Inside the Wall

Last year when the deficit-ridden Venezuelan government slapped on tight new import curbs to protect its dwindling supply of dollars, the prospects for many a foreign firm doing business in Venezuela looked bleak indeed. The industrial giants with major markets in Venezuela could vault the new import wall easily enough by building Venezuelan plants--as Ford Motor Co. and several others have already done. But for foreign firms whose Venezuelan sales were too small to support a separate factory, another export market seemed about to go glimmering.

Today, thanks to an enterprising Venezuelan firm called INSA (for Industrias Integradas), a clutch of U.S. companies have found a way to outflank the new restrictions--a way that is not only legal but encouraged by the Venezuelan government. In a sprawling, $3.6 million plant now under construction at Valencia in Venezuela's industrial "Golden Triangle," INSA plans to manufacture a dozen different products under license from nine U.S. firms ranging from Rhode Island's Fram Corp. (oil, gas and air filters) to RCA Whirlpool (refrigerators, washing machines and gas ranges). The U.S. firms will get royalties of up to 5% of production costs, can sell the finished goods through their own distributors if they wish. To ensure that INSA products match the originals in quality, the U.S.

firms will send their own technicians to Valencia for periodic inspections.

INSA is the brainchild of its burly, personable president. Engineer Roberto Salas Capriles, 37. Salas, a onetime professor at Venezuela's Central University, became convinced three years ago that import restrictions were inevitable in Venezuela, and set about signing up U.S. manufacturers for his scheme. The majority of INSA's stock is held by Venezuelans, but 30% of the company's initial $2.250,000 capital was put up by the Rockefeller-backed International Basic Economy Corp. To help INSA get started, the U.S.

Export-Import Bank has lent it $1.5 million, and the Venezuelan government (which stands to save $3.3 million a year in foreign exchange through INSA's operations) has put up $534,000.

For the U.S. manufacturers tied in with INSA, the new arrangement means a smaller profit per item than they used to earn on the products they shipped in from the U.S. Nonetheless, on the theory that some profits are better than none, still more U.S. companies are now negotiating to have INSA manufacture their products.

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