Industrial decline plagues

former Alcoa company towns

MOENGO, Suriname

The graffiti on the stadium wall here says you're in the “Bauxiet Stadje,” or Bauxite Town. But here, they no longer mine the red clay from which Alcoa made aluminum.

As a result, sewers are failing, squatters seize vacant houses, and there’s not much for young people to do. At least Moengo, population roughly 10,000, has a winning voetbal (soccer) team.

“You hear, 'This used to be like this, this used to be like that,'” said sculptor Yair Callender, a Dutch citizen of Surinamese descent who was a visiting artist in Moengo from January through March. “You feel just the disillusion of people.”

Alcoa ended a century of bauxite mining in the area around Moengo in late 2015, and now the only related jobs are in demolition and site security. Locals say mining has been replaced by a “hustle culture,” in which people scrape out a living day by day.

In a country in which the economy shrank by 10 percent last year and inflation hit 55 percent, that’s getting tougher by the week.

“I am not sure the town will die,” said Marten Schalkwijk, professor of social change and development at Anton de Kom University, in the capital, Paramaribo, 66 miles west of Moengo. “People have not left in large groups. They are not leaving because they don't have anywhere to go.”

It’s hard to believe that Alcoa’s Suriname century, which propelled a backward, plantation-based economy into industrial age prosperity, began in Moengo — just as it’s hard to believe that the battered Monongahela River town of Braddock was once the epicenter of the American steel industry.

But beneath Moengo’s veneer of palm trees and tropical breezes lies the same kind of industrial ruin that Pittsburgh’s Mon Valley and other ravaged Rust Belt communities are still trying to recover from decades after their economic engines died.

More industrial decline is on display 47 air miles southwest of Moengo in the river town of Paranam, the former site of Alcoa’s smelter and refinery. There, the jungle is relentlessly encroaching on a soccer stadium, a recreational hall, a playground and a gymnasium that were vital components of a thriving Alcoa company town. The once well-kept labor village where Alcoa built housing for its middle-class workers has become, in the words of a former Alcoa accountant, “a labor jungle.”

“This was a real living environment until the end of the 1980s,” said the retiree, who asked not to be identified. “Things are so overgrown by bush that I don’t even know the place anymore.”

‘Party town to war zone’

Alcoa's century in Suriname was conceived in once-forested Moengo, on the Cottica River, in 1916. Mining brought Dutch and American managers, Creole construction workers, indentured laborers from Indonesia and even Frenchmen who escaped from the prison in their country’s neighboring colony of Guiana. Barges of bauxite floated off to Paranam; Mobile, Ala.; Brazil, Japan, France, Germany, Italy, England and the Netherlands.

The 1958 Brokopondo Agreement — which brought an alumina refinery and aluminum smelter to Paranam as well as the Afobaka dam that electrified Suriname — brought a new surge of prosperity.

A man walks through a neighborhood in Moengo, Suriname, built by Alcoa's subsidiary for its employees.

“A few years after that, we had electricity and my mother didn’t have to wash on a washboard,” recalled former Suralco employee Remy Vyzelman, 68.

Mr. Vyzelman, who now operates a port facility in Paramaribo, said Alcoa also brought safety, health and quality standards that benefited workers. “They had the highest standards in the world,” he said. “The company brought a lot of good, new management techniques to the country.”

Alcoa retiree Russell Yester of McCandless recalls what it was like being stationed in Suriname from 1971 to 1975.

“It was a very Third World, underdeveloped country trying to find its way,” he said. “There were virtually no other top-shelf employers besides Alcoa.”

Anton Brandon, 69, was stationed in Moengo at about the same time. He grew up in Suriname and joined Suralco, Alcoa’s Suriname subsidiary, as an intern in 1969. Two years later, he was a full-time industrial engineer.

