Page last updated at 13:52 GMT, Monday, 13 July 2009 14:52 UK

Venezuela's socialist factories

By Yolanda Valery
BBC Mundo, Venezuela

Car factory in Venezuela
Iran has helped build a car plant in Venezuela

"Atomic" bicycles, "Kick Ass" mobile phones, drinks promising eternal youth, cars, "Guayuco" disposable nappies, medicines, tractors and tinned tomatoes.

These are just some of the items the Venezuelan state is producing in its recently created network of "socialist factories" scattered across the country.

An official report from June 2008 states that the factories are part of a government strategy which aims to "form a solid production machine, to serve the people and develop society".

The aim was to establish 200 companies to begin with, using state aid or mixed funds, often in partnership with other countries such as Iran, China or Argentina.

Hello Mr President

The last few weeks have seen the opening of several of these new industries on successive programmes of "Hello Mr President", Hugo Chavez's Sunday television programme.

The BBC is Taking the Pulse of the Global Economy, looking at a range of subjects this summer
Consumer behaviour - how have lifestyles changed over the year
Food prices - which remain a concern particularly in many developing economies
Highly volatile energy prices - which have been a major issue in the past year
The plight of migrant workers - as the global recession takes hold in many economies
Housing markets - which have turned from boom to bust in many countries
Rising unemployment levels - as firms cut back because of falling orders

The word sovereignty is used repeatedly in the "Hello" programme.

According to Mr Chavez, reducing or even eliminating dependency on foreign technology and goods is the ultimate goal.

However not everyone believes they are on the right track.

"We are going to extremes, where the state is everything, taking over enterprise and professionalism," the economist Alejandro Sucre told BBC Mundo.

According to official spokesmen, a socialist factory is not any ordinary factory.

The former Deputy Minister for Social Security, Jesus Farias explained, what makes a socialist factory stand out.

"It can be run by the workers directly or indirectly, so that collectively they can decide how to manage the company," he says.

Another key aspect is the "appropriation of surplus," in other words, using the profits, which according to officials will always be "reasonable", to benefit the workers and their communities.

New ownership

However, as a member of the executive committee of the United Socialist Party of Venezuela (PSUV), he admitted that the first attempt at this, which was to rescue companies and install the workers as co-owners, did not work.

Bathroom factory
Down the plughole; a fate best avoided for Venezuela's economy

This was due mainly to the fact that employees were not sufficiently trained and there was not enough supervision by the state.

"It is not something that can be decreed," he says.

"First you have to create the right conditions, educate the workers who are used to capitalism."

"Just putting up a factory does not make it a socialist one. We are in the process of looking at a new way of ownership that has never existed in Venezuela before and that requires a huge amount of organisation and awareness," he says.

Economist Alejandro Sucre saw at first hand the rescue process of those companies and has his own theory as to why it failed.

"The workers don't have any capital in the factories and all they are interested in is picking up their wages every fortnight, they don't really care about the efficiency of the company."

New from Hugo Chavez plc

Nappies - factory produces 250 nappies per minute and will initially account for 15% of the internal market

Tractors - with Argentine finance, the factory is expected to produce 400 tractors in 2009

Mobile phones - funding from China, a million phones per year to be produced

Bathroom fixtures and fittings - factory capable of producing 150,000 bathrooms

He went on to say, "Everybody knows 100% capitalism has its defects."

"Communism also has its faults but extremes are not the answer, the individual has an important role to play."

It could be too early to evaluate the success or failure of the new socialist factories.

According to press reports, some projects never really got off the ground, like the case of a piping factory in the south of the country where hardly a brick has been laid.

In other cases, differences between foreign partners and the locals have hindered production, as with the Venezuelan-Iranian car assembly plant.

There is also criticism over so-called obsolete technologies, like that supplied by Iran for a bicycle factory.

The government is ambitious in what it wants to make but questions are being asked about whether it is possible for them to do so much and do it well.

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