October 26

Venezuela's Chávez orders expropriation of Owens Illinois local unit


The wave of seizures continues in Venezuela and the government has a list of companies to be expropriated. On Monday night, it was the turn of the local affiliate of the US-based glassmaker Owens Illinois, the main supplier of glass containers in the country.

Venezuelan President Hugo Chávez ordered in a mandatory radio and television broadcast the expropriation of glass maker Owens-Illinois Venezuela.

According to the Head of State, the US based glass manufacturer "has exploited workers for years and has destroyed the environment in (the state of) Trujillo ... and they have taken away the money of Venezuelans."

The government's sights are set not only on Owens Illinois. The Venezuelan president has already decided the next candidates to be seized. "I have here another little list (of companies) ... but today we will stop (making announcements)" said.

Owens Illinois de Venezuela has two plants that make bottles in the country and its main activity is the production of glass and juice containers, and bottles for energy drinks, soft drinks, beers and alcoholic beverages, several types of food, cosmetics and pharmaceuticals. The giant food manufacturer and supplier Empresas Polar is one of its main clients.

October 27

Owens Illinois surprised to learn of the seizure decision
US company Owens-Illinois Inc., the world's largest producer of glass containers, was "surprised" to learn of the decision made by President Hugo Chávez to expropriate its subsidiary in Venezuela and expressed readiness to cooperate with government officials to understand the reasons.

Owen-Illinois is a leader in the manufacture of glass containers. President Chávez announced the seizure of its Venezuelan affiliate during an official event held on Monday night.

"We were surprised to learn of this decision and we are prepared to work with government officials to better understand the situation," corporate spokeswoman Stephanie Johnston said in an e-mailed statement sent to AFP.

"We remain committed to complying with all laws and regulations," she added.

The company "has been supplying glass for food and beverage containers to meet the needs of the Venezuelan people for more than 50 years" in Venezuela, the statement highlighted.

With two plants in Venezuela, located in Los Guayos and Valera, the company employs more than 1,000 people in the country.

Its turnover represents less than 5 percent the global segment operating profit," the statement added.

Owens-Illinois Inc. is the world's leading glass container maker with more than 22,000 employees in 21 countries, according to its website.

Venezuelan workers reject nationalization of Owen Illinois' local affiliate
The announcement of the expropriation of US-based glass maker Owens Illinois' unit in Venezuela was followed by the presence of National Guard troops in two factories owned by the US bottler.

The presence of troops did not stop the protests of the workers of the US glass manufacturer, who rejected the seizure of the company and said that they would defend their jobs and their collective bargaining agreement.

At Owens-Illinois plant located in Los Guayos, in the central state of Carabobo, Rigoberto Méndez, one of the union leaders of the expropriated company, rejected the Venezuelan president statements according to which the workers of the company were exploited. He also said that the workers of the plant were aware that the nationalization was a threat to the country's giant food and beer conglomerate Empresas Polar.

"If we get a flu, Polar gets pneumonia," Méndez said. The union representative said that in the coming days the workers of the plants would continue the protests against the expropriation of Owens Illinois' local affiliate.

US expects proper compensation for expropriated glass maker
The United States expects Venezuela to properly compensate the US based bottle maker Owens-Illinois after Hugo Chávez's government announced it would expropriate the local affiliate of the firm.

"Statements are one thing. We'll see what actual actions take place," State Department spokesman Philip Crowley told reporters at a press conference. "But we would expect Venezuela to provide prompt, adequate and effective compensation for any expropriation of the investments of Owens-Illinois in accordance with international law."

Government's plans to compensate the US-based company for the expropriation of its assets in Venezuela are unknown.

October 28

Expropriation of Owens Illinois could weaken Venezuelan private sector
The expropriation of the local unit of US bottle manufacturer Owens-Illinois was made official by the Venezuelan government. According to the Official Gazette No. 39,358, dated October 26, 2010, the "forced acquisition" of the US company will allow to "strengthen the public sector's industrial capacity to manufacture glass containers for the Venezuelan people."

Upon the execution of the measure, the Venezuelan State has seized the "movables, real estate and changes and improvements presumably owned" by the company.

The action against Owens Illinois forms part of a "complete set" of nationalizations through which the government seeks to control the food sector, said Luis Vicente León, director of polling firm Datanálisis and economic analyst.

