Thursday, August 04, 2005
I don't generally post full articles without commentary but for this one from yesterdays New York Times I'll make an exception. It gives a good overview of the attempt to introduce worker co-management in Venezuela:
Making a Place for Blue Collars in the Boardroom
By BRIAN ELLSWORTH
PUERTO ORDAZ, Venezuela - For 20 years, Pedro Gómez felt like he was just part of the machinery at his job at Aluminio del Caroní, a state-owned aluminum company in an industrial zone where the Caroní and Orinoco Rivers converge in southeastern Venezuela.
Mr. Gómez, 51, a casting table operator who shovels molten aluminum down a channel from an industrial oven into a cast that makes 12-foot billets, says management never listened to his complaints about corrupt contractors or bad equipment.
But things have changed. Management is now heeding his request for a new casting table, he said, and will even allow him to help determine the company's 2006 budget. This April, he was permitted to vote along with the company's other 2,700 workers to elect some of Alcasa's 19 managers and 2 of its 5 corporate directors. Most of the candidates were drawn from the rank and file.
"The managers and the workers are running this business together," Mr. Gómez said above the din of rumbling forklifts and humming industrial fans, sweat dripping down his face from the heat of the casting house. "It gives us new motivation to work hard."
While worker-managed businesses have been the dream of the world's socialists, in Venezuela they may become a reality. Using tottering companies as the entry point, Venezuela is offering financial incentives in exchange for carrying out "co-management," in which workers are decision makers, in some cases even owners, of businesses across the country. The plan essentially casts the state in the role of rescuer. Four state-owned companies - another aluminum plant besides Alcasa, a coal plant and a power plant - have begun the programs. But incentives like cheap credit and debt write-downs from the government have also enticed more than 100 private, small and medium-size companies to adopt worker management models. Twenty-three of those have agreed to hand over between 10 percent and 49 percent of their shares to employees.
Driving the campaign is President Hugo Chávez, who has promised to reverse the historical dominance of Venezuela's $64 billion oil industry over the economy by revitalizing sectors like textiles and paper, reducing reliance on imports and creating jobs at the same time - a task he says he believes is best left to workers.
The worker management campaign comes as Mr. Chávez has embraced socialism in a political project that promises to roll back the free-market policies begun in Latin America throughout the 1990's.
"This is a new organizational culture," says Alcasa's president, Carlos Lanz, 62, a Marxist former guerrilla with no background in aluminum who most recently developed educational programs in rural Venezuela. "The workers are operating as a collective rather than receiving orders from a group of experts."
Despite the enthusiasm of Alcasa's workers, the company's balance sheet leaves little room for optimism. Alcasa has lost money for years, posting $90 million in red ink in 2004, and this year's budget indicates the company could lose as much as $59 million as outdated technology and foreign competition continue to take a toll. A planned $650 million investment by the Swiss commodities trading company Glencore, aimed at doubling Alcasa's output, was suspended. Instead, the company announced last month the government would provide financing.
Critics say state involvement in co-managed businesses will likely create uncompetitive enterprises, much like the sluggish state-owned companies that survived throughout the 1970's and 1980's on government subsidies.
It is also unlikely to bring about the diversification from oil President Chávez is seeking.
"Since the discovery of oil in Venezuela, businesses have lived from the transfer of oil revenue, but have never produced sustainable economic activity that didn't depend on oil," said Orlando Ochoa, an opposition sympathizer and economist who is a professor at Andrés Bello Catholic University in Caracas. "Chávez is now insisting that co-management can resolve this problem, which is simply naïve."
Indeed, one business from which worker management is notably absent is Venezuela's most profitable company, Petróleos de Venezuela, the state oil giant known as Pdvsa (pronounced pey-dey-VEY-sah), which is still run by corporate executives who removed the two union representatives from the company's board this year. Nonetheless, Pdvsa's character has changed. After a strike in 2002 aimed at ousting President Chávez from power, the company fired almost 20,000 mostly midlevel finance and planning employees and hired more than 15,000 field workers, adding a greater rank-and-file presence. Since the program began this year, the government has spent at least $25 million to revive bankrupt and failing private enterprises. President Chávez has said he would expropriate as many as 700 bankrupt companies and others that are working below capacity.
For instance, the government is preparing to inject around $8 million into Hilandería del Tinaquillo, a textile mill that wove cotton into yarn and cloth until it shut its doors in 1992, felled by cheaper imports. Joseph Mishkin, the Venezuelan owner of the textile plant, is negotiating a joint venture with the government.
"I've been looking for a way to revive that plant for 10 years," said Mr. Mishkin, "and I'm willing to work with anyone that can help make that happen."
But the plan has its critics. One of the most vocal is Teodoro Petkoff, a former planning minister and guerrilla who fought alongside Mr. Lanz, but has criticized many of Mr. Chávez's economic goals as unrealistic.
"Co-management is a potentially fertile idea," Mr. Petkoff wrote in Tal Cual, the newspaper he edits. "But if it is applied in the Tinaquillo style or with the utopian delirium of Alcasa, the result will be a terrible fiasco."
Here at Alcasa, in the industrial city of Puerto Ordaz in Venezuela's sweltering southeastern savannah, Mr. Lanz speaks more comfortably about Latin American currents of Marxism than about aluminum production. Mr. Lanz served seven years in jail for the 1976 abduction of the American glass industry executive, William F. Niehaus, who was held for three and a half years. After weeks of accusations by Mr. Chávez in February that the Bush administration was preparing to invade Venezuela, Mr. Lanz invited military reserves to the factory to prepare workers for an American invasion.
But workers also point to changes in the workplace that they say will make the company run smoother. "I worked here for 15 years and never knew anything about how much the company was producing or what we were spending our money on," said Johnny Viera, 35, a maintenance worker in Alcasa's stamping plant. Mr. Viera and his 300 co-workers participate in roundtables that make recommendations to management, a process that recently allowed him to quickly purchase $5,000 worth of tools.
It is too soon to say what the outcome of the worker management program will be, but workers seem optimistic.
"This is the workers' opportunity to improve this company's performance," said Estalin Orta, 42, a recently elected manager of Alcasa's casting plant, chatting in an air-conditioned office above the din of the manufacturing operations below. "And we've started at a company that has had serious financial problems - so no one can say we took the easy road."