Kherson Occupation

A combine produced in Kherson

What is the significance of the Kherson factory occupation?

Questioning property rights over means of production
becomes even more important in a region where the fall of communism
created a huge ideological vacuum for right-wing forces to exploit. For
two decades since the fall of communism, capitalism went largely
unchallenged, with governments creating and enforcing laws to defend
the properties of the new rich, forgetting about the rights and needs
of the rest of the population.

The story of the combine plant in Kherson is no exception
here. Governments denied workers any claims over means of production in
the name of private property and rule of law. At the same time,
governments failed to punish those private owners who did not pay
workers for months. In response, during three years of struggle, the
workers of the combine plant in Kherson have achieved a lot: the
partial reform of their trade union, and an impressive change in the
quality of the actions carried out against employer and state. From the
suicide of worker Yury Atyanasov, who hung himself from his work lathe
in December 2006, to the February 2009 factory occupation, and the road
blocks happening while you read these lines.

Yet numerous problems hamper the success of workers. The
political connections of the plant owner and the class character of
political power in Ukraine mean that the most important political
forces in Parliament – formed out of millionaire oligarchs owning the
country’s plants – will block any nationalization attempt. This
influences the horizon of expectations of workers, meaning that people
believe that there is little to be gained from protest. In effect,
protests remain an isolated phenomenon not only in Kherson and Ukraine,
but also in wider Eastern Europe. Furthermore, political forces are
trying to use the Kherson workers in inter-party fights that are
ubiquitous in a pre-electoral year, risking to discredit the Kherson
workers and their cause in the eyes of other workers. And last, trade
unions have abandoned Kherson workers, claiming that the questions
raised in Kherson are beyond their competence.

This article aims to offer activists and to those
interested in the Eastern European labor movement an in-depth
understanding of the region’s only factory occupation. The situation of
Kherson workers – with plant owners ignoring worker rights and leaving
people to work for months without wages and in outrageous conditions,
is not unique – it is present everywhere in Eastern Europe. The
isolation of the workers – with trade unions more interested in
lobbying governments to subsidize capitalists than in organizing worker
protests – is also not unique, particularly in the post-Soviet
countries. By understanding the plight of the workers and also how
their protests develop, we can better understand their cause and how to
help them. Read below an in-depth analysis of the situation in Kherson,
starting from the political economy of the machine-constructing sector
in Ukraine, and ending with the development of worker protests. The
information presented here comes from three rounds of fieldwork carried
out in Kherson in 2007-2009 and based on interviews with tens of
workers and participant observation in worker and trade union meetings.

Kherson worker, sign says: Worker control for the factories

Background: How to Kill an Enterprise

The Khersonskii Kombain (HK) plant was the country’s biggest combine-producing plant and the Soviet Union’s second biggest. It was privatized under the Ukragromashinvest (UAM) scheme, used in the case of some 40 Ukrainian plants. This was a fraudulent scheme, aimed to privatize a big group of plants to the hungry business friends of President Leonid Kuchma (who ruled the country in 1994-2004). It all started in 1998 when the state transferred HK shares – together with shares of some 39 other plants – to the state-owned structure, UAM. UAM’s initial goal was, at least on paper, to find solutions for re-launching production and making investment at the plants. However, around 1999 UAM managers started siphoning off shares to their privately-owned structures, such as the British company Interlink and the Canadian company Katredes. These structures had been set up by intermediaries – friends of the UAM management – to loose all trace of the initial shares. In the case of HK, the UAM managers could only sell 25% of the shares to Katredes. Yet there was also another company interested in HK and also other UAM assets: Interpipe, owned by oligarch – and close friend of Kuchma – Viktor Pinchuk. Pinchuk had big plans at that time (early 2004), of taking over not only HK, but the entire UAM.

