Development & Aid, Economy & Trade, Headlines, Labour, Latin America & the Caribbean

ARGENTINA: Factories Without Bosses – and Without State Support

Marcela Valente

BUENOS AIRES, Nov 29 2004 (IPS) - "We have gas masks, slingshots and stones to defend ourselves," said an employee at a worker-run tile factory in Argentina that is facing the threat of being shut down, because local authorities want the machinery seized to collect on a debt left unpaid by the former owners.

The case of Fasinpat (Fábrica Sin Patrones or Factory Without Bosses) illustrates the total lack of state support for workers who have refused to sit back and watch the factories where they worked for decades deteriorate into huge rundown warehouses with broken windows and rusty machinery peering out from the weeds of a ghost town.

The phenomenon of bankrupt companies being taken over and reopened by their employees began to emerge in Argentina in the second half of the 1990s, but really took off in the wake of the late 2001 economic meltdown.

"We represent 170 companies that maintain jobs for more than 10,000 people," Eduardo Murúa, the president of the National Movement of Recuperated Companies, told IPS.

In late 2001, the financial system collapsed after capital flight left Argentina, Latin America's number three economy, with virtually no foreign currency. Factories stopped producing due to the lack of imported components and parts and the severe contraction of the domestic market.

Over the next two years, more than half of the population of 37 million slid into poverty, and unemployment climbed above the 20 percent mark.

A large number of companies filed for bankruptcy in 2002. But according to Veraz, a private national credit-rating agency, the number of businesses that went under was 75 percent higher in 2003 than in 2002.

In the first 11 months of 2003, 2,680 companies went under in the city of Buenos Aires alone, compared to 1,299 in 2002, reported another credit risk rating agency, Fidelitas.

Against that dismal backdrop, and despite the growing magnitude of the movement through which workers have been salvaging companies and jobs, state support has only been seen in isolated measures, and there is no comprehensive public policy towards the sector, said Murúa.

Since 2003, economic activity has recovered significantly. But many companies continue to face difficulties.

In some districts, the workers running factories that were abandoned by their owners have successfully pressed for statutes and laws, passed by city councils and provincial legislatures, that have enabled them to run the companies legally.

There are also municipal governments that have entered into partnerships with the workers, as in the case of the Zanello factory, which is now Argentina's main exporter of tractors.

In other areas, worker-run factories remain in a sort of legal limbo as court decisions or new legislation have been delayed, making it impossible to formulate long-term plans and projects.

And in some cases, like Fasinpat in the southern Argentine province of Neuquén, authorities have even taken action against the workers.

Up to 2001, the factory was known as Zanón, a leader in the tile industry. But due to poor management, the firm's debt piled up to more than 100 million dollars owed to the provincial government, state-owned banks, and the World Bank, and in 2001 the owners decided to close the factory down.

But 260 of the employees refused to let the company collapse, and continued producing tiles, at 20 percent of the factory's capacity. Shortly afterwards, when the volume of tiles produced had doubled and exporting part of the output began to look like a possibility, the workers called in another 220 former employees.

However, the right-wing provincial government of Governor Jorge Sobisch launched an offensive against the factory, taking legal action to demand repayment of more than three million dollars in debt contracted by Zanón with the provincial government.

According to the latest legal ruling, the debt is to be covered by selling off the machinery with which the workers are manufacturing tiles.

The legal battle has led to five attempts to evict the workers from the plant. But the 480 workers and their families, with the support of several thousand local residents, have blocked every eviction attempt.

In a telephone conversation with IPS, Alejandro López, the secretary of the Fasinpat workers union, said that for three years the workers have been asking the judge handling the case to expropriate the factory on behalf of the state.

Unlike other "recuperated" companies that turn into cooperatives, Fasinpat wants the factory to be nationalised, and run by the workers.

But because the workers realise that a solution of this kind could take time, they would agree to become a cooperative temporarily.

"We have discussed it in assembly," said López. "We are prepared to defend the factory any way we can. We have purchased gas masks, and have slingshots and stones. We have also reinforced the number of guards posted round-the-clock at the edges of the factory grounds, and we have organised a phone network."

Murúa, meanwhile, told IPS about his meeting with President Néstor Kirchner a month ago.

In the meeting, he pressed for the passage of a law that would allow the state to expropriate and nationalise firms that had gone under, in order to give the employees the option of keeping the companies open.

Murúa also asked the centre-left Kirchner for a one-time subsidy payment equivalent to 5,000 dollars per job, which would give the workers access to financing, since the legal vacuum in which companies like Fasinpat are caught up makes it impossible to secure bank loans.

"If we had that capital, we could bring in more employees, and begin to export products," said Murúa, who pointed out that all of the worker-managed companies have prospered. "Sixty percent (of the firms) have taken on more personnel, and in many cases the employees earn more than they did before," he added.

According to Murúa, Kirchner regarded the creation of such a fund as feasible, and ordered the Ministry of Social Action to study the idea. However, the president saw the proposal for new legislation on state expropriation of factories as a much more complicated issue.

"We met 26 days ago. I am counting the days, to see if the government comes through," said the head of the National Movement of Recuperated Companies.

In December 2003, Kirchner had stated that two million dollars would be earmarked for a line of soft credit to be made available to worker-run companies.

The "recuperated" businesses include small and medium-sized metallurgical, textile, food industry, paper, tile and farm machinery factories, bakeries, sugar and rice mills, as well as a growing number of service companies like transport firms, restaurants, schools, hospitals and hotels.

The cases tend to follow the same pattern: the owners of the company stop paying wages and bills, and eventually abandon the heavily indebted firm.

But alerted by the abundant number of similar cases, employees now make preparations to prevent the owners from making off with the machinery and raw materials, and simply wait for the owners to leave before beginning to run the company themselves.

Most of the companies operate as cooperatives, but in some cases they become corporations in which private investors or the state own shares.

At times, the owners who have disappeared show up again, drawn by the resurgence of what was once their company, and try to win it back by invoking their property rights in the courts.

"This is not a passing phenomenon or merely a consequence of the crisis," said Murúa. "The movement of worker-managed businesses will continue to expand and become stronger, even if the economy grows, because unfortunately there are many small companies in trouble that will continue to go under."