| February 12 Updates are highlighted in bold text below. Yesterday, Toyota announced that it will shut down it's manufacturing of cars in Australia beginning in 2017. Toyota Australia employs 4200 workers who will lose their jobs and thousands more, working for related businesses will lose their incomes. Prior to Toyota's announcement, Ford and General Motors also declared they would be liquidating their operations in Australia. Toyota's announcement was treated by CNN with little more than a passing comment, adding a statement by a Toyota executive who said that production in Australia is no longer profitable. Toyota Australia has reported increased production by 7 percent and profits of $221 million (before taxes) last fiscal year ending March 31, 2013. According to Toyota International (biggest automaker in the world) says globally, it is on track to post a $23.7 billion profit for the year. The General Effects on Australian Economy and Society Toyota Australia's President and CEO, Max Yasuda, complained that the company was reorganizing due to "external challenges including the high Australian dollar, intense market competition and the high cost of materials." Inexplicably, Yasuda said the objective of eliminating their Australian operations is "... to secure a solid foundation for future growth in Australia." Adding what appears to be more pretzel logic, he stated:
Toyota Venezuela to Close Operations
While Toyota gave the country and workers a 3 year notice of their plans to close their plant in Australia in 2017, Toyota Venezuela made their announcement on February 7, announcing their closure of the plant for an "indefinite" period of time at Cumana in Sucre State in only 6 days, February 13, 2014. It is uncertain at this point whether the closure will be permanent or temporary and may depend upon negotiations with the government. The Cumana plant employs 1,700 workers directly and ancillary industries and busineses will also feel the brunt of this plant closure. Toyota Venezuela produced 12,000 vehicles in 2012 and production fell to 9,500 in 2013. Cars of all makes and models produced in Venezuela in 2013 numbered 72,000. Media Coverage The corporate media's coverage of Toyota's move against Australian workers stands in contrast with the the way they handled Toyota's decision to stop production in the Bolivarian Republic of Venezuela last week. The media cites Toyota's claim that their profits in Australia are not what they want, sympathizing with this giant corporation with little or nothing to say about the impact on the country, its economy and the workers. On the other hand, the state-controlled corporate media blamed the Maduro government for Toyota's stoppage of their manufacturing plant in Venezuela. As in Australia, Toyota declared they would end production in Venezuela shortly after the Ford Motor Company announced that it was reducing production in the country. Bloomberg News flatly stated that Ford's reason for their cutback as, "the availability of U.S. dollars crimps its ability to pay suppliers." Bloomberg made no effort to place Toyota's decision in context of the economic war against Venezuela or even bothered to ask the Maduro government for its position or perspective. Rather they chose to interview Henkel Garcia, a member of the right-wing opposition here who said, |
| “The foreign exchange system is totally paralyzed, and if they’re not going to give dollars to import food and medicine, they’re obviously not going to assign dollars to car part importers.” |
Regarding the availability of dollars, it's important to note that the lion's share of dollars issued by the government have always gone to the automotive sector.r - to import cars and spare parts.
In their article titled, "Toyota Venezuela slams brakes on vehicle assembly, irks president," Reuters' Andrew Cawthorne quoted a Toyota executive in Venezuela, "We are in an extremely difficult situation, for different reasons beyond our control, which affect operational continuity, due to shortage of parts."
In Australia, Toyota falsely claims it's plants are no longer profitable. In Venezuela they make other claims according to an internal memo by Toyota Venezuela, according to Reuters.
| "We are in an extremely difficult situation, for different reasons beyond our control, which affect operational continuity, due to shortage of parts." |
The memo also stated, "There will be an indefinite production stoppage" and said workers' salaries would be guaranteed for two weeks.
The "local automobile chamber" in Venezuela, quoted by Reuters, calls itself CAVENEZ, a tool in the right hand of Washington employed to "track the local auto industry" and in our view, to help destroy the economy. Reuters directly blames the closure of the Toyota plant on the government:
| "Like other private businesses in Venezuela, carmakers are complaining that the socialist government's currency controls are preventing them from importing essential products." |
*Update: Lack of availability of car parts as a reason for Toyota to stop production is questionable and uncertainty about new government currency exchange controls may be part of the problem for Toyota's planning in the future. The reasons for either or both are explained in the second update below regarding the abuse of the currency exchange and imports. These are issues currently being addressed by the government with Toyota and they are only part of the truth. Reuters and the others omit that the reason for the new currency controls is the increased abuse of Venezuela's currency by corporations in 2013.
