Wednesday, April 30, 2014

Authorities thwart workers' self-management of their factory

Mada Masr
Workers struggle to self-manage
Renationalized companies left idle as workers fight to make factories function

April 3, 2014

Jano Charbel

Weary of governmental inaction regarding the court-ordered re-nationalization of their companies, many workers have sought to take matters into their own hands through experiments in workers’ self-management — only to find that the government is actively obstructing their efforts.

Last month, authorities pulled the plug on one such experiment at the Tanta Flax Company, which has been awaiting re-nationalization for over two years.

On March 15, the Middle East Paper Company (Simo) became the seventh company to become re-nationalized by court order since late 2011. However, state authorities have not yet moved to bring this company back into operation under the public sector.

Since September 2011, the Administrative Court has issued verdicts nullifying the privatization contracts for the Tanta Flax Company, Nubariya Seeds Company, Shebin al-Kom Textile Company and the Nile Cotton Ginning Company, as well as the Nasr Steam Boilers Company and Omar Effendi chain of department stores.

According to the court’s findings and rulings, these public sector companies had been sold off to private investors from 1990s to 2010 at far less than their real market value. Yet these companies and their workers have been largely left in a state of limbo, no longer operated by either private or public investors.

With the exception of the Omar Effendi stores, and to a lesser extent the Shebin al-Kom Textile Company, the state has not invested in re-nationalizing or re-operating these stalled companies.

In hopes of getting their jobs back and their factories running, workers from these seven companies have filed petitions and staged protests and sit-ins nationwide demanding a return to their jobs over the course of three years.

These labor pleas come amid intensified calls from leading state officials — including Prime Minister Ibrahim Mehleb, Field Marshal Abdel Fattah al-Sisi and Minister of Manpower Nahed al-Ahsry, among others — for workers to stop protesting or striking, and to help salvage the economy by resuming production.

But these calls for a return to production are ringing hollow for many workers.

“This is empty talk delivered for the sake of media consumption,” says Hesham al-Oql from the Tanta Flax and Oils Company.

“The opposite of these official statements is true. We workers are jobless and want to re-operate our companies, but the government is keeping us from getting back to work.”

Driven by frustration and years without an income, workers from the Tanta Flax Company were the latest group to try their hand in self-managing their factories.


On March 19, dozens of former workers began to operate two production lines out of the ten within the Tanta Flax Company. Yet as news of this effort spread beyond the company’s walls, local authorities switched off the electricity to the company, and the experiment was over within a matter of hours.

According to Oql, police forces were dispatched to the factory within two hours after receiving news of the workers’ experiment.

“They claimed to sympathize [with] and support our efforts, yet a few minutes after they had departed all electricity to the company was suddenly cut off,” he says.

Another former worker, Gamal Othman, explains, “Upon announcing our intention to self-manage the company, the Holding Company for Chemical Industries called the local utilities authority in Tanta and had them cut off our electricity.”

“Our intention in self-management was to show the Holding Company that it is easy to re-operate the company’s factories, and that we have raw materials to last us for a month of production,” a frustrated Othman recounts.

Othman adds that he and his fellow workers sought to pressure the Holding Company and the Ministry of Investment to follow through on their promise of purchasing the necessary amount of flax seed crop from local farmers — estimated at about LE7 million — by mid-May.

“We fear that if the Holding Company does not buy these crops from the farmers, they will sell their produce to others, and plans to re-operate the company by next year will never be implemented,” he warns.

Both the Holding Company for Chemical Industries and the Ministry of Investment had made statements to the effect that they would re-operate the Tanta Flax Company by 2015, although no specific date has been mentioned for this operation.

Othman criticizes the government’s failure to re-operate Tanta Flax and other stalled companies.

“The authorities shouldn’t be paying workers compensation amounting to only their basic wages, while they and their production lines remain idle. This is a waste of the state’s resources. The authorities should move to invest in the actual re-operation of workers and their companies, as this will benefit both the state and the workers,” he asserts.

The Tanta Flax Company’s workers were inspired by the successful experiment in self-management which workers at the Nubariya Seed Company had embarked upon some two years earlier. These two years of self-management proved fruitful for the company, generating an estimated LE10 million in profits during this time.

The profitable Nubaseed Company had been sold to Saudi investor Abdel Ellah al-Kaaki in 1999 — the same businessman who would purchase the Tanta Flax Company in 2005.

