S. Florida firms 'in pain' from strike in Venezuela
www.miami.com Posted on Mon, Jan. 13, 2003 BY CHRISTINA HOAG choag@herald.com
From airlines to oil refineries, traders to soft-drink bottlers, U.S. companies that do business with Venezuela are reeling from the effects of the South American nation's unrelenting 42-day-old national strike.
''We're all in pain,'' said Francisco González, president of the Venezuelan American Chamber of Commerce of the United States, which represents some 300 Venezuelan-linked businesses. ``It's worrisome. Some businesses have had to close, others are desperately looking for new clients.''
The strike, called Dec. 2 by opposition leaders to pressure leftist President Hugo Chávez out of power, has virtually shuttered Venezuela's commercial sector and paralyzed its vital oil exports.
Losses are now spilling over into South Florida, which has traditionally counted Venezuela as one of its top three international trading partners as well as a key source of shopping-loving tourists.
Under normal conditions, 50,000 Venezuelans come to Miami per month, typically spending $1,200 to $1,500 each. Visitors double over the December holidays, according to the Venezuelan Chamber.
But November witnessed the arrival of only 7,000 Venezuelans in Miami, González said. ''Do the math and you can see the loss in revenue for Miami-Dade County,'' he said.
New visa restrictions will choke that tourist market even further. Fearing an influx of visitors who don't want to return to a nation careening toward civil war, the State Department announced last month that the Caracas embassy will not renew or issue new visas to Venezuelan nationals as of Jan. 20.
Airlines have trimmed their operations accordingly. United Airlines shut down its office in the Venezuelan capital and canceled its daily Miami-Caracas flight, while American Airlines has suspended its routes to Caracas from Dallas/Fort Worth and San Juan, Puerto Rico, until Jan. 31.
For security reasons, the carrier has changed the schedules of its remaining four Miami-Caracas flights so crews and planes do not have to stay overnight in Venezuela.
The crisis, which shows no sign of abating, is exacting a particularly heavy toll on South Florida's trade sector.
''We have merchandise sitting in warehouses without possibility of shipping it,'' said Alberto Villegas, president of Pantrade, a Miami importer-exporter who relies on Venezuela for about 40 percent of his business. ``The shipping lines don't want to go there.''
The trade flow has dried up so completely that Xiomara Castillo decided to temporarily shutter her Hialeah export firm, Transoceanic Trade, which sends heavy machinery and parts to the country's state oil company Petróleos de Venezuela and mining firms.
''It's not safe to send the shipments,'' she said. ``The situation is very volatile, you don't know if the ports and customs are working or if there's gasoline for the truckers to deliver the goods.''
Ports are in fact technically open, said Bruce Brecheisen, vice president of Seaboard Marine in Miami, but that did not keep the shipping line from suspending sailings. ''We had to divert Venezuela-bound cargo to Cartagena, Colombia, and Río Haina in the Dominican Republic,'' he said. ``We're waiting for the situation to improve.''
The one item that Venezuelans are sending abroad is money. Coral Gables-based Commerce Bank, owned by Caracas' Mercantil Servicios Financieros, has recently seen a 25 to 50 percent spike in deposits from Venezuelan clients.
''The purchase of dollars by individuals has gone up,'' bank Chairman Guillermo Villar said. ``We're seeing more flow [of money] coming in.''
Oil companies wish that were the case. The strike has slowed the flow of petroleum from the world's fifth-largest oil exporter from 2.5 million barrels per day to 400,000.
The situation is difficult at Tulsa, Okla.-based Citgo Petroleum, which is wholly owned by Petróleos de Venezuela and receives about half of its crude from Venezuela. The company's four U.S. refineries process 865,000 barrels of oil a day to supply 14,000-plus gasoline stations across the United States.
The company has so far managed to keep pipelines flowing thanks to the spot market, but the crude crunch may get so severe that the U.S. government, a favorite target of Chávez's incendiary rhetoric, may have to bail it out as a matter of national security.
''We talked with the Department of Energy early on and told them we may reach a point where we may need to borrow from the Strategic Petroleum Reserve and repay it at a later date,'' spokesman Kent Young said. ``The DOE hasn't made a decision yet.''
Foreign companies operating in Venezuela are in a bind. They don't want to be seen as actively getting involved in domestic politics, but at the same time if they start operating, they run a risk of violent attacks.
Most multinationals are at a standstill simply due to practical reasons. Operations at Venezuela's Coca-Cola bottler, Miami-based Panamco, are involuntarily paralyzed as most employees cannot report to work due to scarce gasoline supplies, Chief Financial Officer Annette Franqui said.
''It's not feasible to operate,'' she said. ``We sold one day during the beginning of the strike, but right now plants are not operating. We don't want to produce because product becomes obsolete as we cannot guarantee delivery.''
With Venezuela's gross domestic product predicted to plummet a stunning 12 percent in the first quarter of 2003, Venezuelan business people -- such as Ariel Acosta-Rubio, president of the Churromanía fast-food franchise -- are looking to the United States for salvation.
Acosta-Rubio is set to open five new churro outlets throughout Florida by April. His 35 Venezuelan stores are under lock and key.
''The losses are gigantic. The franchisees call me every day, they don't know what to do,'' he said from his Brickell Avenue office. ``The business here is going to have to help the businesses there get back on their feet. Thank God for the United States!''