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El Salvador
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The novel of Calvo Conservas
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The Business
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Tuna is the
third most consumed sea product in the world, topped only by shrimp and what
are known as deep-sea fishes. The tuna industry is divided into two large
sectors: fishing (tuna fleet) and processing (canning, freezing and
marketing). The European Union fleet, composed primarily of
Spanish (60 percent) and French (40 percent) ships, catches 500
thousand tons of tuna per year. The Spanish companies, with their tuna
reefer fleets, catch nearly 60 percent in international waters and the rest
through agreements with other countries.
Tuna
accounts for 58 percent (in volume) of the canned products produced in
Spain, having reached a total of 182 thousand tons in the year 2004, at
a value of 518 million euros (some 700 million dollars). In this way,
Spain, with 16.4 percent of global production, has come to occupy the
third place in canned tuna production, topped only by Thailand (19.3
percent) and the United States (16.5).
Ramón Núñez
Gamallo,
in an article published in the financial magazine Revista Galega de
Economía (vol.15, No.1, 2006), noted that the “greatest challenge
[for canning companies] consists in eliminating the restrictions that
exist in resource extraction and trade,” this last one includes, among
other things, tariff payments, and here is where we find our first clue.
According
to the National Association of Canned Good Manufacturers, the
factories installed in Galicia account for more than 70 percent of
canned and semi-preserved fish production in Spain. It is an industry
that is undergoing a swift internationalization process, with Galician
shipyards and fishing, processing and canning companies owning some 35
industrial plants outside of Spain and having more than 50
subsidiaries established in other countries. The two largest canneries in
Galicia -and Spain- in terms of sales volume are Jealsa
and Calvo. In the year 2005, these two companies combined produced
120 thousand tons of canned goods.
Jealsa
In 1958, Jesús Alonso Fernández founded the canning company
that bore his name, and which in 1974 turned into a corporation
called Jesús Alonso S.A. (Jealsa). In 2000, the company
Mare Aperto was formed, as a joint venture with Italy’s
Star. In December 2005, it purchased the fish and shellfish
division of Robinson Crusoe, the largest canning company in
Chile. This is Jealsa’s second business in Latin
America, as it already had a tuna treatment and processing plant
in Guatemala |
Calvo Group
Calvo is a
leading operator in Spain, with 25 percent of the tuna market, and it is
the fourth tuna company in the world, with a turnover of 350 million euros (some
470 million dollars) in 2005. It has two production plants in Galicia,
one in Italy, another in El Salvador, and two in Brazil,
and it had another in Venezuela that closed down in mid 2006. Its
Brazilian subsidiary Gomes da Costa, which it purchased three years ago,
has a 50 percent share of that market, with nearly one hundred thousand euros of
annual turnover. Gomes da Costa has just inaugurated a canning plant for
sardines and tuna in the Southern state of Santa Catarina, where its
fishing, reception and processing complex -considered the largest in Latin
America- is also installed, in the city of Itajaí. This new
factory will allow the company to increase production and exports. Calvo
has a fishing fleet formed by eleven tuna ships, two support vessels and three
merchant ships.
Sell
away!
In October
2006, the Spanish canning industry went into panic. Various press media
announced the possible sale of the Calvo Group to the Thai company
Thai Union, the world’s largest tuna processor, no less. The news
mobilized some unions, the local authorities, and representatives of the
industry, all concerned over the future of what is an emblematic business in the
Spanish market. The situation of a family business turned into a State affair
and, as we will see below, went as far as involving the Royal family. Calvo’s
sale would bring more than a few problems. To begin with, the company is worth
an estimated 300 to 350 million euros, an amount that nobody in Galicia,
and few in Spain, were prepared to pay, and therefore it was
destined to fall into the hands of foreign investors, which would ultimately
benefit from past subsidies granted by the Government to the company. Moreover,
the future of local communities was at stake, as there are 3,000 jobs directly
generated by the company, in a region where employment is scarce.
After several
weeks of meeting after meeting between members of the Calvo family,
Xunta de Galicia authorities, unions, and representatives of the canning
sector, a great announcement was made: “the company stays home.” It’s hard to
know what really happened. Some members of the Calvo family claimed that
the decision to sell the company had been due to the lack of third generation
candidates to replace the second generation that was getting ready to step down.
Others resorted to less convincing arguments, such as the one put forward by
Manuel Calvo García Benavides who said: “we put it on the market to find
out how much it was worth.” Whatever the reason for the announced sale, the
truth is that while turnover was growing, profitability was dropping, so much so
that at the closing of 2006 the Group had lost the not inconsiderable sum of
12.5 million euros. In addition, losses as high as these are hard to swallow for
minority shareholders –22.2 percent of the stock is held by Caixanova,
Caja Castilla-La Mancha, and Caja Burgos-, who were certainly not
likely to be moved by family sentimentalisms.
