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posted 22 Apr 2012, 19:55 by Gerry Kangalee
The Chamber of Commerce has been relentless in its attack on the workers at TCL and their union, the OWTU, condemning both for causing harm to the construction sector and consequently the overall economy of T&T. The organisation likes to pride itself as being responsible and objective in its views and purports to present a “national perspective” guiding its positions. I would like to examine some of the positions of the organisation

The Chamber blasts the OWTU for taking strike action and cites the negative effects, yet it never mentions that TCL instituted lockout action shortly afterwards. Therefore both the union and the company have exercised their legal rights to take industrial action but the goodly Chamber criticizes only the union.

Cement prices have soared since the strike, in many cases well in excess of 100%. Consumers have complained that some hardware stores have also instituted a quota system whereby cement is only sold if other material is purchased. TCL has been boasting that it has been producing considerable volumes of cement at Claxton Bay and importing thousands of tonnes from its overseas plants; yet these murderous prices! Has the Chamber condemned this practice? Where is its concern for the construction sector? Or do profits supersede national interests?

Arising from the strike and subsequent lockout of workers at TCL volumes of pertinent information is now in the public domain, quite a lot of which was available before but had escaped below the radar and seriously questions many of the management’s decisions.

Some of these decisions have implications that can reach considerably further than the industrial relations issues that dominate the news but can send shockwaves throughout the entire country. The company is publicly owned and its shares are traded on the local Stock Exchange. It was one of the first State Enterprises to be privatised and that was accompanied by considerable hype.

NIB and UTC are among the largest shareholders in the company; so too are many pension plans and credit unions. Therefore any convulsions in the financial affairs of TCL will have serious ramifications throughout the country. The company’s audited financial statements and comments made by the Auditors must send alarm signals to all shareholders, contributors to NIB, investors in UTC, and members of pension plans and credit unions.

The company’s auditors in its report for 2010 and 2011 noted the mountain of debt that the organization is immersed in. This debt did not arise from the payment of salaries and wages or from the industrial action but arose from acquisitions by the management and the need for additional expenditure on improving efficiencies and expansion.

In 1998 the company’s long-term-debt (LTD) was $327 million; this skyrocketed to $1.2 billion in 1999. The LTD was reduced to $848 million by 2004 only to explode once again to $1.1 billion in 2005 and peaked at $1.44 billion in 2008. Dubious investment decisions, significant cost overruns etc. are at the heart of these onerous debts The company’s auditors had this to say in their 2010 report:

“Most of the debt agreements are therefore in default either through non-payment of interest and principal or due to cross default clauses. Lenders can therefore initiate legal action to demand immediate repayment of outstanding loan obligations which the TCLG is not in a position to immediately meet. This condition, along with the matters set forth in the Note 26, indicate the existence of a material uncertainty that may impact on the Group’s ability to continue as a going concern.”

These comments are about the state of the company’s finances more than a year before any industrial action and that situation has worsened since.

TCL’s losses for 2011 amounted to $375 million and may be worse if certain projections of the management are not fulfilled. Very instructive in all this doom and gloom are the comments of Mr. Satnarine Bachew that the company’s operations at Claxton Bay are profitable.

The OWTU has quantified these profits at $300 million over the last 3 years. The company’s losses result from its overseas operations. Should the workers in T&T be held responsible for questionable decisions made outside of T&T by the management of the company? Did the management consult with the workers before making those bad investments? To my mind the shareholders and other stakeholders need to intervene urgently into the affairs of the company. Who says that the best crew to get the ship out of the rocks is the same one that it ran aground?

It seems that this management cannot run a profitable operation in a market in which it has a monopoly!!! There has been no collapse in cement prices or any such calamity. The company’s creditors have moved to secure their interests by appointing two directors to oversee their interests. Why haven’t the shareholders called for an extraordinary meeting so that the performance of the leadership of the organization can be reviewed? The management has been involved in lengthy negotiations with its creditors, the details of which have not yet been made public but it appears that the creditors are moving decisively to protect their interests.

The auditors “material uncertainty” about the company’s future as a going concern must send great fears to all first scheme investors of the UTC, all workers as they are contributors to NIB, most pension plan members and credit union members.

If, as the auditors state, it is possible for TCL’s creditors to call in their loans what will become of all those who invested hundreds of millions in buying shares in the company? Will another call be made on the State like Clico and HCU? It clear that an urgent meeting of the shareholders needs to be called that will take decisive steps to change the leadership of the company and that, I believe, will also deal with the industrial relations problems.