Exploring State-anchored District:
The Case of Iron and Steel Industry in Ciudad Guayana,
Venezuela
A Research Paper presented by:
Luis Enrique Vargas Osorio
(Venezuela)
in partial fulfillment of the requirements for obtaining the degree of
MASTERS OF ARTS IN DEVELOPMENT STUDIES
Specialization:
Local Development Strategies
(LDS)
Members of the examining committee:
Dr. Peter Knorringa (Supervisor)
Dr. Bert Helmsing (Second Reader)
The Hague, The Netherlands
November, 2011
Disclaimer:
This document represents part of the author’s study programme while at the
Institute of Social Studies. The views stated therein are those of the author and
not necessarily those of the Institute.
Inquiries:
Postal address:
Institute of Social Studies
P.O. Box 29776
2502 LT The Hague
The Netherlands
Location:
Kortenaerkade 12
2518 AX The Hague
The Netherlands
Telephone:
+31 70 426 0460
Fax: +31 70 426 0799
ii
Acknowledgements
I would like to thank my Supervisor, Dr Peter Knorringa for giving me helpful
advice, guidance, comments and inputs as well as for his patience. I would like
to thank my Second Reader, Dr Bert Helmsing for his valuable comments and
inputs.
I am grateful to all LDS staff for their inputs and support; and to my
classmates for their comments and advice.
I am grateful to MIBAM staff Mr Francisco Bosque and CVG staff Mr
Luis Piña for providing me useful information and their help during my
fieldwork. My special thanks go to Firms’ staff and Municipality of Caroní staff
with co-operation makes it possible to undertake this research.
I am grateful to Banco Central de Venezuela for giving me support to
undertake this academic endeavour.
Last but not the least, I am grateful to my wife Orleny and my daughters
María José and Mariana for their support and understanding during my studies.
iii
Contents
List of Tables
List of Figures
List of Acronyms
Abstract
vi
vi
vii
viii
Chapter 1 Introduction
1.1 Background
1.2 Indication of problem area
1.3 Research objectives
1.4 Research questions
1.5 Methodology
1.6 Scope and limitations
1.7 Structure of the paper
1
1
3
4
4
4
5
6
Chapter 2 Conceptual and Analytical Framework
2.1 Introduction
2.2 Industrial districts and clusters
2.2.1 Typology of industrial districts
2.2.2 Inter-firm co-operation
2.2.3 Role of the state
2.2.4 Firm size
2.2.5 Local and non-local embeddedness
2.3 Ownership structure
2.4 Analytical framework
7
7
7
8
9
10
10
10
11
11
Chapter 3 Exploring Inter-firm Interactions
3.1 Introduction
3.2 Mining
3.3 Pelletizing
3.4 Briquetting sector
3.5 Steel-making sector
3.6 Conclusion
13
13
13
15
16
18
20
Chapter 4 Exploring State-anchored District
4.1 Introduction
4.2 Conceptualizing Ciudad Guayana’s I&S industry
4.3 Mapping out Ciudad Guayana’s I&S industry
4.4 Conclusion
21
21
21
25
29
Chapter 5 Ownership Structure and Other Factors
5.1 Introduction
30
30
iv
5.2
5.3
5.4
Changes in inter-firm interactions due to ownership structure
5.2.1 Mining
5.2.2 Briquetting sector
5.2.3 Steel-making sector
Changes in inter-firm interactions due to other factors
Conclusion
Chapter 6 Conclusions
Appendices
References
30
30
32
36
39
42
43
46
48
v
List of Tables
Table 4.1 Local and non-local uses of I&S production 2011
Table 5.1 Supply and demand of pellets in the district (Million tonnes)
24
40
List of Figures
Figure 2.1 Analytical Framework
Figure 3.1 I&S industry chain of production 2011 (Million tonnes)
Figure 4.1 Mapping out state ownership
Figure 4.2 Mapping out private ownership
Figure 4.3 Mapping out state ownership and workers’ self-management
Figure 5.1 Destiny of iron ore production in Venezuela 1968-2010
Figure 5.2 Photo of Palua Port
Figure 5.3 Hot briquetted iron production in the district 1991-2010
Figure 5.4 Destiny of steel production in Venezuela 1968-2010
Figure 5.5 SIDOR’s labour and steel production 1990-2010
vi
12
14
25
27
28
31
32
34
37
39
List of Acronyms
BRIQVEN:
CASIMA:
COMSIGUA:
CVG:
FMO:
I&S:
MATESI:
MIBAM:
O.IRON:
OPCO:
RYP:
SIDETUR:
SIDOR:
SIZUCA:
SNAC:
TSC:
VENPRECAR:
Briquetera de Venezuela, SA; Venezuelan Briquette, SA
Siderúrgica del Turbio, SA - Planta Casima; Casima Plant
Complejo Siderúrgico de Guayana, CA; Guayana Steel
Complex, CA
Corporación Venezolana de Guayana; Guayana’s
Venezuelan Corporation
CVG Ferrominera del Orinoco, CA; Orinoco Iron-mining,
CA
Iron and steel
Materiales Siderúrgicos, SA; Steel Materials, SA
Ministerio del Poder Popular para las Industrias Básicas y
Minería; Ministry of Popular Power for Basic Industry
and Mining
Orinoco Iron, CA; Orinoco Iron, CA
Operaciones al Sur del Orinoco; Orinoco South Operations
EBS Rieles y Perfiles, CA; Rails and Structures, CA
Siderúrgica del Turbio, SA; Turbio Steel, SA
Siderúrgica del Orinoco Alfredo Maneiro, CA; Orinoco Steel
Alfredo Maneiro, CA
Siderúrgica Zuliana, CA; Zulian Steel, CA
EBS Siderúrgica Nacional, CA; National Steel, CA
EBS Tubos sin Costura, CA; Seamless Tubes, CA
Venezolana de Prerreducidos Caroní, CA; Venezuelan
Prereduction Caroni, CA
vii
Abstract
Industrial districts and their developmental features have been of the interest
of many scholars. Most of the literature refers to the traditional Marshallian or
Italianate district where inter-firm negotiation with co-operation is assessed
within a production system characterized by a geographical and sectorial
concentration of private- small and medium enterprises (SMEs). Such
production systems are less likely to observe in developing countries where can
play an important role in promoting and sustaining industrial districts. This
academic endeavour claims that ownership structure matters for industrial
district analysis. The findings suggest that under state ownership, the state
tends to induce initial competitive advantages whereas under private ownership
tends to emerge voluntary co-operation.
Relevance to Development Studies
For developing countries it is worth to explore different types of clustering
initiatives. The case of Ciudad Guayana’s I&S industry in Ciudad Guayana
offers a great opportunity to explore inter-firm interaction patterns in stateanchored districts which have not been sufficiently researched. Additionally,
this research attempts to contribute to scholar knowledge by bringing the issue
of ownership structure into the debate of industrial districts.
Keywords
State-anchored district/typology of industrial districts/ownership structure/
iron and steel industry/Ciudad Guayana/Venezuela
viii
Chapter 1
Introduction
This thesis analyses inter-firm interactions both inside and outside the iron and
steel (I&S) industrial district in Ciudad Guayana, Venezuela, and explores the
question of to what extent those interactions change as a result of changes in
ownership structure as well as other factors. It seeks to find out the nature of
co-operation among firms under a given ownership form. Other factors are
also taken into account to explore interaction patterns. The study builds on
typology of industrial districts put forward by Markusen (1996).
1.1 Background
Firms within Ciudad Guayana’s I&S industry have experienced changes in
ownership structure throughout their trajectory that are linked to broader
political economy context. This trajectory can be split into three distinct stages
where a distinct ownership structure was prevalent: state ownership, private
ownership and state ownership with workers’ self-management.
State ownership
The first stage of state ownership in Ciudad Guayana’s I&S industry can be
framed in the context of state-led and import-substituting approach to
industrialization that was on fashion in Latin America in the early 1950s. At
that time had been discovered iron ore deposits in “Cerro Bolívar” and “El Pao”,
located 130 kilometres from the district. That was the outset of I&S activity in
Venezuela, albeit it was primarily a private-foreign controlled and exportoriented activity. But the prevalence of state ownership in Ciudad Guayana
started in 1960 with the creation of Corporación Venezolana de Guayana (CVG), a
state agency with the mandate of seeding a growth-pole in a virtually
unpopulated zone in the Southeast of Venezuela. Ciudad Guayana started
from scratch as part of a comprehensive plan designed by a small group of
specialists from Massachusetts Institute of Technology (MIT), Universidad
Central de Venezuela (UCV) and CVG (Interview 10b). The plan in broader
sense was to channel oil revenues to industrialization projects and “deflect
migration away from ‘core’ coastal population centres like Maracaibo and
Caracas” (Hite 2004: 63). In 1964 was created the steel mill SIDOR and in
1975 with the nationalization of the iron industry the two foreign-owned
mining companies were transformed into “CVG Ferrominera del Orinoco”
(FMO). These two large state-owned firms have shaped the landscape of I&S
in Ciudad Guayana as from the mid-1970s.
Private ownership
The neoliberal agenda was widely adopted in Latin America. Accordingly, it
was believed that privatisation was an option to promote competitiveness in
I&S industry. The rationale behind this policy was to recover investment
levels, reduce fiscal deficit, promote industrial development and enhance
1
collective welfare motivated by technological changes and public sector
distress (Corporación Venezolana de Guayana 1990: 4).
In 2008 SIDOR was sold to Amazonia Group, a foreign consortium with
a little participation of SIVENSA, a domestic firm. According to one
respondent (Interview 11b) there were two major events prior SIDOR’s
privatisation. First, in the early 1990s SIDOR started a reconversion program
determining that former Siemens-Martin plant would not meet the
international standards in terms quality and cost, and consequently it was shut
down. As a result, the production capacity of SIDOR dropped from 4.8 tons
per year to 3.6 tons per year and 4000 workers were fired. From that time
onwards, SIDOR would depend on a new steel mill (Plan IV) which
construction had started in 1974 and finished in 1982. It can be argued that
this decision concurred with the neoliberal certainties that were on fashion at
that time, namely the reduction of the state size. Second, a debt burden to
finance construction of Plan IV: even though there was an increase in the
productivity as well as in the operative standards due to the reconversion
program, it was difficult to recover the profitability of the firm because of the
debt burden (Interview 11b).
As from 1998, I&S industry experienced a decade of private-foreign
ownership over SIDOR. Moreover, both private-foreign and domestic
ownership was also present in the district in other sector: the briquetting
sector, encompassing five medium enterprises that employ between 200 and
700 workers (Briquetera de Venezuela. 2011, Complejo Siderúrgico de
Guayana. 2011, Venezolana de Prerreducidos Caroní. 2011, Orinoco Iron.
2011). Private-foreign investment constructed: i) OPCO (nowadays FMO
briquetting plant) which started operation in 1989 and operated by the
Japanese Kobe Steel, ii) COMSIGUA which started operation in 1998 with a
majority participation of Japanese capital with the 73% of the shares (Interview
06), and iii) POSVEN (nowadays BRIQVEN) which started operation in 1999
with a majority participation of Korean POSCO.
The other two private-owned briquetting mills were established in the
locality by domestic capital. SIVENSA Group started up VENPRECAR in
1990 also with participation of CVG with 13% of the shares (Interview 07).
The other briquetting plant was initiated as a lab with participation of both
FMO and SIVENSA Group to develop a technology that could produce
briquettes from iron ore fines that was the strength of FMO (Interview 15).
The technology was approved and in 2000 started up Orinoco Iron (O.IRON)
with SIVENSA Group as the major shareholder (Interview 08).
State ownership and workers’ self-management
The process of nationalization (it is still going on) of I&S industry in Ciudad
Guayana began in a context of rethinking the national economy with impacts
at local level. During the last decade Venezuelan National Government has
been promoted a radical change towards the so called “Socialism of 21st
Century”, which industrial policy has been framed in this study under the neodevelopmentalist approach since it resonates with some of its features, namely
the recall of state-drive development and the importance of manufacturingbased industrialization for national and local development. Nationalization
process is led by MIBAM somewhat diminishing CVG ascendancy on the
2
district (Interview 06). OPCO was nationalized in 2007 followed by SIDOR in
2008 after a period of dispute between them and the labour unions (Interview
12). Then in 2009 were nationalized COMSIGUA, O.IRON, VENPRECAR
and BRIQVEN (Interview 06, Interview 07, Interview 08, Interview 09). More
recently in 2010 started the process of nationalization of SIDETUR which
owned CASIMA plant in the locality. The majority of these firms are nowadays
operating under the supervision of a transition committee composed of
representatives of the government and the labour unions.