Lastly, at the
end of 2006, the company’s management was passed down to the third generation of
Calvos, with no greater visible trauma than the dismissal of the till
then general manager, Ramón Calvo Arechavaleta, who despite his last name
is not part of the family. When it closed the first quarter of 2007, the company
was shouting from the rooftops: the net profit for the period stood at 2 million
euros.
Calvo Conservas El Salvador
Labor pains
Calvo
began operating in El Salvador in 2002, with the construction of a tuna
loin processing plant in the locality of La Unión. The president of the
Group, José Luis Calvo, and the Vice President of the Republic, Carlos
Quintanilla Schmidt, were both present at the ceremonial placing of the
foundation stone on April 10 of that year. According to accounts from back then,
José Calvo cried repeatedly during the event, attributing his emotional
state to being from that day on vested in the office of consul to El Salvador
for the autonomous community of Galicia. With respect to the future
factory, he stated that for the country it was simply a new investment, but “for
us it’s like giving birth to a new son,” and this may have also contributed
to move him to tears.
Among other
concepts voiced throughout his long speech, the Vice President cited verbatim
the declarations that another Calvo -in this case Ramón- had made
to the magazine Cinco Días explaining the reasons for the Group’s
success: “…We’ve never had a strike; we don’t know what it is to go to court;
we’ve had the most loyal people working for us for many years. We encourage team
work and continuous training.” What don Ramón forgot to point out was
that for more than half of the 62 years that the company has been in business,
Spain was under the Franco dictatorship, where only the so-called
vertical unions were permitted to operate. These unions were created by
Franco to simultaneously represent the interests of both workers and
management. Is that perhaps the model the Calvos long for?
The right united
Galicia’s
appointment, in 2002, of José Calvo as consul to El Salvador is a
key piece in this puzzle, which ties in with another: On September 20, 2001, the
Xunta de Galicia, in a decision signed by Manuel Fraga Iribarne,
had awarded Carlos Quintanilla Schmidt (as we said, Vice President of
El Salvador) the Galician Silver Medal.
As for the
canning plant, it was finally inaugurated in September 2003 by the then
President of the Republic, Francisco Flores, a member of the ultra
right-wing party National Republican Alliance (ARENA), together with the
President of the Xunta de Galicia, Manuel Fraga Iribarne, a former
Francisco Franco Minister and founder of the also right-wing Popular
Party (PP).
2004
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The National Republican Alliance (ARENA) has governed El
Salvador since 1989. It was formed in 1981 by army major
Roberto D’Aubuisson (1944-1992), founder of the death squads and
considered to be the intellectual perpetrator of the murder of
Monsignor Oscar Arnulfo Romero; his followers and the people who
financed him were members of the oligarchy, the armed forces, and
paramilitary organizations. A reading of ARENA’s bylaws
clearly reveals that its objectives are to maintain social control
through the Armed Forces and economic control through the already
dominating class, namely the financial oligarchy. Politically it can
be defined as a nationalist right-wing party, and in economic
matters, it is neoliberal |
In the year
2004, Calvo El Salvador fired almost 300 women workers because
they held a spontaneous strike to protest against abusive working conditions
(exhausting workdays and no weekly rest in tuna ship unloading tasks) and
the absence of the most basic safety measures: leaks in the refrigeration
system had made several women workers faint, as well as caused a number of
work accidents. These workers also denounced that their bosses and foremen
abused them with insults and foul language.
In March,
Elías Antonio (“Tony”) Saca González was elected
president of the Republic, securing the fourth consecutive presidential
victory for ARENA.
2006
Last year
turned out to be a particularly busy year for Calvo in El Salvador.
On January 25, Tony Saca attended the inauguration of the new tuna
canning plant –with a daily production capacity of 200 thousand cans- in the
port of La Unión, where, according to officers of the Group, six
million dollars were invested and 300 direct jobs were created. When it came
time for the speeches, the President of El Salvador declared that the
Calvo Group “has firmly established itself as a leader of
canned tuna production, expanding globally and carrying the prestige of the
brand, and thus of the good work of Salvadorians, throughout the world.”
He also highlighted that the Group had exported 54 million dollars
worth of products in 2005. As for the new plant, he explained that “it will
bring canned tuna to even more places in the world, which will in turn mean
more jobs,” and that this will be one of the companies that will benefit
with the upcoming entry into force of the FTA with the United
States. He also referred to the social program carried out by the
company for its personnel, which consists of benefits and compensations, “through
which the dedication and efforts that the labor force has shown to date is
acknowledged.” Lastly, he congratulated the Calvo family on
behalf of the government and the people of El Salvador, and urged them to
continue placing their trust in the country, with the assurance that their
business activities are being facilitated by clear rules and a stable
climate for business.
