Chiquita's Brand of Crisis Management

September 25, 2007

In the aftermath of Hurricane Mitch, business interests—both domestic and foreign—sought to use the crisis to advance their own interests. Perhaps the most illustrative example was that of the Tela Railroad Company, a subsidiary of the Cincinnati-based Chiquita Brands International (the corporate descendent of the infamous United Fruit Company). Though it lost over three-quarters of its banana crops to the storm, Tela took advantage of the destruction to modernize its Honduran operations, including the installation of high-tech irrigation systems and the introduction of genetically improved bananas.

Chiquita publicly dragged its feet before making a commitment to rehabilitate its plantations, trying to take maximum advantage of the post-Mitch weakness of both the government and the company union. The tax on banana exports had been lowered from 40 cents to four cents per box earlier in 1998, but Chiquita demanded a total exemption from the tax for five years. According to government sources, it also sought exemptions from several labor regulations and agrarian reform laws, and threatened to close its Honduras operations if it did not get its way. President Carlos Flores, frustrated with the company's threats, finally threatened to go public about the company's negotiating strategy if Chiquita did not recommit to replanting. Fearing bad press, Chiquita finally announced it would rehabilitate most of its plantations over the next three years. On May 20, Flores himself planted the first new bananas on Chiquita's Corozal plantation.

Chiquita also sought to take advantage of Mitch by reducing the effectiveness of the Tela Railroad Company Workers Union (SITRATERCO). "Chiquita was lucky with Mitch," said Vitalí García, general secretary of the SITRATERCO on the Cobb plantation camp north of El Progreso. "It allowed them to speed up diversification and modernization. And they told us to accept the changes or we could leave."[1]

With many of the 7,367 Tela workers having decades on the job, leaving meant losing precious health benefits and pensions. Under such conditions, it was safer for many to sign a new agreement defining working conditions, even though many did not like them and felt betrayed by union leaders who pushed them to accept Chiquita's terms. According to García, union leaders "handed Tela everything it wanted on a plate."[2] Discontent with union leaders runs high in the camps these days. "When the leaders get elected, they don't even own a house," said Miguel Hernández, a Tela worker in the Cobb camp. "When they leave office, they've got a nice house and a new car."[3]

Even with the new planting, by August Chiquita was providing only 900 full-time jobs to SITRATERCO members. The rest were offered weekly survival payments taken from their accrued benefits. In August, union officials said 2,800 workers had deserted the camps, many heading north to the United States. Those who remained and had yet to be rehired could get work as temporary employees working for labor contractors hired by Tela. "By using temporary workers, Tela gets out of having to pay for health, education and pension benefits," García said. "Tela hopes workers will choose a few lempiras in the hand rather than the benefits of belonging to the union."[4]

Union workers watched their position erode further when Tela announced in July that it would plant African palm rather than bananas on three of its plantations. Although Tela promised that no one would lose their job as a result, the 350 existing workers on the three plantations figure that the switch in crops will result in a loss of 300 jobs.

Tela did offer to build new homes for many of its workers who were affected by Mitch, but in La Lima, a sprawling city at the edge of the plantations, rather than in the camps that dot the banana fields. "Dismembering the banana communities will undercut the ability of the workers to strike effectively," warned Oswaldo Martínez, news director for Radio Progreso. "As long as the workers lived in the middle of the fields, they could shut down production when they wished, and could always survive by eating bananas. Since the great banana strike of 1954, bananas have been the fuel of victory for the workers. But if you move the workers out of the camps, it will be like taking the fish from the sea."[5]

Paul Jeffrey is a United Methodist missionary in Central America. He writes regularly for Latinamerica Press, National Catholic Reporter and other church-based media. He is the author of Recovering Memory: Guatemalan Churches and the Challenge of Peacemaking (Life & Peace Institute, 1998).

1. Author's interview, Vitalí García, Campamento Cobb, May 1999.
2. Author's interview, Vitalí García, Campamento Cobb, May 1999.
3. Author's interview, Miguel Hernández, Campamento Cobb, May 1999.
4. Author's interview, Vitalí García, Campamento Cobb, May 1999.
5. Author's interview, Oswaldo Martínez, El Progreso, May 1999.

Tags: Honduras, Chiquita, Hurricane Mitch, labor rights, modernize

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