However, the Orange Revolution and the UAM managers’ good connections to the Orange political parties made Pinchuk uncertain over his prospects of staying the plant’s main investor. In 2005, oligarchs Pinchuk and Rinat Ahmetov lost control over the country’s biggest steel mill that the Timoshenko government nationalized and sold to Lakshmi Mittal. (Mittal Steel was the world’s number one steel producer; it kept its position after a merger with Arcelor.) This probably changed Pinchuk’s plans for the HK plant, from initial investments to trying to get rid of it. After taking control over HK in 2004, making investments of some USD 7 m in 2004-2005 and repaying all previous wage arrears, in 2006 Interpipe almost let the plant go bankrupt. The plan was to asset-strip it by using the following scheme. Management would let the plant build-up debt to other Interpipe-controlled companies. These companies would file a bankruptcy suit against HK that the Interpipe-controlled management at HK would accept. The plant would be split into two: an old one to be bankrupted, featuring on its balance-sheets all debts, assets, union and old and “unproductive” workers; a new one, owning all production equipment and the production workers.

Initially the plan worked out well. In 2006 the plant’s situation quickly worsened. Production fell dramatically and even stopped, going from some 100 combines a year to zero. Wage arrears reached several months (wage arrears refer to a situation where workers not receiving any wages at all). In 2006 Interpipe declared that HK is bankrupt. Being the main investor, this meant that before liquidation HK had to pay Interpipe back the money it had invested. Basically, the HK was forced by court to pay money to the structure it had bankrupted it. Interpipe generously offered HK to pay the sum in property rights. Using all its legal resources and despite UAM opposition, Interpipe divided HK into two companies. All production facilities, 1,400 production workers and the biggest part of the HK’s real estate were regrouped under a new company called the HMZ. 800 non-productive workers (engineering-technical personnel and retirees), all debts, some real estate, and the union were left under the old HK.
By liquidating the old HK, Interpipe was getting rid of UAM’s property claims, paying all debts by selling the real estate and getting rid of one third of the workforce and of the union. Interpipe would be left with a new, “clean” plant, free of any competing property claims. This new plant was called the HMZ.

It is important to note that this whole reorganization is just a book-keeping trick. The HK and the HMZ differ only juridically; physically they share the same space. Soon after establishing the HMZ, Interpipe sold it to another company, the Bila Tsirkva-based combine-producing Bilotserkovsel’mash (BTS).

Kherson Workers: First Organizing Attempts

The union at the Kherson plant was until 2006 quite representative of the country’s passive, employer-paid and employer-friendly union scene. Ukraine’s (and Russia’s) misfortune was that the fall of the Soviet Union did not bring any democratization of the trade union structures. Trade unions kept a leadership consisting of professional bureaucrats rather than of workers. The plant-level union in Kherson is member of Ukraine’s Auto- and Farm-Machine Builders, ASMU, an industry-wide union organizing workers in civil machine-constructing. Industry-wide unions such as ASMU are affiliated to one giant structure called the Federation of Trade Unions of Ukraine – FPU. The FPU – and ASMU – maintain territorial offices that should supposedly assist workers and plant-level unions in their fights with employers. As we will see below, the FPU structures in Kherson – and also in Kyiv – largely ignored the workers’ struggle in Kherson.

The two combines that made it to the city center

Throughout the first year of plummeting production and rising wage arrears (2006), the ASMU union leadership reacted “with understanding” to management’s failure to sustain production and pay workers their wages. It negotiated a plan to repay wage debts that the management signed but failed to keep in. Once it became clear that part of the plant would go bankrupt, the union reacted by sending petitions to the government and president and lobbying one minister to buy a few combines that were still on the company’s stocks. The idea was to pay some wages from selling the combines. The union got help from the then-communist-controlled Ministry of Industrial Policy, who bought a few combines in late 2006. Probably the administration used this money to pay the wage arrears.

Some union-council members supported by a workers’ initiative group however demanded more radical actions, strikes and outside-the-factory demonstrations. The group called the conciliatory union leaders kabinetchiki, people better at moving around papers in offices than in mobilizing workers. At least initially, it was difficult to mobilize workers for such actions. The Kherson workers were a divided collective, with no experience of collective action. All this would change, however, in December 2006.

