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Re: Good business vs. good investment
On Wed, 17 May 95 20:24:59 EDT Jorge Raygoza wrote:
> ... The only point is that by buying the "state enterprises" those
> people who bought them were not thinking on making them productive and
> efficient but on speculating with them. Those buyers will recover their
> investment (and maybe get some profits) before "competition arrives". Then
> they might sell shares in order to then making them productive or just resell
> the enterprise in pieces to create local natural monopolies. So, the
> modernization (if any) comes after the "competence" arrives not before. And
> the benefits to consumers may not come in any of the two scenarios...
A problem here seems to try to construct the rule out of the exception: Telmex.
Almost all the state enterprises that were sold had, or have now, domestic and/or
international competition. If the aim of businessmen was to buy public monopolies
there were not many options to go for. For example, one of the conditions in the
selling of Miconsa (Maiz Industrailizado Conasupo, SA) was that MASECA would
not buy it under any circumstance, precisely to avoid the creation of a monopoly;
Televisa was not allowed to bid for Imevision.
Also the idea that businessmen just want to milk the companies is highly unlikely,
and even irrational in a business sense. If someboy tries just to obtain monopoly
profits without investing for the future it is because he/she thinks competition will
prove to be overwhelming, and of course (if that is a general perception) nobody
will buy that company when competition arrives, therefore, that person should end
up losing money.
There are some ideas on the privatization process that seem to be widespread, but
lack specifics: 1) The selling of public enterprises was pre-arranged to favour of
friends of Salinas; 2) Public monopolies were converted into private monopolies
(any examples asides from Telmex?); 3) Enormous profits have been made. This
last idea is true - in some cases. Aeromexico and Mexicana, presents examples
that not all the groups that bought public enterprises have a rosy horizon. Another
example appeared yesterday in the column "Mesa de Negocios", I think in El
Universal:
(brief translation: a steel mill complex, privatised during the Salinas
administration, will be declared bankrupt this week).
Sidena, Siderurgica Nacional, sera declarada en quiebra
antes de concluir la semana. Jaques Rogozinski en el sexenio pasado
privatizo la empresa conformada por Tractores Masey Ferguson, Fundiciones
Sidena, Aceros Especiales y Motores y Maquinarias que dan empleo a 1500
personas en Ciudad Sahagun, Hidalgo, e indirectamente a otras 1000. La
quiebra sera declarada por un juez de lo concursal del Distrito Federal,
aunque ya esta en una quiebra tecnica y el juez solo validara la realidad.
Hay dos propuestas de compra, una son grupos de Guanajuato y otra National
Casting, aunque podrian agregarse otros. Lo importante es que ahora que- de
en manos que la hagan viable.
Regards,
Sergio.