Cablegate: Puebla Once Again the Site of Intense Dispute

DE RUEHME #1800/01 1641658
R 121658Z JUN 08




E.O. 12958: N/A

REF: (A) MEXICO 0324 (B) OTTAWA 0767

1. Summary: The central Mexican state of Puebla is once
again the site of a bitter dispute between two labor groups
competing for control of a collective bargaining contract at
&Mexmode8, a sport clothing manufacturer. In this latest
instance of conflict between workers, groups the competing
parties are each affiliated with Mexico,s two main
opposition political parties. A previous inter-union type
dispute in Puebla (Ref A) was occasionally tense but rarely
were there any serious concerns over a potential outbreak of
violence. This new row, occurring at a factory that mainly
produces merchandise for international sporting goods company
Nike, has shown clear signs of being potentially violent.
Moreover, are accusations that the political affiliations of
the parties involved in this disagreement have prompted local
labor authorities to act in ways inconsistent with their role
as neutral arbiters. In 2003, the Mexmode factory, which is
owned by the Korean &Kuk-Dong8 corporation, was the subject
of a submission (formal complaint) under NAFTA,s labor side
accord, the North American Agreement on Labor Cooperation
(NAALC), for alleged labor rights violations. End Summary.

The Dispute

2. Starting in January 2008 a long simmering dispute at the
&Mexmode8 clothing manufacturing company in the central
Mexican state of Puebla began to take on a new level of
intensity. Mexmode employs nearly 700 workers who mostly
produce sports apparel for the Nike brand. In 2001 the
workers at Mexmode voted to change union representation away
from an older, more established and rather complacent labor
union to another that they viewed as more willing to take on
management with regard to defending labor rights. The losing
side in that contest for control of the Mexmode workers,
collective bargaining contract was a member union of the CROC
(Revolutionary Confederation of Workers and Peasants), the
third largest labor federation in Mexico. It appears that
the larger CROC realized that its affiliate had lost the
support of the workers but the local member union (FROC )
Regional Front of Workers and Peasants) never fully accepted
its defeat. Instead, the FROC formed a dissident group
within the winning union and has continually used regularly
scheduled annual assembly meetings to criticize from within
in hopes of returning to power.

3. In March of this year these criticisms began to take hold
when the current union leadership decided to support company
management in implementing a productivity enhancement
program. The program was portrayed by the dissidents as an
attempt to make Mexmode,s staff work harder but without any
commensurate increase in pay. The dissidents also partially
succeeded in portraying the union leadership, currently
headed by Secretary General Josefina Hernandez, as being too
cozy with company management. Hernandez and the other
Mexmode union leaders were scheduled to hold an assembly
meeting to conduct normal union business and brief the
members on overall situation of their organization this past
April but failed to do so.

4. While the purpose of the cancelled April meeting was to
discus routine union business it could also have been used to
launch a no confidence vote in the present leadership.
Consequently, Hernandez and her supporting union leaders
decided not to hold the scheduled assembly in April stating
that they feared an outbreak of violence. Media reports
covering the events at Mexmode certainly described an
extremely tense situation and it is very possible that there
could indeed have been violence between the competing groups.

5. Whatever the merits of the choice not to hold the
previously scheduled April meeting, the decision itself
rapidly became the focus around which the dissidents rallied.
As relations between the competing groups deteriorated the
decision not to hold the April assembly became the basis for
which the dissidents affiliated themselves with a mass
organization of questionable background know as &Antorcha
Campesina8 (Peasant Torch). Shortly after the dissidents
obtained Antorcha Campesina,s (AC) support they filed a

MEXICO 00001800 002 OF 003

formal complaint with the Puebla labor authorities over the
current union leadership,s failure to hold the scheduled
assembly. This formal filing was followed up with protests
outside of the Mexmode factory, wildcat strikes, physical
abuse and intimidation by AC supporters and in mid-May an
impromptu assembly that &elected8 a new leadership slate.
This new leadership, with AC,s support, is demanding that
the Puebla labor authorities recognize them as the legal
representatives of the Mexmode workers.

