Business, Finance & Economics

Factory workers in limbo as Egypt renationalizes

Two employees of the Shebin al-Kom Textile Factory talk about the plant, which is currently at a standstill while the Egyptian government takes control of operations, in October 2011.


Juliana Schatz

SHEBIN AL-KOM, Egypt — A new banner hangs over the main gate of the main textile plant in this factory town, and it reads "Shibin is now 100% Egyptian."
The sign refers to the September landmark court decision to renationalize this factory, taking it — along with two other industrial factories — out of the hands of foreign investors. Workers and activists allege that the 2007 privatization of the Shebin al-Kom Textile Factory, about 45 miles north of Cairo, was born of a corrupt deal in which the factory was sold at a fraction of its real value.

What was hailed at first as a workers’ victory now presents new challenges. Although the factory is in the process of transitioning to government control, the holding company that will ultimately take the reins has yet to do so and is still not providing it with the raw materials it needs to function. 

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The equipment in the factory is appropriate for the foreign market, not the Egyptian one. And with an ongoing legal battle about control of the factory, workers see a long road ahead.

They're standing on the concrete floor next to their silent machines, visibly frustrated and insisting they are eager to get back to work.  

"If the government gives us all the materials, all the spare parts, then we'll work," says Ihab Shalaby, a technician at the factory. 

The sprawling factory stretches out over a massive lot inside the town of Shebin al-Kom, where it is a primary source of income for area residents. Under the control of the Indonesian firm Indorama, it made products for Adidas and Nike. But workers say that the foreign firm cut wages and reduced the workforce by almost 75 percent. They began protesting as soon as the factory was sold, and were reenergized by the protest movement that led to the ouster of former Egyptian President Hosni Mubarak in February.

Now that the government is in the process of taking control, Shalaby says it will take some time to get the factory back on its feet. Indorama’s machines spin thick yarn, not the thin threads they can sell here on the domestic front.  

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Shalaby explains, "The problem, how can we open new markets? This will take some years for this company. Not in one day or one year."

Although foreign investment raises concerns among many workers, some, such as Ahmed Sayed Kholeifi — who has worked at the factory for the last 27 years — believe what’s most important is to have investors who care about building a productive workplace. 

"If the investor was a good person and gave the workers their rights, we would have told them, ‘welcome’ and ‘please stay with us,’" says Kholeifi. Many of his colleagues, though, see nationalization as the best way to improve their living conditions.

Hossam al-Hamalawy, a journalist and activist with the Revolutionary Socialists group, says the story at Shebin al-Kom is representative of worker's challenges in Egypt and represents a disturbing pattern across Egypt just starting to be reversed.

"Companies belonged to the public sector,” he says. “They were privatized to either local or foreign investors, the workforce was cut down, the factories were sabotaged, more or less, and there was resistance in virtually all of those factories."

Deposed President Mubarak pushed an aggressive privatization plan during his last decade of rule. The central problem, many say, was the corrupt way factories were privatized. It was common for them to be sold off at reduced prices to Mubarak supporters and foreign firms with political connections.  

Last month, Finance Minister Hazem al-Beblawi announced that the government would hear an appeal from the Indorama firm on the court decision to nationalize the factory, citing difficulties returning the company to the state and a nervous investment climate. This leaves the factory — and its workers — in limbo.  

Despite the announcement, technician Ihab Shalaby says it appears the government will take full control of the factory soon.  

Beblawi's recent statement about the appeals process was a change in tone from his original statement about the renationalization. He had previously stipulated that the government would respect previous agreements and contracts only as long as they were conducted legally. To some, this sounded like an open invitation to file more cases regarding illegal sales of denationalized companies.

Other workers are filing cases for nationalization. Wael Habib, for example, is a worker in a textile factory in the Nile Delta, and a new member on the board of the General Federation of Trade Unions. 

"The first thing that happened after the revolution is we started filing cases against some companies that were privatized and regaining those companies back to the people and the government," says Habib.

Habib adds that workers are expecting to win their cases in a variety of industries. However, he is quick to say that court victories in several factories do not reflect a government consensus on the issue. He says these successes are due more to the efforts of labor lawyers who have simply documented in court what was obvious corruption in each case.

Still, righting the wrongs of the past is a complicated endeavor, particularly from an economic perspective.

Mona Said, an economics professor at the American University in Cairo, says that thwarting corrupt deals on the sale and purchase of factories is one thing and a government vision for an economic policy that guarantees workers’ rights is quite another.  

In contrast to what has happened so far, Said explains, what is needed going forward is a modernization program and comprehensive industrial policy.

"Part of this would involve training, and upgrading the environment and the skills of the workers, and looking at the conditions from an efficiency point of view —whether their working and wages were conducive to productivity and how can you do things better," added Said.

Said believes it's possible for Egypt's economic policy to support both social justice and growth, what she terms ‘inclusive growth,’ but it will take more overall planning than the interim government has shown to date.

Meanwhile the September court decision has given momentum to Egypt’s organized labor movement. Strikes continue to spread rapidly through a number of sectors, fueling the movement.  

"By the domino effect, whatever happens in one factory affects the rest,” Al-Hamalawy adds. “When one company gets renationalized, that gives boost to the workers in other companies to follow suit — which is already happening now."

Back in the Shebin al-Kom Textile Factory, the next shift of workers descends from buses, passing through the main gate. They're ready for work, but with no raw materials in the factory, they'll pass the day waiting. 

Technician Ihab Shalaby remains hopeful about the future of the workers there, however. 

"I believe that tomorrow is better,” he says. “And after tomorrow is best. But to reach this you give in sometimes blood, you give in sometimes your freedom. It will come. Maybe not for me. Maybe for us, for others. But it will come."   

This story is presented by The GroundTruth Project. 

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Tagged: Egypt.