Venezuela: Building a Boom

Venezuela's economy floats on a sea of oil, but it can be a choppy voyage. As with other one-commodity countries, politics can intrude, markets can shift and prices tumble. Last week, at least one city in Venezuela was learning to live on other resources. In historic, Spanish-colonial Valencia, 96 miles west of Caracas, a highly diversified industrial complex is growing up, and attracting many U.S. investors.

Fast-growing (pop. 202,000) Valencia owes its boom to a wide-awake municipal council that is luring industry by offering good facilities, a big labor pool, tax exemptions and political peace. Marking off 2,000 acres of bushland near the Caracas superhighway in 1959, the council first swung a $300,000 deal with Ford Motor Co., which took 104 acres for a new assembly plant. The council used the money plus its own funds to attract more industry by providing electric power, opening streets, digging drainage ditches. It also took pains to see that foreigners were well treated. When Venezuela broke relations with Castro's Cuba last November, the council organized a civilian patrol that, just in case of reprisals by Fidelistas, kept a protective watch on the home of every American in town.

So far, 22 major industries besides Ford have been lured to Valencia with a total investment of some $110 million. Among them: United Carbon, $3.3 million investment; Britain's Rootes Motors, $1 million; British-American Tobacco, $8 million; Container Corp. of America, $6.6 million; Owens-Illinois, $6.2 million; Armco Steel Corp., $4.4 million. When it started, the council hoped some day to see a payroll of $800,000 each week. Though most of the plants are still unfinished and many regular production employees have yet to be hired, 12,000 new industrial jobs have already been created, and the Saturday payroll is pushing past $440,000.