Nowadays, the state-owned I&S industry in Ciudad Guayana comprises de
following firms which interactions are the focus of this study:
Firm
CVG Ferrominera del Orinoco, C.A. – FMO
Siderúrgica del Orinoco Alfredo Maneiro – SIDOR a/
FMO Planta de Briquetas, S.A. – FMO briquetting plant b/
Briquetera de Venezuela, S.A. - BRIQVEN c/
Complejo Siderúrgico de Guayana - COMSIGUA c/
Orinoco Iron, CA – O.IRON c/
Venezolana de Prerreducidos Caroní - VENPRECAR c/
Siderúrgica del Turbio, SA - Planta Casima - CASIMA d/
a/ Privatized in 1997 and nationalized in 2008.
b/ Nationalized in 2007.
c/ Nationalized in 2009.
d/ Nationalized in 2010.
Activity
Mining
Manufacture
Manufacture
Manufacture
Manufacture
Manufacture
Manufacture
Manufacture
Additionally, I&S industry is likely to expand since three state-owned
firms are now in process of construction, albeit just one in the locality. These
three firms are also included in the study sample:
Firm
E.B. Siderúrgica Nacional, C.A. – SNAC
E.B. Tubos sin Costuras, C.A. – TSC
E.B. de Rieles y Perfiles, C.A. – RYP
Activity
Manufacture
Manufacture
Manufacture
1.2 Indication of problem area
Industrial districts and their developmental features have been of the interest
of many scholars. Most of the literature refers to the traditional Marshallian or
Italianate district where inter-firm negotiation with co-operation is assessed
within a production system characterized by a geographical and sectorial
concentration of private- small and medium enterprises (SMEs). Such
production systems are less likely to observe in developing countries, where
the state and large firms can play an important role in promoting and
sustaining industrial districts. Thus, it is worth to explore other strategies of
3
clustering so as to identify inter-firm interaction patterns and the type of
production system that is taken place. This research attempts to contribute to
scholar knowledge by bringing the issue of ownership structure into the
debate, albeit it is acknowledge that other factors play a role in affecting
interaction patterns.
1.3 Research objectives
The aim of this research is to explore inter-firm interactions both inside and
outside Ciudad Guayana I&S industry. It explores the question of to what
extent those interactions change as a result of changes in ownership structure.
The study additionally searches other factors influencing inter-firm interactions
and builds on typology of industrial districts proposed by Markusen (1996).
Within Markusen’s framework it is also explored changes in direction of local
and non-local embeddedness.
1.4 Research questions
This research analyses the main question of to what extent inter-firm
interactions change as a result of changes in ownership structure in Ciudad
Guayana’s I&S industry?
Sub questions:




What are the inter-firm interactions among state-owned firms in
Ciudad Guayana’s I&S industry?
How can be conceptualised and mapped out Ciudad Guayana’s I&S
industry?
How does ownership structure influence inter-firm interactions in
Ciudad Guayana’s I&S industry?
How do other factors influence inter-firm interactions in Ciudad
Guayana’s I&S industry?
1.5 Methodology
This thesis adopts primarily a qualitative approach to explore the research
questions. Accordingly, the research strongly relies on inductive analysis based
on semi-structured interviews undertaken in the locality. As stated by
Markusen (1994: 478):
Evidence to test these newer theories has come increasingly from qualitative
data, especially from interviews of firms and other industrial and regional
actors such as trade associations, business service providers, labour unions,
and economic development officials…This makes sense because a key focus
in recent theory is the degree to which firms are “embedded” in local
economies, through relationships with competitors, customers, suppliers,
regional business organizations, and public sector forums.
Accordingly, a fieldwork was carried out in Ciudad Guayana, Venezuela,
where I&S industrial district is located. It was targeted managers of the firms,
4
government officials from Ministry of Basic Industries and Mining (MIBAM),
the municipality of Caroní (local government) and CVG as well as
representatives of workers among firms. In order to substantiate findings, both
qualitative and quantitative data is examined from primary and secondary
sources.
Primary Data
For data collection semi-structured interviews were conducted to gather data
of the firms and in-depths interviews were implemented for other actors. It
was considered to apply a questionnaire to collect standardized data. The firms
identified above represented the whole stated-owned complex. Accordingly,
the questionnaire was sent attached to them, but the sampling was too short
that it was considered not representative to report them. This quantitative
endeavour was dropped out of the analysis, albeit respondents’ comments on
questionnaire were used as fruitful source of relevant data. All the interviews
occurred in interviewees’ place of work from 28th July 2010 to 25th August
2010. Primary data collected was mainly qualitative although quantitative data
was also gathered. In data processing, most of the qualitative data was used in
its original state and coded where necessary using Atlas.ti 6.2.
The selection of key respondents was made purposively and snowballing
technique was used to locate fruitful respondents. The main strategy was
sending a letter to the head of the organisation asking for key resource persons
at planning, procurement or personnel area. The respondents were selected by
the organisation based on their knowledge and/or position in the organization.
Due to time and financial limitations, a total of 16 interviews were conducted
in the field that comprised 22 key respondents: 14 from I&S firms, most of
them strategic planners and personnel managers. Additionally, it was selected 1
informant from MIBAM, 2 from the municipality, 1 from CVG and 4 from
the workers representatives. Interviews were conducted in Spanish and needed
to be transcribed and translated from Spanish to English.
Secondary Data
To substantiate the study a set of quantitative data was gathered from available
information provided by Banco Central de Venezuela (BCV) and CVG.
Additionally, a set of data was used from desk review of different materials
that could be found on internet (books, journals, articles, newspapers) as well
as any published and unpublished materials related to the topic.
1.6 Scope and limitations
As for the scope of this study, the focus was on I&S industry in Ciudad
Guayana, Venezuela, hence, its findings may not be generalised to either
resource-based state-owned industrial district. Therefore, further research is
needed on this regard.
There could be some selection biased since it was targeted the managers
of the firms and they might not be always the most appropriate respondents.
Also the researcher made use of his working relationships with some officials
from these organizations as an entry point. However, it was always up to the
organization the selection of key informants. As mentioned before, it is
5
acknowledged that due to lack of time and financial resources the sample size
was small especially to apply a questionnaire, which limited the researcher to
obtain different points of views to confirm the responses. To overcome this
limitation there was discussion on the questionnaire and the secondary data
was gathered from desk review.
1.7 Structure of the paper
This paper has been organised into six chapters. Chapter one presents the
background of the case study, indication of the problem area, objectives,
research questions and the methodology. Chapter two shows the relevant
concepts as well as the analytical framework to address the research questions.
Chapter three explores inter-firm interactions among state-owned firms.
Chapter four explores the role of state, the role of large firms and local and
non-local embeddedness as to conceptualize and map out the district. Chapter
five builds on the main research questions; the analysis aims to find out
whether ownership and other factors influence inter-firm interactions. Chapter
six presents the conclusions of the study.
6
Chapter 2
Conceptual and Analytical Framework
2.1 Introduction
This chapter introduces the conceptual and analytical framework. It addresses
concepts of industrial districts and clusters, draws on typology of districts,
discusses nature of inter-firm interactions, the role of the state and firms in
shaping industrial district configuration, defines the concepts of local and nonlocal embeddedness and finally shows the analytical framework used to address
the research questions.
2.2 Industrial districts and clusters
Industrial districts and clusters have been of interest of scholars for the last
three decades. The concept of clusters focuses on the advantages that accrue
to firms and the area in which they operate due to sectorial and geographical
concentration of firms, while industrial district additionally implies the
existence of co-operation (Schmitz 1995: 536). Piore and Sabel (1984) made an
important contribution to the study of industrial districts by identifying
“networks of technologically sophisticated, highly flexible manufacturing firms
in central and northwestern Italy” (1984: 17) as an alternative to Fordist massproduction. Porter (1990, 1998) gave clusters prominence as a source of
competitive advantage. Pyke and Sengenberger (1992) clarified that an
industrial district is not merely a concentration of firms within the same sector
and locality, but they characterised by “strong networks of (mainly) small firms
which, through specialization and subcontracting, divide among themselves the
labour required for the manufacture of particular goods” (1992: 4) that bring
about collective efficiency. Schmitz and Nadvi (1999) identified an “incidental
and deliberate effects into the concept of collective efficiency defined as the
competitive advantage derived from external economies and joint action”
(1999: 1504). The former is termed passive collective efficiency and include
external economies such as a pool of skilled workers, access to suppliers of
specialized inputs and new knowledge spillovers. The latter is called active
collective efficiency meaning a “conscious pursuit of joint action”.
However, the production system this paper is intended to analyse differs
substantially from the above features of industrial districts. Markusen
contribution to the debate of industrial district expanded to a large extent the
scope of the analysis. This thesis adopts the definition of industrial districts
given by Markusen as:
A sizable and spatially delimited area of trade-oriented economic activity
which has a distinctive economic specialization, be it resource-related,
manufacturing, or services (Markusen 1996: 296)
7
2.2.1 Typology of industrial districts
Markusen’s definition of industrial district broadens the typology of
production systems that may bring about both passive and active collective
efficiencies. This is especially important for developing countries. As some
scholars have discussed (Hilhorst 1998, Altenburg and Meyer-Stamer 1999), it
is less likely to find such a sophisticated system of production in developing
countries. For example, Altenburg and Meyer-Stamer elaborated about
typology of clusters in Latin American countries. They distinguished three
types of cluster: i) survival cluster of micro and small-scale enterprises, ii) more
advanced and differentiated mass production clusters, and iii) cluster of
transnational corporations; albeit they did not consider resource-based clusters,
such as the metallurgical industry in Ciudad Guayana (Altenburg and MeyerStamer 1999: 1695). In this paper is taken the typology of industrial districts
put forward by Markusen which contributed to industrial district analysis by
characterizing other form of ‘sticky places in slippery space’. According to her,
there are four basic types of industrial district: Marshallian and Italianate
district, hub-and-spoke district, satellite platform and state-anchored district.
• Marshallian and Italianate district is “a region where the business
structure is comprised of small, locally owned firms that make
investment and production decisions locally. Scale economies are
relatively low, forestalling the rise of large firms. Within the district,
substantial trade is transacted between buyers and sellers, often
entailing long-term contracts or commitments.” (Markusen 1996: 2979)
• Hub-and-Spoke Industrial District is “another quite different type
of industrial district is present in regions where a number of key firms
and/or facilities act as anchors or hubs to the regional economy, with
suppliers and related activities spread out around them like spokes of a
wheel”. (Markusen 1996: 302)
• Satellite Platform is “a congregation of branch facilities of externally
based multiplant firms. Often these are assembled at a distance from
major conurbations by national governments or entrepreneurial
provincial governments as a way of stimulating regional development
in outlying areas and simultaneously lowering the cost of business for
competitively squeezed firms bristling under relatively high urban
wages, rents, and taxation”. (Markusen 1996: 304)
• State-anchored Districts “where a public or nonprofit entity, be it a
military base, a defence plant, a weapons lab, a university, a prison
complex, or a concentration of government offices, is a key anchor
tenant in the district. Here, the local business structure is dominated by
the presence of such facilities, whose locational calculus and economic
relationships are determined in the political realm, rather than by
private-sector firms”1. (Markusen 1996: 306)
1
The hypothesized features of state-anchored district can be seen in Appendix II.
8
The contention is that Ciudad Guayana’s I&S industry resonates with
state-anchored district category, which features are being analysed in
chapter 4.
2.2.2 Inter-firm co-operation
The source of competitiveness in industrial districts depends highly on interfirm co-operation:
According to the industrial district model, there is intense competition
between firms producing the same things and co-operation between firms
producing similar but non-competing goods or between firms engaged in
different staged of production (Schmitz 1992: 95)
It is acknowledged that there are several forms of co-operation. Literature
on industrial districts tends to identify the more frequent forms of cooperation. For example, Kristensen surveyed some instances of co-operation
in Italian industrial district:
Co-operation is manifest in the collective organisation of services, the
strength and political influence of the small business trade associations, the
collaboration between units in a production chain over questions of design
and technology, and the general atmosphere of openness that encourage the
spread of ideas and innovation so crucial to the district’s success (Kristensen
1992: 124).
The question is: would a group of state-owned firms co-operate to take
advantage of sectorial and geographical concentration? As it is implied in
Markusen’s typology of districts, the answer could be affirmative, but what
form of co-operation? As mentioned above, co-operation can take many
forms. For the purpose of this study, interactions will be analysed within
Markusen’s framework of state-anchored district (1996: 299).
Additionally, to draw on the nature of interactions, this thesis adopts the
framework of ‘resource-exchange analysis’ which “builds on but goes beyond
Weber's formulations, exploring macro and micro relationships by considering
normative, instrumental, and coercive elements of politics” (Uphoff 1989:
296). This framework accepts Weberian notion that authority is a special kind
of power (in Uphoff 1989: 300) and that the state claims “legitimate use of
physical force in the enforcement of its order” (in Uphoff 1989: 302):
The authority of the state exists to the extent and to the degree that its
leaders and their agents successfully uphold the claims they make upon their
subjects for compliance - regardless of the basis upon which that success
rests (Uphoff 1989: 302).