Kaaki had ceased his investments in these two companies by 2011, when workers began filing their cases before the Administrative Court and calling for re-nationalization.

The Nubaseed workers’ successful experiment in self-management was halted by former Prime Minister Hazem al-Beblawi’s Cabinet in late 2013, when the ministers appealed against the re-nationalization verdict issued in 2011.

The Administrative Court is scheduled to issue its verdict regarding this appeal on April 12.
According to Oql, “The ball is in the playing field of the Finance Ministry. It has been there for nearly three years now, yet we continue to await any action.”

So as to encourage the Ministry of Investment to re-operate our company, we informed them that we are willing to work for one month without wages, free of charge, in order to get our company back on its feet and also to get our jobs back. Yet we didn’t hear back from them, and thus we decided to try self-administrating the company.”

Former presidential contender Khaled Ali, who served as the lawyer for many of the aforementioned privatized companies, has called on state authorities to allow workers to self-manage their companies when they are stalled, or when investors flee the country.

Notable experiments in workers’ self-management include those of Ramy Lakkah’s light bulb factory in the Tenth of Ramadan City, which lasted from 2001-2006. Although the owner and investor had fled the country, this experiment managed to increase both the company’s production and profits. After settling his finances, the company was returned to Lakkah upon his return from France.

In this same industrial zone, the textile enterprise known as the Economic Company for Industrial Development was successfully managed from 2008-2010. Its owner, Adel Agha, had fled the country and left over 500 workers behind, who managed to operate the company themselves. This company, and its mother company Ahmonseto, was liquidated in 2010 and shut down as banks repossessed Agha’s assets.


While Simo’s workers have considered self-managing their company, they are unable to do so as gas lines and electricity have been cut-off since June 2013 due to the former-owners’ failure to pay their industrial utility bills.

As is the case with the aforementioned companies, the Administrative Court found that the Simo Paper Company — which had been privatized as a share holding company in 1997 — was sold-off to investors at a fraction of its original market value.

Over 500 workers at the Simo Company — the company originally employed around 3,000 workers prior to its privatization — have been without work, pay or compensation since they brought forth their case before the Administrative Court in June 2013.

“We signed petitions to government officials, the Cabinet and local authorities to re-operate our company — to no avail,” says Abdel Ati Ghareeb, president of Simo’s local union committee.

Simo’s workers protested outside Cabinet headquarters on March 8 along with workers from several other stalled companies, where they demanded state investment in order to get their company up and running.

A judicial appeal filed by the Holding Company for Chemical Industries — which, like the Tanta Flax Company, is supposed to manage and oversee Simo — against the March 15 verdict has halted the re-nationalization of the Simo Paper Company. The Administrative Court has still not delivered its verdict regarding this appeal.

“Our company is very profitable and can easily be re-operated with a little bit of investment, maintenance and the payment of wages,” says Ghareeb.

“We are willing and able to get back to work, and in fact we are insisting upon returning to work. We just want our jobs and company back.”

The Ministry of Manpower is due to pay Simo’s workers one month of basic wages as of next week, according to Ghareeb, who adds, “While we are grateful for any sort of assistance, we are not calling for monetary handouts or temporary solutions. We demand the actual re-operation of our company and the reinstatement of all sacked workers.”

Simo’s workers are taking shifts sleeping-in at the company, located in Shubra al-Khaima, in order to protect its five factories, and to keep intruders and thieves out, Ghareeb explains.

“We are unable to pay our rents or feed our families. We’re quickly losing all hope as there appears to be no genuine concern from the authorities, or any real willingness to resolve our grievances. Over 500 workers are slowing dying as our company is paralyzed.”

We are desperately screaming for the state to salvage our company,” he pleas.

Ghareeb and thousands of other workers remind the ruling authorities that in April 2013, former Prime Minister Hesham Qandil was sentenced to one year in prison for failing to uphold the verdict of re-nationalization for the Nile Cotton Ginning Company.

Qandil appealed against this verdict, but again the sentence was upheld in September 2013. The former prime minister was arrested in December 2013 and is now serving his sentence.

“We just want the government to practice what it preaches regarding production and the ‘wheel of production,’” Ghareeb says. “Help us get this company back in production, and within one month we will be bringing back the profits.”

*Photo of workers at the self-managed Economic Company for Industrial Development in 2009, by Jano Charbel 

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