Chavez orders takeover of Owens-Illinois branch
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Chavez orders takeover of Owens-Illinois branch

Venezuelan President Hugo Chavez ordered the expropriation of US-based glass container manufacturer Owens-Illinois Inc's subsidiary in the South American country.

world Updated: Oct 27, 2010 09:32 IST

Venezuelan President Hugo Chavez ordered the expropriation of US-based glass container manufacturer Owens-Illinois Inc's subsidiary in the South American country. Company spokeswoman Stephanie Johnston said on Tuesday that "we were surprised to learn of this decision and we are prepared to work with government officials to better understand the situation."

Chavez announced plans to expropriate the company in a televised speech late on Monday. The leftist leader criticized the company's practices in the country, saying it had been "taking away the money of Venezuelans" and exploiting local people.

Chavez did not detail his complaints about the Owens-Illinois, which is based in Perrysburg, Ohio.

"O-I has been supplying glass food and beverage containers to meet the needs of the Venezuelan people for more than 50 years," Johnston said. "Our two plants in Venezuela, located in Los Guayos and Valera, employ more than 1,000 people and represent less than 5 percent of our global segment operating profit." Owens-Illinois is the world's largest glass container manufacturer, with operations in 22 countries.

The subsidiary Owens-Illinois de Venezuela CA counts among its clients Nestle, PepsiCo Inc and Empresas Polar, which produces the local beer Polar. It was unclear how the takeover would affect supply agreements with the company's clients.

Earlier this year, Chavez threatened to "go after" Empresas Polar, the country's biggest food producer, while calling it a monopoly and accusing it of evading government price controls on basic foodstuffs by producing fewer of price-controlled items. Polar has denied wrongdoing.

At Owens-Illinois' plant in Los Guayos, union leader Rigoberto Mendez said "we don't have any reason to doubt that this expropriation is aimed at affecting the operations of Polar, a business that purchases 80 percent of our production." Employees were working normally at the plant but are concerned, Mendez said in an interview by telephone.

"Our jobs are threatened, our salaries," Mendez said, insisting there are no labor conflicts at the company and that a government takeover would hurt a successful business.

It was unclear how soon the expropriation could take effect, or how Chavez's government would handle compensation for Owens-Illinois' assets.

In Washington, US State Department spokesman Charles Luoma-Overstreet said: "We would expect Venezuela to provide prompt, adequate, and effective compensation for any expropriation of the investments of Owens-Illinois in accordance with international law."

Chavez has nationalized or expropriated a wide range of companies, including cement makers, retail stores and a steel maker, while seeking to lead Venezuela toward a socialist system. Government opponents and business leaders say the seizures are hobbling the economy and spooking investors.

Chavez said in his speech that more expropriations are planned. "There's another list around here," Chavez said, but added that he would save additional announcements for later.

First Published: Oct 27, 2010 09:30 IST