AN ADDRESS TO THE NATION
BY ERROL K. MCLEOD
OILFIELDS WORKERS’ TRADE UNION
WE STAND IN DEFENCE OF REGIONALISM, THE INDEPENDENCE AND SUSTAINABLE DEVELOPMENT OF THE CARIBBEAN AND THE DIGNITY OF ITS PEOPLE
Fellow citizens and fellow shareholders of TCL, Good Evening,
I have no doubt that you have been following with great interest the issue of the proposed takeover of Trinidad Cement Ltd by Cemex. It is an issue in which the Oilfields Workers’ Trade Union has a crucial stake, not only as the principal workers’ representative at TCL in Trinidad and Tobago, but even more so, because this issue defines, for us, what type of development we wish for our country and the Caribbean. It’s for this reason that we address you this evening and I do so not just on behalf of the OWTU, but also on behalf of the:
Ø Senior Staff Association of TCL, Trinidad and Tobago
Ø Estate Police Association of Trinidad and Tobago
Ø Barbados Workers’ Union
Ø National Union of Public Workers of Barbados
Ø National Workers’ Union of Jamaica
All of whom agreed last week at a meeting here in Trinidad, to form a STRATEGIC ALLIANCE of Caribbean Trade Unions that represent the workers of the TCL Group with the objective of engaging in collective action towards saving the workers’ jobs as well as protecting the interests of our respective countries and of the Caribbean people.
As you know we have unequivocally stated our opposition to the takeover of TCL by Cemex.
This, our considered view, is based on a careful assessment of all the facts as well as our shared vision of the Caribbean and for its development as a region. We are of the very strong view that a takeover of TCL by Cemex would have negative consequences for the workers, the Company, our respective national economies and the development of the regional economy for the following reasons:
(1) There is a very real danger that Cemex would close down the TCL plants and utilize its very substantial capacity in the region to supply those markets that TCL now serves. This is the cold reality of globalisation. Large firms seek to ensure their survival not simply by becoming more competitive. That is the theory. The practice is that success in a market where there is competition is more often than not achieved by the elimination of ones competitors! TCL is Cemex’s competitor in the Caribbean. But being smaller than Cemex means that TCL is a target to be taken over. The old saying that “the big fish eat the small fish and the small fish eat mud” is as valid in the world of corporations as it is in the animal kingdom.
(2) Cemex owns cement capacity of some 80 million tones. It is the second largest cement producer in the world and is aiming to be numero uno. Among other places, it owns plants in Mexico, Costa Rica, Panama, Colombia, Venezuela, has just acquired a plant in the Dominican Republic, is seeking to buy a plant in Puerto Rico and has a terminalling operation in Haiti. The only parts of the Greater Caribbean puzzle that are missing are Cuba and the market controlled by TCL. Cemex wants to control the entire regional market. The implications of such a monopoly producer in the region would be the eventual increase in price and other factors inimical to the interests of consumers.
(3) In spite of all the promises by the representatives of Cemex to the contrary, we wish to state that in our meeting with Mr. Hector Medina, Cemex’s Executive Vice President, Finance and Planning, he stated that he could “give no guarantees on the issue of job security”. This is consistent with his comment given to the April 2002 edition of the “Latin Finance Magazine” as follows: “When Cemex buys a new company, it sends teams of executives to swarm over it looking for savings, efficiency gains and headcount reductions. The company imposes standardization and centralization at every stage of the process to wring maximum savings by reaping economies of scale and tightening controls”.
(4) For the Caribbean to survive in this globalised world, we must seek to strengthen the capacities of our regional firms so that they can better generate growth and produce wealth utilising our natural, physical and human resources. TCL is an excellent example of the type of company that is required if we are to achieve this objective. For TCL to be taken over by Cemex would be to weaken our capacity and to meekly surrender to the forces of globalisation.
(5) One of the strategies that Caricom Heads of Government have collectively agreed upon to counter the forces of globalisation, is the creation of the Caribbean Single Market and Economy (CSME). The CSME is meant to facilitate the growth of regional firms such as TCL as well as build a substantial regional capital market. Publicly traded companies have been encouraged to be listed on all three of the Stock Exchanges (Jamaica, Barbados and Trinidad and Tobago), and firms not now traded are also being encouraged to “go public”. If Cemex were to buy out 100% of TCL then TCL, which is listed on all three Stock Exchanges will be de-listed and Carib Cement, 75% of whose shares are owned by TCL would also be de-listed. This runs counter to the stated Caricom objective of building a regional capital market.
(6) A takeover of TCL by Cemex would also set a precedent, in that many of our major corporations – banks, insurance companies, manufacturing and commercial firms – that are listed on the Stock Exchange could be open to acquisition by large, foreign multinationals. The result would be not only the decimation of the various national capital markets, but the still-birth of the CSME.
(7) TCL is owned by more than 6,000 shareholders. In addition, a substantial number of shares are owned by pension funds, credit unions, mutual funds and the NIB. In this way, hundreds of thousands of ordinary working people in fact have a shareholding in TCL. When TCL does well, they - pensioners, contributors to pension funds and the NIS, credit union members, mutual fund holders – all benefit. If Cemex were to takeover, the only beneficiary of TCL doing well would be Cemex. This is how monopoly capital ownership operates. It is undemocratic and concentrates wealth in the hands of a few.
