The mirage of Chavez’ workers corporate paradise

June 27, 2006

I usually
donít use swear words in my blog, but a while back when I heard
Hugo Chavez say
that the success of Invepal will determine the future of
corporate coops in Venezuela I said, literally
and precisely:

Oh shit! That program is in real

Last Saturday
more problems in the Invepal coop began to
and the more people speak or say something the clearer it gets that
the whole things is a failure. Workers now refuse to even talk to management
(mostly Government personalities including the Minister pf Labor), the Minister says things are
not as bad
, but there are serious accusations of irregularities, no audited
financial statements and while the Government claims Invepal is making money,
the workers say otherwise.

It was
very difficult to imagine a different ending for such a harebrained scheme as
Invepal. Take a company in trouble that could not survive under knowledgeable management
and give it to the workers, running it with a Board made up of political hacks
and union leaders and try that balancing act! Of course, workers, as happens
everywhere, want more, except that it is not easy to restart a company that
already had problems competing, in a cyclical and very competitive business
under an environment of letís be goody, goody to each other. Add to that nepotism,
perks and financial irregularities and what you had was simply a time bomb, as
the last few days have shown.

In fact, the
unions never broke conversations with the previous “mean” and “oligarchic” management
the way they have done with the Government, which is simply rejecting the statements
by union leaders and saying that everything is simply peachy.

But things
are bad
. Invepal not only lacks audited financials, but there are
accusations of graft, nepotism and the Government nor respecting labor union
regulations. Thus, Invepalís workers are fired, when there is a nationwide
firing freeze and union leaders are not given the free time established by law
to attend to union problems.

What is
really happening is what you would expect. In a paper company in trouble like
Invepal, you have to make very tough unbiased decisions, when you are both
owner and manager and union, that is very difficult to do, if not impossible without creating to much friction. Add
to that lack of know how, an ignorant and political Board and anyone would have
realized this was another crazy scheme.

Thus, we
are seeing the same thing that happened during the last oil bonanza of the 70ís,
the state assuming a role that it should have and wasting huge amounts of money on it. It used to be called “La Gran Venezuela”, now it is called a revolution. Same thing, different decade. Expected,
yes, you could read it here,
here or here months
ago in this blog.

The sad
part is that the workers were told they owned the company and now they discover
that they owe the Government the funds for their share of the equity, but on
top of that they have little say in how the company is being run, by whom and
what is done with the cash flow it generates. In the end they own nothing, they have seen no improvement in their salaries, lives or working conditions.

exactly a workerís paradise.

In a few
months you will hear similar problems coming out of Inveval (Valve coop) or
Invetex (textile coop). The Government chose as pilots for their infamous ďcongestionĒ
or shared management three companies that were closed by their rightful owners
(Inveval and Invetex) because they simply had no future or a third one
(Invepal) that began shutting down facilities in order to try to rescue the
remainder of the company. Unfortunately, the rightful owners never thought politics
would get in the way so much as to force the shutdown of the company, the illegal
expropriation of the company and the rest as they say is simply history.

You canít
improvise and ignore the basic rules of economics and human behavior (Which may be the same in the end!). This is simply Chavez’ invention of a workers corporate paradise which only exists in his imagination. But hey!
Now we are doing the same with failed companies in Uruguay and trying in Brazil, exporting both the the crummy model and the silly revolution!

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