«3. Boycott Coca-Cola! | Main | 5. The Unarmed Fortress »

The Coca-Cola Campaigns 1980-1985
4. The next round 1984 - 1985

The strength of the settlement brought the Coca-Cola workers a three year truce before the next round of their battle for survival. Others were not so lucky. While in 1976-80 STEGAC formed a key part of an expanding and dynamic workers' movement engaged in a multitude of struggles, in 1984 it stood almost alone.

A movement dismembered

The mounting tide of killings during the Lucas Garcia years had taken its toll, not only of Coca-Cola workers, but of the leaders and more active members of virtually every union in the country. ln the space of two months in 1980,44 leaders of the CNT were arrested and disappeared, never to be seen again. The first group of 27, including two from Coca-Cola, was surrounded in the CNT headquarters building on 21 June. The other 17 were seized in August at a church conference centre at Emaus, in the countryside.

No movement could for long survive the physical elimination of successive leaderships. The CNT office was closed down, and both CNT and CNUS abandoned public activity. There was still a 'Co-ordinating Committee' of CNT, but it was no longer possible to hold elections. Strikes in factories were virtually impossible after 1979.

With the urban trade union and student movements effectively paralysed, the focus of repression switched to the countryside. ln February 1980, simmering discontent in the countryside boiled over into a strike by 80,000 rural workers in the sugar and cotton plantations. Although the strike was partially successful in its demand for a wage increase, some workers suspected by the military of being involved in the strike were rounded up when they returned home, and killed. These and other cases of increasing army repression were one reason why more and more workers and peasants turned to the armed opposition as the only way out of their poverty. ln early 1982 the four main guerrilla groups joined together to form the URNG and were strong enough to mount a serious challenge to the state.

ln March 1982 'born-again' Christian General Rios Montt became President after a military coup, and vowed to wipe out the URNG. As a result of the army's counterinsurgency policy of attacking the civilian support for the guerrillas, 440 villages were completely destroyed, many hundreds of peasants killed, and over 100,000 forced to flee northwards into Mexico as refugees. Survivors of the onslaught were herded into new 'model village' settlements under strict army control or forcibly conscripted into 'civil patrol' militias.

Rios Montt was ousted in a military coup in August 1983. His successor, General Mejia Victores, soon renewed the assault upon trade unions and urban organisations. Four trade unionists from two sugar mills were kidnapped and went missing. At CA VISA, the factory which made bottles for Coca-Cola, Edgar Fernando Garcia, the minutes secretary of the union, was abducted by members of the BROE (Special Operations Unit of the Police). Garcia disappeared, and five other members of the union negotiating committee fled the country after being threatened by death squads.

The favourite targets were surviving members of the organisations that had led the popular movement in 1977-80, especially the CNT federation and CNUS. For the time being, the Coca-Cola workers were not touched. The strength of their international support had given them a degree of immunity.

Despite this new round of terror, there were signs of a tentative reemergence of the trade union movement. For example, a count of advertisements placed in the press by trade unions (a far cheaper and more common means of communication in Latin America th an in Europe), showed a leap from an average of 4 per month during 1983 to 14 in January 1984, 38 in February and 36 in the first two weeks of March.

At around the same time as the Coke occupation, moves were already afoot to establish a new umbrella organisation called CONUS. At the first meeting 3 unions were present, at the next 18, and at the next 30. Although this was still far short of the 150 or so unions affiliated to CNUS at its height, STEGAC helped by providing the means of organisation and sometimes a place for meetings for other trade unions. Above all, STEGAC was a symbol of strength and survival. Its battle was a battle for the future of trade unionism in Guatemala.

Coke rethinks

The 1980 settlement was not totally satisfactory for the Coca-Cola Corporation in Atlanta. Undoubtedly the company was relieved to have got rid of Trotter, re-established production and avoided further boycotts and damaging publicity. But had this been achieved at too high a cost?

Ever since the 1980 settlement, Coca-Cola had been criticised in business circles for allowing the dangerous precedent of multinational trade union intervention (the IUF) in multinational corporation affairs. For example, an article in Business Week in November 1980 argued:

'A cardinal rule of labor relations for multinational corporations has always been to prevent unions from gaining enough power to negotiate on a multinational basis. The companies have refused, for example, to bargain with international labor federations. But Coca-Cola Co. apparently negotiated with the International Union of Food & Allied Workers' Associations (IUF) to resolve a dispute involving human rights and union recognition in Guatemala.

