When Ralph O'Neil arrived in 1977 to take over as manager of General Tire's Moroccan plant, he knew he was not getting one of the Akron company's softer assignments.
General was still reeling from the disclosure that it had bribed Moroccan government officials in an unsuccessful attempt to keep Goodyear from building a tire plant here in 1972.
"I was the guy who was sent in to take the flak -- a sort of kamikaze pilot," O'Neil recalled.
His expectation that General Tire's problems here had only begun turned out to be all too accurate.
The two government holding companies that are General Tire's partners in its Moroccan affiliate have been pressing to take control of the company. They are also demanding that more Moroccans be appointed to top management positions.
"Never in all my career have I seen a situation where there are more misapprehensions and less communication," said a Western diplomat who has been watching the pulling and tugging.
Yet General Tire's difficulties in Morocco are not unique. They are symptomatic of worldwide tensions that have grown up between multitional companies and governments since the nations of the oil cartel gave the world a stunning lesson of their power in 1973.
Loyd N. Cutler, a Washington-based international lawyer, writes of "an atmosphere of mutual distrust and a sense of conflicting interests" between governments and companies worldwide.
New controls over corporate operations have been imposed in dozens of countries and governments are demanding a larger share in the ownership and management of foreign firms.
In Liberia, the government of President William Tolbert in 1976 revised its half-century-old concession with Firestone to put the Akron company's huge plantations there on the same footing as other foreign enterprises.
In the Philippines, the government has recently taken steps to force Goodyear, Firestone and Goodrich to forego further increases in tire prices which officials say are too high.
The powerful Philippine National Oil Co., in pressing its efforts to buy a substantial interest in Goodyear's Philippine subsidiary, has imported$8 million in Japanese tires in the last two years to supply local bus companies and government agencies -- and to provide competition for the three Akron firms.
These steps represent a sharp shift from the permissive climate of the 1950s and 1960s, when developing nations were desperate to attract foreign investment and companies had free rein to operate.
Even then, the politics of nationalism and nonalignment caused sporadic flareups against the companies. The Indonesian government seized Goodyear's tire plant and plantations in 1965 only to hand them back again two years later, after President Sukarno had been eased from power and thousands of his communist supporters had been murdered.
A close relationship grew up between the companies and ruling business and political groups in this period.
"In the process of localizing control, the benefit fell to an elite close to power," a Treasury Department aide said. The global tire industry was no exception.
Members of the Tuason family, which had made a fortune in Philippine real estate, became the leading local shareholders of Goodrich when it built a plant there in the 1950s.
In Thailand, the Crown Property Bureau -- which handles the assets of the royal family -- purchased a 17 percent interest in Firestone's subsidiary in the 1960s.
Members of the Sabet family, which accumulated wealth during the reign of the now-exiled shah of Iran, became General Tire's principal partners in that country. The subsidiary's final 1978 board meeting was held in Paris to accommodate partners who preceded the shah into exile.
And in Morocco, a leading Casablanca businessman, Othman Benjelloun, persuaded Goodyear to build a plant and bought a 35 percent interest in the Akron company's Moroccan subsidiary.
Congressional liberals have frequently cited these close ties between the companies and foreign "oligopolies" as an example of a form of American economic imperialism.
When Philippine President Ferdinand Marcos imposed martial law in 1972, critics at home and abroad charged that the U.S. multinational companies dominating many sectors of the Philippine economy were behind the move.
Martial law, with its no-strike provisions, did end a bitter, year-long strike at Firestone's plant outside Manila. And most of the Philippine and foreign businessmen who live in the opulent, guarded residential compounds of Manila say they are thankful for the improved investment climate.
Today, however, the government has "authorized" more than 100 strikes against local companies and Marcos' close associate, Geronimo Velasco of the National oil company, has resumed talks with Goodyear to purchase part of its Philippine holdings.
U.S. businessmen insist that the tensions are part of a worldwide phenomenon that is only partially explained by the drive of developing countries to shuck the vestiges of colonialism.
A more important one is the urgent economic need to control imports of raw materials, conserve foreign exchange and promote exports so as to pay huge bills for imported fuel and food.
