Cecil GutzmoreFINAL RITES are about to be said over Alcan Aluminium Ltd's 50 years old Jamaican operation. With acknowledgement to Shakespeare, its Jamaican epitaph should be: "Alcan: good, being gone." If that seems harsh, it is largely because of the company's reputation for good works here.
Alcan's final Jamaican act was to try to dispose of its assets to the Swiss mineral commodity giant, Glencore, for a price of around US$250 million. This figure Glencore's 'due diligence' revealed to be in the region of US$75 million more than they are actually worth. Alcan sale price was a blatant, fortunately failed, attempt to perpetrate against Glencore a version of what it has historically succeeded in perpetuating against Jamaican Governments and against the Jamaican people.
The cost of Alcan's social involvement in allegedly generous sponsorship of sport, social, educational and general community programmes gives the term 'chicken feed' a bad name. Certainly so when set against the scale of an international company said to be one of the largest alumina operators in the world, with revenues of some US$13 billion in its last year of account. But such 'philanthropy' was simply the way its reputation as a "good corporate citizen" was purchased: cheap cover, it might be thought.
Let me acknowledge one other welcome leg of this facet of Alcan. As Dennis Morrison has observed, the company "had led the thrust towards progressive employment practices, promoting Jamaican employees to the highest technical and managerial positions in its local operations as well as giving them exposure across its worldwide system." A first cousin of mine is one of the latter. So as I understand it was, ironically, the gentleman, Mr. Michel Bell, who came to make the announcement of their pull-out from Jamaica. There is, of course, no need for gratitude in respect of this progressive Alcan way. The company recognised that our in-tellectual capacities matched the high grade of our bauxite and so it developed and exploited both with a certain mutuality - those so 'developed' benefited - but overwhelmingly Alcan was the taker.
That the purchaser of Alcan's Jamaican business found it to be seriously overpriced reflected Alcan's long-term failure to invest here on the scale required to keep its plants state-of-the-art modern. To have done so would have secured high productivity, or low production costs, based on high capital-to-labour ratios. This would have kept Jamaican alumina, which is extracted from two very high quality bauxite ores, internationally competitive.
Instead, Alcan's corporate strategy for Jamaica was to milk maximum profits from its objectively clapped-out plant. Add to this sorry tale the fact that throughout its time in Jamaica Alcan's waste-disposal methods (other alumina companies are also guilty) resulted in the development of those infamous red-mud lakes that have been slowly poisoning the ground-water in some parts of our country. I have somewhere a substantial article on this matter in a geographical journal. If they have not poisoned us it is not because of any steps they took but the fortuitous fact that the nature of mud itself in partly inhibiting seepage.
And so we will shortly have a new relationship with Glencore. They will not now just be a friendly forward-purchaser of much of our alumina production. They will also be a major domestic producer.
Let us not be confused about it: Glencore's investment to purchasing Alcan's Jamaican operation is Alcan Aluminium Ltd (Canada) not Jamaica bound. Accordingly, the real question concerning Glencore is what is the amount of money they are going to put into bringing the fixed capital stock of the former Alcan plants here up to date? If it is not substantial they will simply pick-up where Alcan left off. They will be milking ageing capital -- cheaply acquired -- for all the profits that can be wrung from it and the workers' labour. They may also seek to exploit their power-position vis-a-vis the Jamaican government and the relatively vulnerable trades unions to secure concessions for themselves.
We should not be surprised in the circumstances if they succeed, where Alcan failed, in changing the basis for calculating the bauxite levy. Alcan, after all only gave up because, as a result of a merger it found itself with an internal over-supply of alumina and its own investment policy had rendered that coming from its Jamaican source somewhat expensive.
It would be useful -- I will try to do so myself -- to obtain the figures for Alcan's total fifty-year investment in Jamaica as against the profits they extracted over the period. How similar will this prove to be to the position of the other bauxite-alumina companies that have operated here over that period? The question is relevant to Jamaica's overall situation in the global economy. Everyone says our island needs massive foreign investment. And we do. But, on what terms? Capitalists must come here not just snapping up bankrupt enterprises, some of which can be asset-stripped. They must come prepared to invest for reasonable long-term profits. Not for the short-term tax-break and the over-quick amortisation of capital invested.
Cecil Gutzmore is research student and lecturer at the University of the West Indies. E-mail:
gutzmorecr@hotmail.com
