Shape Up or Shut Down, Cuba Warns State Businesses

Progreso Weekly

Some executives on state run farms are still relying on government subsidies to bail them out, says Granma.
Some executives on state run farms are still relying on government subsidies to bail them out, says Granma.

HAVANA TIMES — Unproductive and/or inefficient state-run enterprises were warned that they could be shut down or turned over to self-employed workers if they didn’t mend their ways.

The warning came in an article Monday (Jan. 13) in the Communist Party daily Granma, written by the newspaper’s Camaguey correspondent, Miguel Febles Hernández, and undoubtedly cleared by the party’s leadership.

Titled “The heavy ballast of economic losses,” the article reminds readers that the 2011 Economic Guidelines of the Party and Revolution provide that “the state-run enterprises or cooperatives that consistently show financial losses in their balance sheets or an insufficient labor force, that cannot pay with their assets the obligations they have contracted, or that present negative results in financial audits, will be submitted to a process of liquidation or can be transformed into other forms of non-state management.”

Although almost three years have passed since the Guidelines were approved by the Sixth Party Congress in April 2011, “there are still enterprises, especially in the farm sector, whose economic-financial status is pitiful,” the article says, “and in some cases, despite repeated warnings, do not show a radical change in the short run.”

Some executives are still relying on government subsidies to bail them out, “as if the State were a life preserver to set aright their failure to execute the plans and control their business expenditures.”

“Always waiting for deliverance ‘from above’ that might pull the chestnuts out of the fire, many management teams fall into immobility, routine, negligence, mediocrity and lack of initiative, phenomena that negatively affect the performance of any organization,” the article continues.

Those managers clearly have no idea “of how to come out of their quagmire. They only propose temporary fixes that barely serve to suspend the problems, without solving them once and for all.”

“This state of affairs will change little if we don’t eliminate the unproductive personnel that still abound in the companies, the payment of wages for no productivity, the inadequate handling of bank loans, the idle inventories, the cost of lost animals or harvests, and the unending chain of unpaid bills.”

“The issue goes beyond a simple rearrangement,” the article explains. “It is a question of linking the revenues to the results obtained, to raise productivity, diversify production and services, to improve efficiency and seek new alternatives and variations to get the most of the potential of each entity.”

“Only […] with greater autonomy and greater responsibility, the companies can ‘oxygenate’ their accounts and generate profits that ensure self-generated development, comply with the tax laws and contribute to the progress and social welfare of the localities where they operate.”

The article ends by saying that “the socialist state enterprise is and will be the very heart of the country’s structural base. To make it into a strong and organized entity should therefore be everyone’s greatest endeavor.”


9 thoughts on “Shape Up or Shut Down, Cuba Warns State Businesses

  • January 16, 2014 at 9:31 am
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    Haven’t you heard? WalMart is investing heavily in their online store in anticipation of the inevitable downsizing of the US storefronts. On topic, if the modern world has moved on to greater online purchasing, the costs of brick and mortar consumerism will naturally go up. So, just about the time when the everybody else is getting their groceries delivered by drones, Cuba as a late entrant into the 21st century will be forced to pay a higher start-up costs to get access to the same Black Friday madness that the rest of us so thoroughly enjoy. If Cuba were Guatemala, you could reasonably argue that third world countries always accept a lesser quality of life (as measured by most) or pay a premium to live like the people live on TeleMundo. But Cubans are terrific consumers. They are as brand-conscious and fashion-forward as any NYC SoHo socialite or Beverly Hills Botox-filled trophy wife IF given access to the resources. This regime has set the Cuban people and Cuban culture back 100 years in their capacity to “keep up with the Jones”.

  • January 15, 2014 at 11:34 pm
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    Apparently they will fire both the CEO AND the guy in the mail room, as exemplified by today’s paper which announces that, nationwide, J.C. Penny is closing hundreds of stores and laying off thousands of employees. Pretty soon the only alternatives for brick-and-mortar will be Wal-Mart…and the dollar store! But of course ever more folks are just ordering through Amazon.com anyway!

  • January 15, 2014 at 1:09 pm
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    That’s weird. I could have sworn this article was about Cuba and Cuban state businesses. So why are people discussing the USA and Google?

    If the government really is planning on handing over the operations AND ownership of state businesses to worker co-operatives, then that would be a very positive step for Cuba’s economy and democracy.

    However, I am suspicious that the government will use issues like this to provide a pretext for re-assigning individual state businesses to one of the larger state corporations, such as the military-owned holding company. GAESA already has extensive holdings in tourism, trucking, restaurants, manufacturing and farms. Since Raul Castro became president of Cuba, GAESA has been rapidly expanding their control of the Cuban economy. Should it come as a surprise then to learn that the director of GAESA is Raul Castro’s son-in-law?

  • January 14, 2014 at 9:26 pm
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    The communists that created this system are now trying to blame the problems on the people that had no choice but to go along with them or face jail time. Que cojonudos.

  • January 14, 2014 at 9:06 pm
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    Ray Kurzweil whose predictions of the future have been ridiculed by you and others is head of engineering at Google.
    I wonder how the many more employees of McDonald’s Burger King and all the other minimum wage job workplaces across the country and the 50% of all U.S workers who are paid less than $27k per year would have to say about their jobs.
    Google is an exception. Google is an anecdotal example of a good workplace that in no way represents the overwhelming majority of workplaces in the U.S.
    Google is the rare benign dictatorship in a capitalist world that is overwhelmingly malignant.
    It’s like saying that in the U.S any ONE can become rich while the reality is that only .0001% do.
    It’s just one more lie of omission isn’t it ? .

  • January 14, 2014 at 4:47 pm
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    Each year Fortune magazine does of annual survey of employees to compile a list of the 100 best companies to work for. For 2012, the best company was Google, Inc. Over the last year, Google’s stock price has soared 66%. The GOUSA along with the average stockholder likes what Google employees like. If a company works well, everybody is happy.

  • January 14, 2014 at 2:50 pm
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    Getting rid of the top-down management of the state enterprises is just what is needed and they should be replaced by cooperatives: democratically-run worker-run operations leading to a democratic society as a whole.
    Undemocratic and hierarchical structures will always lead to inequities and an unhappy workforce that will refuse to perform unless forced to do so .
    A workforce that has a real say in how their work will be divided and how the profits and products they produce will be shared is a workforce that will function very well as seen in the example set forth by Spain’s Mondragon Cooperative workplaces.
    That sort of thing, unfortunately, is what the GOUSA has always opposed .

  • January 13, 2014 at 10:01 pm
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    Too bad they don’t apply the same “shape up or shut down” criteria to the guy(s) who came up with the ten million ton sugar harvest, the miniature super cow, the glass of milk on every table and all the other really stupid flights of fancy Cubans have had to endure over the years. Most failing companies will fire the CEO if the company is losing money, not the guy in the mail room. Now imagine if Cuba was the company, the CEO is……

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