LOMO's predecessor, a joint-stock company called Russian Optical and Mechanical Products, was founded in 1914 as a producer of artillery sights, and went through a number of changes before uniting with several other optical ventures in 1962 as LOMO.

In Soviet times, the enterprise primarily produced optical equipment for military, scientific research and medical applications.

Three of its 17 divisions are still defense producers. LOMO representatives declined to specify what products the firm makes for the military, although the company is known to supply Russia's space program with optical systems.

The government, however, has not proven to be a dependable client. In 1996, LOMO was forced to write off 30 billion rubles in overdue payments from the Defense Ministry.

Even so, with reported sales in 1996 of 186 billion rubles (about $37 million), the company managed to break even for the year. For this, company officials thank LOMO's recent cost-slashing overhaul.

"With the help of consultants from McKinsey & Co., we hammered the company into business units and expense centers. We put together individual accounting departments for these structures in 1 1/2 to two years," said Aronov.

The company built a 70-person sales and marketing division from the ground up, Aronov said. The company shut down unprofitable activities, including the production of movie projectors and sound technology.

This led to a reduction in staff from 20,000 employees in 1992 to 9,000 by January 1997. The company's financial management has been completely replaced over the last three years, he said, ineffective workers have been let go and young replacements hired. "I try to take on very young people, and the good ones rise to the top."

After the cutbacks, LOMO let out vacant floor space to more than 100 organizations, generating additional revenues of about 7 billion rubles a year.

Last year, LOMO invested 3 billion rubles into new energy-saving technology, which saves the company 20 million rubles a month.

According to the company's chief economist Vladimir Didyk, in 1995 the city of St. Petersburg gave LOMO the buildings it is housed in, producing an additional $2 million to $3 million a year in maintenance payments.

LOMO has also made wise use of odd holdings left over from the Soviet era. LOMO has entered into a joint venture with the Sheraton Commander hotel chain to manage the company's rest home in the southern Russian resort town of Sochi, an arrangement that has saved LOMO some $500,000 to $700,000 a year in maintenance costs.

Thirty percent of the company's 1996 sales resulted from a deal with the Russian Central Election Committee for electronic vote-counting stations. The government cut its order in half after production started, however, and now those lines have come to a halt. However, the government promises that the next elections will be counted completely electronically.

Ultimately, it was the uncertainty over state contracts and payments that pushed LOMO onto the international market.

"Five years ago, we made a strategic decision to develop our export potential," said LOMO assistant general director Lazar Zalmanov. "Even inside Russia, we weren't competing against domestic producers but foreigners - the Germans, the Japanese and the Americans."

The company is not licensed to conduct international arms sales, but it does sell part of its production abroad through the state arms trader Rosvooruzheniye.

For civilian optics, though, the company is on its own. One of the first large orders came from an Israeli firm that had recently hired a former LOMO manager, according to Aronov.

This particular order got LOMO into the business of manufacturing night-vision devices. "Then we went further, making night-vision binoculars for civilians to use," Aronov said. "This gave rise to an entire trend."

The company's exports have certainly boomed: LOMO had $80,000 in export sales in 1992, but the figure has grown, hitting $16 million in 1996. Civilian production accounted for $3.5 million of the 1996 total.

"I anticipate that by the year 2000 the firm will have more than 70 percent exports," Aronov said. "There is nothing we can make for Russia - it doesn't need our capacities."

The prospects for LOMO exports look promising, but it must find the right market.

"They are completely capable of settling into their own niche on the world market for inexpensive optical devices - children's microscopes, hunting binoculars and telescopes," said Katrin Scheigner, head of the St. Petersburg representative office of German optical producer Karl Zeiss.

For LOMO, inexpensive may be the operative: High prices are what turned a club of artsy photo enthusiasts - who call themselves "lomographers" - away from the LOMO Compact.

The Lomography Society, founded in 1992 by three Austrian students, says the very qualities that Russian consumers do not like about the camera are what attracted them: U.S.S.R is emblazoned across the camera's front, and there is no flash or automatic shutter. Collages of blurred and skewed-angle LOMO snapshots graced 30 exhibits worldwide last year.

"This is not a way to capture your family on film," said Matthias Fiegl, president of the Lomography Society. "It's not important if the shot is blurry or if you chose the wrong angle. Lomography is a combination of art, entertainment and socializing."

The 22,000 member Lomography Society has an exclusive dealership of LOMO compact cameras. For a $130 fee, members receive one camera, a screwdriver for rewinding the film, two rolls of Agfa film and a year's subscription to the quarterly LOMO Magazine.