Corporations and businesses routinely obtained millions of dollars from the government, legitimately, at the legal exchange rate (6.3 bolivars to $1) and instead of using them for their intended purpose (e.g. importing car parts) they traded them on the illegal black market dollar racket which was at 12 bolivars per dollar last year and skyrocketed to about 80 bolivars per dollar where it stands today - all for personal gain and to cause capital flight from Venezuela. Among their many underhanded attacks, they purchased containers of auto parts, for example, which when inspected by port authorities were filled with junk metal. The balance of the legal dollars they received for those shipments were traded on the black market.
Eric Schaal, a Wall Street media hack who aptly calls his website "Wall Street Cheat Sheet" describes Venezuela as "the beleaguered country." He goes on to expand upon Bloomsberg pronouncements saying, "The Venezuela auto market took a turn from unsteady to dismal in recent months." Schaal cites as his authorities, Bloomberg and CAVENEZ stating,
| "The foreign exchange crisis in Venezuela has made it nearly impossible for local factories to get dollars to pay for car parts ... There are few signs the country is a viable spot for foreing automakers to do business. Where there’s a sum total of zero automobiles produced, there’s no room for things to get worse." |
He continues by quoting the New York Times which boasted,
| "Toyota's biggest profit in company history when it records $18.8 billion at the end of the fiscal year in March ... The number eclipses the profits of all three Detroit automakers combined. On the back of such a windfall, Toyota plans to expand into markets where there is room for the brand to succeed." |
What these vulgar profits tell us is that their shutdown of plants in Australia and Venezuela are thugs with zero respect for the dignity of their host countries and the workers who enrich their owners and stockholders. Moreover, that disrespect far more than a byproduct of profiteering; it is the largest car-maker in the world operating as a key player in the capitalist movement to erase national borders for what they term, "globalization" and a "free market economy." Both are depicted in the 3 minute clip from the movie "Network" :
The media operatives cited above also think they've seen the face of God. Toyota's move in Venezuela should not surprise anyone who has been following the capitalist war against Venezuela's successful socialist economy. It plays for economic dominion like the tricky flea flicker play in US football when a quarterback receives the hike, hands off to a running back who then surprises the defense by passing to a wide receiver in US football.
The 2013 Attack and the Government's Response
Toyota's sudden announcement of the plant closure comes at an interesting time. In the past year transnational corporations and opposition retailers in Venezuela suddenly increased prices for consumer goods, imported and domestic, that placed them out of reach of lower wage earners and even much of the middle class, gouging profits of 500 to 2500 percent.
In November 2013 President Maduro and Venezuela's lawmakers launched a counter-attack by auditing retailers across the country, forcing them to reduce their prices by as much as 70 percent. The government has also imposed a maximum profit margin of 30 percent on manufacturers and retailers. Limiting the profits of any capitalist is like taking meat from and eating rotweiler. The capitalists' are now fighting back by increasing prices for international flights in and out of Venezuela (over which the government has no direct control), slowing production in various manufacturing sectors and taking actions like this one taken by Toyota.
*Update highlighted in Bold
Attacking Corruption: Over the past decade, CADIVI was the government agency that issued dollars at the official exchange rate to Venezuelans traveling abroad and to businesses importing goods. One of the measures President Maduro has taken this year was to eliminate CADIVI because of corruption within. The most high level arrest took place on August 19, 2013 when Lieutenant Colonel Francisco Navas Lugo, Head of Dollar Import Applications at CADIVI was arrested at the behest of the Attorney General for irregularities in issuing dollars to importers. Lugo was taken into custody along with one of his nephews by by the Counter Intelligence Unit.
Many others have been arrested both, within and outside government on corruption charges since President Maduro began the surprise counterattack against corruption and violations of the dollar-exchange in early November. In the first wave of this offensive in November and December, 820 people have been arrested and over 260 are in jail. After they eliminated CADIVI, the government created the new National Trade Center for issuing dollars to individuals and businesses. Many loopholes and portals for corruption in CADIVI have been identified and closed with this reorganization.
Regarding the availability of dollars to importers, new laws have been passed to be enforced by the National Trade Center. They stipulate that:
- dollars sold at preferential rates will be for essential imports
- each company will be required to sign a legally binding Performance Contract with the government.
- the contract will require that imported goods will be purchased at the correct international price (i.e. not inflated to reflect more than what was actually spent by the importer) and consumers will not be overcharged.
