"Recovered Factories" Argentina's Great Victory

by Eduardo Stanley

(PNS) -- Since 1972 the Mil Hojas pasta factory on the outskirts of this city has churned out delicacies like ravioli and Italian desserts. But Mil Hojas' fortunes -- along with those of the national economy -- began to decline with the late 1990s as deep recession set in.

The factory owners decided to abandon it amid a national epidemic of bankruptcies. Mil Hojas, like many other factories in Argentina, was to permanently close its doors.

That was when its workers decided to act. They took back, or "recovered" Mil Hojas, transforming it into what today is a thriving cooperative, as Argentina emerges from one of the worst economic crisis in its history.

Today, thousands of workers are reactivating previously closed factories on their own terms and simultaneously breathing life into the national economy.

Jose Abelli, who leads an association of workers in recovered factories, known in Spanish as "fabricas recuperadas," says that "capitalism almost destroyed itself. We are the resolution to the problem. We are looking to create networks of services and restart the economy." His organization represents 10,000 workers.

Abelli, 48, says the no-holds-barred capitalism that was unleashed in Argentina in the 1990s destroyed what he calls an unwritten "social contract" that had granted the country's working class a dignified portion of Argentina's income.

That contract was rendered moot during the 1990s government of President Carlos Menem, who advocated for privatization and trade liberalization schemes pushed by the International Monetary Fund. Though the economy grew initially, unemployment in the country skyrocketed from 6 percent to 24 percent.

"We began to organize to recover the dignity that the system took away from us," says Abelli. "The government wanted to give us food but not jobs and health care. Nor did they want to give us education for our children."

The centerpiece of Menem's economic policy was a currency peg that set the value of the peso artificially high by decreeing it equal to the dollar. This created an illusion of prosperity and modernity for some Argentines. But the currency peg also undermined local industry's competitiveness, as cheaply produced imports flooded in and Argentine goods became too expensive to compete globally.

Simultaneously, investors took their overvalued pesos abroad to speculate in foreign markets or accrue interest in U.S. or Swiss bank accounts, sucking the life out of a traditional industrial sector built on small- and medium-sized enterprises like Mil Hojas.

"The factories, the machinery, the domestic market were all there, but the bosses left and they left everything behind," says Abelli. "They abandoned the ideal of productivity and devoted themselves to speculation."

But worker-owned "recovered" factories like Mil Hojas could help resuscitate part of Argentine industry. While the sharp devaluation of the peso in the 2002 wiped out the savings of some Argentines, the competitiveness of local goods was given a boost.

Many Argentine factories are now even dreaming of exporting.

President Nestor Kirchner's election this year has also brought a measure of stability and end to the paralysis that gripped Argentina following the resignation of the last elected president, Fernando de la Rua, late in 2001.

Mil Hojas' 15 workers decided to open the factory as a cooperative. Says Jose Aguilera, the factory's treasurer and a 22-year veteran, "the day that we bought the factory and it passed into our ownership was very emotional. People would bring us gifts and call us to congratulate us."

"Our initial objective was only to maintain our source of work -- we worked 12 to 14 hours a day," says Juan Gonzalez, factory secretary. The workers say they succeeded thanks only to the unconditional support of their families, who endured early days when there was no cash on hand, even for basic necessities.

But as Mil Hojas recovered clients and reorganized, it achieved stability and began setting its sights higher. Soon the factory launched new products and hired 15 new workers. Now all the workers enjoy health benefits and a steady paycheck.

Argentina's recovered businesses include all kinds, from transport to lunch counters to a hotel. Some employ 10 to 15 workers but others have staff as large as 4,000.

"These are businesses with people -- we don't measure them solely on the basis of profits or losses," Abelli says. "These companies have social worth." Recovered factories represent "the revival of entire neighborhoods and of an important sector of the economy," Abelli says.

He cautions that too much pressure from foreign lenders could still derail Argentina's economic progress. "However, we are optimistic," he says.