Venezuela seizes Kellogg cereal factory after closure

#1
At the BBC: http://www.bbc.com/news/business-44136293

Authorities in Venezuela have seized a plant owned by the American cereal manufacturer Kellogg.
It comes after the firm announced it was pulling out of the country because of the worsening economic situation.
President Nicolas Maduro, who has previously accused the US of waging economic war against his government, called the closure "absolutely unconstitutional and illegal".
He said the factory had been handed to workers and would continue production."
Venezuela continues on its forced march into complete 3rd world status. If you are a multinational company what can you do when the government seizes your assets without any compensation no less.
 
#8
Sounds like socialism works!
What failed here though was a US corporate entity. Socialism is essentially maintaining food production and the dignity and benefits of employment for it's people after Kellogg's announced the closure of the plant. Kelloggs are worrying about their assets and trademark infringement while the Venezuelan's are worried about their livelihoods and putting food into their kids mouths. The situation in Venezuela is terrible and the leadership is to blame, and this would be unethical in most countries but this could potentially save lives. Venezuela needs a solution and closing food production facilities clearly is not it.

Especially with the US subsidizing all your socialized medicine programs.
Amazing how quickly a thread can be derailed with Trump-speak these days.
 
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#10
Socialism is essentially maintaining food production and the dignity and benefits of employment for it's people after Kellogg's announced the closure of the plant.
The quiet dignity of having to raid zoo exhibits for animals to eat after being forced at implicit gunpoint to vote for a Dear Leader who blames everyone but himself for his country going up in flames.

Very dignity. Many socialism. Wow.
 
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#11
The quiet dignity of having to raid zoo exhibits for animals to eat after being forced at implicit gunpoint to vote for a Dear Leader who blames everyone but himself for his country going up in flames.

Very dignity. Many socialism. Wow.
Exactly my point - if you take away employment and food production facilities then you are left with the indignity of scavenging for food, begging and criminal behavior to feed your family.

If you read my full comment instead of cherry picking a quote and ignoring the part where I criticized the Venezuelan government, you needn't have bothered to reply.
 
#12
Socialism is a broken concept.

It panders to the idea of helping the poor but in reality is just spiteful of those who have made it.

The funniest part is seeing how the idea of the
Bourgeoisie vs the proletariat never worked so now the neo-marxist spin it as Opressed vs Opressor (i.e. Identity politics/white priviledge etc..)
Accept Majority Privilege. You wouldn't go to Japan and say Japanese Privilege.

This eqalitarian idea in Europe is only leading to angry young men.
You cant fight biological masculinity, if you do..it fights back.
Good luck with your ever pushing right/angry men...

The Socialist idea, is a failure..
Hierarchys exist and always will. You cant force it.

People are inherently evil. Social constructs make them good. Proven, western, Christian Judeo, Patriarchal, Capitalistic constructs

Neo-Marxist/Socialist believe its vice versa. That's a lie.
 
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#13
Exactly my point - if you take away employment and food production facilities then you are left with the indignity of scavenging for food, begging and criminal behavior to feed your family.

If you read my full comment instead of cherry picking a quote and ignoring the part where I criticized the Venezuelan government, you needn't have bothered to reply.
But you placed more of the blame at Kellogg's hands than at Venezuala's by your word choices - Kellogg was the only entity described as having failed.
 
#14
I am all for anarchcaptalism, but most ppl here just repeat this socialism doesn't work. At least, oldgaf had it's share of discussion on it. I remember reading a thread about a user from Venezuela about how he was trying to leave the country, and there was a deep and nice debate about social democracy versus Marx kids.

One guy tried to enforce how Venezuela was fine using ideology forms and received a big "fuck you" from everybody, slandered. The guy had some parents killed by the national police if I am not wrong
 
#16
But you placed more of the blame at Kellogg's hands than at Venezuala's by your word choices - Kellogg was the only entity described as having failed.
No is said "here", meaning this particular article. This is a story about Kelloggs closing their plant because of their failure to produce a profit in Venezuela's economy. The government have seized the plant to continue food production in a nation that is desperately in need of food. Kellogg's has failed in Venezuela, whether or not this seizure and work-in fails too is yet to be seen - I can't imagine an empty, inoperable factory would be more beneficial to Venezuelans than a seized, staffed and operable factory though. Would you prefer they just starve over daring to infringe on Kellogg's patented cornflakes recipe?