In December 2006, after four months with no wages paid at the plant, worker Yury Atyanasov committed suicide by hanging himself right next to his workplace. This was the trigger event for protests led by a workers’ “initiative group” that was unhappy with the union’s lack of results in negotiations. Demanding payment of wage arrears and re-nationalization of the plant, workers took the protest to the streets. This meant that several high-ranking local officials – such as the governor – came to meet the workers. Workers also ensured media-access to the plant (bad publicity for the owners) by chasing away security guards; they went on strike; they “wrinkled up” the plant’s general manager; they blocked the town’s main streets, threatened to block the railway etc. Management immediately found the means to pay the workers some USD 40/each. For the protesters, it was the “first cash we saw in four months”. Workers forced the union leaders to stay day-and-night in their office and work out a plan to solve the crisis. Workers soon organized elections and voted in new union leaders, reforming half of the union council. Interpipe temporarily started paying wages again but no arrears; meanwhile the liquidation process went on and the government refused to return the enterprise under state property.

However, the new union council failed to make use of the significant mobilization potential among workers at the plant. After the events in early 2007, when protesting workers convinced the employer to start paying wages again, the union booked only a long list of defeats. From its many demands, the union only achieved one. The union’s main goals were: (in 2006) stopping the liquidation process; return of the plant under state property; payment of wage arrears; (in 2007) establishing the union at the new HMZ plant and force the management to sign a collective agreement. The union only achieved recognition at HMZ.

The biggest defeat that the union suffered was the way how the 800 workers to stay at the old HK were selected in May-June 2007; management targeted those workers that mostly needed the union’s protection (old engineering-technical personnel also known as ITR). The union simply did not know that the law allows it to co-shape the liquidation process. The union also did not try to pressure the court that decided on the details of the liquidation process, although the more radical workers demanded that the union does so.
Interpipe also refused to pay the newly (in 2007) accumulated wage arrears at the HK; actually, it wanted to pay the due wages from selling real estate and other plant assets. The union registered a work conflict and started pressuring Interpipe to pay the arrears from its own money and not wait until the assets would be sold. In September 2007 Interpipe agreed to pay the arrears from its own money, also after loosing a work conflict over the issue. However, as late as summer 2009 – the last time I was in Kherson – there was no improvement over this issue as Interpipe was delaying payments to the 800 workers. Interpipe could simply get away with ignoring the authorities’ decision over the payment of wage arrears, and the union refused to do anything about it.

For instance, in December 2007 union leaders decided not to carry out a conflict-oriented action in order to push demands against Interpipe. hey argued that they did not want to cause the plant such damage as to weaken it at the expense of worker living standards. At that time, Interpipe had already laid-off 720 of the 800 workers, without paying them their due wages. In November 2007 production workers from the new plant, HMZ, believing that HMZ and HK owners are connected, demanded that the union addresses an “ultimatum” to the HMZ owner. They threatened to strike at HMZ if the former HK workers would not get their due wages. Union leaders refused, prompting those workers to threaten that they will split the union. The HMZ workers were ready to engage in collective action in solidarity with their laid-off HK colleagues. The leaders decided not to make use of this potential.

At the same time the union faced a very different problem: with the creation of the new HMZ in June 2007, the union had been confined to the old HK. The new owner of HMZ, the company BTS, quickly moved to sign a collective agreement with only nine employees – basically with the management employees – an agreement that was binding for all of the 1,400 workers at HMZ. The collective agreement omitted to include any guarantees to pay for what workers call the “social sphere” (dormitory reparations and, most of all, medical assistance). BTS refused to recognize the existence of a workers’ organization at the new plant.

The union based its response on tactics used in their battle for recognition by the workers in Vinnitsa, a battle-hardened collective in another Ukrainian town. News had traveled from Vinnitsa to Kherson with help of the School of Worker Democracy, a small initiative set up to help struggling collectives. The union organized a workers’ conference in August 2007 at which workers demanded that the HK union represents their interests at the HMZ. The conference was a reunion of delegates; each shop elected its delegates and 100 delegates attended the conference. Then the union asked workers to send requests to management’s accountant to redirect 1% of their wages to the union (that up to that moment the administration refused to recognize). By the time I arrived in Kherson in September 2007, more than 800 workers had sent in such requests. Apparently management was overwhelmed.  Consequently, BTS recognized the union.

