Nadaleen Singh

Two of three econ­o­mists in­ter­viewed by the T&T Guardian are ad­vis­ing the Gov­ern­ment against pur­chas­ing the Arcelor­Mit­tal steel plant at Point Lisas.

The for­eign op­er­a­tors of the plant have shut it down, putting 644 work­ers on the bread­line. Since then, there have been calls for Gov­ern­ment to take over the fa­cil­i­ty and mit­i­gate the im­pact of job loss­es.

UWI econ­o­mist Vaalmik­ki Ar­joon, who sup­ports the pur­chase of the fa­cil­i­ty, is rec­om­mend­ing that Gov­ern­ment in­vest in the plant through a pub­lic-pri­vate part­ner­ship as an in­vest­ment which will re­alise prof­its in the long-term.

He said lo­cal com­pa­nies which have been do­ing busi­ness with Arcelor­Mit­tal that are in dan­ger of suf­fer­ing loss­es which may lead to staff cuts.

"We are not on­ly go­ing to have the is­sue of 700 work­ers on the bread­line, we are al­so go­ing to have the is­sue of small­er com­pa­nies im­pact­ed be­cause Arcelor will no longer be op­er­at­ing here.

"There is al­so the so­cial im­pli­ca­tion which is much more im­por­tant to con­sid­er, much more im­por­tant over this $1.3 bil­lion debt in par­tic­u­lar," Ar­joon said.

How­ev­er, that view is not shared by Mar­i­ano Browne, man­ag­ing part­ner at Browne and Com­pa­ny and for­mer Min­is­ter in the Min­istry of Fi­nance.

He said it would not be "good busi­ness sense" to buy a plant bur­dened with debt.

Browne said steel mag­nate Lak­sh­mi Mit­tal, chair­man and CEO of Arcelor­Mit­tal, had a long and prof­itable op­er­a­tion in T&T but nev­er ex­pand­ed or im­proved the plant al­though he had re­cov­ered his in­vest­ment in the fa­cil­i­ty sev­er­al times over.

He al­so re­called that pri­or to 1986 Gov­ern­ment had bought fail­ing com­pa­nies in an ef­fort to save jobs.

"That pol­i­cy large­ly failed, and to do so now would not yield any bet­ter re­sult," he said, adding that it was not about fair­ness but about prop­er man­age­ment.

"Mit­tal is one of the rich­est men on the plan­et. He got there by know­ing how to ne­go­ti­ate hard and he has had suc­cess, so these re­cents steps are not about fair­ness, it is about get­ting what he wants," Browne said.

"He has done this be­fore In Eu­rope quite suc­cess­ful­ly, so this has noth­ing to do with that re­spect. In fact it is in­ten­tion­al­ly dis­re­spect­ful. The more in­censed the oth­er par­ty is, the eas­i­er it is to ne­go­ti­ate suc­cess­ful­ly."

Econ­o­mist Dr Roger Ho­sein said the T&T econ­o­my will not be able to af­ford the pur­chase of the Arcelor­Mit­tal plant, even at the price of US$1, be­cause it is as­so­ci­at­ed with a $1.3 mil­lion debt.

"We need to be care­ful as it is one thing to own these com­pa­nies which cater to the ex­tra re­gion­al mar­ket but an­oth­er to thing to ac­tu­al­ly find buy­ers. Our own ex­pe­ri­ence with steel in the 1980s un­der state own­er­ship was one in which the lo­cal com­pa­ny was hit with a vol­un­tary ex­port re­straint from the Unit­ed States and this made it ex­treme­ly dif­fi­cult for the do­mes­tic firm to sub­sist," Ho­sein said.

Ho­sein said Gov­ern­ment should seek a for­mal meet­ing with Arcelor­Mit­tal Steel and the union to see if a rea­son­able in­ter­ven­tion can be made that does not de­mand a lot of the coun­try's ex­ist­ing re­sources.

"Whether or not it is fair for the com­pa­ny to close its op­er­a­tions at this point in time is an­oth­er ques­tion that will need de­tailed prob­ing, sim­ply be­cause we are not sure how the rapid de­cline in in­ter­na­tion­al prices of steel has af­fect­ed the com­pa­ny's bot­tom line. It may well be that at the ex­ist­ing price of steel, in the con­text of the cost of pro­duc­tion in Trinidad and To­ba­go, has made it over­all un­eco­nom­i­cal to con­tin­ue," he said.

"This, how­ev­er, is a dif­fer­ent mat­ter to the so­cial jus­tice state­ment raised by some of the trade union lead­ers and con­tex­tu­al­ly, if there is a ba­sis for the work­ers to be com­pen­sat­ed, it should be done in a fair and rea­son­able man­ner."