The Venezuelan "revolution" is badly cemented

Pertigalete cement plant

August 17th, 2008, at midnight,  Venezuelan armed forces entered the installations of the Mexican company CEMEX and took over the cement factories owned by this company. Workers cheered this move by autocrat Hugo Chavez who had already taken over many other private companies in the country in order to build a “socialist society”.

Five years later the same workers who cheered Chavez’s move were declaring the plants in operational emergency since cement production was practically paralyzed. In the states of Zulia and Lara cement factories were paralyzed.  In Pertigalete, located in the city of Puerto La Cruz, eastern Venezuela, the largest cement plant in the country, labor leaders indicated that the production collapse was almost total. The furnaces were largely non-operational, there were no trucks to move the limestone from the quarries to the plant and plant maintenance had not been done. Only four of the 13 mills were working, there was no replacement for the damaged equipment and labor leaders worried that the government was trying to avoid talking to them. Distribution of cement had collapsed for lack of bags.

Five years ago, theworkers cheered, today they lament the destruction of the industry

A leader of the workers, Mr. Eleazar Bellorin, said that production had declined steadily, from 10,000 tons per day to barely 6000 tons per day.

A former top manager of the cement sector in Venezuela told us:
“The Pertigalete plant was considered for a long time the jewel of the cement crown, a  model plant with an excellent location, a deep port, first class technology quality and competent staff. Today, reports (Cement International Review, November 11, 2013)  indicate the plant is in crisis.  Rampant corruption, anarchic labor unions, lack of maintenance, low morale, dispirited personnel and lack of clear plans and objectives explain the collapse”.

“Reality was” – he adds -  “that 15-20 years ago all important cement producers in the world wanted to have or to buy a plant like Pertigalete. When the Mendoza group (led by Eugenio Mendoza, not the same family of POLAR) fell into an economic crisis Lafarge (France) and CEMEX (Mexico) made their best efforts to get it. Inexplicably the other large producer at the time, Holderbank (today, Holcim) did not make a bid for it.  In June 19,  2008, an official government decree was published, nationalizing the Venezuelan cement industry, forcing the three largest cement producers in the world to sell their Venezuelan assets. The excuse was the “strategic” nature of the activity. At that time the government guaranteed an orderly transition and a more efficient performance under state control. It is relevant to mention that, immediately after “nationalization” the president of the corporation became Natacha Castillo Hernandez, the wife of minister/vice president of the regime Elias Jaua. After 5 years of a disastrous performance the lady was forced to resign, in February 2013.

But the poison, adds the former executive, had already taken hold.  The damage had been done. The lack of professional know how and the abuse of the corporation for the political and economic  benefit of  few brought about the destruction of the jewel of the crown. Added the former executive: one more [horror] story of the Socialism of the XX century.

Last November 4 we read the following story in ICR Newsroom:

“The government of Jamaica has signed an agreement for Caribbean Cement Co Ltd (CCCL) to supply cement to Corporación Socialista del Cemento under the Petro Caribe agreement, local media have reported. However, the arrangement is yet to be approve from authorities in Venezuela”. A country that was an important cement exporter 15 years ago, now reduced to the role of importer from a small Caribbean country.

November 11 we read, in the same news agency:

“Venezuela’s Fabrica Nacional de Cemento has halted bagging cement at its key Pertigalete plant, the country’s largest cement plant. During normal operation the works bags around 105,000 bags per day”. The title was tragic:

Cementos Venezuela’s Pertigalete works out of action
By ICR Newsroom
Published 11 November 2013

Staff at Pertigalete, Cementos Venezuela’s largest plant, have declared an “operational emergency” as the seven kilns have stopped producing clinker. Union leaders have said there are no trucks to transport to limestone from the quarries to the plant and only four out of 13 mills work (two to grind raw meal and two to grind cement).

Summary. 

What is going on in the Venezuelan cement sector is the same process of systematic destruction that has taken place in the oil industry and in the steel, aluminum, electric and telecommunications sectors. A gang of sorcerer apprentices have been turned loose on the country’s industry, like wild elephants in a crystal shop, breaking and ruining all they find. 

Only private investors with a death wish would enter Venezuela during these tragic times.