Labor Leaders of Venezuela’s Heavy Industries Respond to Electricity-Saving Measures

The Venezuelan government’s measures to reduce national electricity consumption amidst nation-wide shortages and rolling power outages have invoked varied responses from unionists in the basic industries, especially the steel and aluminum sectors.
The Guri dam in Venezuela's Bolivar state (YVKE)

Mérida, January 9th 2010 ( – The Venezuelan government’s measures to reduce national electricity consumption amidst nation-wide shortages and rolling power outages have invoked varied responses from unionists in the basic industries, especially the steel and aluminum sectors.  

Venezuela’s electricity consumption has increased by more than 40% over the last ten years, driven largely by five years of consecutive high economic growth. Meanwhile, the water level at Venezuela’s largest dam, which provides more than 70% of the nation’s electricity, has dropped by an average of 9 centimeters per day since last September, causing a decline in electricity production.

To address the shortage, the government has exchanged millions of incandescent light bulbs for more efficient fluorescent light bulbs in homes and offices across the country, and invested in more than thirty new thermoelectric and hydroelectric facilities in different regions, with the goal of augmenting electricity production by 1,400 megawatts next year.

However, production still falls short of demand, and as a result, the state-owned national electricity company, Corpoelec, has implemented daily power outages to some sections of the country since October.

Last week, the Ministry for Electricity, which was created last month to revamp Corpoelec and solve the electricity crisis, announced its second round of measures to regulate energy consumption by private and public businesses and institutions and reduce the importation of energy inefficient appliances.

The measures included mandatory reductions of between 50 and 500 megawatts for Venezuela’s heavy industries, particularly the largest state-controlled steel and aluminum companies, ALCASA, Venalum, and SIDOR. As a result of the measures, these three companies were forced to shut down significant portions of their production. This came in addition to an estimated 33% decline in production last year driven by a sharp drop in international steel and aluminum prices, lack of machinery upgrades, and other factors. 

Venezuela’s heavy industries are concentrated in the Guyana region of southeastern Bolivar state. These industries consume a large fraction of Venezuela’s overall consumption of 17,000 megawatts. For example, Venezuela’s largest steel plant, SIDOR, has consumed between 800 and 1,000 megawatts of electricity in recent years.

The Measures and the Socialist Guyana Plan

According to the Worker Control Collective, a bloc of aluminum sector unionists, the electricity-saving measures are consistent with the government’s Socialist Guyana Plan to transform Venezuela’s basic industries.

One of the main tenets of the plan is to re-orient the industries away from raw material export and toward manufacturing for the domestic market, thus converting energy-intensive processes such as liquid steel production into less energy-intensive manufacturing.

The Socialist Guyana Plan was drafted last May by a series of working groups composed of more than 2,000 union representatives along with government officials. Venezuela Analysis spoke with Alexis Adarfio, a Worker Control Collective unionist who participated in the working groups, about the recent electricity measures.

Adarfio said the shutting down of raw material-producing sections of ALCASA, Venalum, and SIDOR is the first step in the partial conversion of these companies into manufacturers of materials for Venezuela’s construction, transportation infrastructure, naval, automobile, and surgical equipment industries, among others.

The investments and timetable for this conversion, the regulation of the three private banks that dominate heavy industry financing, and the increase of worker control of management and the re-training of workers, are also part of the Socialist Guyana Plan, Adarfio said.

The main way in which the plan falls short, for now, is that it is limited to the Guyana region, Adarfio said. “What’s happening in the Guyana must be extended to the entire country, to the industrial areas of Aragua, Carabobo, and the capital, and the rest of the economy,” said the union leader.

According to the Worker Control Collective in a recent dispatch posted on the pro-Chavez website Aporrea, those who criticize the government’s electricity-saving measures include managers from state-owned and private companies as well as small union currents “who don’t accept the changes and transformations proposed by the Socialist Guyana Plan.”

For example, SIDOR managers proposed to shut down rebar production for sale on the domestic market, but maintain the production of steel slabs for export. “The opinion of the top management of SIDOR worries us,” Worker Control commented. “This position demonstrates that the interests of the traitor prevail over the interests and needs of the people.”

These “reactionary right-wing groups” are using the electricity rationing as the justification for a “media campaign to discredit the revolutionary process” and to weaken the Socialist Guyana Plan, said the collective.

Critiques of the Measures

Other union leaders have taken a critical stance toward the electricity measures. The president of the steel workers union SUTISS, Jose Luis Hernandez, said the mandatory reductions were double the amount of megawatts that workers expected, and that 80% of SIDOR’s production has been affected.

This has cause “de-motivation and disconcertedness” among the approximately 17,000 union and contract workers at SIDOR, some of whom fear their jobs may be lost, said Hernandez.

Instead of mandating such a large energy reduction in the basic industries while mandating a smaller reduction of between 20% and 30% in shopping centers, for instance, all public and private businesses should share the burden of conserving electricity, said Hernandez.

SUTISS Secretary Froilan Cova said the government has not taken responsibility for its failure to sufficiently invest in electricity production in previous years, when it was known the demand was growing. He said the government’s recent investments in thermoelectric plants built on site for SIDOR are correct, but should have been initiated when they were first suggested in 2001.

In SIDOR’s management, Labor Director Pedro Rondon came out against the measures, saying they “demonstrate the government’s lack of knowledge about the heavy industries and what they mean for regional and national development,” and that they “were decided without knowing the opinion of the unions and the general labor force.”

The steel worker union current Matancera Unit said the measures could lead to increased imports of rebar if the SIDOR management goes through with its plan to cut rebar production while maintaining production of steel slabs for exports, thus increasing the industry’s dependence on foreign firms.

In the aluminum sector, ALCASA unionist Edgar Caldera said, “The government pretends to hide its double inefficiency in the electricity as well as the aluminum sectors.” He encouraged workers to hold a national worker assembly and “unite in defense of our industries and to impede the continued closure of more [production] cells.” Caldera is from the relatively small union current C-CURA (Classist, Unitary, Revolutionary, and Autonomous).

Government authorities, including the head of the Basic Industries Subcommittee of the National Assembly, Angel Marcano, and Minister for Basic Industries and Mining Rodolfo Sanz, visited the Guyana region last week to assure workers that their jobs will not be eliminated.

“The government guarantees the job stability of the workers. We have not fired any workers and we are not going to do so,” said Sanz, who is also in charge of the Venezuelan Guyana Corporation, which is the holding company of SIDOR, ALCASA, and Venalum.