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Summaries of session 2
Getting to know the other study circles in the project Who are the people in the other study circles around the world? Take turns to read to each other extracts from what the other study circles have said about themselves and what they hope to get from the course. Discuss briefly what similarities there are with yourselves, and what differences. The facilitator should record the main points of the discussion.
The facilitator hands out the four readings to everyone:
Four people read one out each in turn. After each reading, discuss the issues raised at the end of each reading, and other points which you feel are important. The facilitator should record the main points of the discussion.
Take the information which you found out in answer to the questionnaire 'TNCs in Our Country'. Take each question in turn and compare your answers. Pool your information and record it on flipchart paper. What are your main conclusions from this information? How powerful is the role of TNCs in your own country? What are the responses of trade unions and community organisations? The facilitator keeps the flipchart notes.
Creative Writing about TNCs In ones or twos, write a brief description of how a particular TNC is operating in your country. Use your personal experience to describe something that happened to yourself, your family, your trade union or your community. What was the impact and how did people respond? If there is time, you can read your writings to one another. The facilitator gathers in the writings.
The study circle evaluates the session, using the form provided.
Read the three case studies of TNC activity around the world Shell's "Ecological War" in Nigeria, Daewoo: Corporate Blackmail? and McDonald's: Using Kids to Sell Burgers and critically evaluate them using the pointers as guidelines.
You will need:
Getting to know the other study circles in the project is important so that your study circle members feel part of an international project rather than just a local one. Building international solidarity between the study circles is integral to the project.
The four readings on TNCs and why they are important make some strong assertions. Study circle members should not feel that they must agree with these assertions. They should be encouraged to say if they disagree and to give their reasons. As facilitator, a key role you should play is to give room to different opinions. Conflicts of opinion must not, however, be allowed to degenerate into anger. Many of these issues will arise again during the course.
Questions for Discussion are only for guidance. It may be that study circle members wish to bring out different points too.
For the creative writing at the end of the session, some study circle members may feel more inhibited than others. If so, they may like to work in pairs. They can write poems as well as prose. Some might prefer to draw a picture or a cartoon but unfortunately where equipment is less sophisticated this will be difficult to share with the other study circles through the Internet.
List of 'The Global Giants': the top 50 world corporations
TNCs or MNCs: a note on terminology
"There is nothing new about the international character of capitalism.... So what is new? It is the shift from a world economy based on national market economies which are linked together by trade and by investments to a single, borderless global market economy increasingly governed by one set of rules. Transnational corporations are the spearheads of globalisation." Dan Gallin, former General Secretary of the foodworkers international union IUF, writing in ILRIG's 'Workers World News', January 1996
International trade dates back thousands of years. But the difference today is that the world economy is more and more one integrated economy. National economies can hardly be said to exist..
This global economy is increasingly dominated by giant private corporations, known as transnational corporations (TNCs) which operate in many countries. TNCs are sometimes also called multinational corporations (MNCs).
TNCs are huge conglomerates, that is corporations that control the production and distribution of goods and services through companies that they operate across the world. A very large proportion (about 40 per cent) of world trade takes place inside TNCs. Altogether they control about 70 per cent of world trade.
TNCs divide up their activities between different countries, moving to new locations to seek out the best advantage for their profits. For example:
To create these giant corporations, smaller companies are bought up, merged together or go into a joint venture. More and more, it is big corporations - and not individual shareholders - which own smaller companies.
Or the big corporations sub-contract work out to smaller companies and play one off against another so as to dominate them. This 'sub-contracting' is a trend which is also growing everywhere. Many smaller companies competing for TNC contracts drives down the terms and conditions for workers.
Corporations hold together all these activities across the globe by using new communications technology. Computers linked to each other by means of satellites give bosses instant communication and allow them to control production which is scattered across thousands of miles and over several oceans.
TNCs now dominate the world economy. For example, the 300 largest TNCs own or control more than one quarter of the whole world's productive assets.
This concentration of capital is giving TNCs huge economic and political power. It is a power greater than individual national governments. This means that it is a power greater than those we have democratically elected.
