The Government issued today a decree expropriating Venepal, the paper and paper product company that went under about two months ago, declaring itself in bankruptcy. The company went under for a variety of reasons, heavy debt, high inflation, untimely management decisions, strong competition and many others.
But Venepal also had a chance to recover in the last three years and the irresponsible action of some MVR Deputies hampered this possibility. Basically, the company decided to shut down some plants that were no longer competitive, as the currency was devalued and the company could begin exporting again, particularly to the countries in the Andean Pact. However, some members of the National Assembly began threatening the company with expropriation if they shutdown those plants, saying the workers would take them over.
In the end the company, whose stock traded in the Caracas Stock Exchange, did not survive, declaring bankruptcy two months ago. It is unclear what the expropriation means. Will those that lent money to Venepal be paid liquidation value? Or will the Government simply take it over and let the former workers of the company run it?
Whichever the case may be, it is not an easy task to revive the company. While it is true that the company had too much debt and will come out of the bankruptcy proceedings without any, it is not clear whether the former workers have the management expertise to run it. Moreover, it is unclear how the company will even find temporary financing for its daily activities, particularly if the Government pays no compensation to Venepal’s debt holders. Finally, the company will face very strong competition from Manpa, one of Venezuela’s best managed industrial company, which has done well in both good and bad times and may have been one of Venepal’s main problems.
I found it so naïve when I read the interview with the former President of the National Assembly today, where he says about Manpa: “We have to investigate; Manpa is a monopoly and one of the things the Constitution establishes is that we are against monopolies. A company can not have a monopoly in a product or sector because it does what it wants. We are going to refloat Venepal so that there is competition between the two companies.”
The Venezuelan Government should be proud of the Manpa oligarchs, who have been smart, aggressive, realistic and worked hard. Instead they view Manpa as the enemy which they plan to defeat, as if the last few years of Manpa’s success were shear luck. I place my bets of Manpa’s side. (I own some of its stock) They have the experience, the management and the know how, they have proven it. I am sure a worker-owned Venepal will be another failed Government experiment that will in the end be paid by all Venezuelans, rich and poor alike.