After recognition, the union became less and less inclined to mobilize workers against the employer. It refused to take action against the employer even when basic solidarity demanded it. For instance, at the beginning of each month the employer had great difficulties in finding the money to pay wages. A few (three) production shops were always paid first and got the entire wage, something that some – workers saw is a tactics to divide the union. Alternatively the union could have asked that all shops get paid, even if they first get only 20% of the wages. This would have been a good opportunity for the union to set a signal to both management and members, but it avoided to act on this issue. In the end, the workers acted without the union.

The February-March 2009 Factory Occupation

Like any instance of collective action, the Kherson factory occupation had its ‘pre-history’. It did not happen out a sudden, but required several mobilizations. In November 2008 the situation at the combine-plant had worsened to the extent that workers took the conflict out of the plant again and into the streets of the town. The new owner, BTS, had stopped paying the workers their wages already in September. Furthermore, in November the owner announced that all workers would be laid-off, as there was no more production at the plant. The workers stormed the local administration, asking the regional governor to talk some sense into the owner. The workers got paid some of their money, but not the full wages and not the arrears. In January workers continued picketing the local council. A last meeting was held on February 2. At that time, the workers and the governor had no more contact to the owner. The owner refused to meet them, and the combine-plant’s director had left the plant too, according to her to another city. There was nothing left in the plant’s accounts, and the last ten combines produced at the plant had left the plant with an unknown destination.

On February 3, a few hundreds of workers gathered in front of the plant’s administrative building. Again they were led by an “initiative group”. The members of the initiative group were in contact with Marxist groups in Kyiv that had promised to spread the news would the workers organize anything radical. The several hundreds of workers then stormed the building, broke the security gates, chased away the guards, and occupied the administrative building. The news spread fast, and very soon all major local and national TV stations and all of the Ukraine’s big newspapers reported the occupation.

English-language (UK Channel 4) news on the occupation: klick link here.

The workers’ demands – drawn together with Kyiv and local activists – were the the return of wage arrears, the nationalization of their plant, and a government plan to buy the plant’s products. On February 7, the workers and activists from Kherson, Kyiv and Crimeea organized a march through the city, in an attempt to raise awareness about the factory occupation and the workers’ plight among city inhabitants.
During the occupation there were two attempts to break away from the ASMU union. The leader of that union’s plant-level organization had lost the workers’ trust. The initiative group members – all of them members of the plant-level ASMU union council – were divided between the idea of creating a new union, independent of ASMU, and reforming the ASMU union by voting down its leader.

Kherson worker holding ASMU union flag

First, the initiative group started talks for the creation of a new union with the Confederation of Free Trade Unions of Ukraine (the KPVU), an organization dominated by miner unions and perceived as close to the party of the prime-minister, the Yulia-Timoshenko Block (BYUT). BYUT is seen by many leftists as a right-wing, nationalist, political party, close to some of the country’s oligarchs. Many leftists in Kyiv and Kherson (for instance, the Communist Party) criticized the workers for their choice and threatened to stop supporting them. Actually, a KVPU union would never emerge at the combine-plant. The initiative group members opted for the second option, reforming the existing ASMU union. But the ASMU union in Kyiv was ready to fight to keep its union leader, and in the subsequent vote in the union council the result was a 6:6 stalemate. The initiative group nevertheless got the promise that, as soon as the plant would start producing again, elections would be held in all plant shops, to vote in new union leaders.

The occupation’s first achievement was that the workers restored communication to the owner. The plant director returned to the plant to talk to the workers – it turned out that she had not left town after all. A week later, the plant owner himself showed up at the plant, ready to talk to the workers. There was little to discuss, actually, with the owner insisting that he has no money to pay workers their due wages. But the owner nevertheless offered a way out: to pressure local and national authorities to buy parts of the plant’s production, so that he can return the workers their money. In order to pressure the authorities, the owner asked the workers – represented by the initiative group – to organize a meeting in front of the local council. He even returned the ten combines, in order for the workers to use them during the demonstration. The secret service and the police however found out about the plan, and interfered, prohibiting the workers to take the combines out. After negotiating, the police allowed the workers to take out two of the combines.