Coke denies that it "negotiated" with the IUF; Coke says that its representatives met with the IUF officials merely to keep them abreast of the company's effort to find a new franchise owner. "If this isn't a negotiating situation, I don't know what is," IUF's Dan Gallin says. "Our objectives were exactly what we got."

Herbert R Northrop, director of the Wharton School's Industrial Research Unit of the University of Pennsylvania, said, "it would appear that Coca-Cola's lack of preparation and understanding of the nature of the relationships let it into a virtual de facto recognition of the IUF. They gave Gallin a big political victory."

Soldiers rounding up demonstrators in Guatemala City - Credit: Jenny Matthews

The same Professor Northrop drew the comparison with IUF's earlier campaigns against Unilever, which 'achieved no significant objective'. He concluded:

'It remains to be seen whether the Coca-Cola Company can develop a policy similar to that of Unilever. This means developing programmes to counter trouble before it· becomes a national or international problem. If after such a reorganisation, Coca-Cola desires to extricate itself from its new relationship with the IUF, it May then be equipped to withstand the barrage of critical publicity the IUF would likely attempt to unleash. '

By 1984, extricating itself from its new relationship with the IUF appeared to part of what Coca-Cola had in mind.

Asset stripping

When Trotter and Mary Fleming sold EGSA to Zash and Méndez in October 1980, the real purchasers of the plant were Coca-Cola Atlanta. Virtually all the finance came from Coke. Zash and Méndez established a Panama registered company called AICA which became the owner of the EGSA plant. The entire plant (land, buildings, machinery and transport fleet) was mortgaged to Coke Atlanta. At the same time, the two managers became owners of six beverage distribution companies which sold Coke to retail outlets outside Guatemala City.

ln addition to EGSA, there were two other Coca-Cola bottling plants in Guatemala, Embotelladora del Pacifico in Retalhuleu, owned by INCASA, a Coca-Cola subsidiary, and Embotelladora Quinto in Puerto Barrios, a franchise owned by the Castillo family. Under the terms of their licenses from Coke Atlanta, these two companies were not permitted to compete with EGSA for sales in and around the capital. ln neither plant was there a trade union.

Although sales were not booming, aIl at first appeared to be reasonably well at EGSA. During 1983, however, sales and production began to decline sharply, and the Coca-Cola workers became concerned. ln November 1983, they wrote to the IUF in Geneva (STEGAC was now an IUF affiliate) to sound the first alarm about Zash and Méndez's policies. Suddenly, management was claiming that the other two Coke plants were entitled to sell beverages in EGSA territory, and at the same time deliveries outside the capital were cut, supposedly because the distributors (wholly owned by Zash and Méndez) were behind with payments. The IUF made various attempts to speak to Zash and to Coke Atlanta, but without success. The first response from the corporation was a telex on 20 February informing the IUF of the closure and bankruptcy of the plant.

Other unions bringing supplies to support the workers during the occupation – Credit: IUF

Zash and Méndez had apparently been running down the company for their own financial advantage. Much of the detail of the as set-stripping was only discovered after the occupation began in February 1984, when the union leaders discovered a duplicate set of company accounts, quite different from those which had been published to justify the closure. An independent North American accountant was sent in by the IUF to conduct a separate investigation. He concluded that money had been siphoned out of EGSA by various devices: the distributors (owned by Zash and Méndez) were being grossly undercharged by EGSA for supplies of the beverage. This amounted to about eight per cent of EGSA’s revenue - more than the company's alleged total annual loss. In addition, various expenses of the distributors such as transport, promotion and some wages were being paid by the bottling plant. Repayments on the original debt to Coca-Cola, already a serious burden on EGSA, suddenly tripled between 1982 and 1983 suggesting that the repayments were being used to milk the plant of its financial resources. Moreover, half-a-million dollars of repayment money was unaccounted for.

STEGAC and the IUF believed that while Zash and Méndez had almost certainly been lining their own pockets, their overall strategy could not have gone unnoticed by Coke Atlanta, which rnust at least have known about the closure in advance and have approved it.

--> The unarmed fortress