Governments seize private property for public use. This is called Eminent Domain in the "USA", "Compulsory Purchase" in the UK and "Expropriation" elsewhere. It's not normally something that most people can emotionally get behind, but there is a public safety or interest that drives these decisions.

https://realestate.findlaw.com/land-use-laws/eminent-domain-public-use-requirement.html
 
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#18
Yeah, works pretty great for us in the EU.
Has there ever been any ideology that failed so miserably that its proponents decided to redefine it to mean its opposite and pretend they won? They're like eunuchs that never shut up about the size of their package.

What a wonderful and just world it would be if Europeans like you lived up to your values and implemented real socialism in Europe, I'd love to see that.
 
#19
I wonder if they'll try to run it without any support from corporate or skilled technicians or being able to buy parts and service from vendors. The answer is sadly no.
 
#21
In a free market, if Kelloggs was unable to turn a profit, they'd have to sell off their assets for someone else to try their hand at - with the added benefit of acquiring the assets from a motivated seller. Kelloggs can fail, but the assets don't disappear, and their prices can fall until someone else sees a way to profitability.

In Venezuela, the functioning of the market is so hindered that's it's hard to say it's Kelloggs that failed. The government has created an environment where failure could well have been inevitable. If the government is so spooked by the results of its own failings that it starts to seize private assets, every company will be motivated to get out of Venezuela with whatever they can.
 
#23
kinda an aside but the political views toward business there make me a little worried for Venezuelan rum ... my favorite rum is Diplomatico

that said, it's probably pretty safe. the plantations and rum exporters probably a good relationship with Maduro government since ultimately they export a resource-based thing, whether based on sugar or oil; don't think rum has price controls there; margins on sugar cane probably high so rum distilleries may be more resistant than sugar factories if sugar has price controls; and, ultimately, I guess it's still primarily an export that is still being paid in the same amount of USD or Euro or whatever which is probably appealing considering the VEF.

I bought a few extra to store tho just in case haha

/edit/ was curious so I search just now, and this month actually NYT even did an article on it: related to demand side tho (consumer activism about what's happening there).
 
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#24
No is said "here", meaning this particular article. This is a story about Kelloggs closing their plant because of their failure to produce a profit in Venezuela's economy. The government have seized the plant to continue food production in a nation that is desperately in need of food. Kellogg's has failed in Venezuela, whether or not this seizure and work-in fails too is yet to be seen - I can't imagine an empty, inoperable factory would be more beneficial to Venezuelans than a seized, staffed and operable factory though. Would you prefer they just starve over daring to infringe on Kellogg's patented cornflakes recipe?

Governments seize private property for public use. This is called Eminent Domain in the "USA", "Compulsory Purchase" in the UK and "Expropriation" elsewhere. It's not normally something that most people can emotionally get behind, but there is a public safety or interest that drives these decisions.

https://realestate.findlaw.com/land-use-laws/eminent-domain-public-use-requirement.html
Did Kellogg fail to turn a profit because they made bad business decisions or because the government fixed prices?

Eminent Domain requires compensation from the government as well, which I don't believe Venezuela's government has offered. Also this isn't the first closing business they have seized without compensation.

He also claimed it was unconstitutional to go out of business. That is a great way to entice business to your country.
 
#25
Did Kellogg fail to turn a profit because they made bad business decisions or because the government fixed prices?

Eminent Domain requires compensation from the government as well, which I don't believe Venezuela's government has offered. Also this isn't the first closing business they have seized without compensation.

He also claimed it was unconstitutional to go out of business. That is a great way to entice business to your country.
Irrelevant really given they have seized a non-operable plant to continue feeding themselves in a hunger-stricken nation. This would have not been seized otherwise. Would you have them instead starve? Kellogg’s gave exactly 0 days notice to 300 workers, no help and no compensation to the workers who turned up on Tuesday morning to find out they are now unemployed - some of the workers had been employed there for decades and have no other prospects for employment. So the issue of what Venezuela owes Kellogg’s is debatable and is an issue for the world bank to arbitrate (which it is).

They also announced in their statement that they had “written off all value of their Venezuelan holdings” - so I’m not sure what compensation they want.

The problem with eminent domain is not with compensation, it’s with property and liberty rights. Normally enacted in the US because a local government wants to build a mall or highway - not to feed a starving nation (a real public interest).

I’m not defending Maduro, but he is not claiming that it is illegal to go out of business. He is accusing US corporations of deliberately worsening the economy to manipulate their upcoming election. Regardless, I think the ship has sailed for attracting foreign businesses to Venezuela.
 
