2002 June 30
OWTU SAYS: DO NOT SELL YOUR TCL SHARES!
TCL’s local shareholders will do themselves a great disservice and adversely affect the development of both our local and regional capital markets if they sell their shares to CEMEX.
The Oilfields Workers’ Trade Union condemns the position taken by Minister Key Valley on the CEMEX take-over bid to be inimical to the interests of the local TCL shareholder and the workers at Trinidad Cement Limited, ARAWAK Cement in Barbados and Carib Cement in Jamaica.
A 100% take-over by CEMEX will bring only an immediate quick buck to shareholders in a financial environment in which there is already high liquidity and cheap funds. It is the medium to longer-term adverse consequences of an oligopolistic CEMEX ownership and control that must concern the government and the national community. The OWTU insists that the shares held by Pension Plans, Credit Unions and Co-operatives, the Unit Trust Corporation, the National Insurance Board, the E.S.O.P. and other Trustees on behalf of workers and other ordinary citizens must not be sold.
And contrary to the reported expressions by the Junior Minister of Finance, it is the responsibility of the government to protect local industry, shareholders and workers from the international sharks in the waters of the free market system.
CEMEX has recently bought out cement plants in Panama, Puerto Rico and the Dominican Republic. It wishes to remove the small competition that TCL has struggled to establish in the Caricom Market. CEMEX is the world’s second largest producer of cement.
Its recent acquisition of the Dominican cement operations, the tremendous capacity that it now owns and the cheap labour that it employs ($2 [US] per day) will present it with all the obvious opportunities to close the Jamaica, Barbados and Trinidad operations and thereafter reduce us to the status of importer and distributor of the product.
When TCL was privatized in 1988 and had $200m worth of debt forgiven, it could not have been and was not with the intention to once more pass it to the absolute control of the foreign private sector. It was precisely to avoid this that the then government held ‘A GOLDEN SHARE’ of some 29.5%. TCL was considered to be of strategic importance to our local and Caricom development.
TCL has grown since then, with hard work and sacrifice, into an efficient well run and enviable Caribbean enterprise providing good terms and conditions of employment for its workers and reasonable returns to its shareholders. We have worked and struggled too hard to surrender now.
DO NOT CUT YOUR NOSE TO SPOIL YOUR FACE! SAVE TCL FROM THE SHARKS! HOLD ON TO YOUR SHARES! LET OUR ‘ONE CARIBBEAN, ONE COMPANY’ PHILOSOPHY BECOME A CONCRETE REALITY!
The OWTU demands that the government intervenes to protect shareholders’, the workers’ and the national interest.
2002 June 30
BY DAVID ABDULAH
The announcement this week by giant Mexican cement multinational, Cemex, that it intends to buy out the entire shareholding of Trinidad Cement Ltd. is its second attempt at controlling the regional cement market. Earlier this year Cemex made its first move, but it was somewhat clumsy and when the TCL Board exposed the takeover bid, Cemex withdrew – but this was only a tactical retreat.
This second attempt is the really serious one. Being a huge corporation (Cemex is the world’s second largest cement producer) it can easily make lucrative offers for the purchase of the 80% of TCL’s shares that it does not own. It is to be noted that sometime after TCL was privatized and its shares listed on the local stock exchange Cemex was virtually invited to buy into TCL to the maximum of 20% and this was seen as a means of obtaining a "strategic partner". At the same time the government naively (or is that stupidly) gave up its "golden share" through which it could exercise a veto over any major decision including the possibility of other shareholders agreeing to what, in effect would be a takeover bid by a "predator".
Well, as anyone who has observed the process of acquisitions, takeovers and mergers that has been a characteristic of neo-liberal globalisation would know, most "strategic partners" end up being nothing more than "Trojan Horses". Once let in through the front door, they quietly bide their time, develop all the information they require and then make their move and gobble up their erstwhile "partner". It’s a ruthless, cut-throat business, is this so-called liberalized competitive environment.
