Venezuelan Government Intervenes in Key Food Sector Company

Venezuelan President Hugo Chavez announced on Monday the nationalization of U.S.-based glassmaker Owens-Illinois affiliates, placing 60% of Venezuela’s glass bottle industry under government ownership.

Mérida, October 27th, 2010 ( – Venezuelan President Hugo Chavez announced on Monday the nationalization of U.S.-based glassmaker Owens-Illinois affiliates, placing 60% of Venezuela’s glass bottle industry under government ownership.

Owens Illinois Inc. is the world’s largest glass container manufacturer, employing 22,000 people worldwide and operating facilities in a total of 21 countries, including the Latin American nations of Brazil, Colombia, Ecuador and Peru. The firm has operated in Venezuela for 52 years.

Venezuelan daily El Universal reported that “industry sources” cite the company’s role in Venezuela’s food processing sector – producing bottles for everything from mayonnaise, tomato sauce, juice and wine – as the reason behind the government’s decision to nationalize the firm’s Venezuelan assets.

As he announced the expropriation, Chavez described Owens-Illinois as “a company made up of U.S. capital, with years exploiting workers, destroying [the environment] and taking with it money that belongs to Venezuelans.”

In addition, Chavez called for an environmental damage assessment to be conducted in and around the two glass-production facilities nationalized.

Company & U.S. Response

“We were surprised to learn of this decision and we are prepared to work with government officials to better understand the situation,” stated company spokesperson Stephanie Johnston in response to Chavez’s announcement.

“Our two plants in Venezuela, located in Los Guayos and Valera, employ more than 1,000 people and represent less than 5 percent of our global segment operating profit,” she added.  

According to Reuters, the company’s stock fell nearly 6 percent after Chavez announced the nationalization.

U.S. State Department spokesman Philip Crowley said that, “We [the U.S.] would expect Venezuela to provide prompt, adequate and effective compensation for any expropriation of the investments of Owens-Illinois in accordance with international law or any other private business … present in Venezuela”.

Union Opposition & Government Response

Private press in Venezuela quoted one union representative from the expropriated plant at Los Guayos, Rigoberto Menendez, who suggested that the government’s decision was aimed at the major food distribution company, Polar, which currently purchases 80% of Owens-Illinois Venezuelan glass production.

“If we get the flu, Polar gets pneumonia”, stated Menendez.

Menendez called the expropriation undemocratic. “They are committing an injustice against us. The rules of democracy are that the majority should be listened to and they didn’t consult us at all,” he said.

Speaking to criticisms from Menendez and others opposed to the nationalization, Jaua stated that, “there is no reason for a single worker to be concerned, these are inclusive measures, measures that will expand their rights to participate, expand their rights as workers.”

“The last 10 years have been necessary to accumulate strength, to generate real power, popular power, so as to take measures that serve to confront factors of power that go against the development of the country,” said Venezuelan vice-president Elias Jaua about the nationalization.

Jaua also insisted that the expropriations are in line with the Bolivarian Constitution as they serve to, “democratize Venezuela’s strategic economic and productive sectors.”

Jaua called for worker participation in pro-nationalization rallies schedule for today, reiterating what he called a need, “to mobilize and defend this decision taken by President Chavez to advance the economic and productive revolution that Venezuela needs.”

Food Sector

In recent months, the Venezuelan government has intervened in a number of what it has called “strategic companies” in the food production and processing sector, beginning in May with the nationalization of Sociedad Mercantil Molinos Nacionales, a subsidiary of the Mexican food company Gruma.

One month later, it expropriated Envases Internacional and Aventuy, producers of aluminum and cardboard food packaging products, respectively. On October 3rd, President Chavez announced the nationalization of AgroIsleña, Venezuela’s largest distributor of agricultural inputs, declaring in a written statement that the “Agrarian revolution has only just begun.” 

Comments by Food Minister Carlos Osorio on October 12th triggered speculation in Venezuela as to possible government intervention in Alimentos Polar, the nation’s largest food processing firm.

“Food has gone from being seen as a necessity to being a business. Our revolution establishes that food can not be a commodity,” said Osorio in statements to the press.

Days later, vice-president Jaua spoke to the press regarding nationalizations in the food industry. Jaua affirmed that government interventions were not against the “private” sector, but against “monopolistic elements” of the economy.

“The policy of nationalizations and expropriations, sustained by the National Constitution, is directed at dismantling the monopolistic … apparatus that has control of most of the country’s factors of production,” said Jaua.