As stated by Boulding “power in any social system invariably involves
some combination of self-interested, coerced, and altruistic relationships” (in
Uphoff 1989: 305). Accordingly, for the purpose of this paper, it is made the
distinction between negotiated, coerced and voluntary co-operation: i)
negotiated, when co-operation is combined with more degree of self-interest,
ii) coerced, when co-operation is combined with more degree of “legitimate
force” as in the Weberian notion, and iii) voluntary, when co-operation is
combined with more degree of altruism.
9
It can be argued that qualitative feature of industrial district that
differentiate from mere geographical and sectorial concentration of firms, is
the emergence of voluntary co-operation among firms.
2.2.3 Role of the state
The role of the state at national and local level has not been ignored in
industrial district analysis (Pyke and Sengenberger 1992, Schmitz 1992, Benton
1992, Parrilli 2009, Sabel 1992), albeit the state is seen more as enabler rather
than a producer. For developing countries and transition economies stateowned enterprises are existing phenomenon: “the state may be a major shaper
of industrial geography, especially in developing countries” (Markusen and
Park 1993: 157).
This thesis adopts a broaden approach of role of state, as put forward by
Markusen:
As rule maker, as producer and consumer of goods and services, and as
underwriter of innovation, with consequences for the distribution and
anchoring of employment within and across regions (Markusen 1996: 295)
2.2.4 Firm size
The bulk of scholars’ attention is given to production systems of SMEs
(Schmitz 1995, Schmitz and Nadvi 1999, Parrilli 2009, Brusco 1992). The
contention, as stated by Pyke and Sengenberger (1992: 7), is that most of
employment is generated by SMEs and that “small firms are more flexible,
more efficient, and more capable of adapting to market requirements than
large, cumbersome, bureaucratised enterprises”. Thus, it is often neglected the
role of large firms as Markusen stated:
The study of industrial districts and networks within them has generally been
confined to smaller firm in particular industries; their links to larger firms and
to other firms and institutions outside the region have been ignored
(Markusen 1996: 309).
There is empirical evidence that large firm may play role in sustaining the
growth and development of industrial districts (Scott 1992). Scott stated that:
Industrial districts may comprise varying combinations of both large and
small establishments and that large producers are often quite instrumental in
inducing and sustaining agglomeration (Scott 1992: 273).
This study explores the hypothesized role of large firms put forward by
Markusen (1996: 299).
2.2.5 Local and non-local embeddedness
The notion that economic relationships are embedded is social structures can
be seen in Granovetter who stated: “most behaviour is closely embedded in
networks of interpersonal relations” (Granovetter 1985: 504) including
economic behaviour of firms.
In this paper, the concept of local and non-local embeddedness is taken as
in Markusen (1996: 296): the former refers to networks within the district and
10
the latter refers to networks extending across national and international space.
The contention is that more degree of local embeddedness leads to integration
of district, whereas more degree of non-local embeddedness leads to
disintegration of district.
Networks approach is taken to define integration. As stated by Birner and
Ege: “network approach…offer perspectives for integrating coordination and
cooperation into a unified theory of social stability” (Birner and Ege 1999:
749). Birner and Ege elaborated on the convergences and divergences of
Durkheim’s argument of co-operation and Hayek’s argument of competition
and evolution of coordination as basis of social cohesion. Thus, it is assumed
that networks of competition and co-operation lead to integration to district,
whereas disintegration is taken as the opposite direction where networks lead
to differentiation from district.
2.3 Ownership structure
The literature on industrial districts tends to focus on private sector initiatives
somewhat undermining the role that can play the firm’s management structure.
For example, Vakhitov and Bollinger (2010) have claimed that it might be an
effect of ownership structure on agglomeration economies. They analyzed data
from Ukrainian firm and suggested that state-owned firms gained little from
agglomeration externalities, while private-owned firms gained more and that
foreign-owned firms might gain the most from agglomeration economies.
Luong and Weinthal (2006) also analyzed transition economies and have
suggested that might be a relationship between ownership structure and
institutional capacity.
It seems that there is little research regarding the relationship between
ownership and industrial districts. This thesis seeks to contribute to this
debate. For this purpose is taken the types of ownership used by Vakhitov and
Bollinger (2010: 2): state-owned, private-domestic-owned and private-foreignowned. It is included a fourth category of ownership: a cooperative or non for
profit organization. In this study is made the assumption that ownership
structure may influence nature of interactions. The contention is that stateownership tends to influence the nature of firm interactions in the district
through the state exerting its ‘legitimate force’ to impose political interest, thus
enforcing coerced co-operation. Meanwhile private-ownership tends to
influence the nature of firm interactions through firms exerting negotiated cooperation. A third effect could be hypothesized when ownership structure
adopts the form of cooperatives which may bring about voluntary cooperation.
2.4 Analytical framework
The researcher has surveyed different theoretical frameworks from which to
approach the study case, but none of them seem to embrace the case entirely.
The concepts discussed above are taken to construct an analytical framework
to address the research questions. Figure 2.1 shows schematically the causality
relations of the research arguments. As can be seen, this approach stresses the
importance of ownership structure for industrial districts analysis. It is argued
11
that ownership structure influences nature of co-operation: i) state-ownership
is expected to bring about coerced co-operation, ii) private ownerships both
domestic and foreign are deemed to produce negotiated co-operation, and iii)
cooperative ownership is expected to generate voluntary co-operation. As a
result, it is envisioned to observe different pattern of inter-firm interactions
due to changes in ownership structure.
This argument does not imply that ownership structure alone can
influence nature of co-operation. As mentioned above, co-operation may take
several forms. Accordingly, other factors may play a role in shaping the nature
of co-operation. Thus, the research seeks to identify such factors in the study
case. Following the suggested approach, factors other than ownership
structure may lead to coerced, negotiated or voluntary co-operation depending
on bargaining power of stakeholders that also influence inter-firm interactions.
Then, the analysis follows Markusen’s framework that takes into account the
role of the state at national and local level, the firm size, inter-firm connections
and local and non-local embeddedness as to determine the typology of
industrial district. As a further contribution to the analysis, it is argued that
local embeddedness lead district to integration whereas non-local
embeddedness lead district to disintegration which shape configuration of
industrial district.
Figure 2.1
Analytical Framework
Source: Author’s own elaboration based on Markusen (1996)
12
Chapter 3
Exploring Inter-firm Interactions
3.1 Introduction
The aim of this chapter is to answer the first sub question. It explores what are
the inter-firm interactions among state-owned firms in Ciudad Guayana’s I&S
industry. It seeks to answer to whom do they relate? What do they exchange?
What nature of co-operation do they have? The chapter is divided into four
sections that show how firms interrelate through the chain of production of
I&S industry in Ciudad Guayana: mining, pelletizing, briquetting and steelmaking.
3.2 Mining
The mining activity represents the starting point of I&S value chain in Ciudad
Guayana. Ferrominera del Orinoco, CA (FMO) is the state-owned firm that has
the exclusive right to mine iron ore deposits in Venezuela; the totality of those
ore deposits are concentrated in Bolívar State, around 130 kilometres from
Ciudad Guayana. FMO constitutes the second state-owned hub of the district
because of its labour force, production capacity and networks. FMO stood at
6600 workers by 2010 and is expected to have 6700 by the end of 2011
(Ministerio del Poder Popular para las Industrias Básicas y Minería. 2010)
representing the second largest firm in the locality in terms of employment.
Figure 3.1 shows the chain of production state-owned firms in Ciudad
Guayana’s I&S industry. Arrows represent flow of output inside and outside
the locality estimated by the end of 2011. Figure 3.1 also presents production
capacity of firms.
Interactions between mining and pelletizing sector
As seen in Figure 3.1, production chain of I&S industry goes from mining to
pelletizing processes. In these processes are involved FMO and SIDOR which
would exchange 72% of iron ore fines production by the end of 2011. It can
be argued that FMO iron ore fines production has led to a thick relationship
with SIDOR, the other hub of the district. This relationship was created by the
state since the outset of SIDOR giving rise to a SIDOR technology production
designed to use fine material as input. The nature of this relationship can be
regarded as coerced as it is implied by one respondent:
FMO was used to develop SIDOR…the two firms were always seen as totally
integrated…the state was fixing everything in such a way the two firms (were
integrated), actually SIDOR’s iron ore courtyard was constructed in
FMO…FMO had to make SIDOR a train, FMO did it, had to support to
develop SIDOR, FMO did it. Because FMO was the first firm in the locality
it owned the land…and it was the only income-generating firm as it exported
mineral, so the revenues it generated were used to develop everything, of
course, along with state grants since FMO alone could not do it, but it was to
develop SIDOR (Interview 15, emphases added).
13
Figure 3.1
I&S industry chain of production 2011
(Million tonnes)
Source: (Ministerio del Poder Popular para las Industrias Básicas y Minería. 2011),
own elaboration.
The second local user of iron ore fines is FMO itself which owns a
pelletizing plant. Here the relationship is sort of transferring of costs from one
unit of production to the other. Iron in pellet shape is a form of value added
from iron ore fines and represents one of the inputs used in direct reduction
processes2.
Interactions between mining and briquetting sector
FMO exchange iron ore fines production with O.IRON which is the only
world-wide briquetting plant that uses fines material as input. The reduction
technology (FINMET) was actually developed in the locality through a
partnership between FMO and the private-owned Group SIVENSA as from
the late 1970s (Interview 08, Interview 15). One respondent elaborated:
FIOR gave birth O.IRON…FIOR was a laboratory that created FMO jointly
(with private sector), FMO was 50% of FIOR, private sector and us made a
laboratory to use fine material to produce briquettes, that generated what is
O.IRON nowadays…that laboratory lasted for 20 years…the research
development (R&D) lasted for 20 years to create O.IRON (Interview 15,
emphases added).
Direct reduction technology consists of industrial processes to separate the oxygen
from iron (Interview 06, Interview 08, Interview 09).
2
14
This co-operation between the state and private sector can be regarded as
negotiated. Actually, briquetting sector seems to have grown up with deliberate
support of the state. According to one manager:
If you saw the financial statement of those briquetting firms you might see
FMO as shareholder…the command at that time, I am talking about the
1990s, was the state as a promoter not as producer (Interview 15).
This example illustrates how the state through FMO functions as a
promoter of I&S industry upgrading. When it comes to what do they
exchange, the relationship between FMO and O.IRON seems to be very thick
since FMO is the only supplier of mineral fines, albeit this relationship appears
to be coerced as one manager complained:
We have been facing problems with dispatches and reception (of fine
material) leading us to lagging behind, basically, we have lost a lot of
production, the contract between FMO and O.IRON was handled with
biased, very reserved, the firm might have had good reasons for doing that, I
don’t know, but it was little known…the issue of mineral provision has been
very hard, since we have got just one supplier (Interview 08, emphases added)
On the other hand, FMO exchange iron ore lumps with briquetting
plants: FMO briquetting plant, VENPRECAR, COMSIGUA and BRIQVEN.
Similarly to the case of O.RION, FMO has actively participated in promoting
these briquetting plants (Dam et al. 1998: 10) which exemplifies FMO’s role in
district upgrading, somewhat fostering local embedded networks. The
relationship between FMO and its briquetting plant can be considered as a
transferring of costs. However, the relationship between FMO and
VENPRECAR, COMSIGUA and BRIQVEN can be regarded as coerced, in
the same meaning as in the relationship with O.IRON.
The raw material you are asking, is basically pellets and iron ore lumps
supplied by FMO (Interview 06)
3.3 Pelletizing
Pelletizing process is of a great importance for the district inasmuch as it
supplies one of the critical inputs, the pellets, to produce DRI (Direct Reduced
Iron) and HIB (Hot Briquetted Iron), both products are concentrated iron to
produce steel. SIDOR and FMO each have a pelletizing plant to produce
pellets which are used exclusively by local firms. SIDOR production of pellets
is intended to supply its own demand of pellets for its reduction plants. This
functions as a transferring of cost from one plant to the other. Whereas FMO
produces pellets to cover local demand of state-owned briquetting sector
(except for O.IRON that uses iron ore fines, as mentioned above). They are
highly dependent on FMO pellets dispatches leading to a coerced relationship,
as one respondent argued: “basically, the whole region depends on FMO, if
FMO does well, we mentioned that yesterday, if FMO does well we are all
fine” (Interview 08).
15
3.4 Briquetting sector
The briquetting sector is perhaps one of the most successful experiences in the
district upgrading, albeit it is still an intermediate product to produce steel. As
can be seen in Figure 3.1 the briquette production is committed to external
markets leading to disintegration of district inasmuch as this product could be
used locally by the steel mills.