TNCs bring governments under great pressure not only because of how much capital they control but also because they move it from place to place. Governments are anxious to keep investors in their country, perhaps believing this is the best way of providing jobs and keeping the economy going. They have willingly or unwillingly agreed to many reforms which benefit TNCs such as weakening labour laws, wage restraint, relaxing or de-regulating health and safety standards, removing exchange controls, privatising national industry and services, cut-backs in public services for the people, and reducing corporate taxes. "We have to do this", governments say, "so that our country will be globally competitive".
These reforms have been carried out in both industrialised countries and in developing countries. In many developing countries they have been imposed by the International Monetary Fund as a condition for financial help after governments got into debt. They are often called 'structural adjustment programmes' (SAPs). The effect of SAPs is to give free rein to TNCs.
The World Trade Organisation is the institution which governs world trade. The WTO also promotes these 'neo-liberal' policies. It has the power to penalise countries which do not open up to foreign capital and TNCs.
The three big trading blocs - European Union, NAFTA (North American Free Trade Agreement) and APEC (Asia-Pacific Economic Cooperation) - have similarly developed to compete with each other to offer the most attractive deals to TNCs.
In these ways private capital is given more and more freedom while the people and their elected representatives take second place.
At a personal level too TNCs reach into the lives of all of us. They affect what we eat, where we work, how healthy we are, how we spend our leisure time, etc.
So the decisions of a few thousand directors in boardrooms in San Francisco, London, Tokyo or Frankfurt have a huge political, economic and social impact on the lives of billions of people all over the world.
A typical TNC is Unilever. Unilever has its headquarters in the UK and Netherlands. It is active in two main areas: food and detergents/soaps. Its products are sold in supermarkets, shops and roadside stalls all over the world. Do you know any of its brand-names?
One of the products that Unilever makes is Blueband margerine. Unilever owns plantations in Indonesia to grow the palm trees for the oil. Unilever then processes the oil and makes it into margerine. It transports the margerine around the world, puts it in tubs, and sells it to the retailers. It runs all the administration and financing of the operation. Many different economic activities in a single chain like this is called 'vertical integration'.
BTR is another example of a TNC. BTR is another British-based TNC. It started life in Birmingham, UK, making rubber tyres.
Today BTR owns companies involved in tyres, hydraulics, plastics, agricultural equipment, aircraft equipment, cables, carpets, mattresses, sports and leisure equipment, hospital equipment, space and military equipment, nuclear/biological/chemical protective equipment, artificial limbs, construction, paper and printing, publishing, stationery, furniture, finance, insurance, property, transport, etc. in some 35 countries.
BTR is known in countries such as the UK, USA, Trinidad and South Africa for its union-busting.
Shell's "Ecological War" in Nigeria
Ken Saro-Wiwa was a Nigerian activist who was executed in November 1995. He had been campaigning against the repression of the Ogoni people and the ecological destruction of their region, the Niger delta, by the transnational oil company Shell in cooperation with the military regime. Before he was executed, Ken Saro-Wiwa wrote a letter from jail to ask for international support:
"Shell has exploited, traduced and driven the Ogoni people to extinction in the last three decades. The company has taken over US$30 billion out of Ogoni and has left a completely devastated environment and a trail of human misery.
When I organised the Ogoni people to protest peacefully against Shell's ecological war, the company invited the Nigerian military to intervene. Lethal arms supplied by the British Government were used on unarmed Ogoni people while they were sleeping in their beds. Thousands have been murdered, hundreds of thousands driven into the bush and tens of villages flattened.
The World Bank has warned that "an urgent need exists to implement mechanisms to protect the life and health of the region's inhabitants and its ecological systems from further deterioration". Shell has not faced the consequences of its ecological war on the delta.
I have one suggestion for those whose conscience has been disturbed by my story: boycott all Shell products. Picket Shell garages. Do not allow them to profit by their destruction of the people and ecology of the Niger delta.
Please do not allow the kangaroo military tribunal to condemn me to death for a crime I know nothing about. Make appeals for clemency... Support the call for a worldwide boycott of Nigerian oil. Help save life and the environment of the Niger delta."
