Jueves, 27 de Abril de 2017
01:51 CEST.
Economics

Maderas Mayarí: how a company is destroyed

One of the landmark companies in Mayarí, Holguín, is MADEMA (Maderas Mayarí), among the largest of its kind in the country. It boasts a combine that processes wood, workshops that turn out rustic-style finished products, along with coffee plantations, and timberlands in the mountains of Nipe and Cristal, with about 1,000 employees working the land.

A plant to produce artificial wood from waste remains unfinished, its construction paralyzed since the early 90s. This is just one more investment at a standstill for decades that nobody understands, because the product would have a definite market in the country.

Five years ago at Maderas Mayarí (the trade name of Forestal Integral Mayarí) a period of apparent economic prosperity came to an end. Although its coffee business was already sagging, wood was booming. Upon receiving new equipment and implementing "corporate fine-tuning," spearheaded by the ousted Carlos Lage (with result-based payments and other reform measures) it saw a boom in production. And that upturn, to an acceptable extent, ended up economically benefitting its workers and meant more comfortable conditions for managers (cars, renovated and climate-controlled offices, protein-rich lunches, etc.).

Everything seemed to be rosy, and droves of young people aspired to work at the company. But, even at that time, some signs suggested that it was not as solid, sustainable and efficient as it seemed.

Its main timber reserve was the Pinares de Mayarí, and the logging and extraction process was clearly outpacing reforestation efforts, with no effective replantation plan. Wood was being processed from forests that were the result of the massive reforestation effort undertaken during the first decades after the Revolution. And that preceding, almost always volunteer labor was logged on the company's books as an investment. It was pure profit.

When those easily-accessed forests on the Pinares de Mayari plateau ran out, MADEMA management had to resort to other forests, natural or reforested, in more difficult areas. New equipment was then needed. But, in accordance with the regime's iron-fisted central control model, it was not company representatives that travelled to Russia in search of new equipment, but rather Foreign Commerce officials.

The machinery they bought was useless under its new conditions, and this was another factor leading to the company's decline. Moreover, the new plantations took a long time to replace the deforested lands, due to the absence of a well-structured investment strategy. The scenario worsened, and the company began to cut wages and benefits.

That is when its weaknesses came to the surface and the company's profits began to dwindle. The coffee line was a disaster: after the State appropriated (stole) tens of thousands of acres from their owners under Land Reform and nationalization, most of the mountain farms ended up overgrown with foliage and were abandoned. It was only in Pinares de Mayari, under pine forests and on terrain that was flat and easy to work, that they planted coffee. However, when logging began and intensified, the coffee plants were not protected, destroyed due to a myopic fixation on profitable timber.

The locals view the destruction of the coffee plantations as a crime equal to that of the town (Guatemala) sugar mill, and the nickel processing factory in Nicaro (west of the city). The latter company, now defunct, left a veritable fortune in the pine groves, as under the roots of the pine and coffee trees lie huge deposits of unexploited iron, nickel, cobalt and chromium.

MADEMA is no exception, a company typical of Cuban socialism in that it is not headed up by a logical and natural leadership team, but rather one imposed by the Government. Like any business in Cuba, it enjoys no autonomy, nor does it manage its budgets or decide its investments. Rather, it must await orders and resources, allocated at the central level.

Even when making millions, a Cuban company can grind to a halt due to something that costs a relative pittance, and have to wait another year for funds to be assigned it for that purpose. If it has surplus funds in a certain area, it cannot transfer them to others that lack them and have problems to be solved, as the most basic logic would dictate.

Far from being a rarity, Maderas Mayarí constitutes a case representative of the Cuban economy, in which  stagnation is the order of the day.