It Is 1976 All Over Again And Firestone Is Back At The Drawing Boards!

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This newspaper’s attention is drawn to the latest news from Firestone Liberia that the company has planned to cut 800 jobs by the beginning of the second quarter of 2019 — April. .

According to the story, Firestone, following what it says was a thorough and strategic review of its current operations, has concluded that  the decision to lay off 800 workers in the 2nd quarter of 2019 is informed by what it calls shocks to the economy.

It cites as reasons “unsustainable losses resulting from high overhead costs associated with the company’s Concession Agreement with the Government of Liberia, low natural production as a result of the prolonged civil war and continued low global natural rubber prices”.

However, Firestone did not say what are those problems associated with the company’s Concession Agreement with the Government of Liberia that is contributing to high overhead costs, such that it is being compelled by force of circumstances to lay off 800 workers or 13 percent of its workforce.

This newspaper is indeed troubled by this development as it means that at least 4,000 persons stand to be adversely affected as a result of the imminent job loss. With unemployment already at unsustainable levels and with more than 70 percent of the population living below the poverty line of less than a dollar a day, the implications are indeed of catastrophic proportions.

But more to that, Firestone Liberia has also declared that even those measures are not enough to restore Firestone to desired levels of profitability, thus leaving the public to wonder just what more does Firestone expect of the Liberian Government.

It must not be forgotten that only recently during the tenure of President Ellen Sirleaf, the lopsided 99-year Concession Agreement which awarded one million acres of land to Firestone at a rate of US$6 cents per acre, was amended and extended by an additional 37 years for a paltry US$0.50 (fifty U.S. cents) per acre.

It can be recalled from history that President Tolbert, in 1976, renegotiated the contract with Firestone with an insistence on raising taxes and hiring more Liberians in senior level positions. This led Firestone’s executives to complain that the plantation’s profitability was in a state of decline.

Observers note that President Tolbert’s rather fractious relationship with Firestone eventually culminated in his bloody overthrow in a military coup d’etat suspected to have been organized with US backing and covert support from Firestone.

Upon his accession to power, one of the first acts of the military strongman Doe was to annul the 1976 deal Tolbert had reached with Firestone on raising taxes and hiring more Liberians in senior level positions. But Doe went a step further by declaring that until rubber prices rebounded Firestone would continue to enjoy generous tax holidays and exemptions.

In a speech to Firestone executives Doe said “Firestone and Liberia have enjoyed a long and unique historical relationship. We therefore consider this relationship as a contract of survival”.

This newspaper observes that just as it did yesterday, Firestone is playing the same cards of “falling profitability” just as members of the Legislature are calling for a review of all Concession agreements. And as if to drive home the point, Firestone, in an arm twisting move intended to maintain its perks and privileges, is now threatening to lay off 800 workers from its workforce.

It can also be recalled from history that the Firestone Plantations was built on forced labor secured through the cooperation of the Liberian ruling class. According to historian Fred VanderKraiij, at one point during the negotiations Firestone suddenly introduced a new ‘Clause K’ into the agreement under which actualization of the agreement would be contingent upon the Government of Liberia’s acceptance of a US$5 million loan.

The terms of the loan agreement were to be the same as that of the loan contracted by President Daniel E. Howard in 1918. The terms of the loan which virtually placed Liberia as a US protectorate was rejected even by the U.S. Congress as that country had no interests than in securing colonies outside the U.S. Local opposition called for the sourcing of new loans from elsewhere.

But the terms of the Firestone agreement dictated that Liberia was forbidden to contract new loans from anywhere else without the approval of Firestone or the International Finance Corporation of America. In return for this Firestone was granted unlimited rights over 10 percent of the country’s arable land.

But just what has the country received or benefited in turn from Firestone’s activities in Liberia aside from providing employment for many but at starvation wages in conditions akin to peonage? Liberia’s rubber industry has never grown beyond the point of producing latex and raw and unprocessed rubber for export, even after nearly a century of operations in Liberia.

In view of all the above, this newspaper calls on President Weah to remain unfazed by threats from Firestone to lay off workers due mainly to problems with its Concession Agreement with the Government of Liberia. The public has a right to know if indeed there are problems with the Agreement, what the nature of the problem is.

Over the years Firestone has made immeasurable profits from its operations here in Liberia, including profits realized from its operations during the difficult war years, working in close concert with a bloody dictator, tyrant and now a condemned war criminal.

But Firestone, apparently having assessed the character and behavior of current officials, most of who appear to be caught in a mad drive to acquire wealth overnight, is approaching the situation tactfully wielding its stick and carrot in tandem. And its latest move appears purposely intended to whiplash this government into meek compliance with its demands.  From all indications, it is 1976 all over again and Firestone is back at the drawing boards.

2 COMMENTS

  1. Dear Editorial Board of the Daily Observer:

    Thanks for this editorial. You are right in saying that this CDC administration will allow the Liberian Firestone Rubber Plantation Company, a subsidiary of Bridgestone, to do the things it has carried out since 1926.

    Let us remember, tire, which is made from latex, generates about 80% of the revenue of Bridgestone.

    Now let us review Bridgestone’s numbers of 2018 and 2019 posted in February of 2019:

    AMOUNTS ARE IN MILLIONS OF JAPANESE CURRENCY

    ACTUAL ESTIMATE
    2018 2019

    SALES 3,650,111. 3,701,461

    PRE-TAX PROFIT. 427,768. 415,716.

    NET INCOME 291,642. 300,429.

    DIVIDEND PER SHARE. 160 163

    The financial statements of the parent company do not suggest that it is reducing its operational
    activities. I based my comment on the sales numbers and profit numbers. The 2019 estimates of both the sales and net income are higher than the 2018 numbers.

    Interestingly, the Liberian administration does not provide any information to the public to indicate what price Bridgestone is using to buy latex from the Liberian Firestone Rubber Plantation. Note, legally, these two companies are separate. Therefore, each company should receive a reasonable price, meaning, the parent company should not give the subsidiary whatever price it prefers.

    If the parent is not using a reasonable price to buy the latex from the Liberian Firestone Rubber Plantation, then the subsidiary might end up operating at a loss. This is because the subsidiary is not receiving reasonable price for its latex to calculate its sales, but it is paying wages and other expenses based on market value.

    The Editorial stated, “But Firestone, apparently having assessed the character and behavior of current officials, most of who appear to be caught in a mad drive to acquire wealth overnight, is approaching the situation tactfully wielding its stick and carrot in tandem. And its latest move appears purposely intended to whiplash this government into meek compliance with its demands. From all indications, it is 1976 all over again and Firestone is back at the drawing boards.”

  2. Given the precarious economic situation that the CDC-led government has plunged the nation into, Weah will have no choice, but to kowtow to whatever conditions that the Firestone authorities will impose on Liberia.

    For a government that is extremely hypnotized by the accumulation of wealth at the expense of its destitute citizenry and at any cost possible, it will scramble for the crumbs that fall from the master’s table. Selah.

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