Interactions between briquetting sector and SIDOR
The respondents from briquetting sector unanimously agreed that their firms
were created to produce for exports, so they exchange little with local steel mill
SIDOR (Interview 06, Interview 07, Interview 08, Interview 09). For the
research this was a striking finding because it was expected more integration
between the briquetting sector and SIDOR, the largest steel mill in the locality.
There are two ways of explaining why the briquette is made for exports
and its networking with SIDOR seems to be weak. First, as one respondent
stated: “the product in the shape of briquette is made to be exported”
(Interview 09). The briquette is basically concentrated iron manufactured in a
soap-like shape. Its international standard is known as HBI (Hot Briquetted
Iron) which shape and physical properties (less likely to ignite) makes it easier
and safer to transport by sea to international markets (Interview 09); HBI
could be used in SIDOR steel production since it is concentrated iron, but it is
not widely used because SIDOR steel production chain uses a pellet-shape
DRI (Direct Reduced Iron) that is smaller than the HBI (Interview 06,
Interview 09). It seems that the relationship between briquetting firms and
SIDOR tends to be more through a sub-product called CHIPS, albeit this is a
negligible part of the process of HBI production. The process of producing
HBI generates a sub-product fine (CHIPS) that has the same properties as the
HBI (they are little pieces of HBI when briquettes are being cut or screened);
those CHIPS are more suitable for SIDOR conveyor belts system designed for
handling small materials (Interview 06, Interview 09). Moreover, this size-andshape issue between SIDOR and briquetting sector somewhat triggered an
innovation at local level and tested district capacity to adapt. One respondent
from O.IRON elaborated:
From 2006 we were working on an innovation to produce a mini-briquette
which is a better briquette for in bulk handling…the (standard) briquette we
used to send to SIDOR did not work but the mini-briquette was
excellent…we produced mini-briquette for them to improve their material
handling (Interview 08, emphases added).
This example may serve to support the argument that state ownership
tends to generate coerced co-operation. Private sector may not produce at
higher cost without compensation:
This process let us innovate but it increased our cost of production, the cost
of producing a mini-briquette is higher than that of producing a standard
briquette, but SIDOR has not paid us, as far as I know SIDOR owes us the
mini-briquette, SIDOR has not paid us, but actually, there was a negotiation
with them to improve their handling (Interview 08).
16
Second, there was a state policy leading to promote export-oriented
activity based on natural resources. Through FMO, the state promoted the
briquetting sector by attracting to the district both private-domestic and
private-foreign investment. By doing so, the state gained in upgrading iron ore
to a more sophisticated tradable iron. Moreover, briquette production appears
to be a way of making better use of local resources such as natural gas which
deposits in the region are 130 kilometres from the district. As mentioned by
one respondent “a briquette is the more profitable form to export natural gas”
(Interview 15). Natural gas is one of the critical inputs in direct reduction
process to separate oxygen from iron. Briquette production also takes
advantage of hydroelectric power generation in the region, abundant source of
industrial water coming from Caroní River, a navigable channel through
Orinoco River that allows a passage to Atlantic Ocean and a pool of skilled
workers mainly trained in FIOR laboratory as from the late 1970s (Interview
06, Interview 07, Interview 08, Interview 09, Interview 15). The combination
of these local resources leads briquetting sector to lessen cost of production as
compared to international standards (Dam et al. 1998: 5) and benefit from
exporting the product.
Interactions between briquetting sector and CASIMA
The findings suggest that CASIMA has had interactions with all of briquetting
plants and those interactions can be regarded as negotiated, as stated by one
respondent:
If FMO briquetting plant offered us better selling conditions, better that
VENPRECAR…or better prices or quality than O.IRON, we bought them,
we were indeed very good customers of FMO briquetting plant, but we also
were supplied by COMSIGUA and MATESI, we have been supplied by all of
them…although we are very close to VENPRECAR (nowadays BRIQVEN)
(Interview 14, emphases added)
However, interactions between VENPRECAR and CASIMA seem to be
stronger. First, because of their proximity, one is located next to the other, as
mentioned by respondent above, and second, both used to be part of private
Group SIVENSA (Interview 14).
Interactions within briquetting sector
Within briquetting firms seem to have emerged voluntary co-operation as it is
expected to find in industrial districts according to the literature. Although they
seem not to exchange their products, they do exchange assets. For example,
they jointly created in 1998 an operator called Compañía Puerto de Palua
(COPAL) which was in charge of managing Palua Port. In the case of
BRIQVEN and COMSIGUA, they were constructed one next to the other by
private-foreign investors (Korean and Japanese, respectively) also very closed
to FMO pelletizing plant. They have a common space to upload the briquettes
to transport by train the product to Palua Port where “two trains can be
uploaded simultaneously” one for each firm (Interview 06). Additionally, one
respondent mentioned they share the conveyor belt that carries pellets from
FMO to the plants (Interview 09).
17
Additionally, knowledge seems to be shared among briquetting sector;
during the fieldwork the researcher got the sense that everyone knows very
well about everyone else’s process of production. One respondent from
O.IRON elaborated:
COMSIGUA does benchmarking with VENPRECAR (they use MIDREX
technology for direct reduction), if they have a problem with a reactor, they
might advise to the other to cut the flux of gas, increase or decrease the
temperature and so on, they can do that. Our benchmarking was Port
Hedland (in Australia) but that plant shut down and we have survived with
our own people (Interview 08, emphases added)
It is worth mentioning that VENPRECAR and O.IRON also used to be
part of the private Group SIVENSA. Although the two firms were
constructed with different technology for direct reduction, they both shared
administrative personnel; as elaborated by one respondent:
VENPRECAR and O.IRON worked with a high level of cooperation and
integration. The Board of Directors was common between the two firms;
VENPRECAR was like an administrative and productive department of
O.IRON. Their products did not compete they used different production
technologies. Business process management were common between the two
firms…the process of nationalization broke up this relationship (Interview
07).
3.5 Steel-making sector
Steel manufacturing sector comprises two firms at local level: SIDOR and
CASIMA. SIDOR is the largest hub in the district which predominated with
94% of steel production capacity in the district, as seen in Figure 3.1. It
encompasses 2880 hectares of land, 86 hectares of constructions, 80 kilometres
of roads for internal transport, 160 kilometres of railways for transporting
material and a Port with a length of 1037 metres with a capacity of anchoring
six vessels at a time (Siderúrgica del Orinoco "Alfredo Maneiro". 2010).
Additionally, it stood at 6911 workers in 2010 (Siderúrgica del Orinoco
"Alfredo Maneiro". 2011) representing the largest firm in the locality in terms
of employment. Whereas CASIMA is an establishment of a firm (SIDETUR)
headquartered outside the district. It uses briquettes as input to produce billets
that are sent to other establishments of the same firm. Then they would be
transformed into final steel products such as steel rods and beams for
construction (Interview 14).
Interactions between SIDOR and FMO
Interactions between SIDOR and FMO are deemed to be thick as mentioned
above. Not only because FMO exclusively supplies iron ore fines to SIDOR’s
pelletizing plant, but they appeared to be closely integrated as well, albeit
through a coerced form of co-operation driven by CVG. One respondent
explained:
FMO’s directors used to be SIDOR’s presidents and vice versa…the
Management and Board of Directors were all integrated, that was normal
because it was a sole vision directed by CVG…that was created from the
18
beginning, but that relationship obviously started to break down. When?
When it (SIDOR) was privatized (Interview 15, emphases added)
As suggested by the respondent, this relationship cannot be considered
totally harmonious since the mining and manufacturing personnel seem to be
rather different, not only because mining activity tends to require less
professional personnel than the steel industry, but also they might be different
in cultural terms leading to a competitive relationship at personnel level.
Interactions between steel-making firms and external markets
As can be seen in Figure 3.1, steel production is exchanged non-locally, either
to domestic markets outside the locality or exports. These exchanges can be
regarded as negotiated:
Our (SIDOR’s) main customers are located outside Ciudad Guayana…Here
in Ciudad Guayana there is nobody which transforms steel, all (steel)
transformers are located in the centre (of the country), the tube
manufactures, structural mills, they are in the centre (Interview 11a, emphases
added)
Our (CASIMA’s) production is not of final product, but intermediate product
that would finally be transformed into a final product in rolling mills that
owns the firm (SIDETUR) outside the zone. We had three destinations for
our products: rolling mill in Caracas, rolling mill in Guarenas and eventually
exports…we used to export billets (Interview 14, emphases added)
Interactions within steel-making sector
Interactions between SIDOR and CASIMA appear to be voluntary. CASIMA
has function independently from SIDOR since it was created as a private
initiative in 1989 until its nationalization in 2010. Because negotiations have
not been completed, CASIMA continues to function quite independently and
its administrative structure remains the same. However, being in the same
business seems to have benefited both SIDOR and CASIMA leading to
voluntary co-operation. As one respondent suggested (Interview 14), the two
firms have maintained a collaborative relationship throughout the time. They
have benefited from technologies they have acquired to improve process of
production. Typically, SIDOR might attract cutting-edge technology firms
because of its large size and CASIMA takes advantage of that as they are in the
locality. They have common suppliers and information about what inputs have
been dispatched to each firm seems to go back and forth so they might
negotiate lending some inputs when needed. The respondent also reported
CASIMA supporting SIDOR:
Some years ago SIDOR did not produce in its continuously cast, in its steel
mill, did not produce high and low carbon steel and eventually we (CASIMA)
dispatched them billets with those steel characteristics for them to produce
high and low carbon steel. Afterwards they acquired experience and the
technology and we stopped dispatching them. You might know that few
months ago they had many troubles because of the power issue and we sent
them again billets for them to roll (Interview 14, emphases added)
19
3.6 Conclusion
This chapter has explored inter-firm interactions among state-owned firms in
Ciudad Guayana’s I&S. It has sought to answer to whom do they relate? What
do they exchange? What nature of co-operation do they have? The findings
suggest that along the productive chain: mining, pelletizing, briquetting and
steel-making, the nature of co-operation seems to change. At the beginning of
the chain the nature of co-operation seems to be coerced as FMO functions as
the only supplier of mineral for the district. But among firms within the same
sector, voluntary co-operation seems to emerge, as seen in briquetting sector
creating a joint operator to manage a Port, and in steel–making sector lending
to each other specialized inputs and outputs which is in line with literature on
industrial districts.
20
Chapter 4
Exploring State-anchored District
4.1 Introduction
This chapter aims to answer the second sub question on how can be
conceptualised and mapped out I&S industry in Ciudad Guayana? First, it
builds on typology of districts put forward by Markusen (1996); it addresses
the role of state, the role of large firms and the local and non-local
embeddedness as to conceptualize the typology of district. Second, the district
is mapped out according to the three distinct stages in which a particular
ownership structure was prevalent. The contention is that I&S industry in
Ciudad Guayana resonates with state-anchored category proposed by
Markusen (1996).
4.2 Conceptualizing Ciudad Guayana’s I&S industry
This section explores the presence or absence of hypothesized features of
industrial districts put forward by Markusen (1996). It aims to conceptualize a
district through a case study of I&S industry in Ciudad Guayana, Venezuela.
The contention is that Ciudad Guayana’s I&S industry resembles the features
of a state-anchored district, albeit in shape seems to be akin to the hub-andspoke district. As suggested by Markusen (1996: 295-6).
Role of state at national and local level
Markusen and Park (1993) have researched on the role of the state in shaping
and anchoring industrial districts. Similarly to case study of the South Korean
military industry researched by Markusen and Park, Ciudad Guayana’s I&S
industry cannot be fully understood without looking at the national context
that framed such an industrial development in an inhospitable area in the eastsouth part of Venezuela. In the case in point, a national government policy was
designed to promote socio-economic development in Ciudad Guayana. For
that purpose national government created CVG, its regional agency with
devolved authority to execute a comprehensive developmental plan. As Hite
stated:
Along with control over half the national territory, hundreds of billions of
dollars in raw mineral wealth, and long-term access to national oil revenues,
the CVG has a mandate to “sow” Venezuela’s oil wealth as industrial and
urban development based in Ciudad Guayana. This bureaucracy/holding
company/quasi-government promotes physical, economic, and social
development in the region through study, planning, industrial development,
coordination among agencies and businesses, infrastructure provision,
operating firms, making loans, and any number of other functions (Hite 2004:
63-5)
As mentioned above, Ciudad Guayana’s I&S industry can be typified as a
state-anchored district:
21
Where a public or non-profit entity, be it a military base, a defence plant, a
weapons lab, a university, a prison complex, or a concentration of
government offices, is a key anchor tenant in the district (Markusen 1996:
306).