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#26
No is said "here", meaning this particular article. This is a story about Kelloggs closing their plant because of their failure to produce a profit in Venezuela's economy. The government have seized the plant to continue food production in a nation that is desperately in need of food. Kellogg's has failed in Venezuela, whether or not this seizure and work-in fails too is yet to be seen - I can't imagine an empty, inoperable factory would be more beneficial to Venezuelans than a seized, staffed and operable factory though. Would you prefer they just starve over daring to infringe on Kellogg's patented cornflakes recipe?

Governments seize private property for public use. This is called Eminent Domain in the "USA", "Compulsory Purchase" in the UK and "Expropriation" elsewhere. It's not normally something that most people can emotionally get behind, but there is a public safety or interest that drives these decisions.

https://realestate.findlaw.com/land-use-laws/eminent-domain-public-use-requirement.html
They shut down factory because they couldn't get raw ingredients and later on government mandated set price.
No reason to keep factory if you can't make profit. Now goverment will take it, they won't produce stuff and later on they will just sell equipment for money. Like all thiefs do.
 
#28
Populism at its best. How sad it's to see the cyclical return of messianic leaders in Latin America, the "hombre fuerte" who will promise to resolve poverty and subdevelopment only because he says it. Not in all Latin America, of course. But if shit like this happens in only one country, it's too much.
 
#29
I grew up in the Soviet Union and that makes me furious. It's like they never heard of Stalin or Mao.

Dont get me started on the Che Guevara fanboys
Latin American populists are mostly inspired by the "heroes" of the Cuban Revolution: The Castro Brothers, Che Guevara, Camilo Cienfuegos etc. They have a romantic view on Cuban Revolution
 
#30
They shut down factory because they couldn't get raw ingredients and later on government mandated set price.

No reason to keep factory if you can't make profit. Now goverment will take it, they won't produce stuff and later on they will just sell equipment for money. Like all thiefs do.
Had they not seized it that factory would have been looted within days. Kellogg’s said it themselves, when they walked away and issued a statement that said they have written-off all Venezuelan assets. They will now ask the World Bank to determine compensation through bilateral agreements to which Venezuela is signatory.

Given that Kellogg’s held a 75% market share for cereal production in a starving nation, I would say this seizure was very much in the public interest.

In most countries, if you close and condemn and building, the government have a mechanism for seizing it in the public interest.

I’m not faulting Kellogg’s for choosing to cease operations - you assume a risk when you choose to invest and the market decides (isn’t this the one of the wonders of capitalism?!), especially in a foreign venture. But I can’t fault hungry people for choosing to force it open. They’ve been established since the 70’s so Kellogg’s aren’t walking away at a net loss.
 
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#34
Not a fan of Trump's Stand, Za Waruru, but it would be more effective/less harmful than any seizure of food production by a government has been.
Seizing land and property to build a border wall would be less harmful than seizing a food production facility which has ceased operations to continue to produce food for a starving nation? Lol
 
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#35
Given that Kellogg’s held a 75% market share for cereal production in a starving nation, I would say this seizure was very much in the public interest.
IT got shut down because they can't get RAW INGREDIENTS. Meaning even if it got under seizure nothing out of this factory will come out.
 
#36
IT got shut down because they can't get RAW INGREDIENTS. Meaning even if it got under seizure nothing out of this factory will come out.
EDIT
Kelloggs states that "current economic and social deterioration"... went as far to say it was a "purely economic decision" - lack of raw materials is actually a media assumption at this point and not confirmed by Kelloggs (yet) as far as I can tell, but they had issues back in February regarding poor access (not no access). They currently have approx. 4 months of raw materials in stock (enough of a reason to keep producing in my opinion, given the situation)

Though, the Venezuelan government is undoubtedly to blame for this colossal humanitarian crisis, and I hope things change at the polls on Sunday. A factory 300 people strong, closing abruptly, with no communication, severance or assistance for its workers (literally came to work to find a notice posted to it's closed gates on Tuesday morning) is bad taste and would be newsworthy in any western country. Lets not forget there is a human element to this story - don't be blinded for your hatred for the Venezuelan government - these humans need to be clothed, housed and fed in a nightmare situation.

My point, my only point, is that a staffed factory is better than an empty factory. If the Government can provide access to these raw ingredients, then they should continue to be able to produce as a matter of survival. As I stated above, whether they can make this a success or not is yet to be seen.
 
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#37
Seizing land and property to build a border wall would be less harmful than seizing a food production facility which has ceased operations to continue to produce food for a starving nation? Lol
Well, one is just going to be a waste of money, while the other leads to worsening famines.
 
