Argentina: Worker-run Companies Quietly Surviving

(IPS) – After the late 2001 financial and political meltdown in Argentina, thousands of companies were abandoned by their owners in a sea of debt. But some of them were taken over and reopened by their employees. Today, as the economy continues to grow, these worker-run factories are still going strong.

There are now 205 “recovered” companies, with a total of 9,362 workers — up from 161 companies with 6,900 workers in 2004, according to a study published in October.

“How has a phenomenon that emerged as a kind of life raft after the 2001 economic collapse grown rather than faded away during a period of economic boom?” asks the lead author of the study, Andrés Ruggeri.

“The workers learned that running a company by themselves is a viable alternative, to keep a company operating,” he tells IPS. “That was unthinkable before.”

The study, “Las Empresas Recuperadas en la Argentina. 2010” (“Recovered Companies in Argentina 2010”), was carried out by a large team of student volunteers with the Open Faculty Programme at the University of Buenos Aires.

The aim was to provide data to help design policies to strengthen and improve the self-management of companies, says the study, which is based on an in-depth survey of the companies. Although there are some earlier precedents in Argentine history of bankrupt businesses that were reopened by their workers, they were isolated cases.

But as a result of the severe 2002-2003 economic crisis, worker-run companies began to mushroom in a broad range of areas, including the food industry, steel, textile, footwear and plastic factories, meat-packing plants, ceramic, glass and rubber manufacturers, graphic design companies, transport firms, restaurants, health businesses and even a five-star hotel.

The companies were reclaimed by their workers after the owners disappeared overnight, leaving behind jobless employees, piles of debt, factories stripped of everything not bolted down — and, often, charges of tax evasion or fraud.

Many of the companies are producing and even exporting again, after they were taken over by the workers, who were owed months and sometimes years of back wages.

Most of the workers formed cooperatives, and decisions are reached in assemblies, while they receive advice and support from other worker-owned companies and from government institutions as well.

A similar phenomenon has occurred in other countries of Latin America. According to the Open Faculty Programme report, there are 69 “recovered” companies in Brazil, around 30 in Uruguay, 20 in Paraguay and a growing number in Venezuela. Cases are also starting to be seen in Spain, says Ruggeri.

Many believed that as the economy boomed — it grew an average of 8.5 percent a year from 2003 to 2008 — the companies had gradually shrunk in number, and only a few survived as testimony to an era, the study says. But “nothing could be further from the truth,” Ruggeri says.

Even during times of economic growth, numerous companies fall into bankruptcy, sometimes as part of a strategy aimed at enabling the owner to start over again elsewhere. But the employees are left high and dry, and many of them are no longer young enough to be reabsorbed by the labour market, he points out.

“Recovered companies are a labour, economic and social reality that has taken root; they are here to stay and they will continue growing,” the study says. Although they face their own difficulties, they have enormous potential, it adds.

One illustrative case not related to the 2002-2003 crisis is that of Global, a firm that produced latex products — mainly balloons — that declared bankruptcy in 2004.

One Monday morning the workers showed up and found the sign “closed until further notice.” Neighbours told them that trucks had been hauling things away over the weekend — the owners had taken all the machinery.

The company’s dozens of employees were left without a job. But they managed to overcome many difficulties and reopen the business, and by 2005, Global had been transformed into “La Nueva Esperanza” (The New Hope), a cooperative with 32 members.

One of them is Domingo Palomeque, who has worked for 26 of his 50 years of life in the balloon factory on the outskirts of the Argentine capital. But now he does so as an equal partner in the cooperative.

“First we set up the cooperative, and then we recovered the machines they had stolen,” Palomeque explains to IPS.

In the survey by the team of university researchers, the problem mentioned most frequently by the companies is the lack of financing to purchase raw materials and machinery or to hire specialised workers. They also cited problems making headway in the market.

La Nueva Esperanza is no exception. “Credit,” Palomeque says without hesitation when asked what the company needs most. “We have to buy automated machines, not to replace people but to be more competitive.”

The cooperative’s products compete at a disadvantage in the local market today with cheap imports from Malaysia or Singapore. “Our products used to be cheaper, but that’s not true any more,” he says.

Despite the difficulties, they have managed to continue selling on the domestic market, and they even export their products. According to the report, 15 percent of the recovered firms export part of their output, and another 60 percent have the potential to do so.

The La Nueva Esperanza cooperative found its own way around certain hurdles. “It’s something we invented ourselves — we sell to Brazil, Paraguay, Chile and Uruguay, but we don’t export the products ourselves: our customers register at an address in Argentine provinces bordering their countries,” Palomeque explains.

He says there is no turning back. On the contrary, he has ambitions for the cooperative. “Our goal is to get new machines, hire new workers, and continue growing.”

Recovered companies vary in size. Seventy-five percent employ less than 50 workers, only a few have more than 100 employees, and just 2.3 percent have more than 200 workers.

The study calls for coherent public policies to support the firms. “The state should take a more active role, but it acts in an erratic manner because it has an erroneous conception that this is a transitory phenomenon,” Ruggeri says.

“It should strengthen these businesses because they are productive units that are growing sources of genuine jobs, which are neither precarious nor informal,” he adds. “These are workers who have got back on their feet on their own.”

In the last few years, the government has taken some steps that have given the businesses a boost. Through the Labour Ministry, it distributed more than one million dollars in subsidies. But it was a one-off arrangement. Without steady access to financing, the recovered companies “are condemned to teeter on the threshold of survival,” the report concludes.