Shebeen al-Kom revisited

Adding to my previous posting about the Shebeen al-Kom strike, there is another important dimension to this conflict which hasn't been brought up in any of the news reports so far, related to the international nature of the world economy. While the Shebeen al-Kom factory is making losses, and Indorama is using this as an excuse to cut back on salaries and incentives, how about the mother company? While the Sheeben factory has reportedly made losses of 69 million Egyptian pounds over the past two years, in August 2008 Indorama commissioned "a brand new state-of-the-art compact yarn spinning plant of 26,000 spindles" in Indonesia, and announced an investment of 4 billion rupees (roughly 400 million Egyptian pounds) in a new manufacturing plant in India. Just a few days ago, it was reported that Indorama is establishing "the world's biggest fertiliser complex within its premises at Eleme, River State [Nigeria] at a cost of $2.5 billion."

So, even if Indorama is making losses in Shebeen al-Kom, we are clearly not talking about a company on the verge of bancruptcy. And the refusal to pay the workers their full bonuses is not a necessary temporary measure, but part of a long term strategy - employed by most post-privatization companies in Egypt - to turn losses into profits by cutting back salaries.

Another important element of this strategy is the attempts to push older workers into early retirement, while employing new workers at lower salaries and on temporary contracts. Two of the workers I spoke to at the factory said their monthly salary was 500 and 200 pounds after 20 and 2 years at the factory respectively. Paying older workers relatively large one-time sums to accept retirement and replacing them with younger workers can thus be very profitable, especially if the latter are employed on temporary contracts or as day-labourers. This introduces "flexibility" and also excempts them from a number of bonuses and benefits that only applies to workers with fixed employment contracts. Besides those advantages, the use of temporary contracts also makes it harder for the workers to organize. Building an independent union is very hard when the company can get rid of any activist simply by refusing to renew his employment contract.

This brings us to the "conspiracy theories." The allegations of workers that the management is deliberately creating losses may sound absurd. But first of all, it's very unlikely that Indorama expected they would make profits in Shebeen immediately after taking over the factory. They wouldn't have bought the factory if they weren't prepared to sustain some losses during a period of "restructuring," and the 69 million EGP they reportedly lost in two years looks like a relatively small sum compared to the huge investments the mother company made recently. And if the owners are convinced that they cannot make satisfying profits in Shebeen el-Kom in the long run unless they can reduce wages dramatically, it makes perfect sense for them to overstate the losses (for example by buying used machinery from other branches of the company at inflated prices which means the money stays "within the family") in order to have an excuse to fire workers and cut back wages. As anyone remotely familiar with the inner workings of international capitalism would probably acknowledge, this is not a conspiracy but common practice. Then again, this just confirms that being rational is not necessarily the same as being moral...