"Moengo was a fantastic place to be a bachelor," Mr. Brandon said. There was always something to do — the Casa Blanca staff club, two theaters, the golf course, tennis courts and swimming pools — for the 1,100 Suralco employees in the town, he said. “I was young. They had daughters.”

More than a decade later, there was a different kind of activity in Moengo: a civil war that lasted from 1986 until 1992. It pitted President Desire Delano “Desi” Bouterse, a leader of a military coup that seized power in 1980, against Moengo-area native Ronnie Brunswijk, the head of the rebel faction known as the Jungle Commando.

Mr. Brunswijk’s rebels temporarily halted Suralco’s operations. After the war, the government took over municipal functions in Moengo.

"Zero Harm" was the goal at Alcoa's closed Coermotibo Operation near Moengo.

Mr. Brunswijk lost the war but is now a member of the National Assembly. He has large timber and mining interests, the country's best soccer team, and uncontested control over the Moengo area. He did not respond to interview requests.

“You have a regional warlord with much influence,” said Mr. Schalkwijk. “It's not in the best interest of the country.”

Mr. Vyzelman left Suralco in 1995, three years after the end of the civil war that, he said, changed the company.

“Suralco was not the same anymore. It was becoming a different company,” he said.

More changes were in the works. Market conditions made Alcoa realize it had to be more cost-competitive. The company closed Suralco’s aluminum smelter in 1999.

Gradually, convenient sources of the bauxite ore that fed Paranam’s alumina refinery were depleted. And the refinery’s costs were much higher than those of Alcoa’s other refineries and those of its competitors, a handicap compounded by falling alumina prices.

So the same kind of blight that Pittsburgh and other Rust Belt towns had experienced came to Moengo and Paranam.

It flows downhill

“This happens more and more often," said Gladys Renfurm, an elementary school teacher, as she stood over one of several stinking rivulets that ran down streets in her Moengo neighborhood. “If it has rained, you can’t breathe.”

Ms. Renfurm lives on a block of small, wooden houses originally built for Alcoa’s hourly laborers. The streams flow out of pipes that run under the “staff village,” in which management once lived.

The staff village was once Moengo’s best neighborhood. Now fenced off, Alcoa is pressing the government to take it, for free. The company has given the country multiple deadlines to accept the property, but officials just never seem to sign the transfer documents, said Ruben Halfhuid, Suralco’s managing director.

“They like to keep us on the hook. That is what I feel,” said Mr. Halfhuid. The company is grudgingly continuing to pay for security and lighting.

Gladys Renfurm, an elementary school teacher, stands above pooled water tainted with sewage in her neighborhood in Moengo, Suriname. “If it has rained, you can’t breathe.”

Berryl Tempo, standing in a roadside restaurant called Steve's near Moengo, Suriname, is moving her Foundation Okanisie Pikien, which focuses on child development, into a shipping container on land Alcoa controlled.

Some in Moengo think the government should demand training and equipment before taking title to Alcoa’s legacy.

Alcoa “built a [sewer] system and didn't train people to take care of it,” said Berryl Tempo, a Moengo-area native who runs Foundation Okanisie Pikien, which focuses on child development. She’s setting up a new office in a shipping container near the staff village. “It's their piece of the town,” she said. “They should take care of it.”

That’s not always easy, said Akash Nendlal, a manager for environmental, health, safety and security with Alcoa’s subsidiary. At times, squatters have occupied staff village houses.

"They said, well, Suralco isn’t using the houses, we have housing problems throughout the country and the region, so we’re taking these houses," he recounted.

The company had to send security from Paramaribo to oust the squatters. Mr. Nendlal said his Moengo-based security man proved ineffective, because it was “his brother, his cousin, his mother [who] went to occupy the houses.”

Straightforward demands

There are some signs of economic life.

Marcel Pinas, an internationally known visual artist from the Moengo area, created the Tembe Art Studio in a wing of a shuttered hospital that Alcoa built. (The town now relies on a clinic for health care.) In addition to permission to use the space, Alcoa’s subsidiary donated $50,000 to fund a music studio.