- failure to comply with the requrement for honest reporting of amount spent and overcharging could lead to executives begin jailed for up to 10 years, occupation of the plant and possible confiscation of assets.
Of course companies chafe at any restrictions placed on them and these restrictions cut to the heart of their past illegal (and highly profitable) practices in the past.
All legitimate, government-issued dollars in 2013 amounted to about US$42 billion. In the new system, government auditors estimatethat about US$20 billion was fraudulent in the forms of overpricing; syphoning off money to private bank accounts; imports not arriving or junk being received in containers in place of government-approved imports; "fake travelers" giving their identity and traveling documents to a single person who left the country and returned with false receipts for items never purchased, etc.. These examples of fraud included family remittances, airline fares, traveling dollars, general imports and gross overpricing at the point of sale.
Car Sales: These new Performance Contracts do suit auto-makers like Toyota. Also, the indefinite suspension of Toyota Venezuela is related to the number of dollars made available by the government for imports which is an issue for car makers like Toyota. Currently, Venezuela operates two exchange controls - at 6.3 bolivars per greenback for preferential goods, and 11.3 for other sectors. These rates are being reviewed and Toyota is uncertain about how changing exchange rates may affect their business, particularly with importing parts for cars and mfg equipment. This review of the exchange rates by the new National Trade Center agency is a result of Maduro's crackdown on car sales in Venezuela. The price of cars skyrocketed out of control over the past few years. Venezuela was probably the only country in the world where a used car cost more than a new one! For example, Hyundai Tucson 4X2 2.0 SUVs sold for 88,000 bolivars in 2008. In 2013 the same car (used) with average mileage on the odometer were being resold for 400,000 bolivars and more. Also, new imported cars were being held off the market and passed from one dealership to another to drive up the price creating a false "supply and demand" scenario.
| "We have gone through that experience with the oil industry, where transnational corporations siphoned off arrays [of profit] with their local business and then through this debt they were transferred to the parent gains." |
It's also interesting to compare the reaction of Australian Prime Minister, Tonny Abbott to Toyota's shutdown in Australia with that of President Maduro's response to the same in Venezuela.
With crass indifference to the Australians affected by loss of jobs and impact on the economy, Abbott's flip statement was, “while some businesses close, other businesses open, while some jobs end, other jobs start.”
President Maduro on the other hand placed Toyota's move in the economic war against Venezuela:
| "You don't have to be very intelligent to discover the political motives behind this. The only thing these little managers want is dollars, dollars and more dollars. What about the productive capacity, the ability to substitute imports? Where's their capacity to make parts in Venezuela when they've been here 10 years? ... Aluminum, petrochemicals, iron, steel, we have it all." |
Yesterday, unlike Abbott, President Maduro plans to take the issue directly to Toyota Latin America.
| "We want to talk to the Toyota executives and we are going to ask their representative for Toyota Latin America to come to a meeting. We want to talk about these issues because we have a very smooth relationship with Japan, as with the manufacturing companies of assemble." |
If the anti-Venezuelan, anti-worker, anti-socialist media of the west had any pretense of real journalism (sic) they would be examining and reporting the actual reasons for Toyota's elimination of production in selected countries rather than repeating the falsehoods about a the company's loss of profits in Australia or Venezuela's "economic failures." But if that were the case, they wouldn't be known as "the corporate media," now would they.
The Economic War Against Venezuela Has Only Begun
Finally, this economic war is far from over as some battles are won and others lost. The corporations will continue to play tag team and the Maduro government will confront every new counter-revolutionary tactic. The corporate media would have us believe that the corporations are holding all the cards, boasting their profits and inflating their prowess and power. They will also ignore the power of Venezuela which controls the greatest oil reserves in the world and has the backing of other Latin American countries in political and commercial alliances like ALBA, CELAC, MercoSur, not to mention Russia, China and Iran. For one example, driving the autopista and through the cities show that Chinese and Iranian cars manufactured here are now ubiquitous throughout Venezuela and it appears they are well-positioned to eventually fill in the gap left by Toyota and Ford if this conflict cannot be resolved in negotiations.
But underlying all these alliances, strategies and strengths are the people of Venezuela, now educated, empowered and fully conscious of what's at stake, their freedom, independence and sovereignty. The people are keenly aware of the assault on their nation's economy and most are ready to sacrifice or even pay with their lives to defend their country if necessary.
Biography,
Essays and Poetry by Les Blough