[Venezuelanalysis.com's Michael Fox argues that Venezuela’s investment in Uruguay has been characteristically different from the free market private investment that President Bush promoted during his recent trip to the country, highlighting a growing debate in Uruguay over its global integration: A la Bush or a la Chávez. --Ed]
Venezuelan Support for Uruguay Provokes Bush-Chavez Debate
By Michael Fox – Venezuelanalysis.com
April 25, 2007
When U.S. President George W. Bush praised the benefits of investment in Latin America during his joint press conference with Uruguayan President Tabaré Vásquez early last month, he was probably not referring to Venezuelan investment. But he could have been. Venezuelan investment in- and integration with -Uruguay has increased heavily under Venezuelan President Hugo Chávez. But Venezuela’s investment in its tiny South American neighbor has been characteristically different from the free market private investment that President Bush was referring to, highlighting a growing debate in Uruguay over its global integration: A la Bush or a la Chávez.
At FUNSA, one of Uruguay’s oldest and most important factories, they are very clear about the difference, especially now.
FUNSA (Fabrica Uruguaya de Neumaticos S.A) was founded in 1935 in the working-class Montevideo neighborhood of Villa Española. A publicly-traded, privately-held corporation for most of its existence, FUNSA spun production from a large 80,000 square meter, six-city block facility. One of Uruguay’s only rubber production plants, FUNSA was considered one of the primary factories in the nation. FUNSA workers now reminisce that during its height, the “monster” of a company employed over 3000, and was actually composed of five or six factories and 25- 30 small business under the one roof, “producing not only tires, but also batteries, bicycle and motorcycle tires, balls, hot water bottles, mattresses and cement.” FUNSA workers, who were well organized in the 1960s under the National Worker’s Union (CNT), now the PIT-CNT, fought and won important concessions such as relatively high salaries and a promise to employ numerous generations of FUNSA workers.
But during the neo-liberal 1990s the plant ran in to trouble. The owners began to close up and sell off each sector at a time, and in 1998, US-based Titan International bought up over 80% of the shares. Titan essentially ran what was left of the mighty FUNSA in to the ground, in a move that FUNSA workers suspected was intent on eliminating Uruguayan competition to expensive imports from the North American corporation. When the economic crisis hit Uruguay in 2002, Titan shut the doors, letting go of the remaining 400 plus workers, and walking away from millions of dollars of debt.
FUNSA workers would not give in. They set up camp in front of the factory, and installed a 24-hour watch against vandals or creditors, that might try to make off with their expensive machinery. In mid 2003, the Uruguayan Bank of the Republic came to appraise the facilities and liquidate the assets, but the workers pushed to run the factory themselves. Finally, after hundreds of days on the watch, the 90 remaining FUNSA workers where allowed entry back in to the plant. They began to clean and refurbish the facilities and machinery which had been at a stand-still since the closure, and which FUNSA workers say was completely ransacked by the bosses and owners just after shutting the doors.
When the Bank of the Republic returned the following year to reappraise the property after nearly 9 months of cleanup- and what FUNSA workers say amounted to a total of 153,000 solidarity hours of work on the part of the 90 employees -the value of the factory had more than doubled to be worth $2.6 million.
FUNSA workers where allowed to take over operation, and FUNSA became FUNSA Uruguay or FUNSAcoop, with the workers at the helm. In mid 2004, FUNSAcoop fired up the machinery for the first time in 20 months and kick-started latex glove production. In April of the following year, the workers spun out their first tires, but taking over the plant also meant taking over responsibility of the business’s millions of dollars of debt. The FUNSA workers’ coop picked up some private investors to join in a 50-50 partnership, but the remaining debt hung over their shoulders.
On January 13, 2006, FUNSA’s prayers were answered with a loan from the Venezuelan government for $280,000 which enabled the cooperative to pay off its creditors and go debt-free in less than three years from re-entering the factory. In exchange, FUNSA agreed to support Venezuela with advice and expertise for two rubber factories in Venezuela (one to produce latex gloves and the other for tires).
FUNSAcoop representatives say that the factory now employees 210 individuals and has a production of 300 tons of tires a month. But that’s not enough. Their goal is to double production as quickly as possible, thereby creating enough jobs to employ all of those that were laid off in 2002. They are expanding slowly, and although they have focused on producing for the internal market, they have begun to export to some of their neighbors. Longtime FUNSA employee and cooperative member, Nestor Rodriquez says that they are in now also in discussions about exporting to Venezuela.
“Venezuela has been very good to us,” says Rodriguez. “[Their support] was very important… so today the machinery is 60% in our hands.”
The cooperative may share ownership of the company with its private investors, 50-50 or 60-40, according to who you talk to, but one of the major organizers in the recuperation of the factory, FUNSAcoop President, Luis Romero, says that the coop manages everything.
“What’s important to us… [is that] we control the administration and we control all of the production. Our workers are at the same time, coordinators, and maintenance engineers.” Says Romero, “If we had 30% [ownership], we would be fine, if everything stayed the same.”
Venezuela’s loan to FUNSAcoop is not the only case of Venezuelan support for Uruguay’s recuperated factories. The same day Venezuela agreed on the FUNSA loan, it also handed over $4.7 million total to Uruguay’s Vicental (formerly Midovers) and Envidrio (formerly Cristalerías del Uruguay) under an agreement between the Venezuelan and Uruguayan governments in Cooperation For the Recuperation of Productive Units (Convenio Marco de Cooperación para la Recuperación de Unidades Productivas).
Venezuela’s former ambassador to Uruguay, Pilar Urbaneja, commented at the time that the agreement was pushing to create new alternative models of social economy.
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