#39
EDIT
Kelloggs states that "current economic and social deterioration"... went as far to say it was a "purely economic decision" - lack of raw materials is actually a media assumption at this point and not confirmed by Kelloggs (yet) as far as I can tell, but they had issues back in February regarding poor access (not no access). They currently have approx. 4 months of raw materials in stock (enough of a reason to keep producing in my opinion, given the situation)

Though, the Venezuelan government is undoubtedly to blame for this colossal humanitarian crisis, and I hope things change at the polls on Sunday. A factory 300 people strong, closing abruptly, with no communication, severance or assistance for its workers (literally came to work to find a notice posted to it's closed gates on Tuesday morning) is bad taste and would be newsworthy in any western country. Lets not forget there is a human element to this story - don't be blinded for your hatred for the Venezuelan government - these humans need to be clothed, housed and fed in a nightmare situation.

My point, my only point, is that a staffed factory is better than an empty factory. If the Government can provide access to these raw ingredients, then they should continue to be able to produce as a matter of survival. As I stated above, whether they can make this a success or not is yet to be seen.
So, you are saying that if I leave my house for a while, then you are allowed to take it?

The closing of the factory without notice and compensation to workers should have been resolved legally, sueing the company. Not expropiating it.
 
#40
So, you are saying that if I leave my house for a while, then you are allowed to take it?

The closing of the factory without notice and compensation to workers should have been resolved legally, sueing the company. Not expropiating it.
No, and that it a terrible example. What i'm saying if your family are starving and there is an immediate hunger crisis which can be temporarily resolved in the short-term by seizing vacant private property, then you can and should be ethically excused in doing so. Kelloggs have abandoned their production facility and exited the country. They released a statement that they have "written-off" their assets in Venezuela. They have 4 months of raw materials sitting in a warehouse that would otherwise rot, and it is highly unlikely they will be returning anytime soon. Would you be happier to see them starve than produce cornflakes without a license? Would you be happy to see the stocks rot away to an inedible mush then let Venezuelans eat it? This is getting to be a life and death situation.

Let me put it this way, If your family was starving with no resolution in sight, would you not ethically excuse yourself to do whatever it took to feed them, including illegal activities? Maybe it is just me, but I care more about my family than I do about kellogg's private property.

This issue will be resolved legally through the world bank where Kelloggs have already made a claim, but in the mean time people are starving in Venezuela and have an immediate need for food. Venezuela have seized assets before and been made to pay compensation by Venezuelan courts. in fact, US corporations are in the process of seizing Venezuelan assets to recover this owed compensation whenever they possibly can.

And to your point about leaving your house, the USA (and many other countries around the world) can expropriate your home to build highway, rail service or mall - or whatever they loosely decide is in the public interest when it often isn't. You don't even need to "leave" it. I believe property rights should be respected, but this is an abandoned factory in a starving nation for gods sake - let them feed themselves without being criticized for it.
 
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#41
No, and that it a terrible example. What i'm saying if your family are starving and there is an immediate hunger crisis which can be temporarily resolved in the short-term by seizing vacant private property, then you can and should be ethically excused in doing so. Kelloggs have abandoned their production facility and exited the country. They released a statement that they have "written-off" their assets in Venezuela. They have 4 months of raw materials sitting in a warehouse that would otherwise rot, and it is highly unlikely they will be returning anytime soon. Would you be happier to see them starve than produce cornflakes without a license? Would you be happy to see the stocks rot away to an inedible mush then let Venezuelans eat it? This is getting to be a life and death situation.

Let me put it this way, If your family was starving with no resolution in sight, would you not ethically excuse yourself to do whatever it took to feed them, including illegal activities? Maybe it is just me, but I care more about my family than I do about kellogg's private property.

This issue will be resolved legally through the world bank where Kelloggs have already made a claim, but in the mean time people are starving in Venezuela and have an immediate need for food. Venezuela have seized assets before and been made to pay compensation by Venezuelan courts. in fact, US corporations are in the process of seizing Venezuelan assets to recover this owed compensation whenever they possibly can.

And to your point about leaving your house, the USA (and many other countries around the world) can expropriate your home to build highway, rail service or mall - or whatever they loosely decide is in the public interest when it often isn't. You don't even need to "leave" it. I believe property rights should be respected, but this is an abandoned factory in a starving nation for gods sake - let them feed themselves without being criticized for it.
When they expropiate your house to construct public needs, the goverment pays you for the current value of the house.
In this case, Venezuela's government is stealing property.

"Let me put it this way, If your family was starving with no resolution in sight, would you not ethically excuse yourself to do whatever it took to feed them, including illegal activities? Maybe it is just me, but I care more about my family than I do about kellogg's private property."

