The Empire Strikes Back: Multinational Corporations, Local Authorities and Sham Unions Collude to Stonewall Workers’ Struggle for Better Working Conditions in Mexico

Daniel Rangel
Rethink Trade

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We kicked off last month with the inspiring news of Tridonex workers’ win against one of the most powerful sham unions in northern Mexico. In spite of years of firings, beatings and harassment, which included the incarceration of lawyer and labor leader Susana Prieto Terrazas, on February 28 workers at the subsidiary of U.S. auto parts maker Cardone overwhelmingly voted for the independent Sindicato Nacional Independiente de Trabajadores de Industrias y Servicios “Movimiento 20/32” (SNITIS) as their legitimate union.

In so doing, they tossed out a corrupt union that for decades failed to adequately represent its members, negotiate decent wages and working conditions or conduct elections, assemblies or undertake anything that resembles union democracy. This was made possible by the massive mobilization of workers that started with city-wide Matamoros wildcat strikes in 2019 and the U.S., Mexico and Canada renegotiating the North American Free Trade Agreement (NAFTA) to include strong labor standards and enforcement tools that same year.

Quite a blockbuster story, right? You can read more about the ins and outs of the historic Tridonex election day in my previous entry on Rethink Trade.

However, the last few weeks have shown that it will take a lot of work to achieve structural changes to Mexico’s deeply rooted practice of undermining workers’ rights to privilege export manufacturing firms that believe their competitiveness is based on paying starvation wages to industrial workers.

For starters, a month and a half after SNITIS’ win at Tridonex, the representatives of the new union still are not allowed to go into the plant, organize a democratic process for workers to choose their delegates or launch talks with the company about working conditions at the workplace. The federal authority in charge of the proceedings already issued a decision certifying the outcome of the February 28 vote during which workers overwhelmingly chose SNITIS. But the company keeps dragging its feet and is waiting until the defeated union exhausts every available legal recourse before it will recognize SNITIS as the workers’ legitimate representative. Although the company has signaled this situation will be resolved by the end of April, the delays show the legal hurdles that independent unions face even after a decisive victory like the one SNITIS won at Tridonex.

More troubling is Mexico’s decision to push back the entry into force of the new labor justice system — an integral part of the 2019 labor reform — to October 2022 in the 11 Mexican states where most of the manufacturing activity, exports and labor conflicts of the country are concentrated.

Last year, I delved into piles of regulations, orders and minutes to understand Mexico’s plans to establish the labor courts replacing the problematic old conciliation and arbitration boards (CABs) that under the previous system were in charge of adjudicating labor disputes. CABs are a key piece of the structure that has undermined workers for decades, as they have been utilized to stonewall workers’ demands and defend corporate interests and employer-coopted “protection” unions. These boards are part of the executive branch and have a tripartite composition with a representative from the bosses, one from unions and one from the government. Yet, since most labor federations in Mexico are made up of sham unions (dubbed “protection” unions due to their common practice of signing contracts that protect the employers’ interests), these boards are at the very least biased, when they are not outright corrupt. The largest and most problematic of these federations is the Confederación de Trabajadores de México (CTM), which controls the majority of CABs throughout the country.

Hence the need to replace the CABs ASAP with independent labor courts. Doing so is also a commitment assumed by Mexico through Annex 23-A of the revised NAFTA, rebranded the United States-Mexico-Canada Agreement (USMCA). To comply with this commitment, the Mexican government and the judiciary came up with a phased implementation plan. Under the plan, the new labor justice system is being deployed in three phases. Each of the 32 Mexican states was assigned to one phase that has a corresponding deadline, by which the new courts would be operational.

The problem is Mexico has unsystematically changed which states have to be in compliance under each phase, while also pushing back the deadlines. The last delay, approved by the lower chamber of the Mexican congress in March, means that Phase 3 states won’t have independent labor courts until October 2022, instead of the previous May deadline. This delay throws a long lifeline to local CABs in these states, which will thus remain in operation through much of this year.

You don’t need to be particularly sharp to notice that Mexican authorities purposefully left for last virtually every state that shares a border with the United States by lumping them together in the third phase of implementation. These are the states where most export-oriented Mexican maquiladora factories are located and where workers have fought for decades against the prevalence of nefarious working conditions and artificially low wages.

Why is having CABs alive for a few more months such a big problem?

Well, that brings us to the third troubling development of the past few weeks.

After SNITIS won the right to represent Tridonex workers on February 28, it announced that more plants were next. Particularly those where incumbent unions lost “legitimation votes,” which are also required by the 2019 labor reform and USMCA.