Ken Saro-Wiwa, Nigeria, executed in November 1995
(Mail & Guardian, South Africa, 15-21 September 1995)
In 1995 the South Korean giant Daewoo corporation wanted to build a new plant to make TV tubes. It played off four countries to get the best deal: France, Mexico, Vietnam and South Africa.
France offered Daewoo US$50 million up-front capital, plus extra cash for each person trained, plus cheap electricity and land, plus a five-year tax holiday which can be taken at any time in the plant's life. Mexico offered a similar deal. Vietnam offered protection from competition for 10 years, plus tax concessions.
When it came to South Africa Daewoo got the support of Amic, the industrial wing of South Africa's largest TNC, the Anglo American Corporation, to help them lobby the South African Government. Together they showed the new democratic South African Government what the other countries had offered. Amic director Laurie Oliver was pleased with progress. He said, "Government is coming round to the view that foreign industrialists will not manufacture in South Africa unless they receive incentives competitive with those on offer overseas".
It is not known where Daewoo finally built its TV tube factory. The point is to show what pressures corporations put on governments.
Daewoo is the 22nd largest corporation in the world, worth US$ 44 billion. Its profit in 1993 alone was over US$ 482 million.
(Information from Financial Mail, South Africa, 2 June 1995)
"Ronald loves McDonald's and McDonald's food. And so do children, because they
love Ronald. Remember children exert a phenomenal influence when it comes to restaurant
selection. This means that you should do everything you can to appeal to children's love
for Ronald and McDonald's."
McDonald's confidential 'Operations Manual' for store managers.
Children worldwide know Ronald McDonald, the red and yellow clown with his orange hair, balloons and tricks who makes it fun to eat burgers. In fact, McDonald's, the US-based fast food chain, is a company which sells its products through children. Critics say that this is cynical manipulation of children for profit. A judge in the UK has agreed that McDonald's exploits children in its advertising campaigns.
Much of McDonald's advertising is aimed at children. David Green, former Senior Vice President of Marketing of McDonald's Corporation, has admitted they target two age groups, 2-8 year olds and 8-14 year olds. Aiming at children as young as 2-8 can only mean that McDonald's is encouraging young children to ask (pester) their parents to take them to McDonald's.
It is a clever strategy. Research in the UK has shown that children are three times more responsive to advertising than adults, and that two-thirds of children who asked their parents for advertised products were granted their request.
Ronald McDonald turns up at schools, play-groups, libraries, doctors, dentists, and sports centres. According to the company the purpose is to congratulate children on their achievements. Critics say that it is cynical exploitation of children who are too young to realise that the clown is there to sell the McDonald's brand image.
From advertising campaigns during children's programmes on TV to free drinks in McDonald's paper cups for local events, McDonald's spreads its message. In the UK, It has been known to take over local annual fun-days. It gives a minor 'donation' and then saturates the event with the message that McDonald's is fun, fun, fun. The company has also produced an 'education pack' for schools.
As a result, many British children now think they are not normal if they don't go to McDonald's to eat burgers. A school education programme on healthy eating found that teenagers worry that cutting out fatty food might mean they cannot go to a McDonald's with their friends. In the UK, three-quarters of children eat more fat than recommended by government. McDonald's food is rich in fats.
McDonald's is a US-based fast-food chain, the world's largest. Since the first McDonald's burgers were grilled in 1940, it has grown to operate about 15 400 outlets in 80 countries. In January 1996, McDonald's announced it would open a further 3 200 units that year. The corporation's net profit in the first quarter of 1995 alone was US$ 280 million, up 15 per cent on the previous year. Its sales in the same period were worth US$ 6,67 billion (6 670 000 000).
This information comes from the web site: http://www.mcspotlight.org/. The McSpotlight web site was set up during the London trial of two campaigners who were sued by McDonald's for libel. The 'McLibel' case, as it became known, was the UK's longest ever libel court case. In May 1997, the judge found McDonalds guilty of exploiting children in its advertising campaigns, paying low wages to workers, and being cruel to animals. The judge found McDonald's not guilty of the other allegations: that McDonald's destroys rainforests through cattle ranching, causes starvation in the Third World, poisons its customers or exploits workers.
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