CVG has served as the key anchor tenant where major locational calculus
and clusters interactions have been determined. According to respondents
(Interview 10a, Interview 10b, Interview 15), CVG has built Ciudad Guayana
as it is. Through CVG, national government has channelled large investments
for building the two hubs in the district: FMO and SIDOR where the bulk of
district’s production is concentrated, as it was seen in previous chapter. The
influence of CVG on Ciudad Guayana has been overwhelming. It seems that
every local issue regarding urban roads, housing, industrial zone infrastructure
and even the universities’ degree courses to raise skilled labour have been
controlled by CVG in function to support local industry (Interview 10b).
Moreover, respondents stressed CVG’s interaction with other district actors
such as the briquetting sector:
As far as I know the relationship between CVG and private-owned firms
(briquetting firms) started with land negotiation…land was owned by CVG.
CVG said I let you build your enterprise but I have got the land, I want to be
your partner. Then according to land’s market value it determined the share
value in the firm (Interview 14, emphases added)
As for the local government, in state-anchored district is expected to find
a weak local government (Markusen 1996: 298-9). It was found that in the case
study of Ciudad Guayana the involvement of local government in regulating
and promoting I&S industry is consistent with the hypothesized feature of
state-anchored district. It was garnered from the field that a weak local
government has been present in the district since 1989 when the first free
election of governors and mayors took place in Venezuela. Prior to 1989 the
locality had a Municipal Council led by an appointed official with limited
authority and independence, ultimately accountable to national government.
One respondent elaborated:
Municipal Council of Caroni…was overwhelmed by the investment to
develop such a huge program…urban development, industrial development,
the settlement of service-provider firms, all of this overcome what a
Municipal Council could have done (Interview 10b)
According to respondents (Interview 10a, Interview 10b) to understand
the interaction between the municipality and I&S firms it is worth to look at
the relationship between the municipality and CVG. Governance at local level
had been exercised by CVG upon arrival of a mayor elected by the people in
Ciudad Guayana in 1989; local necessities such as waste collection and
disposal, schools and hospital construction and maintenance were satisfied by
CVG. Then the advent of a nominally devolved local government gave rise to
overlapping responsibilities between local government and CVG. Negotiation
between the two seems to have been conflicting. One respondent elaborated
after being asked about the relationship between the municipality and the
firms:
22
First, to look at the relationship between municipality and firms we need to
see how the negotiation started: I am the mayor of this city (for instance), but
CVG was too strong. Then the major said: I was elected and these are my
responsibilities. At first it was a process of negotiation between them, for
CVG to acknowledge mayor authority, I remember the struggles that took
place with the minister; taking with the minister was very difficult, he was the
one who had the ascendancy over the city (Interview 10a, emphases added)
Apparently CVG’s ascendancy at local level continued to be strong
leading to weakening local government action during the first two mayoral
periods. As one respondent argued “CVG normally continued taking over
matters that were supposed to be responsibilities of the municipality”
(Interview 10b). So interactions between local government and I&S firms are
deemed to be weak basically because of CVG control over the industry.
However, as from 2005 with the creation of MIBAM, the ascendancy of CVG
on the district seems to have diminished substantially. The potential creation
of an Iron and Steel Corporation may weaken a bit more the role of CVG in
coordinating I&S industry in Ciudad Guayana:
CVG is already weak; I don’t know what it is supposed to do (after creation
of I&S Corporation) (Interview 06, emphases added)
Role of large firms
The role of large firms is deemed to be important for understanding district
dynamics. Markusen’s hypothesis regarding state-anchored district is that
business structure tends to be dominated by large firms, surrounded by
suppliers and customers (1996: 299). The case study of Ciudad Guayana’s I&S
industry seems to show this feature. As gathered from the field, the business
structure appears to be dominated by the presence of two large state-owned,
vertically integrated firms: FMO and SIDOR. First, they are the oldest firms in
the district with half a century operating. Second, related to the former, they
have created the most extensive networks in the district. Third, their
production capacity and actual production is the highest among local firms.
Fourth, they are the largest firms in terms of employment. These elements
provide a feel for the scale and it can be argued that scale economies seem to
be relatively high as hypothesized (Markusen 1996: 306). Additionally, supplier
and customer sector did grow up surrounding the hubs as reported by
respondents (Interview 10b, Interview 11a). Scott stated that:
Industrial districts may comprise varying combinations of both large and
small establishments and that large producers are often quite instrumental in
inducing and sustaining agglomeration (Scott 1992: 273).
In the case of Ciudad Guayana I&S industry, the district ability to expand
seems to be associated with FMO. Briquetting sector represents the best
example, as one firm (O.IRON) has spun-off from FMO (Interview 08,
Interview 14, Interview 15) and an active participation of FMO in promoting
this sector (Dam et al. 1998: 10, Interview 15).
Local and non-local embeddedness
Markusen has argued that focusing only on local networks might limit the
analysis of industrial district since local actors also are embedded in external
23
relationships that influence their commitment to the locality (Markusen 1996:
309). She anticipated for state-anchored districts: substantial intradistrict trade
among dominant institutions and suppliers (Markusen 1996: 299). Ciudad
Guayana’s I&S industry supports this hypothesis. Table 4.1 shows the local
and non-local uses of I&S estimated production in the district by the end of
2011. Local iron production is used for intermediate consumption by local and
non-local users. As can be seen, iron production is largely produced by the two
hubs with 90% of the total production. Iron production tends to be used
locally as 7 out 10 units of iron are to consume locally. Additionally,
respondents reported proximity of other inputs that are produced and
consumed locally, such as industrial water, natural gas and electricity. I&S
industry highly depends on these four inputs, all of them provided by stateowned firms (Interview 11a). Firms seem to subscribe long-term contract and
commitments with local suppliers of mineral, natural gas, industrial water and
electricity, as reported by 5 out of 6 interviewees. One respondent stated:
“contract with FMO was 20 years, natural gas 20 years, then long term
contracts” (Interview 11a). This feature appears to be contrary to anticipated
commitment since short-term contract between dominant institutions and
suppliers are to be expected in state-anchored districts (Markusen 1996: 299).
Apparently, political change has not influenced commitment with local
suppliers as hypothesized. Additionally, it was reported a strong interaction
between hubs and local private sector basically providing services: surveillance,
consultancy, maintenance, freight transport (Interview 11a).
Table 4.1
Local and non-local uses of I&S production 2011
Local
72%
38%
31%
2%
0%
0%
0%
64%
Iron production
FMO
SIDOR
Other local producers
Steel production
SIDOR
Other local producers
Total
Non-local
28%
21%
0%
7%
100%
93%
7%
36%
Source: (Ministerio del Poder Popular para las Industrias Básicas y Minería. 2011),
own elaboration.
However, due to the nature of I&S activity, other imported inputs are also
important. For instance, refractory material, ferro-alloys, and spare parts are
imported (Interview 08, Interview 09, Interview 11a, Interview 12).
Interactions with non-local suppliers are deemed to be substantial and
negotiated, as respondents reported:
In steel industry, regarding suppliers as local is half a true; normally suppliers
to steel industry are external because of the imported material. Logically,
spare parts are imported because of the nature of the industry, being large,
being one of great complexity and strength (Interview 14)
24
There are spare parts that are specific for the industry that are sold by a few
suppliers, you cannot go to the market and buy them freely, there are specific
suppliers for that purpose (Interview 09)
As for non-local embedded networks, Table 4.1 shows that 36% of total
I&S production is traded non-locally. For instance, it was informed by
respondents that steel production is committed to clients outside the district
(Interview 11a, Interview 14). Both steel mills at local level, SIDOR and
CASIMA, seem to have long-term commitments with their customers.
Respondent of the former explained: “the bulk of those (private-owned) firms
have born and grown along with SIDOR in terms of a long-term project”
(Interview 11a, emphases added). Respondent from the latter explained that
CASIMA used to send its production to other establishments of the same firm
outside the district, thus committed in a long-term fashion (Interview 14).
Additionally, as seen in Table 4.1, 28% of iron production is to be exported,
out of that 21% would be raw material and 7% would be briquettes, a more
sophisticated iron presentation.
4.3 Mapping out Ciudad Guayana’s I&S industry
Ciudad Guayana’s I&S industry has shown a dynamic throughout the time that
can be presented schematically. Figure 4.1, Figure 4.2 and Figure 4.3 show firm
relationships within the district depicted inside the circle and firms
relationships outside the district illustrated by arrows coming in and out the
circle. The size of the bubbles shows relative size of the firms. The visual
models were elaborated based on the information garnered from the field.
The history of Ciudad Guayana’s I&S industry can be split in three
periods taking into account the prevalence of ownership structure. The first
stage corresponds to the early 1960s to 1998 where state-owned firms
dominated business structure. For the purpose of analysis, this period will be
known as state ownership. It is shown schematically in Figure 4.1. As can be
seen, it resembles in shape, the hub-and-spoke district suggested by Markusen
(1996: 297).
Figure 4.1
Mapping out state ownership
Source: author own elaboration based on Markusen (1996) and fieldwork 2011
The district seems to be dominated by two large vertically integrated stateowned firms: FMO and SIDOR, which developed a thick relationship of
25
cooperation (Interview 15) shown by the width of the arrow. These two hubs
also succeeded in inducing positive agglomeration externalities, for example,
the creation of a pool of skilled workers:
SIDOR has been a school for Venezuela and the World, a lot of people have
left from here to work somewhere else in the centre of the country:
engineers, graduates, economists all kind of professionals that worked here in
Plan IV when this pole was created, but still there many people here that can
be useful because of their knowledge (Interview 05)
FMO supported a lot the Mutun in Bolivia, with our miners, our geologists,
that was a deposit that Bolivia opened…FMO supported that exploration,
then we have got the (skilled) personnel, our geologists are good, if they can
open a mine abroad they are good…if you go abroad is because you are
competitive (Interview 15, emphases added)
Additionally, negotiated collaboration between FMO and private sector
gave rise in the 1970s to a lab called FIOR to produce briquettes from iron ore
fines which benefited the district from the creation of a pool of skilled workers
in direct reduction (Interview 06, Interview 08, Interview 09). Small bubbles
within the circle represent local-public and -private suppliers of inputs for the
hubs. The large size of SIDOR generates several networks with private sector
both upstream and downstream. It was gathered information about a sizable
private sector (SMEs) that provides services to SIDOR at local level:
surveillance, consultancy, maintenance, freight transport and the like
(Interview 11a). According to one respondent, the municipality revenues come
primarily from tax collection, being central government transfers of less
importance for them and taxes levied from local state-owned firms null
(Interview 10b). This was a striking finding since municipalities tend to rely on
central government transfers and it was expected stated-owned firms to pay
municipal taxes. However, it might suggest a sizable local private sector that
thrives along with the state-owned firms as municipality respondent
elaborated:
Here are the basic industries, but around them it developed an important
commerce and service sector, the main revenues are taxes levied on
licenses…you can see many private firms that provide services to stateowned firms…the municipality has survived out of own tax collection
(Interview 10b)
Other respondent from SIDOR explained:
Thanks to SIDOR, the zones you can see nearby grew significantly, what it is
called small and medium enterprises SMEs…some of them provides services
exclusively to SIDOR (Interview 12)
Private sector downstream spin-off was also reported, albeit non-local
embedded since the majority is located outside the locality in the northerncoastal region of Venezuela (Interview 11a). There are approximately 306
domestic SMEs that are users of SIDOR’s steel production (Siderúrgica del
Orinoco "Alfredo Maneiro". 2010).
As mentioned above, Ciudad Guayana’s I&S industry highly depend on
inputs supplied by local firms both from public and private sector. State-
26
owned firms provide iron ore, industrial water, natural gas and electricity
whereas SME’s provide services to I&S industry. Just after 30 years, in the
early 1990s private-owned I&S producers started to establish in the district: a)
CASIMA, a private-domestic-owned steel mill which production is committed
to non-local producers; b) VENPRECAR a private-domestic-owned
briquetting plant which production is used by CASIMA and external markets
and c) OPCO (nowadays FMO briquetting plant), a private-foreign-owned
briquetting plant which production is committed to external markets. Bubbles
outside the circle represent external suppliers which are deemed to be of a
great importance for I&S industry. Arrows coming out the circle show nonlocal commitment of the district. As seen, steel production (SIDOR and
CASIMA) tend to be non-locally embedded while iron production (FMO and
briquetting firms) is committed both locally and non-locally.
The second stage will be known as private ownership structure and
comprises the years from 1998 to 2008. During this period I&S producers
within the locality were private-owned firms, except for FMO. Figure 4.2
shows the visual model for this period. As can be seen, it still resembles in
shape the hub-and-spoke category of district. The largest steel mill, SIDOR, is
now a private-foreign-owned firm. CASIMA remains operating as a private
firm which interactions appear not to have changed significantly in this period.
Private-owned briquetting sector expanded substantially during this stage.