Worker column marches through Kherson in February 2009

In front of the local council, the owner had prepared the workers a surprise. His colleagues from the burgeois Party of Regions had organized a small picket of people, holding flags of the Party of Regions and demanding the resignation of the governor (who represents a different party, Our Ukraine, one of the ruling parties and also the former party of Ukraine’s president Viktor Yuschenko). These people were to join the workers’ demonstration and create the impression that the workers marched under the Party’s flags. The workers prohibited the picketers from joining them. Their action, however did not have any effects. The governor kept insisting that the key to their problems is with the government in Kyiv. On March 2, some 50 workers occupied a floor of the regional state administration’s offices. This time the governor promised to use the local administration’s money to buy combines, would the government fail to do so in three weeks.

The second achievement was – from the workers’ point of view – the most important. The government agreed to buy combines from the plant. This – the signing of the corresponding document – happened the day after the workers’ sit-in in the regional administration’s offices, on March 3. On March 10, the first workers received their wages. The government transferred enough money to the plant as to allow the owner to pay back all wage arrears, October 2008-February 2009. The government also promised to buy 200 combines in 2009, and warned the owner not to fire any workers.

The Counter-Offensive

The owner’s response to the occupation consisted of two main elements, using force to regain control at the plant and using the local state administration to successfully divide the workers. With the occupation lasting already for six weeks, the number of workers guarding the plant each night had fallen from a hundred to a couple of tens. On March 18, at 1 am, 35 armed men – employees of a security company from Crimeea – attacked the workers and evicted them from the plant premises. They also installed iron gates to bar the entry to the plant offices (from where they had just evicted the workers).

The same day, the owner issued an order in effect firing 480 workers. On March 20, he signed a memorandum with the state administration, declaring that the plant would start working again with only 350 workers, with the remainder to be hired back until the end of 2009. This step successfully divided the workers between the lucky 350 to have their jobs back and the rest of around 1,000 workers.

Workers reacted by organizing pickets in front of the state administration and by blocking – on March 23 – the entrance to the plant. However, the 350 workers allowed to work were ready to take the owner’s offer. The rest of the workers accepted to protest in town – in front of the state administration – rather than stop their comrades to attend their jobs. The initiative group had also been divided. One worker leader – listed among the 350 – accepted going back to work, with all other initiative group members fired. In May 2009, however, management fired also this leader, on disciplinary grounds.

The situation in Kherson in the occupation’s aftermath

April to May brought many bad news to Kherson workers. First, and most importantly, workers found out that the plant – HMZ – would be re-organized again, same as it happened in 2006-2007. The new plant – NPP HMZ – would have only 350 employees and no union. The union and the rest of the workers would be left at HMZ, with HMZ to be bankrupted and closed. Second, workers suspect that the ASMU union – especially its leader – is working with management to limit the effectiveness of worker actions.

Third, with all HMZ workers fired – the initial plan to reform the union by holding elections could not work anymore.
In May the ASMU union claims having organized a picket in front of the government in Kyiv, asking for government subsidies for the farm-machine industry. In fact it was the owner who organized the picket – and the presence of 100 workers in Kyiv. He paid each worker around 20 Euros to attend.

Ever since April, the initiative group had organized a daily picket in front of the state administration. Some 50 workers gathered there each day to remind the administration of the plant’s fate. However, after two months of picketing, the workers grew increasingly disillusioned. In June they were not holding any flags or banners anymore, and the media ignored them. It was time for a new strategy.
On June 17, workers blocked the main road in Kherson for the first time. Other roadblocks followed on June 19, on July 2, and on July 23. Workers used the following tactics: they would move in a circle on the zebra crossing, with enough people participating as to stop cars from crossing without injuring anybody. This tactics was first used in Ukraine several years ago by Crimean Tatars, and earlier this year by workers of the Vinnitsa ball-bearings plant. The tactics allows workers to achieve some disruption, without exposing participants to the threat of being arrested or fined. Worker leaders declared to TV stations that the aim of such actions is to attract the authorities’ attention that the HMZ owner ignored the government’s warning of not laying off workers.

How workers blocked the main road in Kherson on June 17:video

last roadblock on July 23: video.

The problem is that at least the road block on July 2 took place virtually under the command of the local Communist Party. There is nothing wrong in the Communist Party’s involvement per se: the Communists are the only political party to still mention the issue of nationalizing the plant, and have initiated a corresponding law initiative in Parliament. But the danger for the workers is of over-relying on the Communists instead of developing their own structure capable of coordinating their actions.

