Let me begin by taking the opportunity to wish all readers a Happy New Year.
My first article on the Banks DIH and Ansa McAl imbroglio appeared last year in the Christmas weekend magazine and not the usual Sunday column. The present article, my first for the New Year, continues on this topic. I use the term 'imbroglio' in the caption advisedly, since to the best of my knowledge, officially, the situation remains that of December 10, last year where the Ansa McAl spokesperson declared: "Ansa McAl has not made any offer to buy shares in Banks DIH at this time." As I had pointed out in the previous article, given the known distribution of share ownership in Banks DIH any takeover/merger/ acquisition of that company will certainly be considered 'hostile.' Already signs of this have appeared in the letter columns and advertisements in the media.
However, as Stabroek News last reported, under existing regulations in Guyana an announcement would be required of Ansa McAl, when before an approach has been made, Banks DIH is "the subject of rumour and speculation or there is undue movement in its share price, and there are reasonable grounds for concluding that it is the potential actions (of Ansa McAl as the offerer) which have led to the situation."
CSME and the long-term view
There are several points from that first article I would like readers to keep in mind as they read on. One is that I had tried there to stake out the position that, for any serious evaluation of this matter, a special, if not pre-eminent place, should be given to the interests represented by the Caricom Single Market and Economy (CSME). The CSME is in principle a process aimed at the creation of a single market and economic space within which Caricom people, technology, capital and other productive factors freely circulate alongside the free circulation of goods and services. As such the CSME clearly cannot be finalised this year, or indeed any time in the near future, despite popular perception that it is to be 'finalised' this year. At the very least the CSME must be seen as a long-term project that commenced in earnest in July 2001 when the agreement was signed, and which is expected to gain momentum this year as Caricom members meet the deadline for the implementation of necessary arrangements to concretise it.
Ambitious as this is, the CSME aspires not only to create a single market, but in principle also to create a single economy. This further step, however, is even more complex and long-term than creation of the single market, since it requires unified and convergent economic policies of all Caricom member states in regard to their macro-economic management and development. In turn this requires a host of complementary and supporting institutional, legislative, organisational, and sectoral policy changes. And, as if this is not enough, it would also require, in my view, a significant level of political integration in one form or another.
I have explained all this at some length in order to make clear that the perspective I am offering is not only focused on the interests of the regional economic integration movement, but is also based on a long-term view of the implications of this controversy as it affects cross-border change in ownership and control of firms.
Echoes of the past
A second point readers should bear in mind from the first article is the one where I stressed the maxim that: 'What goes around comes around.' There I showed that, if one took a long-term view of Banks DIH, readers might be surprised to discover that when it sought to branch out from Guyana into Barbados in the late 1950s the firm met a host of unwelcome protests and comments from Barbadians. Guyana's reaction today is therefore certainly not new for the region although some would have hoped that in the context of the CSME it might have been less strident. Barbados's resistance at the time, however, subsided quickly, to the point where ironically Banks DIH succeeded in winning over Carib Beer the right to be the firm to obtain 'pioneer status' (and therefore Barbados government support) to establish the brewery in that country. But, having done so, Banks Guyana put in place an agreement which prohibits Banks Barbados from exporting beer produced there outside of Barbados. So once again readers should note that restrictive practices are nothing new in regional experience of cross-border ownership of firms.
Flagship firm
A third point is that, beyond doubt Banks DIH is a flagship firm in Guyana. It has an enviable reputation for producing good quality products and the firm has enjoyed, on the whole, excellent management-employee relations. This is in contrast to the perceived reputation of Ansa McAl. Indeed the latter's reputation was done incalculable harm as a result of the recent industrial dispute at Carib beer in Trinidad & Tobago. That episode is in many ways, yet another example of the maxim: 'What goes around comes around.'
The Ansa McAl Group, as we shall see in some detail later, is an assertive, almost aggressive, fast-growing firm. It represents a new breed of Trinidad and Tobago firm gearing itself for global competition by building rapidly on the prospective platform afforded by Caricom regional integration. As I will show later, the logic of fast growth for such a firm is the route of mergers and acquisitions (M&As). Unfortunately for the firm, caught up in an industrial dispute last year it found itself at the losing end of an engagement with what can only be described as robust Trinidad and Tobago unions
The NUGFW, which represented the Carib beer workers skilfully exposed each mis-step the firm made, or indeed appeared to make, leaving its image as an employer badly tarnished in Guyana and the wider region where the union has widely publicised its "heroic 58 days resistance" to the Carib Beer lockout of workers. Under the Trinidad and Tobago's Industrial Relations Act 1972, any industrial action, whether strike or lockout, cannot last for more than 90 days before it is referred to the Industrial Court for compulsory arbitration. During the lockout, the NUGFW not only picketed, but also printed Scabga News, a satirically named newsletter after the Ansa McAl head that gave details of the lockout and highlighted workers' views. It also won solidarity from a number of other unions in the country. In all this, Ansa McAl was portrayed as a union-busting firm that wanted to turn the clock back on progressive industrial relations. In an environment like Guyana, such a reputation does not stand well given the struggle over the years to give voice and influence to organised labour. Since the NUGFW has estimated that the cost to settle its claim in full would have been T&T$4.3 million a year, this sum, if anywhere near accurate, would mean that the industrial dispute was a very costly bungle for Ansa McAl, especially in terms of its effect on its public image and reputation in the region, as an employer. It must now rue the day a more constructive and participatory course could not have been found to prevent the disintegration of the dispute to the level that it did.
As I pointed out before, however, the Ansa McAl Group is a vigorous, fast-growing enterprise and should be able to overcome this reputation with time under sound leadership. Last year has been a record-breaking one for its flagship Carib Beer. Indeed, last November the firm produced over a million cases of beer and for 2004 it has achieved production of around 10 million cases (to correct the monthly figure given as that for the year in the first article).
Next week I will give some more details on both firms and make reference to similar occurrences in other parts of the world, as this might be helpful to readers trying to develop an understanding of the issues at stake.