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Elías Antonio Saca
at the inauguration
of
the new Calvo plant |
The then
President of the Group, José Luis Calvo, also gave a speech,
in which he announced that the Corporate Social Responsibility Area would
receive a one million dollar investment -for 2006 alone-, most of which
would be used to implement a social program that includes incentives and
benefits for workers, most notably an increase of the base salary. Not to be
outdone, Miguel Ángel Peñalva, Operations Manager, highlighted the
scholarship program that exists for children of the workers, and said that “to
date we have six people benefiting from a scholarship in the third cycle and
one in the university”. A commendable but meager percentage if we
consider that there are 1,500 people employed. And in case there were any
rebellious unionists in the audience, don José Luis observed that the
“the progress made by the company has been significant, because
four years ago there were only snakes here”
That there are
no longer snakes in the port of La Unión does not mean that every danger
has been done away with, and, in mid 2006, venomous news from the European Union
(EU) started washing ashore. In June 2005, the EU had passed the
Generalized System of Preferences plus (GSP+) applicable to developing
countries who in turn agree to ratify certain international human rights, labor,
environmental and governance conventions. El Salvador fell under the
GSP+ and, thus, a number of products from that country began to be imported
into the EU tariff-free. In the case of tuna, the tariff went from 24
percent to zero.
The EU’s
requirement that El Salvador ratify the ILO conventions is a
hard-to-swallow pill for any party that represents the interests ARENA
represents. The cries of protest rising from the Salvadorian oligarchy could be
heard all the way over in Brussels, and the loudest arguments were that
the ILO has no power to impose obligations on its member states (a
devious argument as the imposition comes from the EU and not the ILO),
and that signing these conventions would preclude any possible development (an
argument used around the world by dictatorships and the right); so they called
for GSP+ to be abandoned “in the name of honor and national dignity”.
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The ILO conventions that had to be ratified by El Salvador were C87 (concerning freedom of association and the right to organize); C98 (concerning the right to organize and bargain collectively); C135 (concerning protection and facilities afforded to workers’ representatives in the company), and C151 concerning the right to organize in public service). |
Showing their
understanding, EU authorities gave El Salvador until December 31,
2006 to ratify the conventions, or else, as of January 1, 2007, the country will
be left out of the GSP+. As the Salvadorian government, headed by Tony
Saca, hesitated to comply with the EU’s requirement, the Calvo
Group decided it was time to step in and help it make a decision. Thus,
in mid June, it organized a meeting with businessmen of the region where it has
its canning plant, and informed them that it was studying the possibility of
moving its business to Nicaragua. The next day, consulted by the press,
Miguel Ángel Peñalva refused to confirm the story, maintaining that there
was no decision in that sense yet, and that the company was waiting on the
outcome of an upcoming meeting with the President of the Republic before it
decided.
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It’s doubtful that Calvo would’ve been able to abandon El
Salvador so easily. Since 1990, a mixed capital corporation
operates in Spain, the Compañía Española de Financiación del
Desarrollo (COFIDES), which was created to provide financial aid to
Spanish investments in “emerging or developing countries.” The list
of project in COFIDES’ investment portfolio as of December 31, 2005
reads: Country: El Salvador; Company: Luis Calvo El
Salvador; Activity: Canning Industry; Spanish company:
Luis Calvo Sanz; Initial investment: 52.60 million euros.
Would it really be that easy to switch from one beneficiary country
to another? |
Either the
interview was never held or the outcome was not as expected, because on June 26,
the company issued a press release in which it said that: “In view of the
uncertainty that the tariff situation created by the SGP+ generates for the
country, the Calvo Group is sorry to announce that it has to cut its operations
in El Salvador in half, which means suspending one of the two production shifts,
and eliminating 600 jobs, which are held (sic) primarily by women. The decision
has been a hard one to make for the tuna company, but we had no choice.”
The Salvadorian
right, far from feeling alarmed, stroke back: “If they want to go, let them
go,” because other companies, like Dell of the United States,
have generated more and better jobs,” said ARENA congressman Roberto
D’Aubuisson, the eldest son of the party’s founder. For its part, the
conservative newspaper El Diario de Hoy declared that “giving in to
the [EU’s] blackmail would be the same as handing the State’s
conduction over to the most backward and violent forces,” and as painful as
Calvo’s leaving the country may be, “we cannot accept any
demands that favor unionism.” Congressman Norman Quijano, also of
ARENA and opposed to the ratification of the conventions, argued, in a
strange syntax, that: “ job opportunities grow scarcer when we generate
political instability, they grow scarcer when we’re holding violent street
demonstrations.” And the Minister of Labor, José Roberto Espinal,
remarked: “I respect the company’s decisions, but decisions are decisions and
we need to face them. Our duty as government is to see how many of the jobs
Calvo has left in the city of La Unión can be filled or covered by other kinds
of investments.” Meanwhile, the euro-deputy for the Spanish PP,
Daniel Varela Suanzes, was appealing to the European Parliament
to stretch the deadlines for El Salvador’s ratification of the
ILO conventions. He added that excluding El Salvador from the
GSP+ “would mean an economic catastrophe for that country and for the
Spanish companies that are installed there, such as the Calvo Group canning
company”.