Basically, given the prevalence of “protection contracts” throughout the country — some estimations indicate that 75% of all collective bargaining agreements (CBAs) could be protection contracts — the new Mexican labor law requires that all collective contracts must be submitted to a “legitimation vote” by May 1, 2023. If the outcome of this vote is that a majority of workers rejects the contract, the CBA is deemed terminated. Although workers retain the existing rights and working conditions, workers’ representation is up for grabs for unions interested to better represent the workers that tossed out their old contract.

Apologies for the legal discursion, but it was important to establish the context for what’s going on at Panasonic facilities in Reynosa, Tamaulipas. This plant was one of SNITIS’ targets after the Tridonex win. In October 2021, the company union that represented Panasonic workers lost its legitimation vote, since most workers, a substantial number of which are SNITIS supporters, voted against their CBA. As I said, this meant that any union could file a request before a federal agency to receive a certificate that would give it the right to negotiate a new CBA with the company, as long as the interested union could prove that at least 30% of the workforce supports it.

SNITIS announced that it would do so. But Panasonic managers, trying to evade the prospect of having to negotiate with a true labor union, snuck in SIAMARM, a dreaded Reynosa CTM union. Panasonic managers allowed SIAMARM to impose its delegates who have tried to bribe workers in exchange of their votes. And, since March 25, Panasonic Mexico started withholding union dues for SIAMARM from its employees’ paychecks.

All of this is quite outrageous considering that the federal agency in charge of these matters, the Federal Center of Conciliation and Labor Registry (FCCLR), had called for a union election (consulta) to be held on April 21 and 22 to determine which union had the right to represent the workers.

Panasonic couldn’t care less and started circulating to workers a new CBA that it had signed with SIAMARM! CTM union representatives demanded that workers sign a document endorsing this contract.

Enter the local CAB. As I mentioned, the problem with these boards is that they often collude with companies and protection unions to undermine workers. What is going on at Panasonic provides a clear example. Starting on November 13, 2021, the FCCLR is the only authority in the whole of Mexico authorized to receive and file CBAs. This function previously belonged to the CABs but since they are disappearing, the federal agency took it over late last year.

In spite of this, the president of the local CAB accepted and filed the Panasonic-SIAMARM CBA, providing cover to the company that now is able to point the finger at the local government.

The fact local CABs repeatedly engage in these kind of ploys and illegal maneuvers is the reason why the decision to delay their demise in 11 Mexican states is so problematic.

Going back to Panasonic, after the company started deducting dues for a union that workers didn’t choose and this union was forcing them to approve a contract for which they weren’t consulted, much less had approved, workers were understandably vexed. The actions of the company and the CTM union triggered work stoppages throughout the plants, which lasted for more than a week. Hundreds of workers have filed written petitions with management requesting that Panasonic stop deducting dues to SIAMARM from their pay, but very few of these petitions have even been accepted by management.

Workers, outraged by the actions of their employer, refused to carry on with their daily tasks for over a week. Stoppages have been halted in the hopes that the April 21–22 vote is fair and transparent and, above all, workers’ will is respected.

What’s even worse, Panasonic has retaliated against SNITIS supporters with mass firings — more than 60 workers have been dismissed. The company even fired 15 workers who were representing their colleagues in a meeting called by management to try to negotiate a resumption of activities in the plants.

And, the company has announced it will not sign a different CBA with the union that receives the majority of the votes on the April 21–22 election. Panasonic even refused entrance to a FCCLR official who was supposed to post materials about the election within the plants.

I’m pretty sure that with these actions Panasonic’s management in Reynosa is violating their Code of Conduct, ESG goals or whatever shareholder corporate responsibility document in which Panasonic touts their commitment to respect human and labor rights. But that has not prompted headquarters to intervene and deescalate the conflict. When asked about the situation in Reynosa, Panasonic Corporation of North America said “it was committed to complying with Mexico’s labor laws and collective bargaining process,” and that “the dispute was between SNITIS and SIAMARM and does not directly involve Panasonic.”

So, if the dispute does not directly involve Panasonic, why has the company jumped the gun and signed a collective contract with an illegitimate union and started withholding union dues for it?

The least the company should do is terminating the contract it signed with SIAMARM and give guarantees the election happening this week will be fair. However, there is no indication that they are planning to do so.

The silver lining here is that the Tridonex case showed us the USMCA can actually be used to hold these corporations accountable. On Monday, we at Rethink Trade had the privilege of accompanying SNITIS in filing a new rapid response petition against Panasonic. We hope putting the spotlight on the labor rights abuses in Reynosa will contribute to a fair election that guarantees workers’ voices will be respected.

The vote is being carried out as we post this piece. So, hopefully next week I will be able to write a new entry discussing the outcome of a fair and transparent election. But even if that’s the case, there is still a long way ahead to achieve fairness at the workplace in Mexico, and for what it’s worth, in North America.

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