Company Under Fire : Anglo American’s Progressive Image Put to the Test

JOHANNESBURG, South Africa — When South Africa’s black miners went on strike last month, the Anglo American Corp. was the hardest hit company, and many here thought that the giant mining and industrial conglomerate got what it deserved for having supported the development of black labor unions over the years.

To end the three-week strike, Anglo American fired nearly 40,000 workers in massive dismissals that threatened to decimate the National Union of Mineworkers and even stunned the public in this country long accustomed to drastic action.

Widely considered to be one of South Africa’s most progressive employers, Anglo American suddenly found itself denounced by the union as “a treacherous, cowardly and ruthless organization” that used “fascist methods to destroy workers’ lives.”

But as they assess the impact, Anglo American executives, while they are unhappy that the strike continued for so long and cost so much, now say that perhaps it was not such a bad thing.

Showed Power of Unions

“I really, profoundly believe that the strike was part of a transition towards a modern, non-racial democracy,” said Bobby Godsell, Anglo American’s industrial relations chief. “People can’t have power unless they can use it, and you only know that they have it when they do use it.”

By shutting down about a third of South Africa’s gold and coal mines, the country’s most important industry, the strike showed black workers that their unions do have real power, Godsell argues, and this should encourage the still-youthful union movement as well as contribute to the development of a democracy in which the black majority fully participates.

“For people who have no power, it is very hard to conceive of both the opportunities and the constraints of power,” Godsell said, arguing that, just as the strike made the mine workers realize the extent and the limitations of their power over the mining companies, the union movement as a whole should bring blacks “an important sense of realism” about what it will take to end apartheid.

“To some extent, the history of opposition to apartheid is captured in the image of people marching around Jericho and blowing their horns,” Godsell continued. “The problem is that the walls have not yet fallen down, and the mere denunciation of apartheid is not going to end it. . . . Apartheid was built brick by brick, and it actually has to be abolished brick by brick.”

South Africa’s young but rapidly growing black unions “understand that to have power you have to have membership, to have membership you have to have something to offer,” Godsell said. “You have to address progress today as well as paradise tomorrow; you have to have a realistic assessment of the powers of your opponent; you have to develop space in which to operate, and you have to engage in a strategy with a realistic chance of success. I welcome the unions’ involvement in politics, and I believe that they are going to play a very constructive role in the process of change.”

But when the mine workers went on strike last month in what was as much a demonstration of strength as a demand for higher wages, many South Africans savored the irony of a black union exercising its new power against Anglo American.

Channeling Conflict

“A lot of people have said, ‘Well, you guys wanted unions, you’ve got them now, and I’m sure that you’re sorry,’ ” Godsell said in an interview. “I’m afraid that I am completely unrepentant. I’m neither surprised at the strike, nor am I sorry that we encouraged the development of black trade unions.

“Democracy is a clumsy, costly, conflict-ridden way of running a society, but the alternative is not terribly attractive. . . . We knew we would be dealing with tough adversaries, but we believed that through bargaining and through the creation of this institution, we could channel conflict in a way that would be to the mutual benefit of ourselves, our workers and society.”

The cost that Anglo American has paid in putting this liberal philosophy into practice has been high--lost revenues from the strike alone will run into tens of millions of dollars--but the company’s resolve appears undiminished by the strike or the criticism of its policies.

“If we don’t stand for improvements in the societies where we work, then we are just after short-term profits,” Zach de Beer, an executive director of Anglo American, said in an interview. “It’s no good just creaming it, grabbing the profits and letting society go to hell. It is not morally justifiable, and it is not good business.”

Like other South African companies, Anglo American, the largest of the country’s big mining and manufacturing conglomerates, is caught up in the nation’s accelerating political, economic and social transformation and, like others, it is trying to shape the changes to ensure its own survival.

“You can’t do good business in a rotten society,” added De Beer, a physician-turned-politician-turned-businessman and one of Anglo American’s principal strategists. “You have to work for change. . . . We also do not have the option, like foreign companies, of simply going away.”

Although Anglo American has diversified its operations in most of southern Africa and as far away as Australia, Brazil, Argentina, Chile and the United States, the majority of its $12.4 billion in assets are in South Africa. Most of its earnings--$735 million in the year that ended March 31--come from here as well.

More Than 70 Companies

Founded 70 years ago by Ernest Oppenheimer to channel American and British capital to develop South Africa’s gold fields, Anglo American now has more than 300,000 employees, counting both its own direct operations and the subsidiaries and associated companies it administers.

The company is not only heavily involved in mining--gold, diamonds, platinum, coal, uranium and other minerals--it also manufactures steel, chemicals, explosives and automobiles. It operates farms and computer-service companies and owns major shares of some of South Africa’s leading banking, insurance, construction and property companies.

According to Robin McGregor, an analyst who compiles the South African financial handbook “Who Owns Whom,” the 70-plus listed companies controlled by Anglo American account for 60% of the equity on the Johannesburg Stock Exchange.

And the company seems to get only bigger. Earnings rose 26% last year; the net value of its assets increased 7.5% and, with considerable surplus funds, Anglo American has been a major buyer of the foreign-owned companies whose multinational parents are pulling out of South Africa.

If anything, these figures understate the size of Anglo American, for the Oppenheimer family also has separate share holdings in De Beers Consolidated Mines and other companies. A recent book, “South Africa Inc.--The Oppenheimer Empire,” ranks the whole conglomerate about 25th among the world’s multinationals.