OPCO was nationalized in 2007 and transformed into FMO briquetting plant,
so it functioned as a private-owned firm a greater part of the period as it was
previously. FIOR transformed into O.IRON a briquetting plant that uses iron
ore fines to produce briquettes for export. VENPRECAR consolidated as the
oldest private-domestic briquetting firm in the district. COMSIGUA showed
up in 1998, a private-foreign-owned plant to produce briquettes for exports.
Finally, MATESI (former POSVEN and nowadays BRIQVEN) started in
2000, a private-foreign-owned and export-oriented briquetting plant.
Figure 4.2
Mapping out private ownership
Source: author own elaboration based on Markusen (1996) and fieldwork 2011
The expansion of briquetting sector seems to be associated with further
development of competitive advantages created in previous stage, notably,
access to skilled labour, specialized inputs and technology spillovers. As seen
in preceding chapter, voluntary co-operation emerged during this stage,
27
somewhat suggesting a connection between private ownership and the
expected source of qualitative advantages that accrue to industrial districts
according to the literature.
The third stage will be known as state ownership and workers’ selfmanagement. It comprises the years from 2008 to the present. From 2008
onwards the state through MIBAM, progressively has been taken over the
former private-owned firms and has been claiming its dominance over the
district business structure. All I&S producers in the district are now stateowned firms. A new dimension: workers’ self-management is added this time
which colours differently the district from the first stage of SOS.
Figure 4.3
Mapping out state ownership and workers’ self-management
Source: author own elaboration based on Markusen (1996) and fieldwork 2011
Figure 4.3 shows the current map of the district. As can be seen, the
district is akin to the prior period, although MATESI is nowadays known as
BRIQVEN and OPCO was transformed into FMO briquetting plant.
Additionally, three state-owned firms are currently being constructed and
represented in the map in dotted shapes which would spin-off from the
district. TSC will be located in the district while RYP and SNAC will be
located outside the district. All of them are expected to grow along district
positive externalities.
The general finding regarding workers’ self-management suggests it is not
in full swing so far. There is some advancement, for example the president of
some firms has been designated from the transition committees, and former
workers have been designated as president of the firms. Although, it seems too
early to evaluate workers’ self-management and it appears not to be fully
understood by some respondents. One reacted: “we don’t know what workers’
self-management is all about” (Interview 07). Some internal and external
factors may have curbed the process:
We are progressing slowly and with difficulties, but logically it has to be like
that, for the workers to assume the control of the firm, but it is not that easy,
there are factors even within the government that are opposed to this
process…it has enemies, many of them within and outside the government,
within and outside the firms, that is why it has been difficult to progress
(Interview 12).
28
4.4 Conclusion
This chapter has shown that I&S industry in Ciudad Guayana could be
categorized as a state-anchored district according to the hypothesized features
proposed by Markusen (1996). The role of the state has been addressed; it was
shown that national state have played an important role in promoting and
sustaining the district; it was found a weak local government in promoting core
industries as hypothesized by Markusen. The role of large firm, notably FMO
and SIDOR, in shaping district business structure has been addressed; it was
shown their success in attracting private sector investment both upstream and
downstream. Local and non-local embeddedness has been analysed; it was
found that local commitment is higher than that of non-local. Although, not all
features have been tested and the district has shown that some features are
contrary to that of state-anchored district, but according to Markusen:
A real-world district may be an amalgam of one or more types, and over time
districts may mutate from one type to another (Markusen 1996: 296)
This chapter has also shown that I&S industry in Ciudad Guayana has
undergone a trajectory that can be split into three historical periods where a
distinct form of ownership was prevalent. The first stage of state ownership
was dominated by the presence of FMO and SIDOR both under the egis of
CVG (the state agency with mandate to develop Ciudad Guayana) which
appears to have succeeded in inducing initial competitive advantages in district.
The second stage of private ownership depicted a district which seems to have
further developed competitive advantages from previous stage as to show
voluntary co-operation (joint action) which according to literature, it is
expected for an industrial district to succeed. The third stage of state
ownership with workers’ self-management shows a district in redefinition.
MIBAM took the lead in coordinating nationalization process of former
private–owned firms which seems to have created a climate of uncertainty
among firms, especially from briquetting sector.
29
Chapter 5
Ownership Structure and Other Factors
5.1 Introduction
The aim of this chapter is to answer the last two research questions. It explores
how ownership structure influences inter-firm interactions in Ciudad
Guayana’s I&S industry as well as other factors. The analysis is based on
interviews undertaken with key respondents during fieldwork and
substantiated with desk review. First, it draws on how ownership structure
influences inter-firm interactions in Ciudad Guayana’s I&S industry. Second,
other factors are explored to explain changes in inter-firm interactions.
5.2 Changes in inter-firm interactions due to ownership
structure
This section builds on the question of how ownership structure influences
inter-firm interactions. It aims to find out whether nature of interactions has
changed among sectors that have experience changes in ownership. Those
sectors are: mining, briquetting and steel-making. The hypothesis is that
ownership structure influences nature of co-operation: state-ownership is
expected to bring about coerced co-operation while private ownership is
deemed to produce voluntary co-operation, as it is implied in the bulk of
industrial district analysis. As a result, it is envisioned to observe different
pattern of inter-firm interactions due to changes in ownership structure.
5.2.1 Mining
As seen in previous sections, state-ownership over iron ore mining was
consolidated in 1975 when FMO was created and maintained thereafter. Prior
to 1975, iron ore mining was dominated by two private-foreign-owned firms:
Orinoco Mining Company and Iron Mines Company of Venezuela,
subsidiaries of US Steel and Bethlehem Steel, respectively, both North
American transnationals. From one respondent’s elaboration it is possible to
observe how nature of interaction between FMO and SIDOR changed, when
FMO experienced change in ownership leading to more integration between
them:
By the late 1960s, between the middle and late 1960s, when the plan started,
FMO was owned by two foreign enterprises, iron mining concessions were
given to Bethlehem Steel and US Steel, both North American firms. What
happened in the interim? Nationalization of iron ore mining came. Why?
Because it was necessary, you had a policy…you wanted to create value
added, that was the mandate that was given to CVG. The concessions were
given to CVG and CVG created FMO for managing the concessions…then
SIDOR was created and FMO was used to develop SIDOR, FMO
constructed SIDOR’s ports, and so on, the two firms were always seen as
totally integrated…the state was fixing everything in such a way the two firms
(were integrated) (Interview 15, emphases added)
30
The respondent continued her elaboration stressing what FMO and
SIDOR exchange:
Actually SIDOR’s iron ore courtyard was constructed in FMO…FMO had to
make SIDOR a train, FMO did it, had to support to develop SIDOR, FMO
did it. Because FMO was the first firm in the locality it owned the land…and
it was the only income-generating firm as it exported mineral, so the revenues
it generated were used to develop everything, of course, along with state
grants since FMO alone could not do it, but it was to develop SIDOR and
the rest of mining (Interview 15, emphases added).
The interaction between FMO and SIDOR can be regarded as coerced
since they were driven by CVG as a centralized policy leading to FMO
mandate to develop SIDOR.
FMO commitment to the district can be depicted through the uses of iron
ore production. It seems that commitment to district has changed due to
change in ownership. Figure 5.1 shows destiny of production of iron ore in
Venezuela from 1968 to 2010. As can be seen, during the decade 1968-1978
when iron ore mining was mainly private-foreign controlled, the production
was almost entirely committed to external markets.
Figure 5.1
Destiny of iron ore production in Venezuela 1968-2010
Source: (British Geological Survey., Banco Central de Venezuela. 2011). Own
elaboration
During the fieldwork was gathered the opinion that mining commitment
was primarily export-oriented since it was developed to satisfy the demand of
transnational corporations. One respondent elaborated:
In the case of the Venezuelan southern region, what I can remember when
we were told about a growth pole, is that it was meant to supply raw material
to transnational corporations, namely it was not meant to develop a region
that had an immense amount of natural resources that could have served to
develop the country, to industrialize the country. Instead of that, it was to
guarantee raw material to transnational corporations and developed countries.
(Interview 13)
However, as seen in Figure 5.1 the trend of iron ore production dedicated
to exports have decreased substantially from the decade 1968-1978 to the
31
decade 1998-2008 when exports stabilized at round 40% of iron ore destiny of
production. Currently, almost two third of iron ore production is used locally
by SIDOR and briquetting sector. Since this trend has been driven by the
state-owned FMO as from 1975, it can be argued that for mining activity,
change in ownership structure from private-foreign ownership to state
ownership seems to have influenced fostering of local embedded networks
leading to integration of district.
5.2.2 Briquetting sector
Briquetting sector throve during the decade 1998-2008 when private
ownership was prevalent in Ciudad Guayana’s I&S industry. Among this
sector, clustering externalities and co-operative behaviours emerged beyond
locational advantages coming from proximity to inputs (mineral, industrial
water, electricity and natural gas). As seen in chapter 3, external economies
were reported, such as free availability of skilled labour (Interview 06,
Interview 07, Interview 09) and information flows about technologies of
production (Interview 08). But also private-owned briquetting firms seem to
have shown voluntary co-operation as it is expected to find in industrial
districts according to the literature; respondents from these firms informed
autonomy from any governmental influence during their stage of private
ownership. As stated above, advantages arising by the presence of local
resources appear to have elicited briquetting sector agglomeration in Ciudad
Guayana. But also collective action was reported by respondents during private
ownership. For example, the Palua Port was conceded by FMO to briquetting
firms for them to have a facility to export their products through the navigable
Orinoco River (Interview 06, Interview 09).
Figure 5.2
Photo of Palua Port
Source: (Complejo Siderúrgico de Guayana. 2011)
32
The firms jointly created in 1998 an operator called Compañía Puerto de
Palua (COPAL) which was in charge of managing Palua Port. After being
granted Palua Port, the firms cooperatively made investments to adapt it
premises for reception, stacking and loading the briquettes into the vessels.
Figure 5.2 shows Palua Port and its facilities. As seen the Port has the capacity
to anchor one vessel at a time. The photo shows two of the material piles;
there are actually four piles, one for each firm that co-ordinately transport by
train their products from plants to designated piles in Palua Port. They also
invested in a soft-loader system that prevents briquettes from breaking down
and to be downloaded softly into the vessel.
Firms also reported (Interview 06) being part of the Hot Briquetted Iron
Association (HBIA) headquartered in the USA that according to its webpage is
a:
Not-for-profit Corporation whose purpose is:
-
To promote HBI as the preferred source of merchant steelmaking
metallics.
-
To inform ship owner/operators and charterers and terminal operators
of the handling, shipping, and storage benefits of HBI.
-
To assist iron and steel producers in the effective use of HBI (Hot
Briquetted Iron Association.).
By joining this association they gained in promoting their product and
benefit from world-wide information and networks of producers, suppliers and
traders of HBI. It seems that for private-owned briquetting firms in Ciudad
Guayana, interacting in proximity within the same sector somewhat triggered
collective action, as reported above.
Other forms of co-operation were also reported. As seen in chapter 3,
interactions between briquetting sector and hubs have been source of
innovations, for example co-operation between O.IRON and FMO gave rise
to developing a unique technology to produce briquettes from iron ore fines
called FINMET and co-operation between O.IRON and SIDOR triggered the
fabrication of a new product: mini-briquette, much more suitable for SIDOR
steel-making process. When it comes to inputs, the briquetting sector local
embedded networks are strong. One respondent elaborated:
Our inputs are pellets, natural gas, electricity and water; those are the four
basic inputs. In the case of pellets we have a contract with FMO. They
fabricate pellets at the plant next to us. Natural gas comes from PDVSA,
through gas pipes. The electricity comes from EDELCA (local producer) and
industrial water comes from HIDRO BOLIVAR (local producer). Those are
the four basic inputs that represent around 70% of production costs
(Interview 09, emphases added)
However, when it comes to customers, they exchange mainly with
external markets and their relationship with SIDOR seems to be weak
(Interview 06, Interview 07, Interview 08, Interview 09). The briquette
production is committed to external markets leading to disintegration of
district inasmuch as this product could be used locally by the steel mills:
33
The firm have not been related with SIDOR, because this firm was created to
produce briquettes to export, that was its purpose (Interview 06)
VENPRECAR was created to export; in that sense it had little relationship
with SIDOR…the only local client was CASIMA (Interview 07)
We are basically exporters, we do not sell to domestic market, some material
around 10% or 15% with low content of iron, we used to sell it to CASIMA
and other portion to SIDOR, but basically firm’s business vision was to
export (Interview 08)
Briquette is made to export (Interview 09)
To answer how ownership structure influences inter-firm interactions, it is
worth to look at the evolution of briquette production. Figure 5.3 shows
briquette production (HBI) from 1991 to 2010. As can be seen, HBI
production stood at around 2 million tonnes per year in the 1990s up to 1998.
Then it grew up substantially from 1998 to 2005 when briquetting sector
reached its maximum level of production with slightly more than 5 million
tonnes.
