The Multinational Monitor

July 1980 - VOLUME 1 - NUMBER 6


Coca-Cola backs down in Guatemala dispute

Coca-Cola's franchise in Guatemala has been the scene of brutal labor repression over the past four years. Now, after unflinching worker resistance and an effective international boycott, Coke appears to be making extraordinary concessions.

by Allan Nairn

After enduring four years of assassinations, kidnappings, death threats, mass firings, and military and police raids, workers at the Coca-Cola franchise in Guatemala City appear to have won a major victory in their drive to unionize Embotelladora Guatemalteca S.A. (EGSA).

Under pressure from an international boycott organized by the International Union of Food and Allied Workers' Associations (IUF), Coca-Cola has tentatively agreed to buy out the current franchise holder, recognize the union, and remove the management team of EGSA president John C. Trotter, a Houston-based attorney whom U.S. Congressman Don Pease (D-Ohio) has accused of " orchestrating . . .an unmercifully ruthless campaign of intimidation and terror" against the Guatemalan workers.

The Coca-Cola agreement, worked out at a July 8 meeting in Geneva between Coke Vice President Harold T. Circuit and I U F General Secretary Dan Gallin, is extraordinary in several respects.

First, it in effect constitutes an unprecedented acknowledgement by a multinational corporation of responsibility for the actions of its franchise holders. Officially Coke has denied this, arguing that its 800 franchises in more than 135 countries are independent companies: "It is the long-standing practice of the Coca-Cola Company ... to let independent foreign management and local labor work out their (own) arrangements ... rather than seeking to impose a uniform labor relations policy."

In practice, however, Coke has imposed a new labor policy on EGSAJ The Atlanta-based soft-drink manu-' facturer has declined to discuss the substance of the agreement. According to a cable from Gallin to Circuit, after' financing a consortium to buy the; bottling plant that will include Coke as; a direct 35 percent shareholder, Coke will remove all military and police forces from the plant, reinstate workers fired by Trotter, recognize the union and withdraw support from the "company union" formed by Trotter, and negotiate a new collective wage and working condition agreement.

Coke, in addition, will consider establishing a relief fund for the families of assassinated workers, and has agreed to use its influence with the Guatemalan government to ask that the agreement not be undermined by clandestine military and police "death squads" which Amnesty International and other observers have implicated in much of the anti-union violence.

The agreement also illustrates the vulnerability of a multinational producer of easilysubstitutable products to an organized international boycott. Repression and violence against workers have been common at EGSA since 1975. In February 1977, two union members were machine gunned to death directly outside the factory three weeks after receiving death threats from the plant's manager. Yet it was not until Coca-Cola international headquarters learned of the impending boycott in the winter of 1980 that it began negotiating to take over the plant and remove Trotter from management. On February 4, 1980, Coke called an emergency meeting with church represerftatives where it announced it would not renew Trotter's franchise when it expired in late 1981. Coke said that it had just found a potential buyer for the plant and asked the church groups to try to head off the IUF boycott.

Coke's fears of a boycott were well-founded. The IUF targeted Sweden, Finland, Spain and several other countries for extensive publicity campaigns by union locals.

Consumers responded to posters listing the assassinated workers, illustrated by Coke bottle caps with blood dripping from the company logo. (In Sweden particularly, the Coke market share dropped precipitously.) The boycott was supplemented by work stoppages at IUF locals in Mexico, France, Australia and elsewhere. Local franchise holders in countries hardest hit by the boycott began complaining to Coke headquarters, calling on it to settle the Guatemala problems and let them get back to normal business.

Coca-Cola spokesman Joe Wilkinson would not say how much the boycott has cost Coke, but IUF North American director Laurent Enkell estimates that it has been "quite expensive." In addition to sales and production loss, Coke laid out large amounts of supplemental advertising money to local franchises to help them counter the boycott.

The boycott was something of a political and economic gamble for the IUF. In defending the rights of 400 workers who were not formally affiliated with the lUF and who lived in a country where the IUF had no organizational base, the union spent what Enkell estimates at U.S.$1 million or 10 percent of the International's entire worldwide budget. But Enkell believes that "the boycott and the work stoppages are what brought Coke to the bargaining table," and that the campaign was worth the expense. "Even if we save the life of one person it would be worth it. Organizationally, it sets a precedent for us which is going to facilitate our negotiations with other companies."

Once the boycott got underway, Coke was so eager to settle with the IUF that at one point the company even proposed a plan under which all of the EGSA union members could quit Trotter's plant and be paid a full salary by Coca-Cola's international headquarters without having to work. Coke headquarters would then build an entirely new bottling pint in Guatemala City. When Trotter's franchise expired on September 30, 1981, Coke would begin production at the new plant and hire the union workers. The union rejected Coke's proposal.

Finally, the agreement, if it holds up, will be a dramatic testament to the courage and persistence of the EGSA workers that is expected to reverberate throughout Guatemala. The Coca-Cola workers have become a symbol of resistance against the rising tide of death squad violence-which now claims the lives of, on average, more than 30 peasants, students, clerics, union members, journalists and moderate politicians daily. Many observers have implicated members of the local oligarchy and right-wing parties, as well as government officials, in these deaths.

Guatemalan workers will be watching closely to see if Coke stands by its agreement, for even as its final terms were being negotiated, the attacks continued. On May 27, Marlon Mendizabal, Marquez' successor as secretary general, was machine-gunned at a bus stop outside the plant. On June 21, 27 leaders of national unions, including two members of the EGSA union executive committee, were kidnapped en masse as they met at the national union federation headquarters. There has been no sign of them since.

"The Coca-Cola company is concerned over the violence in Guatemala, including the violence directed at EGSA employees," says an official Coke statement on the situation, "and will continue its efforts to find a solution.

Allan Nairn is a free-lance writer based in Washington, D.C.

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