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Venezuela to nationalize U.S.-owned bottle manufacturer

President Hugo Chavez, an advocate of socialist economics, announces plans to take over the local unit of Owens-Illinois. A company spokeswoman rejects his charges of environmental damage.

October 27, 2010|By Mery Mogollon and Chris Kraul, Los Angeles Times

Reporting from Caracas, Venezuela, and Bogota, — Charging U.S. bottle manufacturer Owens- Illinois with worker exploitation and environmental damage, Venezuelan President Hugo Chavez has announced plans to confiscate the local unit of the company, the 200th nationalization of a private firm this year.

The seizure comes as Venezuela suffers through a sinking economy and the continent's highest inflation rate. Some experts blame the conditions in part on the inefficiency caused by Chavez's takeovers of private industry, an element of his so-called 21st century socialism program.

The American company said Wednesday that it soon expected to be formally served with a takeover notice, and that it would include the effect of losing its 50-year-old Venezuelan operation in its report to shareholders on third-quarter financial results due out late Wednesday.

State Department spokesman Philip J. Crowley said Tuesday that the U.S. government was waiting to see what concrete action Chavez takes. If a takeover happens, he said, the company was due "effective, adequate and rapid" compensation for its property.

Reached at corporate headquarters in Perrysburg, Ohio, Owens-Illinois spokeswoman Stephanie Johnston said the company rejected Chavez's charges of environmental damage, saying it had received four government commendations for its policies this year.

She added that her company, which operates two factories in Valera and Los Guayos that together employ about 1,050 people, was aware of the "dynamics" behind the nationalizations. Nonetheless, she said, the firm was surprised by Chavez's announcement and learned of it via TV reports.

"Our main concern at the moment is the safety of our workers," Johnston said.

The glass container manufacturer has more than 22,000 employees in 21 countries, according to its website.

In a TV interview Tuesday, Carlos Larrazabal, head of Venezuela's largest industry association, Conindustria, said 131 companies were seized last year, not including small farms and agribusinesses taken over by the agency in charge of land redistribution.

Chavez has long been an advocate of socialist economics and a critic of American foreign policy. His nationalizations have included many U.S. telecommunications, energy and oil field service companies, such as units of Cargill and ConocoPhillips. Domestic and foreign-owned food companies have been a special target, as Chavez has blamed them for double-digit inflation in food prices and the scarcity of many items.

This month, Chavez ordered the seizure of Agroislena, which with 82 outlets is one of the largest distributors of farm products in Venezuela.

In interviews with a Valera newspaper, Owens-Illinois workers expressed concern over the uncertainty created by the takeover.

"Taking this decision, they are alleging we are exploited, mistreated and that we work under insecure conditions," said one worker who requested anonymity. "Nothing could be farther from the truth. We don't want to participate in politics. We want to work and that's it."

Owens-Illinois' largest customer in Venezuela is Empresas Polar, a leading beverage and food producer whose owners have criticized Chavez's policies. This year Chavez, who has been in office since 1999, announced plans to seize a Pepsi bottling operation in Barquisimeto owned by Polar and build housing there.

Venezuela's economy is expected to shrink 2% or more this year, while the rest of Latin America is enjoying better times, with 4% regional expansion projected by some economists. Inflation in Venezuela has run at 30% or more this year.

Special correspondents Mogollon reported from Caracas and Kraul from Bogota.

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