If my family is starving and you have food but don't want to give it to me... I can kill you in order to get it then?


You think that the Venezuelan government does this to save jobs? To feed poor, starving families? They only do it because they want themselves running the business. The country is starving not because Kellogg's closed their factory, but because the government only seeks perpetual power and society is fine with that.
 
#42
When they expropiate your house to construct public needs, the goverment pays you for the current value of the house.
In this case, Venezuela's government is stealing property.

"Let me put it this way, If your family was starving with no resolution in sight, would you not ethically excuse yourself to do whatever it took to feed them, including illegal activities? Maybe it is just me, but I care more about my family than I do about kellogg's private property."

If my family is starving and you have food but don't want to give it to me... I can kill you in order to get it then?


You think that the Venezuelan government does this to save jobs? To feed poor, starving families? They only do it because they want themselves running the business. The country is starving not because Kellogg's closed their factory, but because the government only seeks perpetual power and society is fine with that.
You’re not making sense.

How much is a failed inoperable business in a poverty stricken, economically hyper-inflated country worth exactly? Do you want the Venzeluan courts to decide this or the world bank? Kellogg’s is already making a legally enforceable claim.

The expropriation of property to feed people is not the same as murder. What a stupid comparison to make, nobody was injured in this action. Here’s a fairer one: Would you loot an abandoned/vacant/disused warehouse full of food to feed your starving family?

When a country expropriates your property against your will to build a mall (because it’s in the public interest to have another food court), you probably don’t care for money and have likely rejected offers at that stage. The courts who approve the expropriation of the property are also the ones who decide what FMV is and there are many incidences where this is unfairly or incorrectly determined. Surely proponents of capitalism would want a free market to decide the value, not a judge! If you truly cared anything for liberty and rights, you wouldn’t see a court determined payment for the forcible removal from your home as reasonable. And yet, the seizure of an abandoned, unused factory with 4 months of stock as an apparently outrageous action.

I think I’ve made my views on their government clear, but the government is not hungry. When did people start caring so much about the rights and feelings of a corporate entity over human beings? Many people here hate the Venezuelan government so much they would prefer to watch their citizens starve to death to prove a point about their personal views. Yes the government is bad - should this mean the citizens should suffer?
 
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#46
people still unironically call this socialism/communism in 2018
The people in charge call it socialism, people like Naomi Klein and Chomsky were praising it as a great example of socialism as recently as a couple years ago, but now that it has clearly failed it's not socialism?

OK.

I guess next thing you are going to tell me is that those Scandinavian countries that have some of the strongest protections for property rights in the world and the most free markets are really socialist.

Socialism does not and can not work, period.

You can have a very free market capitalist economy with a large public sector (like Scandinavia), but that has enormous cost that leftists typically don't want to admit:

https://www.nottingham.ac.uk/research/groups/grangercentre/documents/15-02.pdf
https://www.ecb.europa.eu/pub/pdf/scpwps/ecbwp1399.pdf?66dfde6960bf90d04469b07de906d880

This is pretty mainstream economic thought at this point. Large government expenditures directly reduce GDP growth, and over time this decrease and growth rates leads to massive difference in wealth creation. This is even assuming that the government expenditures are demographically sustainable, which in most places they aren't.

You can also get into the public choice economics school of thought were larger government leads directly to rent-seeking and cronyism as well, but just going off mainstream economics, the ideal size of government is much smaller that the typically European state, and even smaller than the US government. The ideal is more along the lines of Singapore or Hong Kong, which is why among the rich countries they vastly outperform the rest in GDP growth.
 
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#49
No, it just got abandoned because it was no longer possible to run it profitably.

State-controlled factories tend to just fall into disrepair and fail completely. They also tend to have astronomically worse safety records.
Yes, it was abandoned, so why do you care so much what Venezuela do with it now? Your problem is you would just prefer to just let it remain empty and unused, eventually be condemned and allow the current stocks to rot away to prove a point. These things "tend to fail" after all.

When it's looted and emptied by the starved - that will be the fault of Venezuela too, for not stepping in to stop it -- or if the police do step in, then it's an opportunity to condemn government totalitarianism.

When a business fails in the USA (perhaps due to tariffs, currency conversion or regulation), it's the nature of the free market. When a business fails in a socialist state, it's the fault of socialism... if it doesn't fail - it's proof that capitalism works! This narrow-mindedness and exceptionalism really makes me laugh.
 
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#50
people still unironically call this socialism/communism in 2018
If a concept fails in application you should always assume it's a problem with the application and not the concept. So yeah, you should keep up banging your head against the brick wall, eventually you'll get it right.