LOMO used to charge around $20 for the cameras. But in 1996 the price was raised to $33, and the society was able to purchase only 7,000 of the 19,000 cameras it had ordered. After negotiations, the society has agreed to purchase the remaining 12,000 cameras sitting at the company's warehouse, plus an additional 3,000 in 1997. But LOMO could not reduce its price to the $18 per unit that the society had requested, and production is now on hold.

LOMO has been more fortunate with other projects. U.S. distributors urged the company to paint and spiff up its existing model of student microscopes, and those models are now on sale through U.S. catalogs.

LOMO at a glance
Leningrad Optical-Mechanical Organization

1996 sales: 186 billion rubles (approximately $37 million)
Employees 1992: 20,000 1997: 9,000
Exports:
1992 $80,000
1993 $130,000
1994 $4 million
1995 $10 million
1996 $16 million
Shareholders:
Ipros Kapital (Interros): 20%
Monetarnaya Finansovaya Kompaniya (Interros): 11%
Vostochnaya Investitsionnaya Kompaniya: 8.7%
ULM Enterprises Ltd.: 6.7%
ChIF Russ-Invest: 5.8%
Sychordia Ltd.: 4.8%
Other stakes:
Credit Suisse First Boston, Creditanstalt, Cyprus-based offshore companies

#461, Tuesday, April 27, 1999

LOMO Rides Fad Into Foreign Markets

By Anna Shcherbakova
STAFF WRITER

St. Petersburg's manufacturer of optical equipment, LOMO, is slowly moving out of the doldrums of the creaking Russian economy to take advantage of the decade's zeitgeist: Updated management and movement into the global market has brought international name recognition, while the company's clanking, Soviet-era camera has become a cultural target of the '90s obsession with all things retro.

LOMO - which stands for the Leningrad Optical Mechanical Organization - saw sales of its products in the United States reach $300,000 last year via its distributor, LOMO-America, while sales in 1999 are expected to hit $3 million.

The origin of the company's success lies in decisions made a few years ago to overhaul the entire management structure with the help of consultancy firm McKinsey & Co. This was coupled to a move away from unlucrative and unreliable government contracts toward exports, which now account for more than 40 percent of production - and counting. The workforce has been cut from 22,000 in 1993 to 6,500, unprofitable sections of the business sold or closed down, and the company has built up an efficient marketing body.

After 1997, when LOMO won a $1 million tender from the World Bank to supply microscopes to Russian hospitals and clinics, the organization has been actively seeking other international tenders.

"We only earn real money from exports," said LOMO spokesman Lazar Zalmanov. "Targeting foreign markets is one of the company's leading strategies, [since] domestic partners mostly pay by barter."

The majority of exported goods consist of "special production," a euphemism for products with military applications; LOMO sells such goods abroad via state arms dealer Rosvooruzhiye, while it is also known to supply Russia's space program with optical systems. But sales on the civilian market have consistently reached $3 million over the last few years - and this owes a great deal to the activities of a group of Austrian students, who in 1992 discovered the LOMO Compact camera in a Prague flea market.

This heavy, low-tech camera - with a glass lens, no flash or zoom and no automatic shutter - took imperfect but "artsy" pictures that had the students so hooked they formed the Lomographic Society, which now boasts 50,000 members - amongst whom, the students claim, are numbered such diverse figures as Yasser Arafat, Brian Eno and the pop group Pulp.

The society has organized exhibitions of the camera's work all over the world, and the Third Lomographic World Congress is being planned for October this year, to be held in New York. In 1997, the LOMO Compact was responsible for 16 percent of export revenue, or $400,000.

"It's retro, it's a philosophy, it's a new design of international quality, it's trendy," said Wolfgang Stranzinger, one of the founders of the society.

But not everything is rosy for LOMO. Zalmanov said that last year could not be counted as very successful for the company, when revenues totaled 262.5 million rubles. Although sales volume increased by 19 percent, LOMO reported a loss of 55.6 million rubles for 1998, owing to the devaluation of the ruble, which made loans more expensive, as well as the failure of an export contract that could have accounted for one third of the factory's output.

In 1998 export sales were 219.8 million rubles (about $8.9 million at Tuesday's Central Bank rate), of which 99.4 million was made from the sales of "special" or military production. Sales volume of cameras decreased by 12 percent, the company's press department reported.

According to Zalmanov, a $10 million contract was signed with an unspecified country, where political instability made it impossible to purchase the goods from LOMO when they were ready. As a result, many factory employees did not receive their salaries for as long as six months.

LOMO has also put up the prices for its trendy Compact camera from $18 to $35, because of the low profitability of manufacturing the camera. But this has put the camera beyond the finances of the Lomographic Society, which purchases them for sale abroad.

There are other popular civilian products from LOMO, however. The concept of night-vision scopes for rifles turned into a broader project of manufacturing night-vision binoculars for civilians, giving rise to another trend.