Having broadly stated our reasons for opposing the takeover of TCL, let me now address some specific concerns that shareholders may have.
We recognize your undoubted concern about shareholder value. After all you bought TCL shares as an investment and you wish to be able to get good returns on that investment. There are, however, several factors that you need to consider. Firstly, is the TT$7.15 price offered by Cemex the best price? In Puerto Rico, for example, Cemex is offering US$35 per share! Is the Puerto Rico operation worth so much more than TCL?
Secondly, your TCL share was trading at just over $5 prior to Cemex’s offer. We know that this is somewhat low, but what are the longer term projections for TCL? It is well known that the cost of expansion of TCL together with the negative impact of ‘dumped’ cement caused TCL’s net profit to fall in 1999. However, in 2001 it was at its highest level ever - $93million! And all projections indicate that TCL will perform very well. This means that your share price should appreciate over time, quite apart from your receiving a decent dividend.
If you simply want to make a quick dollar, then no doubt you can sell your shares at $7.15. But then, where will you reinvest that money? If Cemex were to buy the 80% of TCL’s 250 million shares it now wants, this will pump some $1.5 billion into the financial system. What investments are there to mop up this huge cash injection? The honest answer is –none! The stock market cannot absorb such an amount, the local bond market is flat since the government has reached its borrowing limit, and the banking sector is extremely liquid and therefore any additional cash will depress interest rates even further. The foreign market for stocks is very vulnerable right now as share prices are falling and interest rates are extremely low. Your present rate of return on TCL shares of 14% is therefore better than you can get if you were to sell and then invest elsewhere!
If you are an institutional investor such as a pension fund, insurance plan, credit union or mutual fund you have the added responsibility of being a fiduciary trustee. Not only would the sale of TCL shares prove to be wrong in the short term, it would also be wrong in the long term, since the medium to long term consideration is that TCL is well placed to continue its growth path. If this were not the case, why would Cemex be willing to put out more than US $240 million to buy out TCL?
But let me also say this to the Trustees of all the Pension Plans to which OWTU members belong. This Union is responsible for initiating pension plans for working people in Trinidad and Tobago. Prior to our intervention, private pension plans benefited only expatriate senior staff. The first pension plan for the ordinary worker was negotiated in 1965, and this after a strike by OWTU members at Texaco in 1960. Since then, we have introduced pension plans at many companies and improved them over the years. It cannot be disputed that we are one of the most important stakeholders when it comes to pension plans in Trinidad and Tobago.
As a result of our efforts over the years, the assets of pension plans to which OWTU members belong, now total more than $8 billion, while total assets of all private pension funds in Trinidad and Tobago are in the vicinity of $15 billion! Pension funds represent the largest single source of savings in this country. No financial institution can afford to ignore this fact.
We wish to advise all financial institutions in Trinidad and Tobago that when they act as Trustees of Pension Funds they ought to take the views of the plan members into consideration. Gone are the days when members ceded the power that their pension funds represent to you the owners and managers of capital.
We therefore advise all Trustees that at the TCL EGM on July 29th our position is as follows:
To this end the various Members’ Representatives on the Management Committees of Pension Plans where the OWTU is involved have already communicated this position to the entire Management Committee and to the Trustees. We are very serious about this issue. And we invite other Trade Unions and Members’ Representatives on Pension Plans to take a position similar to that of the OWTU.
Lastly a word to those in Government. We call on Caricom Governments to take a position in support of TCL since this is really a position in defence of the CSME. In this regard we acknowledge the positive approach adopted by the Prime Minister of Barbados.
We therefore issue one last call to the Government of Trinidad and Tobago to alter its position on the Cemex takeover. The Government is in a position to avert a takeover. It must act in the national and regional interest. Governments that act in their national interest are not going contrary to the globalisation process. The US action in defense of its steel, timber and agricultural sectors is ample evidence of this, as is Japan’s and the European Union’s staunch support and protection of their agricultural sectors. We cannot be so naïve or so unrecognizing of our own strategic national and regional interest to simply allow Cemex to walk in here and takeover TCL. We believe that Governments have a responsibility to protect the interests of the working people and all citizens, before anyone else. Charity, after all, must begin at home!
Fellow Citizens, fellow shareholders, TCL is strategically important to the economies of the Caribbean region and the building of the CSME. It is a company in which every Caribbean citizen should have the opportunity to invest. It will grow. It ought to be owned by the broadest possible number of shareholders and not by a monopoly. The takeover by Cemex will have long-term repercussions for the economies of Trinidad & Tobago, Barbados and Jamaica and for the CSME. It will undermine our efforts to build locally owned firms that are creating and distributing wealth. It will weaken the local and regional capital market. Workers employed by the TCL Group will also be the losers. Communities will be affected adversely.
FOR ALL THE ABOVE REASONS, WE SHALL DO EVERYTHING POSSIBLE TO SAVE TCL FROM THE CLUTCHES OF CEMEX!
GOD BLESS YOU AND GOOD NIGHT