In an article published on October 30, 2006 under the title “Backus y Johnston, Workers of Peru’s Leading Brewery Announce Strike” (see article), the journalist Mariela Jara reported that the Union of Brewery Workers of Backus y Johnston closed the conciliation stage of the negotiations for a new bargaining agreement, and planned to hold a meeting on December 1^st to decide whether or not to call a strike. The meeting was held on that date, as scheduled, and the Union agreed to begin the strike on December 14.

What are the Union’s demands?

Above all, the Union is giving priority to the economic clauses: wage increase, categorization, stability, and wage equalization (workers in the provinces earn less wages for the same task performed by workers in the Lima plants). The Union initially requested a wage increase of 15 soles (US$ 4.66) per day, but it lowered that figure to 7 soles (US$ 2.7) during the course of the negotiations, failing to get the company to improve the 4 soles (US$ 1.24) it has offered from the start.

What situation is the company in?

Today, the self-proclaimed business and financial newspaper of Colombia, La República, features an article reprinted from the New York news agency Bloomberg and entitled “SabMiller to Expand Peru Brewery”, from which we extract the following:

London-based SabMiller Plc (the world's third-biggest brewer) acquired the Peruvian Union de Cervecerias Backus y Johnston SAA in 2004 when it bought Bogota-based Grupo Empresarial Bavaria at 5.6 billion dollars. Now it plans to spend 100 million dollars to expand output at its Peruvian unit by 20 percent to meet rising demand. Backus Chief Executive Robert Priday said in an interview that the aim is to upgrade two of its six Peruvian brewhouses and add more distribution trucks and warehouses. The company expects to complete the expansion by the middle of next year.

A very pleased Priday declared that: “We're more than matching the growth of the total market in the country. Our results in the first half of the year have exceeded our expectations.” Peruvian beer consumption per capita has risen to 28 liters from 21 liters last year, a rise that according to Priday is driven by competition from the Belgian-Brazilian InBev, which built a 40 million dollar brewery outside Lima.

In that competition, Backus increased its net income by half to US$ 24 million in the third quarter, with a 33 percent increase in sales volume. These results are due in part to a cut in beer prices implemented by Backus immediately after InBev opened its brewery.

It’s obvious, then, that SabMiller’s strategy to deal with the competition is to lower costs, and if that means sacrificing the interests, health and life of its workers, it doesn’t give it a second thought. Last Saturday, an outsourced worker suffered a fatal accident at the Lima plant, and that same day a worker lost three fingers at the plant in Trujillo.

According to the Ministry of Labor, companies are not allowed to subcontract production area workers. This provision makes sense as subcontracted workers are not duly trained to work with dangerous machinery. Representatives of the Union and the company will meet tomorrow at the Ministry of Labor to discuss these incidents. It should be noted that the Union had already reported these violations before the accidents occurred.

The Ministry will probably charge the company an almost symbolic fine, and the company’s representatives will approach the family of the deceased worker contritely to offer economic compensation. That will also be a symbolic act, as they should really go to jail, because what they’ve committed is a crime.

From Montevideo, Enildo Iglesias © Rel-UITA December 6, 2006