Massive Dismissal by Subsidiary of Chiquita Brands

By Silvio Hernandez, IPS, 24 May 1999

PANAMA CITY, May 24 (IPS) - A local subsidiary of the U.S. fruit giant Chiquita Brands dismissed 400 workers in Panama, on the grounds that they refused to use a fruit-protection device.

The banana workers union, however, argued that the lay-offs were due to a slump in the European market brought about by the banana war between the European Union (EU) and the United States and the crisis in Yugoslavia.

Cameron Forayth, manager of the Puerto Armuelles Fruit Company, one of the subsidiaries of Chiquita Brands in Panama, claimed that the refusal to use the device - which would have entailed extra work by employees - "provoked the loss of 60 percent of the fruit" produced on the company's plantations in the province of Chiriqui on the Pacific coast.

Legislator Carlos Smith of the governing Democratic Revolutionary Party urged Monday that the government mediate in the conflict, in order to prevent a new strike in the sector.

In April 1998, Chiquita Brands laid off 1,800 of the roughly 4,000 employees on its plantations in Puerto Armuelles, in Chiriqui, in reprisal for a strike which the workers clearly lost.

Smith blamed Chiquita Brands for failing to define working relations with the union in the wake of last year's strike. "I believe the conflicts between the union and the company will continue until Chiquita Brands defines the way it is going to operate."

Another local subsidiary, the Bocas Fruit Company, administers banana plantations in the western province of Bocas del Toro, on the Caribbean coast.

Chiquita Brands and its subsidiaries grow bananas on a total of around 10,000 hectares in Puerto Armuelles and Bocas del Toro.

Forayth said the failure to use the fruit-protection device had caused spotting and cuts on bananas shipped to Europe, which reduced the competitiveness of local bananas compared to those exported by Chiquita Brands from other countries in the region.

But secretary of labour relations in the Puerto Armuelles banana workers union, Edgar Williams, charged that Chiquita Brands had "acted illegally" by failing to apply for the "dismissal permit" stipulated by Panama's labour code.

Williams explained that employers "must justify the massive dismissal before the Labour Ministry, either by demonstrating that production has waned or (basing it on) economic reasons."

According to the trade unionist, Chiquita Brands failed to meet that requisite or argue such causes when it sacked the workers.

With respect to the quality of the fruit, Williams accused Chiquita Brands of acting with "negligence in caring for the fruit at the time of removing the flowers, because it ordered that they be cleaned" after the appropriate moment in the growing season.

Trade union leader Javier Pineda said the dismissals were "a provocation and a premeditated action to reduce personnel" at a time when the European market was in a slump, due to the long- standing "banana war" between the European Union and United States, as well as the crisis in Yugoslavia.

Chiquita Brands cut its exports from Panama by 30 percent last year, due to the restrictions imposed by the EU on banana imports from Latin America, which led early this year to a sharp clash between the European bloc and the United States.

In 1997, Chiquita Brands - one of the U.S. transnational corporations that grows and exports fruit in Latin America - exported 33.3 million 18.4-kg boxes of bananas from Panama, bringing the country 180 million dollars in foreign exchange.

With the aim of protecting Chiquita Brands' business in Europe, Washington slapped economic sanctions on a number of imports from Europe. The World Trade Organisation (WTO) then ruled that the EU was to suspend its restrictions on banana imports from Latin America and indemnify the United States.

Nevertheless, Chiquita Brands' sales remain on the decline, due to the fallout from the banana war and the bombardment of Yugoslavia, which has altered the entire European market.

Pineda said the workers refused to use the fruit protection system, which would increase the workload, because it was not agreed on in collective bargaining agreements.

He maintained that the damages to the fruit were purposefully inflicted by certain Chiquita Brands staff who "as in previous years injected the bananas to allege that they had scars" and thus justify layoffs.

Meanwhile, a report recently released in Panama on the financial performance of Chiquita Brands predicted that revenues would be far down this year.

Last Tuesday, the company's shares fell 0.81 cents on the New York stock exchange, from 9.56 to 8.75 dollars per box, the Panamanian daily 'La Prensa' reported.

According to the local paper, Chiquita Brands argued that the projected slump in revenues this year "is principally due to the very low prices of bananas in Europe, despite the larger volumes" of exports. (END/IPS/tra-so/sh/mj/sw/99)