And all those who believed that economic liberalization and privatization was about having competition and many producers are suddenly waking up to the realization that the process is really about the greater and greater concentration of the ownership and control of capital. Put another way, the sharks are eating the sardines and whatever the sardines used to eat have become extinct. In every major economic sector energy, airlines, telecommunications, information and entertainment, automobiles, financial services, one can see this process of the concentration of capital. And the cement industry is no different.
So we, quite shortsightedly, invited Trojan Horse Cemex into TCL and we are now faced with the reality of a takeover bid. Now it may appear to some that Cemex has offered a "good" price for the 80% of TCL shares that it wants to buy. The price offer is $7.15 per share, considerably above the $5+ per share that TCL shares traded for at the start of the week. But really, this is precisely the problem with Trojan Horses like Cemex. For a global giant, $7.15 is chicken feed. In US $ terms that is just over $1 US, and no shares in the US market trade for such a low price (except companies that have gone bust like Enron and now Worldcom).
So Cemex feels that it can come here and offer local shareholders a price that we can’t refuse, since some of us will be so gullible that we will simply take some personal profits and to hell with the consequences. Will this be the case, or will we see a rallying of the national and regional spirit?
TCL, after all, is not an insignificant regional corporation. It owns 100% of the Arawak Cement Company in Barbados, 75% of the Caribbean Cement Company in Jamaica, 75% of Readymix WI Ltd, 80% of Trinidad Packaging Ltd and 60% of another subsidiary TPM. TCL is therefore the major company in the cement industry in the English speaking region and while small in comparison to Cemex, has been able to obtain the kind of size that would enable it to survive in the region as well as export to both the Caricom and extra-Caricom market.
Cemex had itself made a bid for the Jamaican company, but lost out to TCL. If Cemex succeeds now there is nothing to stop it from closing down the Trinidad and Tobago, Barbados and Jamaica plants and using its huge production capacity in the region (it also owns cement operations in the Dominican Republic with which Caricom, and therefore T&T has a free trade agreement) to supply the entire Caribbean. The fall-out with respect to the loss of jobs, foreign exchange and general business activity would be substantial indeed.
The issue therefore is very much a question of whether we wish to see successful local and regional businesses or not. Do we want to have an entirely foreign owned economy? Do we believe that indigenous business needs to be encouraged and supported? Is domestic capital formation important to our development or not?
Minister Ken Valley obviously prefers totally foreign ownership. He has said that he will quite willingly give Cemex the license it would require for it to purchase more than 305% of TCL’s shares. The Minister’s position is absolutely ludicrous, but, given his past track record on the sale of state assets, is consistently so. Remember that as Minister in the Ministry of Finance responsible for divestment in the 1991-95 Manning government, Mr. Valley oversaw the infamous sale of 49% of T&TEC’s generating assets to Powergen, the sale of BWIA to Acker et al, the sale of the Urea and Methanol companies and 51% of Fertrin to a foreign transnational that then made back its money in less than two years!
This time around the entire country must tell Minister Valley – no way must you grant any license to Cemex. We need to nurture our own businesses and the stock market. As TCL CEO Rollins Betrand has pointed out – if Cemex gets through then all the local companies listed on the stock market will become fair game for total foreign takeovers. If this were to happen what outlets would exist for the safe and profitable investment for the major funds in which reside our national savings such as the NIS, pension funds, mutual funds etc?
The Cemex bid to takeover TCL is another manifestation of the very ugly and negative side of neo-liberal globalisation. It also, however, provides an opportunity for us to test our resolve at building an economy that has a national and regional locus. All the TCL shareholders should take a conscious position - that they reject the short-term profits that a sell-out to Cemex would mean, and hold on to their shares as an investment in our future. We trust that we still have some people who will eschew quick money at any cost, notwithstanding the terrible example set by the politicians who were in office between 1995-2001 and those who were the political investors in their party, and the vacuous-ness of the Minister now responsible for divestment.