It's business almost as usual in tense El Salvador
Boston — Ted Marten leans back from the seminar table littered with the remains of a dozen sack lunches and summarizes the results of Delmed, his small Boston-based company: "So far, it's been a very satisfactory experience,"
He's not talking about doing business in Boston. He's talking about his firm's branch in El Salvador -- and he has reason to be pleased.
Despite a well-publicized civil war, his plant in suburban San Salvador has not had one day of interrupted production. And although his operations are labor-intensive (supplying plastic parts to the medical profession), he cannot even complain about a 46 percent escalation in wages in recent years. They have gone from only 65 cents an hour to 95 cents an hour.
His experience is not unique. Telephone interviews with other United States-based firms doing business in El Salvador confirm his view. For many, as John Moreau of McCormich & Co. (the food and spice processors) says, it is "business as usual."
A spokesman for Kimberly-Clark de San Salvador, a three-quarter owned subsidiary of the US papermaker, reports no difficulties at the 400-employee plant there.
Even TExas Instruments, the largest US-based firm in the country, reports a " relatively normal situation" with only occasional interruptions from such things as power outages. "I guess people want to work," notes spokesman Richard Perdue.
The situation is not entirely rosy, however. For instance, an International Telephone & Telegraph subsdiary had an office blown up, allegedly by leftist guerrillas, causing an estimated $100,000 damage. And while many firms, hoping not to offend either side in the still-uncertain civil war, are reasonably tight-lipped, they do recognize certain challenges:
* Since the assassination Jan. 3 of two US labor union officials at the Sheraton Hotel in downtown San Salvador, Delmed has stopped sending technical people to its branch there. Meetings between US engineers and the company's salvadoran management team take place instead in Miami.
* The local economy is in peril. Such indegenous savings as the country has, says Tufts professor and former US Ambassador to Honduras Hewson A. Ryan, are largely in Switzerland, the Bahamas, or Miami. "Above all they need capital," he says.
But the banks are not in a position to help. Ray Toman of the Bank of America, which has a branch still open in San Salvador, notes that "business has withered as has the economy."
Sandy Jenkins of the First National Bank of Boston notes with some understatement that "we're not really beating the bushes for new business" in Central America. US bankers are understandably cautious: After the war in Nicaragua, many had to renegotite their entire operations, and they fear a similar outcome in El Salvador.
* Yankees are potential targets for terrorists. Even before the civil war, one small firm was urged to stay out of the country -- not by leftists, says its executive, but by rightists fearing that it would bring higher wages and upset the control of the local job market by the wealthy ruling families. Both Bank of America and the local MacDonalds have sustained bomb damage, and on March 4 the US Embassy was sprayed with Bullets. Delmed's Mr. Marten says, "We feel that is a risk of doing business."
But other factors make the risk worth taking:
* With the exception of Texas Unstruments, most of the companies contacted are insured by the Overseas Private Investment Corporation (OPIC), a little-known government- sponsored firm that former Sen. Frank Church reportedly described as "the best-managed crazy idea in Washington." It currently provides political risk insurance unavailable through private insurers to US firms in 95 developing countries, covering war damage, expropriation, and currency inconvertibility.
"Traditionally, investment abroad has been the province of the multinationals ," says OPIC spokesman Buck Jordan, who notes that small businesses will rarely venture into developing nations unless they can limit their exposure to political risks. OPIC has already proved its credebility in Latin America, settling 23 claims totaling $450 million after the Allende government came to power in Chile in 1970.
But OPIC takes its cues from the State Department. And while they haven't yet been told not to do business in El Salvador, OPIC oficial John Gurr notes that "we've turned down some very safe proposals in that country since the problems arose."
* For companies already established, there are still profits to be made in El Salvador, where unemployment and underemployment is high, the climate temperate, housing inexpensive, and where local families can reportedly eat for the equivalent of $5 per week.
Although the country, unlike neighboring Honduras, has what Ambassador Ryan characterizes as "a climate of violence," it also has a labor force eager to work. "We feel in the long run, given the lack of interference with production, we will be satisfied," says Mr. Marten.
He adds that his Salvadoran executives are confident about the economy. "They feel the country is close to takeoff," he says -- a different view from that often portrayed in the press.