Figure 5.3
Hot briquetted iron production in the district 1991-2010
Source: (Briquetera de Venezuela. 2011, Complejo Siderúrgico de Guayana. 2011,
Venezolana de Prerreducidos Caroní. 2011, Orinoco Iron. 2011, Instituto Venezolano de
Siderurgia.)
It is worth mentioning that HBI production experienced a decline in the
early 2000s due to worldwide steel crisis. One respondent (Interview 07)
observed that Venezuela positioned as the first producer of HBI in the world.
However, as from 2006 briquette production has decreased 16% between 2006
and 20103. Briquetting firms reported as main explanation of poorly perform:
pellets and mineral (fines and lumps) shortages, worldwide steel crisis starting
in 2008, prices to fall in competitor products (metal scrap) in 2008 and
transition from private to state ownership starting in 2009 (Interview 06,
Interview 07, Interview 08, Interview 09).
Own estimation based on geometric mean of annual percentage change between
2006 and 2010.
3
34
Change in ownership structure as from 2009 appears to be just one among
other factors that influenced briquetting sector performance. But it may not be
the case. The change from private to state ownership seems to have created an
environment of uncertainty among briquetting firms:
Currently we are in process of transition from private to public, but we are
not yet a state-owned firm…because negotiation between the state and
SIVENSA has not been completed yet (Interview 08, emphases added)
Moreover, private owned firm could have anticipated potential
nationalization that could have reduced necessary investment leading to poor
performance of firms:
In its (O.IRON’s) SWOT (strengthens, weaknesses, opportunities and
threatens) analysis, there was threat of nationalization…they stop investing
because they thought they were going to be nationalized (Interview 08,
emphases added)
Additionally, exchanges to customers are likely to change due to change in
ownership structure as it was stressed by respondents, leading to coerced cooperation. The potential creation of an Iron and Steel Corporation, that would
coordinate the whole I&S industry may induce coerce co-operation. One
respondent from briquetting sector speculated about the influence of
nationalization on interactions:
Let’s talk hypothetically, the fact that briquetting firms have been nationalized
to integrate them into the so called Iron and Steel Corporation, it was, for
instance, to make COMSIGUA to produce and send products to SNAC in
Ciudad Piar for them to make slabs, so in theory, it would change the
purpose of the firm (Interview 06)
One respondent from a firm that had been inoperative in 2009 and started
operations in 2010 after central government financial support, reacted to the
question whether they would keep exporting their products:
There is a particular situation: the government wants us to satisfy local
market, which is our priority now, but we face a reality, namely, our reality is
that SIDOR is our local market (Interview 09)
When the researcher asked about potential changes in industry due to
implementation of workers’ self-management respondents from briquetting
sector stated:
We don’t know what workers’ self-management is all about (Interview 07).
That makes me feel uneasy an uncertainty about (Interview 08)
Along with nationalization of briquetting firms other forms of cooperation between them and the hubs were observed that led to integration of
district. For example, one respondent mentioned:
Due to steel crisis in 2008 the briquette prices fell down. FMO financed
VENPRECAR through dispatching pellets for a whole year without any
compensation, thus subsidizing raw material (Interview 07)
It appears that when state ownership is prevalent, interaction tends to
strengthen local embeddedness leading to integration of district.
35
5.2.3 Steel-making sector
Steel manufacturing in the locality is largely dominated by SIDOR which has
undergone changes in ownership structure throughout its trajectory. SIDOR
started operations in 1964 and functioned as a state-owned firm until 1998
when it was privatized and eventually the firm was nationalized again in 2008.
The main question is whether these changes in ownership have influence interfirm interactions.
As seen above, interactions between SIDOR and FMO seem to have
changed due to changes in ownership. The trend appears to show a coerced
interaction under state ownership as FMO had the mandate to develop
SIDOR. However, the trend seems to have changed as a result of change in
ownership: when SIDOR was privatised they could no longer continue to be
as integrated as before:
FMO’s directors used to be SIDOR’s presidents and vice versa…the
Management and Board of Directors were all integrated, that was normal
because it was a sole vision directed by CVG…that was created from the
beginning, but that relationship obviously started to break down. When?
When it (SIDOR) was privatized…the relationship was different because
private sector has different goals than the state. The state needs to think
about the forest while private firms generally see the tree which is normal
(Interview 15, emphases added)
However, the respondent stated that when SIDOR was private-owned,
negotiated co-operation gave rise in terms of setting iron ore prices:
Private-owned SIDOR accepted our (FMO’s) price rise, while as a stateowned firm it was much more difficult…the private tries to negotiate the
prices, it tries to get the best price possible…but they accepted price to
rise…however, state-owned SIDOR did not (Interview 15, emphases added)
The respondent speculated on the change in interactions due to renationalization of SIDOR and the eventual creation of Iron and Steel
Corporation:
The (I&S) corporation is different, because SIDOR, We, everyone will
become a centre of cost, that would be another thing (Interview 15,
emphases added)
On the other hand, interactions between SIDOR and briquetting sector
seem to be weak under private-owned SIDOR but it appears to be somewhat
strengthening under new state-ownership with workers’ self-management, as
seen in this example:
We started to supply SIDOR a bit more volume as compared to what we
used to supply (before nationalization). We are dispatching now almost 1000
tonnes per weak, thus there was a negotiation which I am not fully aware of,
but I do know the volume I managed it statistically (Interview 08, emphases
added)
Interactions between SIDOR and CASIMA seem to be voluntary as
mentioned in chapter 3. As in the case of briquetting sector, these firms within
the same sector seem to have developed co-operative behaviour. Apparently,
36
this behaviour has not changed significantly due to changes in ownership. One
respondent from CASIMA stated:
We have maintained a relationship with SIDOR more as associates rather
than as competitors. I can tell you, if SIDOR is lacking something and we has
it, no in excess, but enough quantity…we have lent SIDOR many things as
well as SIDOR has lent us many things when we have needed them, because
we are in the same business. That was true when SIDOR was state-owned in
its first stage, when it was private-owned by Ternium too, and now (renationalized SIDOR) it is the same (Interview 14, emphases added).
However, SIDOR commitment to the district seems to have changed due
to changes in ownership. Figure 5.4 shows destiny of steel production in the
three distinct periods starting in 19684. These figures correspond to a large
extent to SIDOR since according to data given by the firm it accounted for
90% of steel production in Venezuela from 1990 to 2010. Prior 1990 CASIMA
did not exist and SIZUCA has been always a small firm nowadays accounting
for only 2% of steel production capacity in Venezuela. As can be seen in
Figure 5.4, steel production seems to be committed to non-local domestic
market throughout the series. Nonetheless, it is observed that the pattern of
share changes when ownership structure changes.
Figure 5.4
Destiny of steel production in Venezuela 1968-2010
Source: (World Steel Association.). Own elaboration
During the period 1968-97 when SIDOR was a state-owned firm, 70% of
steel production was exchanged to non-local domestic markets on average, but
during the period 1998-07 when SIDOR was a private-foreign-owned firm, it
tended to lower the level of exchange with non-local producers to favor
external markets. As can be seen, the share of exchange with external markets
increased 12% between 1998 and 2007, somewhat resembling a growing
export-oriented strategy during this period. This argument was mentioned by
respondents.
4
It was not possible to find data for the years from 1964 to 1967.
37
When SIDOR bought HYLSA (in Mexico) they already had steel mills
abroad; they were interested in exporting slabs; they satisfied local market and
the remaining they could export it, they played at saturating local markets and
exporting. The external prices were good and the costs of production were
very low: the labour, other inputs. They sent slabs to their own steel mills
abroad to produce more value added abroad (Interview 12, emphases added)
The product that they (SIDOR) sold the most…- and I can tell you because
at that time I was not in Human Resources Department but in a technicalproductive area - was the steel slabs that they sold at briquette price, namely
as if they did not have any transformation…logically they (SIDOR) were
transferring (the slabs) to Mexico to add value (Interview 13, emphases added
SIDOR increased its productivity with privatisation, that’s not a secret, they
invested money, and they had comparatives advantages because they had
many firms (abroad) to which they could trade and make business plans, they
could purchase many things at lower prices and they focused on exports
(Interview 14, emphases added)
This pattern of interaction with external markets changed when SIDOR
was nationalized in 2008. As can be seen in Figure 5.4, during the years 2008
and 2010 the share of exchange with non-local domestic market increased by
23% somewhat resembling a substantial change towards an increase in district
commitment to domestic market rather than to external market. One
Respondent’ reaction supported this argument.
SIDOR has changed from being an export-oriented firm to increase what
exchange domestically, nowadays is 70% domestic markets and 30% exports
(Interview 11a)
We (SIDOR) do have competitor abroad, but because we are not exporting
now, they are taking over those markets (Interview 12, emphases added)
Another respondent elaborated on the new plan for state-owned firms:
Socialist Guayana Plan established a new scheme for the firms towards
integrated value chains; we started that at MIBAM in 2006. It was thought
creating value chains and those value chains led us to design productive
trains, every single wagon represented one process linked to another and a
single locomotive, one orientation, one purpose…then came up the idea of
creating an Iron and Steel Corporation…I do believe in that to make possible
a national development, a national value added, a downstream transformation
of raw material to import-substitute products and generate wealth and
employment down here (Interview 11b)
This Plan seems to be the main explanation to the extent state-ownership
is likely to change SIDOR’s interactions. The way it would relate with other
state-owned firms would largely depend on a deliberated policy to integrate
firms around a corporation ultimately accountable to central government.
Thus, coerced co-operation would lead to integration of the district.
Patterns of SIDOR’s labour and steel production seem to have been
influenced by changes in ownership. Figure 5.5 shows SIDOR’s labour and
steel production from 1990 and 2010. Left axis shows numbers of employees
38
and right axis level of production. The vertical dotted lines advert changes in
ownership
Figure 5.5
SIDOR’s labour and steel production 1990-2010
Source: (Siderúrgica del Orinoco "Alfredo Maneiro". 2011). Own elaboration
As can be seen, the firm showed an important decline in its labour force
which dropped at a constant percentage change of 4% between 1990 and 1997
prior to privatisation. Then labour force dropped 30% in 1998, when it was
fired more than 3000 employees in one year. Private-owned SIDOR kept firing
employees until 2007 when labour force stood at nearly half of that in 1997.
Finally, as from 2008 when SIDOR was nationalized, it was hired more 1000
workers because they were considered to be related to core operations and
(Interview 12). Similarly, production grew up steadily from 1990 to 1997. Then
steel production systematically increased from 1998 to 2007 when it reached
production record of 4.3 million tonnes. According to one respondent
(Interview 11b) SIDOR managed to add one million ton to its production
capacity without adding of a new steel mill, but improving operations: they
invested in information technology, they invested in slab making process, they
invested in training young professionals and they outsourced processes that
were not directly related with slab production. Finally, steel production has
dropped at a constant percentage change of 20% between 2008 and 2010.
According to this findings, changes in ownership structure seems to have
influenced changes in patterns of exchanges, albeit do not seem to entirely
illuminate about those changes. A number of other factors were gathered to
explain changes in district interactions. Next section draws on those factors.
5.3 Changes in inter-firm interactions due to other factors
This section draws on changes in inter-firm interactions among state-owned
firms in Ciudad Guayana’s I&S industry due to factors others than ownership.
It is acknowledged that ownership alone cannot explain changes in pattern of
interactions, accordingly, a number of others factors were reported: pellets
shortages, worldwide steel crisis starting in 2008, government power saving
program, lacking of financial resources coming from the state and
reconversion plan as factors that triggered changes in interactions.
39
Pellets shortages
Complaining about FMO current inability to provide sufficient pellets to
satisfy local demand were gathered from briquetting sector (Interview 06,
Interview 07, Interview 08, Interview 09). Currently, neither SIDOR nor FMO
have the capacity to supply growing demand for pellets of briquetting sector.
Table 5.1 shows the estimated supply and demand of pellets in the district
from 2011 to 2013. As can be seen, there is need to import 1.2 million tonnes
of pellets in 2011 since the estimated production would be 7.9 million tonnes
as opposed to 9.1 million tonnes of local demand. This gap is projected to
continue in 2012 and 2013 that reinforces the argument of local incapacity to
satisfy growing local demand of pellets which has been triggered by a recovery
of briquetting sector in a current scenario of attractive international prices of
briquettes (Interview 07, Interview 08, Interview 09). The local pellets demand
is expected to stand at around 12 million tonnes by 2013 since the firms might
reach their full capacity of production.
