United Brands In Dispute With Panamanian Unions, Government

A recent decision of the transnational banana company United Brands to close 30% of its Panamanian operations has led to a serious confrontation with the Panamanian government of Ricardo de la Espriella. The dispute threatens to unravel the delicate relations between the government, United Brands and organized labor in this Central American country.

The giant agribusiness company plays a major role in Panama's economy. United Brands, which ranks in the top 100 of the Fortune 500, employs more Panamanians than the Canal Zone - over 13,600. Its subsidiaries within Panama include TRT Telecommunications and Polymer de Panama, which produces plastic goods. According to United Brands' 1982 fact sheet, in 1981 the company paid $53 million in wages and benefits, $31 million in taxes, tolls and rental fees, and accounted for $158 million of Panama's exports - nearly half of the country's total exports of $324 million.

United Brands' threat to close down some of its operations can only exacerbate the country's economic difficulties. Like most developing countries, Panama is going through hard economic times as a result of the world recession. Its problems include falling commodity prices, a declining growth rate of the country's gross domestic product (which has dropped by over 50% since 1979), growing short-term debt, and a trade deficit approaching one billion dollars in 1981.

The incident which apparently prompted United Brands' decision was a dispute over wages between the banana workers union (the Cindicato de Trabajadores Bananeros) and United Brands' branch company, the Chirqui Land Company.

In December 1982, General Ruben Dario Paredes, head of the National Guard, requested a meeting with company officials and leaders of the union after a series of strikes and growing intransigence on both sides. The general received a pledge from the company and the union to abide by a 90 day cooling-off period in order to explore alternatives for resolving the stalemate.

But before 30 days had passed, the company began closing down operations on a selected number of ranches where production had been paralyzed completely by the strike. Threats were made to cease production at others. The reason given was that the workers refused to put in overtime, the company denies that it violated the agreement.

By January 11 of this year, 14 of the company's 19 ranches on the Pacific coast were no longer operating, transforming the dispute into a matter of serious national concern. Close to 75% of United Brands' banana-growing workforce had been idled, with potentially serious draining effects on the country's economy.

A United Brands spokesperson reached in Washington acknowledged that "we cut back production and purchases in Panama ...but in harmony with ...the highest levels of the Panamanian government." He blamed the action on a "a fantastic surplus of bananas on the market."

However, recent statements in the company's 1982 annual report show that United Brands did not look favorably on the government's intervention in the wage structure of the industry. "Government-mandated wage increases in Panama," the statement reads, "increased costs of production in many areas."

While neither the company nor the government has admitted that major differences have existed over wages, Panama's president has made it clear that the company must share some of the blame in the labor dispute. "There's a habit of blaming the workers for everything," de la Espriella was quoted as saying recently, "as if the businessmen were saints."

The president, a much more conservative leader than the late populist President Torrijos, might have been expected to act rapidly to end the workers' strike due to the country's precarious economic situation and the overwhelming power of United Brands. But de la Espriella is attempting to hold to middle ground in the dispute. His administration needs labor support for the important Presidential elections in 1984, and for a proposed rewriting of the Panamanian Constitution, which some sectors of the labor movement oppose. He has already lost important labor support, implementing a public sector hiring and wage freeze last year.

The Panamanian government has appointed Fernando Manfredo, a Canal administrator and labor-management relations expert to mediate the dispute.

By mid-February the 14 closed ranches had been reopened while the government and United Brands negotiate over a contract which prohibits United Brands from reducing its investments in Panama. United Brands appears to be moving slowly on the actions because it does not want the government to retaliate against its other companies.

Whether it closes its banana operations or not, United Brands' actions have angered many Panamanians. In a recent article in the Independent Press Agency of Central America (AIP), Panamanian political analysts Luis Restropo and Griselda Lopez describe the plan as part of a well-planned strategy to "blackmail the government" and force Panama to adopt more favorable - and profitable - policies towards multinational corporations.

But the process might more accurately be described as forced austerity, imposed partly by a crisis of overproduction in the banana industry. A high corporate official in the Public Affairs Office of United Brands in New York told Multinational Monitor that "in the last several months there has been a world-wide overproduction of bananas.. .This has affected prices and made it very difficult to realize profitable operations."

United Brands' 1982 annual report notes that "the company's earnings are heavily dependent on Central and South American operations..." 1982 earnings of $2.8 million were called "disappointing," compared to 1981 earnings of $29.4 million.

While refusing to comment on "negotiations that are ongoing between us, the union and the government," the United Brands official emphasized that the company is "not pulling out of Panama. But there may be some modifications in our operations there."

United Brands seems unwilling to remain in Panama at its previous levels of activity and investment. In the final analysis, given its current composition and circumstances, there is little that the Panamanian government is likely to do.

Jack Mudrey is a Washington-based journalist who writes regularly for the Independent Press Agency and The Guardian.