“In the next five to 10 years, we'll have professional trainers here so we can start Moengo University,” said Vincent Reit, who works with Mr. Pinas. “In this whole country, we only have one university. We need another university, and why not here in Moengo?”

For now, the studio holds annual arts festivals, hosts artists-in-residence and teaches the town's young people. Mr. Callender, the sculptor, was surprised that 40 or 50 local kids showed up for each of his workshops at Tembe. He said he might get a half-dozen kids in the Netherlands.

Rossiano Toto, 21, at Tembe Art in the former Alcoa hospital in Moengo, Suriname, splits his time between modeling, music, photography and video, and wants to build his own company.

Outside of Tembe Art in the bauxite mining town of Moengo, Suriname, where Alcoa helped locally born artist Marcel Pinas to turn the company-built hospital into a cultural center and arts incubator.

In Moengo, he said, the kids “just actually want something to do, I have the feeling.”

Rossiano Toto, 21, mixes music in Tembe’s studio, models clothing, shoots photographs and video. Though his grandfather worked for Alcoa, he doesn’t pine for the days of the company town.

“I will have my own company,” he vowed.

In Paranam, Alcoa is developing a site plan for the Paranam Industry Center, a proposed industrial park that would focus on agricultural and chemical businesses. Mr. Halfhuid said about 30 companies have expressed interest in locating there.

But the government needs to provide incentives for those businesses, make it easier for them to get the licenses and permits they need, and improve roads and other infrastructure, he said.

Potential tenants, he said, want the park to be operated by a private owner, not the government. “That was a straightforward demand,” Mr. Halfhuid said.

He warned that the 30 companies could lose interest if Alcoa and Suriname cannot quickly agree to the terms of the company’s exit from Suriname. Those talks have been stymied by the company’s desire to keep operating the Afobaka Dam until the end of 2019 and the National Assembly’s demand that Alcoa immediately turn over the country’s biggest source of electrical power.

“The Paranam industries project has a fixed timetable. If we lose that timetable, a lot of industries internationally that want to come are going to go away,” Mr. Halfhuid said. “So if by August this year we don’t have the contours of a definitive agreement, I’m in trouble with that project also.”

When the easy money is gone,

an economy starts to lose its footing

PARAMARIBO, Suriname

The abundant bauxite reserves that made Alcoa’s Suriname century possible were a blessing to this South American nation.

They were also a curse.

It’s a phenomenon that economists refer to as the “resource curse,” reflecting the fact that the economies of some countries blessed with prolific natural resources tend to grow more slowly than the economies of those without.

Whether the natural resource is oil, bauxite or something else, it dominates the nation’s economy and is a significant source of government revenue. Resource-blessed countries do not have to tax their citizens as much, a process that normally makes government more accountable to the will of its people. Consequently, under the economic theory, resource-cursed countries often have bloated government bureaucracies, are less democratic and are more prone to violence.

Many of those symptoms apply to Suriname, a country of about 560,000 on the north coast of South America.

As bauxite reserves convenient to Alcoa operations dwindled, the company’s decision to permanently idle its last operations in the struggling nation more than a year ago has contributed to a severe recession. Preliminary government estimates indicate Suriname’s economy shrank more that 10 percent last year after declining 2.7 percent in 2015. Fitch Ratings forecasts the economy could decline an additional 2 percent this year.

Falling prices for oil and other commodities that play key roles in Suriname’s economy have exacerbated the hardship, which triggered a massive devaluation of the Suriname dollar and runaway inflation at the pace of nearly 60 percent last year. The government, which employs about one out of every two people who have jobs in Suriname, ran a deficit of about $240 million last year.

