Crude Oil And Lazy Workers: Details About Chavez's Threat To Oust Toyota

Bertel Schmitt
by Bertel Schmitt

The Christmas season would be a reason to be merry, would it not be for Hugo Chavez. More details about his expropriation threats emerge. Turns out, Chavez did not just threaten to kick out Toyota for being lackadaisical in the production of “rustic” vehicles.

“President Hugo Chavez told foreign automakers Wednesday to share their technology with local businesses or they will be told to leave the country,” writes the Boston Globe. Chavez gave the ultimatum in wholesale fashion to Ford, General Motors, Toyota and Fiat. Implied, the ultimatum is also meant for Fiat-controlled Chrysler, for Mitsubishi, Mack and Fiat-owned Iveco. All of the above have production facilities in Venezuela. All are at risk of instant deportation.

Their options are either to “share their technology with local businesses” (a half-expropriation) or get out (a full expropriation.) Chavez usually doesn’t do nationalizations in piecemeal fashion. He tends to nationalize whole industry sectors. The metals, cement, oil, coffee and electricity sectors are all being owned by the people of Venezuela, or Hugo Chavez, depending how one looks at it.

The auto sector appears to be next in line. Chavez is no fool, and he knows that building cars is not as simple as pumping crude, or baking limestone to make cement. Without foreign technologic know-how, Venezuelan’s roads will soon resemble Cuba’s highways. Hence the offer “share, or go.” If the foreigners go, other foreigners could be invited in: Automakers from Russia, Belorussia, or especially China.

Today’s Nikkei [sub] sees even more sinister dealings afoot: Oil and China. Says the Nikkei: “The takeover threat and possibility of turning control over to the Chinese comes on the heels of two days of bilateral talks with China that ended Tuesday. The Chavez administration said in a statement after the talks that it now considers China its ‘main strategic alliance.’”

Venezuela currently sells 1 million barrels a day of Venezuelan crude to the U.S. Chavez wants to reduce this co-dependency, and focus on China instead. Venezuela currently ships 400,000 barrels a day to China. Chavez wants to raise that to a million per day, damn the distance from Puerto La Cruz to Qingdao.

Chinese cars could be a nice icing on that trade cake. According to the Nikkei, Great Wall Motors begun selling cars in Venezuela in 2006. Chery had plans to open an assembly plant in Venezuela, but nothing came of it – yet.

US and Japanese makers dominate the market in Venezuela. GM leads the market with 45,523 vehicles sold so far in 2009, Ford is second and Toyota is third. Sales are down 49 percent this year, but not because of a lack of buyers. Demand far outstrips the low supply of cars in Venezuela. A gallon of gasoline costs about $0.07 in Venezuela. The land of the “21st Century Socialism” would be a driver’s paradise, if only the roads would be paved and if only cars would be there to be bought.

Indigenous production is hampered by strict currency controls that prevent automakers from getting the dollars to import auto parts they need to meet production goals. Auto makers also have to contend with a “high level of absenteeism, disobedience, aggression and lawlessness of some of the workers,” says the Nikkei. Mitsubishi had to shut down its plant for 30 days in August, because the workers didn’t show up. In May, a Toyota union leader was shot dead. He had led a month-long strike last year that paralyzed the Toyota plant in the eastern city of Cumana. In September, murder charges were brought against a man, but the motive remains a mystery.

Says the Nikkei: “It appears many auto workers hope their company is nationalized so they can become de facto government workers and enjoy the extra job security that comes with it.”

Should it really come to the Chinese taking over Venezuela’s auto plants, then the workers may be in for a rude surprise. Chinese factory managers are not necessarily known for their subtle style when it comes to labor relations. GM, Ford, and Toyota should send their union leaders on an all expense paid study tour to the suburbs of Shanghai, or to frigid Changchun, and they’ll quickly change their minds.

The matters are being complicated by the US and Japan being major trading partners of China, and by GM and Toyota having major joint ventures in China and buying lots of parts from Chinese manufacturers. China will gladly buy Venezuela’s oil and build them some ports to go with it. But they won’t put their booming auto business at risk for some 100,000 “rustic” cars built in Venezuela.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • ZoomZoom ZoomZoom on Dec 28, 2009

    Well, I guess the holiday season is officially over with. Was there ANY good cheer this year?

  • Shaker Shaker on Dec 29, 2009

    Holiday retail sales were up 3.4% this year, and online sales were up 15% - in this economy, that's a good sign :-)

  • The Oracle These are all over the roads in droves here in WNC. Rarely see one on the side of the road, they are wildly popular, capable, and reliable. There is a market for utilitarian vehicles.
  • Stephen My "mid-level" limited edition Tonino Lambo Ferraccio Junior watch has performed flawlessly with attractive understated style for nearly 20 years. Their cars are not so much to my taste-- my Acura NSX is just fine. Not sure why you have such condescension towards these excellent timepieces. They are attractive without unnecessary flamboyance, keep perfect time and are extremely reliable. They are also very reasonably priced.
  • Dana You don’t need park, you set auto hold (button on the console). Every BMW answers to ‘Hey, BMW’, but you can set your own personal wake word in iDrive. It takes less than 5 minutes to figure that that out, btw. The audio stays on which is handy for Teams meetings. Once your phone is out of range, the audio is stopped on the car. You can always press down on the audio volume wheel which will mute it, if it bothers you. I found all the controls very intuitive.
  • ToolGuy Not sure if I've ever said this, or if you were listening:• Learn to drive, people.Also, learn which vehicles to take home with you and which ones to walk away from. You are an adult now, think for yourself. (Those ads are lying to you. Your friendly neighborhood automotive dealer, also lying to you. Politicians? Lying to you. Oh yeah, learn how to vote lol.)Addendum for the weak-minded who think I am advocating some 'driver training' program: Learning is not something you do in school once for all time. Learning how to drive is not something that someone does for you. It is a continuous process driven by YOU. Learn how to learn how to drive, and learn to drive. Keep on learning how to drive. (You -- over there -- especially you, you kind of suck at driving. LOL.)Example: Do you know where your tires are? When you are 4 hours into a 6 hour interstate journey and change lanes, do you run over the raised center line retroreflective bumpers, or do you steer between them?
  • Mike Bradley Advertising, movies and TV, manufacturing, and car culture have all made speeding and crashing the ultimate tests of manhood. Throw in the political craziness and you've got a perfect soup of destruction and costs.
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