Occupied Factories, Expropriation, and Workers’ Cooperatives

Dario Azzellini

At the end of July 2005, Hugo Chávez announced on his TV program Aló Presidente that 136 closed Venezuelan factories were to be evaluated for possible expropriation. “The existence of closed factories goes against the national constitution. It’s just like land lying fallow,” said Chávez. The announcement took place at the inauguration of the Unión Cooperativa Agroindustrial del Cacao, a factory that had been closed for nine years until, with a government loan, it was bought by its workers. The cocoa-producing cooperative is an example of the new “factories of social production” (Empresas de Producción Sociales) that, according to Chávez, represent the focus of an “economic turn in the direction of socialism in the twenty-first century.”

Chávez read out numerous lists—of factories that are already undergoing expropriation, of the 136 factories where expropriation is being considered, of firms that have partially or completely stopped work—representing 1,149 firms in all. In addition, he encouraged people to report any other closed factories. As one of his many examples, Chávez mentioned a fish-processing and packing plant in the Guanta ports, near Purto La Cruz, that had all the necessary equipment to be active, but that was closed all the same. “If the proprietors don’t want to open it, we’ll have to expropriate it, and re-open it ourselves,” said the president.

Title III, Chapter VII, Article 115 of the constitution of the Bolivarian Republic of Venezuela permits expropriation by the state in certain cases:

“The right of property is guaranteed. Every person has the right to the use, enjoyment, consumption, and disposal of his or her goods. Property shall be subject to such contributions, restrictions, and obligations as may be established by law to be in the service of the public or general interest. The expropriation of any kind of property may only be declared for reasons of public benefit or social interest by legally binding judgment, and upon timely payment of a just compensation.”

Although the constitution has been in force since 2000, before September 2005 there had been only two cases of expropriations being successfully concluded: the paper factory Venepal, in January 2005, and at the end of April, the Constructora Nacional de Válvulas (CNV), a factory that manufactures valves for the oil industry. In July 2005 the government began to direct its attention towards the situation of closed factories. When, at the end of September, the National Assembly declared the sugar cane–processing company Cumanacoa and the crude oil producer Sidoroca to be firms “of social interest” and initiated their expropriation, Cumanacoa had already been occupied by employees for more than two months. In the preceding years the factory had gradually reduced its capacities by 80 percent. At the same time, it often paid its employees less than the minimum wage and sometimes, as in colonial times, in sacks of sugar cane. Finally, the employees decided to occupy the plant. Sidororca, on the other hand, had stood still for many years.

The minister of labor, María Cristina Iglesias, had called upon trade unions, workers, and former employees to “take back” the enterprises named by Chávez, because only in this way could Venezuela’s state of dependence be overcome. The National Union of Workers (UNT) declared it would support the government’s actions. Marcela Máspero, of the UNT’s coordination committee, announced that, according to the UNT’s investigations, there were 700 inoperative firms in Venezuela, 30 percent of those in the food and drink sector. According to the UNT, 7,000 new jobs could be created through the activation of the food factories alone; 700 factories would mean around 20,000 jobs. The UNT intends to take a petition to the National Assembly calling for the recognition of a “general public interest,” which would enable the 700 factories to be expropriated and reactivated by the workers in collective administration.

The UNT also reported, in mid-September, that they intended to occupy the 700 closed factories. Among them are the plants of the transnational corporations Parmalat and Heinz. “In view of neoliberalism and capitalism’s offensives, we will make use of the mechanism of the workers to occupy these factories, together with the communities,” said Máspero. At the time of this writing, eight factories have been occupied; they include some silos belonging to the Venezuelan group Polar, a Heinz tomato-processing factory, and two production plants belonging to Parmalat, the Italian food and drink multinational that recently collapsed due to murky financial dealings. “First we occupy, and then we solve questions of ownership, because there is always good ground for the occupations,” Máspero said.