All of these steps require the forced cooperation of multinational corporations.
The Brazilian government has led the way in developing controls, inducements and penalties that force tire companies and other multinationals to work in the interest of the host country's balance of trade.
After the 1973 oil price hike, promotion of exports became a key strategy in Brazil for offsetting the cost of imported oil. Brazil came up with a program called Befiex, under which companies committed themselves to increase exports in return for permission to import raw materials for new product lines.
Many countries also have introduced "coproduction agreements" that obligate companies to buy a percentage of their raw materials locally.
None of these developments is of more concern to the multinational tire companies than the drive for more local control and ownership.
Goodyear, Firestone and Michelin all insist on keeping control of the technology that they install abroad. These companies see themselves as technological leaders of the global industry. They are unwilling to share their technical secrets, or surrender control over production of tires with their trademarks.
As a strategic industry, tire plants have been exempted from laws mandating local majority ownership of foreign enterprises in Ghana, India, Morocco and the Philippines.
Elsewhere, however, demands for local participation have put the five companies on a collision course with governments.
A 1976 Nigerian decree requires that Nigerian citizens own at least 60 percent of the shares of tire company subsidiaries. Michelin has told its stockholders in Europe that it is "uneasy" about this. Privately, Michelin officials have hinted the company will close its Nigerian plant before giving Nigerians access to Michelin's secret techniques for making steel-belted radial tires.
When General Tire became the first American company to invest in Morocco in 1962, conditions for foreign businessmen were far different from what they are today.
It was only six years after independence from France.
The economy was backward, industry was almost non-existent, there were few Moroccans trained as managers of civil servants and foreign capital and technology were urgently needed.
General Tire was granted a monopoly and built a modern tire plant on a sloping hill overlooking the Atlantic Ocean outside Casablanca.
Today, Casablanca is a crowded vehicle-choked city grafted onto an ancient society in which robed Arabs still drive camels and sheep across arid deserts.
While espousing capitalism and industrial development, King Hassan II favors strong government guidance of the economy and Morocan control of industry and resources.
In 1975, the government introduced an investment code requiring most foreign enterprises to have a Moroccan chairman and half ownership by Moroccans. Citibank went along with this but some foreign firms have found the new guidelines hard to work with.
Although tire companies were excluded from the equal ownership proviso, General has felt the pressure anyway.
The Moroccan invitation to Good-year in 1972 was aimed at getting more competition into the local industry.
Since 1974, Goodyear has been able to take over half the Moroccan tire market, and its share is growing.
Meanwhile, relations between General and the state holding companies which control 42 percent of its stock have deteriorated. During his tenure, O'Neil has fired one Moroccan sales manager and replaced him with another, refused to renew a contract to supply tires to the state-owned bus company, and reduced the traditional discount given to some of General's dealers.
O'Neil says that at directors' meetings, Moroccan stockholders constantly remind him of the old corruption disclosures and demand that more Moroccans be named to top management positions.
At present, the company has a Moroccan deputy manager and sales manager, but the treasurer and finance manager are American and the factory floor manager is Venezuelan.
Bensalem Guessous, a retired official of the state-owned National Investment Co., which has the largest block of stock in General, contends that "Moroccanization" is moving too slowly at General Tire. "We believe in capitalism, we are not the Soviet Union," he adds.
The Moroccan shareholders have proposed buying up control of 52 percent of the company. But General Tire is adamantly opposed. "We are not going to sit there with 48 percent of our capital tied up and no control," says Vice President Roy Megargel.
As part of its effort to bring pressure on General, the Moroccan government since early 1978 has not renewed the agreement by which the local General subsidiary remits a "fee" to Akron for the parent company's technical assistance.
These fees have been running $600,000 a year.
But O'Neil still feels General has some bargaining power. Morocco urgently needs tires and both Goodyear and General are currently operating their plants near full capacity.
Megargel feels that in the final analysis, the Moroccan situation is something of a Hobson's choice for General Tire.
"Do we keep giving technical assistance?" he asks. "Or do we pull our people out, cripple the plant and write the whole thing off?"
NEXT: The radial tire race .