Besides, the Communists’ involvement comes at a price. First, the Communists in Kherson re-directed protests in the direction of demanding the governor’s resignation. Workers who support this turn says that the governor is to blame for much of the difficult situation they face. For instance, they suspect that it is the governor who prevents the local prosecutor from charging the HMZ owner. But in case workers would indeed succeed in getting the governor out of the way, there is no guarantee that the Communists will stay on their side. Second, the HMZ nationalization law that the Communists initiated in Parliament probably only serves the purpose of boosting the Communists chances in the upcoming presidential elections. The Communists raised the issue in Parliament probably without really believing that it stands a chance, since none of the other parties – with many businessmen in their ranks – would want to nationalize a plant and create such an important precedent. But Communists nevertheless initiated the law in order to attract visibility. This creates among the workers the expectation that the Communists might ‘get something’, and wait for that to happen, instead of trying some other political solution. For instance, they could follow the example of Vinnitsa workers and pressure the State Property Fund to look into the legality of the plant’s privatization. But right now there is little talk about this in Kherson, despite the initiative group having had contacted some of the Vinnitsa activists.

The Attitude of Left-wing groups towards Kherson workers

Ukraine’s many left-wing groups – identifying themselves as anarchists, trotskysts, marxists – have had a tremendous influence in Kherson. Needless to say that activists from left-wing groups helped from the occupation’s beginning in formulating demands, drawing banners, spreading the news about the occupation, and organizing solidarity actions with the Kherson workers. The peak of these actions was the April 25 Conference of Struggling Collectives (CSC), an idea of Kherson workers that the Organization of Marxists (OM) and the All-Ukrainian Workers’ Soviet (VSR) helped bring to life. The CSC was meant to allow for some coordination of workers in similar situations of conflict as in the Kherson case. Currently, the OM and VSR share different opinions as to where to take the CSC, and there have been no news about the CSC since April.

But among leftist-groups there is strong critique of some of the actions of Kherson workers. Because of these actions, certain left-wing groups would even avoid showing support for future mobilizations in Kherson.
The actions criticized all refer to the Kherson workers’ decision of siding with one organization or the other, and especially with the KVPU and later with the HMZ owner. In my view, all these alliances – if one can call them so – were temporary. They happened under the sign of necessity, as workers believed these organizations to be capable of solving their most concrete issue: feeding their families and themselves. Again, the cooperation with the allegedly government-close KVPU was short-lived. In the end, the initiative group decided to try to reform the ASMU union rather than to create a KVPU-organization at the plant. Many believe even nowadays that there exists a KVPU-cell at the combine plant, but this simply is not true.

The cooperation with the owner – using the combines for the meeting in February and the May pickets – followed the same logic as with the KVPU, as the workers were ready to do anything to receive their wages. One has to understand that the workers have every right to try out every possible way of solving their problems. If they sided with the KVPU in the belief that this will grant them access to the government, it is their right to do so and find out to what extent this is doable. But workers actually never set up a KVPU organization. They have stayed within ASMU, hoping they can reform it.

Currently, ASMU is passively watching as thousands of workers loose their jobs all over Ukraine. ASMU has abandoned its members. Even though workers like those in Kherson paid their dues for two decades, the mainstream unions ASMU and the FPU did not even offer juridical help to the laid-off workers.
This is why workers still need the left-wing groups’ solidarity. They need it more than ever.

The situation in Kherson is going to become explosive again in autumn. First, the already unemployed will not have found any jobs by that time. One simply knows that 1,000 people in their 50’s looking for jobs in times of crisis in a place like Kherson stand no chance of finding anything. Second, the 350 workers still with jobs will have lost them by September, when the plant will not have any more orders to work on. This is due to both the seasonal character of the farm-machine business, and to the government not keeping its promise of extending subsidies to the combine-plant. This will again place all HMZ workers in the same situation, making mobilization easier. Third, in late autumn the workers will have no more work to do on their land plots, their subsistence basis. This means that they will all be in Kherson. At that time, solidarity will be badly needed. And left-wing groups should be ready to assist workers in a fight that is crucial for the wider post-communist region’s working class.