Table 5.1
Supply and demand of pellets in the district (Million tonnes)
2011
7.9
6.6
1.3
7.9
5.4
0.7
0.7
1.2
1.1
(1.2)
Pellets production
SIDOR
FMO
Pellets demand
SIDOR
FMO
VENPRECAR
COMSIGUA
BRIQVEN
Exports
2012
9.9
7.6
2.3
9.9
6.6
1.0
1.0
1.4
1.2
(1.3)
2013
10.3
7.6
2.7
10.3
6.6
1.1
1.0
1.5
1.5
(1.4)
Source: (Ministerio del Poder Popular para las Industrias Básicas y Minería. 2011)
Pellets shortages are likely to change local interactions. As seen above,
both briquetting and steel manufacturing sectors depend on local supply of
pellets. Current deficit of pellets may trigger necessity of importing pellets
which it is envisioned in MIBAM corporative plan (see Table 5.1) leading to
disintegration of district due to an increase in linkages to non-local suppliers.
Respondents elaborated:
Basically the decline of production was due to raw material shortages, which
one? Pellets, pellets shortages; (FMO) pelletizing plant started to have
problems…they could not manage to supply the amount of pellets needed.
There was need to import pellets from Brazil, Qatar, we had to import pellets
in 2007 and 2008 had we not imported pellets the plant would have shut
down. (Interview 06, emphases, added)
Nowadays there is no enough pellets and the quality of pellets have decreased
(Interview 07)
40
The plant (FMO pelletizing plant) next to us was inoperative in 2010 and part
of 2011, I think it started recently the pelletizing plant (the interview was in
August 2011) (Interview 09, emphases added)
Steel crisis
Briquetting sector and hubs developed another form of co-operation that gave
rise after nationalization of firms that tends to integrate networks to the
district. That was tolling agreements, where FMO or SIDOR dispatched
pellets to briquetting firms for them to fabricate briquettes and everyone could
keep producing after steel crisis in 2008 when metal prices dropped sharply
including metal scrap which is a substitute of briquettes. One respondent
elaborated:
What did we do in 2010? We made a tolling agreement with SIDOR, they
dispatched us pellets and we produced the briquettes. Because a ton a
briquettes had more value added than a ton a pellets, we sent them the
proportional material and we kept the remainder (Interview 09)
We implemented tolling agreements as an opportunity to keep doing
business. FMO supplied pellets and VENPRECAR fabricated briquettes,
then we charged FMO transformation services and FMO exported the
briquettes (Interview 07)
One respondent reported variations in exchanges due to steel crisis:
We began here (in 2008) and sold the steel in 1250 to 1300 dollars per ton
and it dropped to 380 to 360 dollars per ton, the international market
declined as well as the domestic market… we had an important crisis, we had
to export our inventories of finished products in disadvantage (Interview 11b,
emphases added)
Government power saving program
I&S industry is one of highly demanding of electricity to produce. A
government power saving program launched in 2010 due to climate factors
that diminished hydroelectric production, influenced greatly I&S production.
This kind of government decision seems to reinforce coerced interactions
among local constituents. The effect of power savings program was notably
observed in SIDOR production as one respondent explained:
The plant needs 750 megawatts to be operative, and the government put a
top of 300 megawatts…we had to reduce production by 80%” (Interview
11b)
This is not a Guayana’s curse, aluminum and steel are highly electricity
consumers, one furnace, one electric arc furnace and we have got 6, one
furnace can consume the power that needs Maracay, the whole city of
Maracay with all air conditioners, malls, discos, households everything
switched on (Interview 11b)
Lacking of central government resource allocation
One common claim among respondents was the lack of resources that were
supposed to be allocated by central government once again leading to coerced
interactions within the district.
41
On top of other issues we have not received resources from the
state…neither in quantity nor in opportunity (Interview 11b)
Guayana needs to receive large investments because we are too old in steel
world, SIDOR has more than 35 years that is very old in steel world when
you are old after 20 years, an old firms needs more maintenance…this a
financial resource issue, we need to renovate including technology, nowadays
exists green technology although it is more expensive. I think there is a
financial resource issue and there has always been (Interview 15)
Because of nationalization and investment shortages, namely because we
don’t have financial resources coming from the state, we haven’t received a
penny, that’s the truth, we hope we will receive in the near future (Interview
08)
Reconversion plan
As can be seen in Figure 5.5, SIDOR showed an important decline in its
labour force which dropped at a constant percentage change of 4% between
1990 and 1997 prior to nationalization. This decline in labour force was
explained due to implementation of a reconversion plan that involved shutting
down of old plant Siemens-Martin and firing more than 4000 employees. One
respondent elaborated:
In 1990-1991 we (SIDOR) started what we called a reconversion plan. It was
determined that one steel casting in Siemens-Martin lasted 9 hours while
making it in electric arcs of Plan IV it lasted 1 hour… Siemens-Martin was
shut down and we had to fire 4000 people or so. We kept Plan IV only; Plan
IV had already a learning curve of 14 years (Interview 11b, emphases added)
The reconversion plan was probably a government attempt to keep
SIDOR competitive towards external markets (Interview 11b) or perhaps
preparing the firm for its imminent privatization (Interview 13).
5.4 Conclusion
This chapter has shown that there are good reasons to believe that ownership
structure matters for industrial district analysis. The case of Ciudad Guayana
showed that when state ownership was prevalent, coerced co-operation tends
to occur and the state appears to induce local embedded networks leading to
integration of district. On the other hand, when private ownership was
preponderant, voluntary co-operation seemed to emerge somewhat suggesting
a connection between private ownership and the expected source of qualitative
advantages that accrue to industrial districts according to the literature. These
findings may not be generalized, but it might explain why industrial districts
tend to succeed within production system of private SMEs that happen to be
geographical and sectorial concentrated.
This chapter has also shown that ownership alone cannot explain patterns
of interactions. It was found that both domestic and external factors have
influenced pattern of interactions. Interestingly, when it comes to domestic
factors (pellets shortages, power saving program, resource allocation and
reconversion plan) the state seems to be involved somewhat highlighting the
importance of ownership structure for industrial districts.
42
Chapter 6
Conclusions
This thesis analyses inter-firm interactions both inside and outside the iron and
steel (I&S) industrial district in Ciudad Guayana, Venezuela, and explores the
question of to what extent those interactions change as a result of changes in
ownership structure as well as other factors. Theories on industrial districts
stresses the advantages that accrue to production systems based on private
SMEs that are geographical and sectorial concentrated. Positive external
economies could emerge from agglomeration of firms that are known as
‘passive collective efficiency’ and include external economies such as a pool of
skilled workers, access to suppliers of specialized inputs and new knowledge
spillovers. But what distinguish an industrial district from mere agglomeration
of firms is the qualitative feature derived from voluntary co-operation called
‘active collective efficiency’ meaning a “conscious pursuit of joint action”
Schmitz and Nadvi (1999: 1504).
The study builds on typology of industrial districts put forward by
Markusen (1996) to explore Ciudad Guayana’s I&S industry. Markusen
contribution to industrial district analysis was designing a comprehensive
framework that includes inter-firm connections, the role of national and local
government, the role of large firms and embeddedness in local and non-local
networks to conceptualized typology of industrial districts. Ownership
structure is not directly addressed within Markusen’s framework, although she
claimed that “the study of industrial districts requires a broader institutional
approach” (Markusen 1996: 293). This research attempts to contribute to
industrial district analysis by introducing ownership structure in the debate.
This study has explored inter-firm interactions among state-owned firms
in Ciudad Guayana’s I&S. The findings suggest that along the productive
chain: mining, pelletizing, briquetting and steel-making, the nature of cooperation seems to change. At the beginning of the chain the nature of cooperation seems to be coerced as the state functions as the only supplier of
mineral for the district leading to greater bargaining power. It was also found
that among firms within the same sector, voluntary co-operation seems to
emerge, as seen in briquetting sector creating a joint operator to manage a
Port, and in steel–making lending to each other specialized inputs and outputs
which is in line with literature on industrial districts.
I&S industry in Ciudad Guayana could be categorized as a state-anchored
district according to the hypothesized features proposed by Markusen (1996).
The role of the state was addressed; it was shown that national state have
played an important role in promoting and sustaining the district; it was found
a weak local government in promoting core industries as hypothesized by
Markusen. The role of large firm, notably FMO and SIDOR, in shaping
district business structure was explored; it was shown their success in attracting
private sector investment both upstream and downstream. Local and non-local
embeddedness was analysed; it was found that local commitment is higher
than that of non-local. Although, not all features have been tested and the
43
district has shown that some features are contrary to that of state-anchored
district, but according to Markusen: “a real-world district may be an amalgam
of one or more types, and over time districts may mutate from one type to
another” (Markusen 1996: 296).
The study has shown that I&S industry has undertaken a trajectory that
can be split into three historical periods where a distinct form of ownership is
preponderant. The first stage was characterized as state ownership. Here the
business structure of the district was dominated by two large state-owned
firms: FMO and SIDOR. The role of CVG (the state agency with mandate to
develop Ciudad Guayana) was deemed to be significant; it has served as key
anchor tenant in the district. Through CVG leadership, the district appears to
have succeeded in inducing agglomeration externalities, notably, access to
skilled labour, specialized inputs (i.e. pellets) and technology spillovers (i.e.
FIOR lab). Co-operation behaviour between firms was exhibited during this
stage, albeit in a coerced fashion due to CVG ascendancy on the district which
centrally commanded the construction of Ciudad Guayana with little
participation of local authorities.
The second stage depicted a district where the business structure was
dominated by private sector. The district exhibited co-operative behaviour (i.e.
creation of joint port operator: COPAL) leading to collective action among
briquetting sector. This sector comprised by medium enterprises, largely
benefited from positive externalities created in prior stage. The nature of cooperation between FMO and now private-owned SIDOR became mainly
negotiated. The ascendancy of CVG on the district diminished substantially
during this period and involvement of local authorities in promoting district
seem to remain weak. It appears that there was a shift towards more
commitment of firms to external markets leading to disintegration of district.
The third stage of state ownership with workers’ self-management shows
a district in redefinition as it is nowadays. The state owns the whole I&S
industrial complex in Ciudad Guayana after being nationalized the private
firms from 2007 and 2010. The nature of co-operation between state-owned
firms seems to be in line with expected behaviour. They appear to interact
under coerced fashion, albeit this time coercion is exerted by MIBAM
(Ministry for Basic Industries and Mining) which in turn purports to
implement workers’ self-management approach. The success of this approach
seems to be undefined, as managers, especially from newly nationalized
briquetting sector, manifested uncertainty of strategy. It was found that when
state ownership is prevalent, interactions tend to strengthen local
embeddedness leading to integration of district.
This study has shown that there are good reasons to believe that
ownership structure matters for industrial district analysis. The case of Ciudad
Guayana showed that when state ownership was prevalent, coerced cooperation tends to occur and the state appears to induce local embedded
networks leading to integration of district. On the other hand, when private
ownership was preponderant, voluntary co-operation seemed to emerge
somewhat suggesting a connection between private ownership and the
expected source of qualitative advantages that accrue to industrial districts
according to the literature. These findings may not be generalized, but it might
44
explain why industrial districts tend to succeed within production system of
private SMEs that happen to be geographical and sectorial concentrated. It is
acknowledged that ownership alone cannot explain patterns of interactions. It
was found that both domestic and external factors have influenced pattern of
interactions. Interestingly, when it comes to domestic factors (pellets
shortages, power saving program, resource allocation and reconversion plan)
the state seems to be involved somewhat highlighting the importance of
ownership structure for industrial districts.
45
Appendices
Appendix I. List of Interviewees
Code
Respondent
Organisation
Interview 01
Interview 02
Interview 03
Interview 04a
Interview 04b
Interview 04c
Interview 04d
Interview 05
Interview 06
Interview 07
Interview 08
Interview 09
Interview 10a
Administration Director
Advisor to the President
Planning Executive
President
Worker Representative
Worker Representative
Worker Representative
Finance Director
Planning Manager
Planning Supervisor
Planning Supervisor
Planning Manager
Advisor to the Planning
Coordinator
Interview 10b Planning Employee
Interview 11a Planning Manager
Interview 11b Advisor to the Industrial
Director
Interview 12 HHRR Head-ofDepartment
Interview 13 Former Worker
Representative
Interview 14 Plant General Manager
Interview 15 Planning Manager
Interview 16a Technical Department
Engineer
Interview 16b Technical Department
Engineer
46
Date
MIBAM
CVG
TSC
TSC
TSC
TSC
TSC
SNAC
Comsigua
Venprecar
OI
Briqven
Municipality
28-07-2011
29-07-2011
02-08-2011
04-08-2011
04-08-2011
04-08-2011
04-08-2011
05-08-2011
08-08-2011
09-08-2011
11-08-2011
12-08-2011
16-08-2011
Municipality
Sidor
Sidor
16-08-2011
17-08-2011
17-08-2011
Sidor
17-08-2011
Sidor
19-08-2011
Casima
FMO
RYP
22-08-2011
24-08-2011
25-08-2011
RYP
25-08-2011
Appendix II. Hypothesized features of state-anchored district
Source: Markusen (1996: 299)
47
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