But all this economic muscle does not translate fully into political strength. “Despite what some people think, we are not the South African government, and our influence is limited,” another Anglo American official remarked. “Being responsible for 40% of the country’s gold production can get us a hearing, but it does not guarantee the results.”

Writing last year in the U.S. quarterly Foreign Policy, Anglo American’s chairman, Gavin W. H. Relly, outlined the company’s three principal strategies to promote change and “achieve a democratic South Africa.”

Pushing for Faster Changes

The first is to move so boldly today in bringing an end to apartheid that its actions will still be seen as “credible” in 10 or 15 years. “Credibility will require an absolute mind-wrenching effort to grasp the future and translate it back to the real action we should be taking now,” Relly said.

Anglo American does push for faster changes. Relly, for instance, argued strongly during his report to stockholders last month for the repeal of the country’s Group Areas Act, which racially segregates business districts and residential neighborhoods and is one of the remaining pillars of apartheid. The company had earlier successfully advocated repeal of the “influx control” laws that prohibited blacks from living in urban areas without government permits.

Anglo American also spends as much as $20 million a year on what South African companies call “social responsibility”--largely community improvement projects, with most of the money going to black education.

The second approach in the broad Anglo American strategy, Relly wrote, is to “support and nurture effective and responsible trade union activity.”

“It is impossible to face the future in industrial affairs if we have no one to talk to,” he said.

Anglo American expects not only to negotiate with strong labor unions, Relly said, but that their relationship “will undoubtedly mature into some much greater form of worker participation” if the country is to avoid “the extreme left-wing measures that have ruined so much of the rest of Africa.”

Finally, Anglo American must be “a stalwart advocate of free enterprise,” demonstrating that a market economy offers the greatest opportunities for growth, the creation of new jobs, the improvement of living standards and the generation of wealth.

In an effort to broaden the appeal of capitalism, Anglo American plans to offer its employees shares in the company, though details have not yet been announced.

“Our government is running the country so badly now, and has been for years, that the average black does not distinguish between the political system and free enterprise,” De Beer remarked, reflecting on the widespread conviction among black activists, including most black labor leaders, that post-apartheid South Africa should be socialist.

“I see no virtue in any form of socialism,” De Beer added. “But I do see some virtue in a social welfare state.”

Anglo America’s avowed liberalism should not be interpreted as softness, according to company officials.

Anglo American, like other South African mining companies, offered wage increases of up to 23% and put them into effect, but the miners struck anyway after having first demanded 30% raises, then scaling back to 27% in hopes of a counteroffer. But the companies refused to go higher.

“We felt with the rest of the industry that we needed to stand firm on wages,” De Beer said, explaining Anglo American’s tough tactics during the strike. “Not so much for the money involved--we thought that a 17% to 23% increase against inflation of 16% or 17% was fair--but because we needed to demonstrate that we were not always a pushover.”

Relly, speaking at the corporation’s shareholders meeting last month, said that even with a commitment to improve its workers’ wages, the company and the mining industry as a whole also had to ensure its long-term viability, and the same principle applied to Anglo American’s advocacy of faster and broader changes here.

“Support for black political rights does not mean for one moment that this will always imply agreement with the political views expressed by black leadership on such important issues, for example, as nationalism, socialism and sanctions,” Relly declared.

He also expressed understanding for President Pieter W. Botha’s imposition 15 months ago of emergency rule to curb the growing civil unrest in the country, and he praised “the sensible way” that the government was approaching negotiations with blacks on a new political system for the country.

“For years and years, we have heard about the liberalism of Anglo American, what a progressive company it was, how it hated apartheid, what a beautiful future it envisioned for us all,” Frank Meintjies, a spokesman for the Congress of South African Trade Unions, said following the Relly statement.

“But it really is just so much crap, and that became clear when they used the police and their own security forces in an attempt to break the miners’ strike.”

Cyril Ramaphosa, general secretary of the National Union of Mineworkers, was equally blunt. “Anglo American has throughout the years tried to portray an image of being liberal,” he said as the strike ended with a union retreat to save its members’ jobs.

“But it has become patently clear that there is no such thing as a liberal bourgeois or a liberal capitalist. They are all the same. They use fascist methods to destroy the workers’ lives. It has all been just a facade at Anglo American.”

Despite such harsh words and the bitterness of the strike itself, Anglo American executives reaffirmed their commitment to promoting change.

De Beer sees business as able to mediate among South Africa’s conflicting groups because of its own commitment to “justice and freedom, the rule of law and free enterprise.”

Godsell sees the role of business as “both supportive and near the cutting edge.”

“The first challenge is to destroy apartheid in our own backyard, and we do that by employing people on a non-racial basis, training them on a non-racial basis, rewarding them on a non-racial basis,” Godsell said. “We particularly demonstrate that the sharing of power can work through the collective bargaining process--that people can share power and what will result are mutually acceptable outcomes, not the destruction of the enterprise.

Critical Dialogue Needed

“Destroying apartheid in one’s own backyard is demonstrating the ability to share power without surrender, and that is what worries fearful white South Africans.”

Business should also engage both the government and what Godsell called its “putative successors,” among them the outlawed African National Congress, in “a critical dialogue about the conditions we need to operate in South Africa in order to do our job, which is not just making money for ourselves but creating wealth for the community,” he added.

“I honestly don’t know any South African businessmen who are not thoroughly aware that their capacity to deal with anything of significance economically--their ability to create wealth, to achieve economic excellence, to compete on world markets--is completely dependent on the resolution of our economic problems,” Godsell said. “I don’t think that today there are too many apolitical businessmen around.”