Máspero offered the case of the corn-processing factory Promabrasa, occupied in September 2005, as an example. According to reports, the workers hadn’t been paid at all for more than six months. At the beginning of September, after workers had taken over the running of the factory, the army occupied a number of the grain silos in Promabasa belonging to Venezuela’s largest food and drink manufacturer, Alimentos Polar.Antonio Albarran, minister of agriculture, demanded that Polar both pay the producers a fair price and lower the cost of flour for the poor. According to a parliamentary investigation committee, Polar bought up the factory years ago as part of their plan to eliminate any competition in the sector and gain a monopoly over the Venezuelan market. Polar closed the site, which contains grain silos, a plant for the production of maize flour, and another for the production of corn oil, and relocated some of the machinery to Colombia. The processed maize products were then exported from Colombia back to Venezuela and sold over Polar’s distribution network. Eventually, at the end of September, the governor of the state of Barina, Hugo de los Reyes Chávez, the president’s father, expropriated the plant by decree, and its former owners were compensated at market value. The plant, according to the model of cogestión, is to be handed over as soon as possible to the cooperative Maiceros de la Revolución, which consists offormer employees.

The inactive factory in the state of Monagas, on the other hand, was first occupied by former employees and then seized by the state for examination. The factory belonged to Alimentos Heinz, the Venezuelan subcorporation of the ketchup multinational H. H. Heinz Co. Heinz disputed that the factory had been abandoned; it was just no longer profitable, and was therefore about to be put up for sale. A spokesperson for the company described the actions of the Venezuelan government as “infringing on ownership rights and free trade.” In another declaration, Heinz stated that the factories had to be closed temporarily because rural suppliers hadn’t been able to fulfil their commitments.

The Venezuelan minister of agriculture alleged that, although 80 percent of the factory belonged to the workers, Heinz had illegally acquired it in 1996, and it had been closed since then. The cattle breeders and agricultural union Congafan, which has close ties to the government, approved this evaluation and called the closure on Heinz’s part “criminal” for the damage it had caused the tomato producers in the surrounding area. Meanwhile, the industrial union Conindustria, which is aligned with the opposition party, condemned the government’s actions. Eventually Heinz and the Venezuelan state agreed on a price and the state bought the factory.

The cases of the paper factory Venepal and the valve factory CNV work as models for the way in which factories should be expropriated. In both, factories workers’ cooperatives were instituted; 51 percent of each factory is state-owned and 49 percent is under the ownership of a cooperative that consists of all the employees.

The government’s attempt to increase national production, and above all production in the failing interior market, doesn’t just involve the expropriation or seizure of private factories. For example, cooperatives are also granted interest-free or low-interest loans to buy inactive factories. In September 2005 former employees used a special government loan to buy a cocoa-processing plant that had been shut for nine years—closed, according to Elías Jaua, the minister of the economy, as a consequence of neoliberalism. It was no longer being subsidized by the previous government, and chocolate produced outside of Europe was at that time charged with additional tariffs. The factory’s former (international) owners transferred ownership to a private bank, to which they were in debt. The workers formed a cooperative (Unión Cooperative Agroindustrial del Cacao) that bought the closed factory with a government loan of 4,800 million Bolivar (approx. $2.3 million) at an annual interest rate of only 4 percent (interest on private bank loans is around 26 percent). A time frame of six years was agreed upon for paying back the loan. Small cooperatives, on the other hand, are granted interest-free loans. 1

Partially inactive factories that show signs of being in financial straits are also being offered state support. Through a special program, employers who reactivate businesses or create new jobs have access to favourable loans, provided they set up a workers’ cooperative that concedes a share of the factory’s administration, direction, and profits to the workers. According to the minister of labour, María Cristina Iglesias, in 155 of these factories an agreement between workers and employers in the form of a “workers’ cooperative” has already been instituted.

The concept of the “workers’ co-management” (cogestión), as it is laid out in the new constitution, is based on social citizenship and social equality as a means of achieving social order (with the state as guarantor). The models for cogestión that are being discussed within the scope of a “participatory and protagonistic democracy”—that is, the state as a participative space in which, by diverse means, the population contributes to the structuring of public life and the regulation of institutions—are diverse, because until now cogestión had no legal basis. Since the beginning of 2005, workers’ co-management starts being introduced in state companies, and reaches in some cases —for example at the aluminium factories ALCASA— as far as the election of section directors in the workers’ assembly. Workers’ participation is being accelerated by the individual unions of the UNT. All these expropriated factories must act correspondingly, in view of social interests at large: ten percent of their profits must be transferred into a local development fund for the community in which they are situated. With offers of loans under special conditions and specific requirements—the institution of a workers’ co-management, among others—the government is trying to induce private businesses, as well, to adopt a model of cogestión.

Translated from German by Emily Speers Mears.

1 “Chávez anuncia expropiaciones de empresas cerradas,” www.rebelion.org, July 27, 2005.