4-22-08, 9:52 am

Original source:

Mérida, April 19, 2008 (venezuelanalysis.com) -- The Venezuelan government and Argentine steel company Ternium formed a joint commission in Caracas Thursday to negotiate indemnity for the nationalization of Ternium Sidor, which is controlled by the Argentine conglomerate Techint and is the largest steel company in Latin America.

Meanwhile, the United Steel Industry Workers Union (SUTISS), whose 14-month collective contract dispute led to the company's nationalization on April 9th, initiated collective contract negotiations with the government. Groups from both countries weighed in on the issue in the scope of regional integration efforts.

Techint revealed in a statement Friday that Ternium could maintain 20% participation in the company, while the government acquires a 60% share. Ternium`s stake in Sidor constitutes over a quarter of its total operations worldwide and is worth $2.4 billion according to company receipts, Techint announced.

The Venezuelan Vice President Ramón Carrizalez declared that the government 'comes into negotiations, like we have with several companies...ready to pay what must be paid.'

Techint President Paolo Rocca pleaded with Argentine President Cristina Fernández to 'confront the Venezuelan government in defense of national capital,' but Fernández has not made public statements on the matter.

Former Argentine President Néstor Kirchner had quelled nationalization threats against Techint by Venezuelan President Hugo Chávez in May 2007 by negotiating a deal in which the company promised to prioritize the Venezuelan market.

A transition commission headed by the Venezuelan Minister of Basic Industries and Mining, Rodolfo Sanz, was also formed last week to negotiate the collective labor contract with Sidor workers.

Sanz, who is simultaneously president of Venezuela`s principal state owned mining corporation, assured that the workers will retain their 20% share in Sidor, and that 'Sidor will continue to be a successful company with greater humanism,' while it is 'put at the service of national development.'

SUTISS President José Rodríguez said the workers' salary demands remain the same, and they hope to incorporate Sidor's estimated 9,000 contract workers into the collective contract, a proposal supported by President Chávez, who criticizes Sidor for having cut its permanent work force from 13,000 to 5,000 while it received subsidized inputs from the Venezuelan government.

Sidor workers occupied and shut down the plant directly following the nationalization in order to avoid 'irregulaties' until further notice was received from the government, according to SUTISS President José Rodríguez.

Despite the precautions, however, the management was able to block worker access to the automated production system, which the workers deemed an act of 'sabotage' reminiscent of the paralysis of the computers of the state oil company PDVSA during the management-led strike in late 2002.

'The company alleged that the system was down because of a technical failure,' one worker told the Venezuelan state television station VTV, suspecting that the company used the opportunity to destroy confidential information or harm the system.

Soon after, the workers began deliveries to the national market. Over the weekend exports began again, SUTISS General Secretary Nerio Fuentes told the press.

The National Coordinator of the pro-Chávez National Workers Union (UNT), Orlando Chirino, praised the workers' resilience since the nationalization and said the workers should assume full control of the company by way of a worker control committee 'elected democratically by the workers.'

He also suggested the acts of sabotage by the management were grounds for indemnity to be cancelled and for the money to instead pay for worker salary increases.

The workers are the 'most willing by way of their accumulated collective knowledge, work experience... to defend the company, and protect it from any outside or internal threat and guarantee its security and full functioning,' Chirino advocated.

However, the Workers Federation of the State of Bolívar expressed concern that Sidor's 10,500 ex-workers, who are now class B stockholders in the company, will be negatively affected by the nationalization, since company stocks dropped 10.37% in New York following the nationalization, according to the Venezuelan daily El Universal.

Also, the Argentine Metallurgy Workers Union complained in a letter to Chávez that the nationalization was a 'regional undertaking' that will make them less competitive in their national market.

The letter made explicit reference to MERCOSUR, a South American economic integration initiative in which Venezuela aspires to become a member, urging that Chávez 'take the necessary measures so that this experience of Latin American integration is not frustrated.'

This sentiment was echoed by the association of the most powerful Argentine industries, the Industrial Union of Argentina (UIA), which announced in official statements that 'the integration of Venezuela as a partner in MERCOSUR requires, without a doubt, respect toward reciprocal investments, and moreover the promotion of projects of complementary production.'

The UIA also called Ternium Sidor a 'project that materializes in a successful way the integration among Argentina, Brazil, and Venezuela,' and said the nationalization would have a negative affect on this trend.

However, in the opinion of Mario Bragachini, a specialist from the Agricultural Technology Institute, a consulting firm that has worked with the Venezuelan government, the nationalization of Sidor will not affect investments by Argentine agricultural firms in Venezuela because there is such a strong demand and supply relationship between the two countries.

In the past two years, 40 Argentine enterprises exported $100 million in machinery to Venezuela, and in February Chávez invited a group of Argentine companies to explore potential investment deals to help Venezuela promote its agricultural sector to combat food price inflation, according to El Universal.

In the wake of the nationalization, some Argentine firms announced their investments in Venezuela would proceed as usual, while others said they would 'think a little more' and called the nationalization 'an alarm,' according to the Argentine daily La Nación.

Alejandro Uzcátegui, president of Entrepreneurs for Venezuela, a Venezuelan non-profit association of small and medium size enterprises, supported the nationalization, and asked that negotiations allow benefits to the small and medium enterprises involved in the iron and steel supply chain to continue.

Early last week, the World Union Federation pledged its support for the nationalization and its solidarity with SUTISS workers.

'As an international union movement, we feel proud that in Venezuela there are combative unions that defend their class interests but also their national interests,' General Subsecretary Valentín Pacho told Venezuelan alternative media sources. The Argentine Communist Party also manifested its support for the nationalization, which 'is inscribed in the logic of recuperation of natural and industrial resources that are strategic for the development of Socialism of the 21st Century,' according to the General Secretary of the party, Iván Piñiero.

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