Out of boxes! Colgate-Palmolive suspends operations in Venezuela

The crisis has forced that the second of five factories that the company has in Venezuela close. This is the most recent case in a series that does not seem to have an end

Out of boxes! Colgate-Palmolive suspends operations in Venezuela

The factory located in Valencia, north of Venezuela, stopped production due to the lack of cardboard to distribute the products, said Carlos Rodríguez, leader of the workers' union.

Leer en español: ¡No hay cajas! Colgate-Palmolive suspende operaciones en Venezuela

On August 23, the government of Nicolás Maduro took control of the facilities of the Irish transnational Smurfit Kappa, which was responsible for producing the cardboard boxes for packaging that Colgate-Palmolive used. "The liquid factory, which makes dishwashers and detergents, was paralyzed due to the lack of corrugated cardboard boxes. They were bought from Smurfit Kappa, but the supply was cut and we are waiting to see if the inventories that we already had purchased, are distributed by the government," said Rodríguez.

With the suspension of operations of the liquids factory, the plastic containers were also stopped. And although the factory that produces toothpaste continues to operate, it does it in a single shift and has boxes for just one more month of production. "Of the five factories, the one that produced detergents only produces in a shift of work and before it had three, and the one of oral care (brushes of tooth and toothpaste), that also lowered of three turns to one".

Another of its factories that produces soaps has been inactive for more than a year due to the regulation of prices by the government and the lack of inputs.

Smurfit Kappa was one of the few container manufacturers that remained in the country, so Colgate would be managing to import from Colombia the cardboard for its operations, although that could increase the price of the products, said Rodriguez.

The last in a series of closures

For several months the government of Nicolás Maduro has expropriated several companies that had announced the lack of any raw material to make their products. In July 2016 the government took control of the plant of the American company Kimberly-Clark, a manufacturer of personal hygiene products, in the state of Aragua. On May 15, 2018, he took control of the food company Kellogg's. Since then, the products have disappeared from the market.

The economic crisis that Venezuela is going through: with five years in recession, an acute shortage of food, medicines and all kinds of basic goods has caused companies to face obstacles such as the difficult access to raw materials, price controls and the lack of dollars to import goods.

Coca-Cola Femsa can be the next

The main Coca-Cola bottler in the region, the Mexican company Femsa, could be the next to significantly reduce the scale of its operation to adapt to the crisis in Venezuela. According to Reuters, the company is negotiating with the Venezuelan government and its workforce to carry out a massive layoff of 2,000 employees, 40% of its workforce. This is to reduce the total production of its factories to a level that matches the real needs of the Venezuelan market.

You may also be interested: Latin America: This is how unemployment figures are going this year

"We are reviewing our production to make sure it is adequate for market conditions in Venezuela," said José Ramón Martínez, director of corporate affairs at Femsa. However, in the comments he made to Reuters, he said that for the moment "they keep their commitment and their intention to continue operating in the country."


LatinAmerican Post | María Fernanda Barinas Ortiz

Translated from: '¡No hay cajas! Colgate-Palmolive suspende operaciones en Venezuela'

Listen this article