The human effects are evident in the capital city: a former economics student drives a cab because of inflation-induced tuition increases at the city’s Anton de Kom University; parents pine for children who had to emigrate to get jobs; an economic development consultant says he doesn’t get any assignments because no one is investing in Suriname. This month thousands of people have protested in the capital’s streets, chanting for an end to spiraling prices.

“We are in a very bad position,” said Jennifer Simons, the speaker of the National Assembly, Suriname’s legislature.

Many in Suriname say the root of the crisis is the country’s inability to develop the democratic infrastructure necessary to put the economy on sounder footing. They point to the failure to invest revenue from Alcoa’s bauxite business, which accounted for 10 percent of government revenue for years, into developing a more diversified economy.

A bauxite tax imposed from 1974 to 1985 was supposed to be used to develop new industries. Instead, much of it went to “increase the civil service and increase apparent prosperity,” according to a 2014 Central Bank of Suriname report.

“We never learned to save. We never had a state fund or a heritage fund because it wasn’t part of the political culture,” said Surinamese economist Winston Ramautarsing.

Although some expect the economy to grow slightly this year, Mr. Ramautarsing is confident the slide will continue. He expects the economy to shrink 2 percent to 5 percent in 2017.

Democracy with issues

The lack of democratic institutions that promote more stable and sustainable growth is a key reason why countries such as Suriname fall victim to the resource curse, according to Ravi Madhavan, a professor of business administration at the University of Pittsburgh.

“It’s not so much the resource itself. It’s the absence of good institutions,” Mr. Madhavan said.

Although Suriname is a democracy, it is a checkered one.

The country has experienced two military coups and a six-year civil war since gaining independence from the Netherlands in 1975. Its current president, Desire Delano “Desi” Bouterse, played major roles in both coups.

Mr. Bouterse has been implicated in the 1982 murders of 15 opposition leaders the year after he seized control of the government. So far, he has avoided standing trial. In 1999, a Dutch court convicted Mr. Bouterse in absentia of smuggling a half-ton of cocaine.

His son is serving 16 years in a U.S. prison after striking a deal with an undercover U.S. Drug Enforcement Administration agent posing as a member of Hezbollah, the Islamic terrorist organization.

“Drug trafficking is prevalent with evidence of involvement by state officials but is unlikely to affect visitors,” IHS Markit, an economics research firm, wrote in a January report on Suriname.

The tarnished legacy last month prompted the Center for a Secure Free Society to brand Suriname as “the new paradigm of a criminalized state.”

Fitch Ratings recently knocked Suriname’s long-term credit rating down two notches to B-, citing the instability caused by commodity shocks.

“Investment is slowing and unemployment is rising, reflecting government spending cuts, weak business confidence,” the ratings agency wrote last month.

A struggling host nation

Any hopes for a turnaround are pinned on more natural resources: a new gold mine the government has a large stake in and Staatsolie, the government-owned oil company.

National Assembly member Riad Nurmohamed puts little faith in such large-scale projects, saying the government lacks the ability to responsibly manage the cash those ventures generate.

“Suriname does not have the capacity to deal with large projects,” said Mr. Nurmohamed, who teaches at Anton de Kom University.

He said Suriname needs to develop attorneys, engineers and other experts who have the expertise to manage the country’s natural resources so that they are sustainable. Mr. Nurmohamed has spent 10 years developing such a program at the school and is seeking funding to extend his efforts for five more years.

“If a multinational comes to deal, we really don’t have the experts,” he said. “For natural resources, we really do not have a good economist in the country, a good lawyer.”

Marten Schalkwijk, who teaches social change and development at the university, said Alcoa may mistakenly be blamed for problems that really resulted from the government’s failure to develop sound policies.

“I wouldn’t blame everything on Alcoa or Suralco,” he said.

Mr. Madhavan agreed, saying responsibility for the current mess lies largely with the government.

“There is a limited role that a company like Alcoa could have played in that context,” he said. “The heavy lifting has to be done by the host nation, because it’s really about the building of those political institutions.”

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