However, in the opinion of León, this strategy poses "huge risks" for end users and for private companies that still survive in the beverage and food production sector. "There is a clear risk that comes mainly from the fact that the State uses its businesses as a political weapon instead of a tool to produce."

The Venezuelan pollster said that companies such as Polar and other large food manufacturers could be adversely affected by a government's refusal to supply glass containers for the purpose of "weakening" their position.

The other threat is to final consumers, León said, because the expropriations carried out so far have worsened the performance of the seized companies. "End users face the biggest risk because nationalizations have deteriorated Venezuela's production capacity."

Local unit of Owens Illinois begins transfer to government's management
US bottle manufacturer Owens Illinois posted on its website a statement explaining that the company was to discuss Venezuelan government's plans to transfer management of the company's two plants in Venezuela to government control. The plants are located in the states of Trujillo and Carabobo.

"In a meeting with the ministry of Science and Technology in Caracas Wednesday evening, Owens-Illinois de Venezuela was informed of the government's plans to transition management of the company's operations to government control. At approximately 9 a.m. today, local time, government officials intend to arrive at O-I's plants in Los Guayos and Valera to begin the transition process. At this time, no agreement has been reached between the government and the company," the firm reported.

"Although we have not reached an agreement with the government, we will comply with the laws and directives we have been given. The safety and well-being of our employees is of the utmost importance to us," said Enrique Machaen, O-I's General Manager in Venezuela. "Glassmaking is a highly specialized, complex and technical industry, and we are concerned by government plans to manage the operations without having the appropriate level of expertise."

October 29

Venamcham makes an appeal to stop seizures
The president of the Venezuelan Chamber of Trade and Industry (Venamcham) Carlos Henrique Blohm, said, apropos the government steps to seize companies, that in order to improve the investment climate there is need to stop confiscation and observe the rule of law.

"Takeovers should stop," he said during the forum "The new law of the insurance activity."

Blohm said that the assets of 46 out of 1,080 members of the organization have been partially or fully seized and 10 businesses only have been indemnified by the Venezuelan State. He added that payable assets amount to USD 20 billion.

"All these processes (seizures) have an impact on investments. The Central Bank numbers already showed downsizing and they will keep on falling down (…) the biggest impact of such a situation is on workers."

The Venezuelan State has 110 industries in the food sector
Venezuelan Minister of Trade Richard Canán visited on Thursday the facilities of Agropatria (former farming company Agroisleña) located in Cagua, state of Aragua. There, he said that the Venezuelan government already has 110 plants agro-industrial plants all over the country.

"The government has built agribusiness plants and has nationalized more than one company which was in an irregular situation. Nowadays we have more than 110 plants selling food for the people," the minister said.

He claimed during his visit that the government has make provision for the plants from the expropriated Spanish farming supply firm Agroisleña to remain operational. Canán added that the rights of workers have been respected during transition from Agroisleña to Agropatria.

In the opinion of the top Venezuelan official, in the 64 Agropatria's agriculture stores work more than 2,500 workers who will be "dignified" by the government because "most of them worked as outsourced employees or were subcontracted by the former owners of Agroisleña."

Business leader fears "strong impact" if Owens-Illinois output sinks
Venezuelan consumers will be harmed in a short time if the production of glass containers manufactured by Owens Illinois, the expropriated US company, decreases, since OI's production meets a significant percentage of the glass-container market for food products in the country, warned the president of the Venezuelan Confederation of industries Conindustria, Carlos Larrazábal.

The business leader has once again rejected the explanation of the government according to which the nationalizations "deal with essential sectors." In his view, seizures just have "shown (government's) inefficiency," Larrazábal said.

"Although the government spends millions of Venezuelan bolivars per day trying to demonstrate that the so-called socialist enterprises are successful, the reality is that it does not make it," Larrazábal said.

Venezuelan business chamber regrets expropriation threats
The Venezuelan Chamber of Food Processing Industries (Cavidea) issued a statement condemning expropriation threats to the food sector. In view of Cavidea, there are no grounds to justify these measures.

According to the business chamber, Venezuelan companies "face a tough competition, including from the own government, which has entered the sector as food producer and manufacturer and currently controls 50 percent of production in some key areas."

"There are no monopolies or oligopolies and no company has the power to set the price and the supply of products in the market."

The business sector reiterated that the food sector is highly regulated. "Prices to buy raw material and to sell the final product are set by the government in the Official Gazette."