In comes Prince Philip of Bourbon and Greece
That was
how things stood when from Spanish quarters it was decided that it was time
to start playing hardball; so, more or less officially, and more or less
veiled, the pressures began. On May 9, 2006, Spain signed an
agreement whereby it granted the Central American Bank for Economic
Integration (BCIE) 40 million dollars for the implementation of
environmental projects in Central America. Even though the BCIE
is headquartered in Tegucigalpa (Honduras), the agreement was
signed in San Salvador, with Prince Philip in attendance, who
also took the time to open the Spain-Central America-Panama Business
Meeting in that city. The event examined the possibilities for Spanish
investments in the region, and the heir to the crown made it a point to
highlight the growth of trade relations, which have turned Spain into
the EU’s leading trading partner and investor in the region, further
underlining that in the previous year (2005) alone, trade activities had
reached a total of 1.32 billion dollars. One need not be an expert in
diplomacy to understand that, translated into more colloquial language, his
Highness’ message to the Salvadorian government was: Look at all that’s at
stake! Just suck it up!
After the
meeting with the business representatives, Prince Philip and the
President of the Republic Tony Saca flew across the country by
helicopter to the Gulf of Fonseca to visit the Calvo Group
tuna plant. Nobody can be so naive as to think that these two were merely
interested in seeing how tuna is cut open, so the only explanation for the
visit is that it was also meant to send a clear message, and that it was set
up to find a solution to a problem that affected the Spanish canning
company. The agreements reached by the three parties were not disclosed, and
we have no way of knowing what they were, but, from the clues that are left
by those involved, it’s not hard to imagine their scope.
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May 2006
Prince Philip
and Tony Saca during the visit
to
the Calvo factory in El Salvador |
Finally, in August 2006, the Legislative Assembly ratified the four ILO conventions. Things seemed to be going back to normal, until six months later -already into 2007-, when Calvo workers understood that it was time to apply the convention and tried to form a union. The company’s reaction was immediate and fulminating. In February, Berta Menjivar, a unionist and the wife of the union’s general secretary, was fired. In March, two other workers were fired: José Joaquín Reyes, secretary of relations of the union’s governing board, and Roberto Hernández, social welfare secretary. At present, while the dismissal case has been taken to court, the company refuses to recognize the union’s legal status, even though the workers timely filed all the necessary documentation with the Ministry of Labor, as required by law.
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It’s evident, then, that the interest the Calvo Group had in the ILO conventions was merely trade-related, and they had -and have- no intention of enforcing them. After all the pressures to have them ratified, it seems outrageous that Calvo would now refuse to comply with the provisions of these conventions, and -as we showed above- the company is joined in this abomination by the Salvadorian government, the Xunta de Galicia, Prince Phillip, the Spanish government, the EU, and even the ILO itself. (+
info)
Epilogue (provisional)
Recently, the company’s executives in El Salvador refused to meet with IUF representatives and leaders of the Spanish trade union federation Comisiones Obreras. “We’ll discuss this in Spain,” they said, whether moved by arrogance or cowardice, it’s not clear. Meanwhile, Ministry of Labor officials look the other way and the police continues to be at the company’s service, ready to repress the smallest sign of protest.
As long as the Calvo Group refuses to give an explanation and the ILO conventions are not enforced, we have the right and the obligation to interpret what’s going on and why. So, from the above account, we venture to say that what we have here is an agreement in which two parties came out winning. On the one hand, the government agreed to ratify certain conventions that would have no political implications for it, as the Calvo Group undertook not to enforce the conventions in its plant. On the other, the transnational corporation will continue exporting to the EU with zero tariff, while exploiting cheap labor, as the Ministry of Labor and the police will prevent the workers from organizing in a union.
This is thus far the plot of a novel that is by no means over.
By Enildo Iglesias and Gerardo Iglesias
© Rel-UITA
May 31, 2007
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UITA - Secretaría Regional
Latinoamericana - Montevideo - Uruguay
Wilson
Ferreira Aldunate 1229 / 201 - Tel. (598 2) 900 7473 - 902 1048 -
Fax 903 0905
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