U.S. Asks Mexico to Investigate Stellantis' Labor Practices

The United States has requested that Mexico investigate worker rights violations that were alleged to have taken place at one of the parts factories owned by Stellantis. Officials are curious about what’s been happening at Teksid Hierro de Mexico, a facility located in the border state of Coahuila that’s responsible for manufacturing iron casings, in regard to unionization. According to U.S. officials, this is the fourth such complaint under the United States-Mexico-Canada Agreement (USMCA).

Having supplanted the North American Free Trade Agreement (NAFTA) signed into law by the Clinton administration in 1993, USMCA sought to rebalance trade laws the Trump administration believed had disadvantaged the United States. However, it also sought to advance worker protections in Mexico and give employees an easier pathway toward unionization.

Unfortunately, political matters have complicated the issue. Some U.S. officials have been pushing for widespread unionization across Mexico, especially within the automotive sector. But it’s not always clear which union workers would best like to have represent them. Since USMCA went into effect in 2020, there have been numerous labor disputes in Mexico where the labor force has alleged that their employer was prohibiting them from organizing. However, the most common complaint is that workers are being represented by the wrong types of unions, with the United States often trying to draw attention to the matter to help steer the outcome.

You’re welcome to speculate as to why. Though the obvious supposition is that U.S. leadership would like to see more Mexican unions that would play nice with the United Auto Workers (UAW) and American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). Similar to the unions in the United States and Canada, Mexican labor organizations often have a lot of political influence and are frequently tied to a particular party.

In the case of the Teksid Hierro, the U.S. Trade Representative’s office is concerned that factory workers had been denied collective bargaining rights in connection with an allegedly invalid contract with the Confederation of Mexican Workers (CTM). One of the country’s oldest and most influential organizations, it has deep ties to the Institutional Revolutionary Party (PRI), which was dominant until the early 2000s. Since then, its political influence has weakened substantially. CTM now has internal factions creating division and far more competition than in past decades.

According to Reuters, Teksid Hierro has been contending with various union rows since 2014 and the U.S. wants the matter looked into. Allegations have included Stellantis (previously Fiat Chrysler Automobiles) and CTM aggressively trying to stop workers from unionizing under the organization of their choice — which the outlet claimed was the National Union of Mine and Metal Workers of the Mexican Republic. Actions reportedly included incentivizing (effectively bribing) people to support CTM and threatening those that openly expressed their desire to join the alternative group.

Worth noting is the fact that the two unions are on opposite ends of the political spectrum. Despite things not being quite so cut-and-dried today, CTM has historically supported nationalist right-wing political candidates that dominated 20th-century Mexican politics. Conversely, the Mine and Metal Workers started out as an affiliate of the larger Confederation of Mexican Workers before breaking ties to join with the Popular Socialist Party in 1949. Since then, its predominantly allied itself with left-wing organizations that have gained ground in the 21st century and various global trade institutions. But it does share one aspect with CTM: They’ve both been accused of rampant corruption for decades.

From Reuters:

Labor disputes in Mexico have long featured intimidation tactics by powerful unions cozier with employers and governments than workers. Under the USMCA, the trade pact that replaced NAFTA, factories that violate worker rights could lose their tariff-free status.

Companies have been watching how the tougher labor rules will play out.

Stellantis, the world’s fourth-largest auto group which formed from the merger of Peugeot maker PSA and Fiat Chrysler, said it “respects and supports the collective bargaining rights of its employees around the world and will comply with all local laws in that regard.”

The United Auto Workers union, which represents U.S. Stellantis workers, along with the AFL-CIO labor federation and the Miners Union, flagged the potential violations, the [U.S. Trade Representative] office said.

Teksid, CTM and the local Conciliation and Arbitration Board should be included in the review, it added.

The situation is reminiscent of an earlier scenario involving General Motors’ Silao plant, where the United States threatened to impose import tariffs on pickup trucks manufactured there if the facility didn’t address alleged voting irregularities. The plant had apparently opted to retain CTM as its chosen representation until it matter was called into question. A repeat ballot in August of 2021 paved the way for workers to scrap their contract after pressure from the United States. This also coincided with the Mexican Secretariat of Labor and Social Welfare, the Biden administration, and dominant U.S. and Canadian trade unions getting involved. By September, the U.S. government had stated it would no longer be seeking to impose tariffs on those vehicles. Several months later, the facility voted to be represented by the SINTTIA union — which has garnered strong support from the AFL-CIO and UAW.

I suppose the point I’m trying to make here is that union efforts are rarely ever as independent as claimed because governments see them as incredibly useful political tools. We saw this for decades with CTM and have begun to see new battles being waged as alternative unions grow in strength.

Leadership from the Confederation of Mexican Workers has said it plans to abide by the current rules outlined in the USMCA and that workers should at the Stellantis factory simply have a vote and be done with it. However, Mexico’s federal labor center stated that the Miners Union was the only organization with a valid contract in May of 2022. A formal decision should be made as to whether or not Mexico will abide by the U.S. request to launch a comprehensive investigation by June 17th.

Whatever the final outcome, here’s hoping it improves productivity within the automotive sector and ultimately results in fairer compensation for workers. There’s been far too much politicking from all sides already and the industry really needs to start whipping itself back into shape.

[Image: Chess Ocampo/Shutterstock]