The Players

6. There are a number of different elements involved in the
ongoing dispute at the Puebla Mexmode factory. First and
foremost is the fractured union itself, Sitemex (Independent
Union of Mexmode Workers). As noted above, the current
leader of Sitemex is Secretary General, Josefina Hernandez.
Sitemex is a member of the National Workers, Union (UNT),
the second largest labor federation in Mexico. The UNT
describes itself as being &independent8. However, in the
Mexican context, independent labor organizations are actually
those entities that have no formal link with any of Mexico,s
political parties. Although not officially linked to any
political party, by any measurement that matters, these
independent organizations are closely tied to the PRD (Party
of the Democratic Revolution Mexico,s, main opposition
party. The national leader of the UNT has been very public
in his support for Josefina Hernandez and Sitemex,s current
leadership slate.

7. The leader of the dissident group within Sitemex is led
by Enrique Puente. Some labor observers and several media
reports have linked Puente and his supporters to the Puebla
FROC, and by extension to the larger national CROC labor
federation. Post notes that while the CROC officially lists
the FROC as a member of its broader organization it has long
been at odds with many of its associate members in Puebla and
has little effective control over these affiliates. For all
practical purposes Puente and his supporters have no real
connection to the CROC beyond a link on paper and in recent
weeks have fully taken on the mantle of Antorcha Campesina.

8. The Antorcha Campesina organization began in the 1970,s
as a student movement in Puebla dedicated to promoting the
interests of peasant and agricultural worker groups. Over
time AC expanded from its original focus on agricultural
issues and now also includes a broad range of labor issues on
its agenda. This expanded focus has enabled the AC to grow
into a national level organization. Concurrent with its
growth in size the AC acquired a reputation for using
aggressive protest tactics to the point where some Mexican
academics describe it as a paramilitary organization. The AC
claims it is formally linked to Mexico,s former ruling
party, the PRI (Institutional Revolutionary Party). The PRI
is one of Mexico,s two main opposition parties and is
currently the governing party in Puebla. Some international
groups who monitor labor issues in Mexico claim that the AC
is controlled by the PRI. There seems little doubt that for
its own reasons the AC works closely with some PRI
politicians in Puebla but, based on currently available
information it would be a stretch to assert that it is
controlled by the PRI.

9. The Mexmode Company is a maquiladora factory operated by
the Korean owned Kuk-dong Corporation. By all publicly
available reports Kuk-dong/Mexmode, Sitemex and their main
customer, Nike, have maintained a generally positive
relationship. Kuk-dong and Nike have remained publicly
neutral with regard to which group controls the Mexmode
collective bargaining. That said, the Korean owners of
Mexmode have sent high level executives to Mexico to try and
help resolve the dispute between the competing labor groups
within the factory. Josefina Hernandez and the UNT have
welcomed the involvement of Mexmode,s Korean owners.
Enrique Puente and the AC have asserted that the involvement
of Kuk-dong corporation executives is proof that the current
leadership of Sitemex is controlled by company management.
They seem to totally ignore the fact that at present Josefina
Hernandez and union she leads are the legally recognized
representatives of the workers at the Mexmode factory.

MEXICO 00001800 003 OF 003

The Puebla Labor Authorities

10. The labor authorities in Puebla are represented in this
dispute by the state government,s Secretariat for Social
Development, Secretariat of Labor and that office,s
Conciliation and Arbitration Board (is roughly equivalent to
Labor Relations Board in the US). As in the case of previous
labor disputes in Puebla (Ref A) the authorities there have
been extremely deliberate in their handling of the Mexmode
situation. The authorities have done little to resolve the
dispute, levied no penalties for wildcat strikes and taken no
actions against those accused of physical abuse and
intimidation of UNT supporters within the factory.

11. The authorities have declined to formally recognize the
impromptu election in which Enrique Puente and the AC are
claiming they won the right to represent the Mexmode workers.
However, the authorities have also failed to formally reject
the results of that election which apparently failed to meet
the minimum quorum requirements. They did indicate their
willingness to formally organize elections to determine which
group would be the legal representatives of the Mexmode
workers but said it might take another two months before
these elections could be held. Some international NGO,s have
claimed that the PRI government in Puebla is tacitly
supporting Enrique Puente and AC against Josefina Hernandez
and the UNT in order to gain their support for upcoming
elections in 2009.


12. The situation at the Mexmode factory is characterized by
varying degrees of mistakes and unacceptable behavior
compounded by the relative inaction of less than vigilant
arbiters. The current leadership of the Mexmode workers
union clearly misjudged the extent to which the AC supported
dissidents would be able to portray their actions in the
worst possible light. Moreover, their failure to hold a
previously schedule assembly meeting only served to validate
many of the complaints against them. That said, the strong
arm tactics and alleged physical abuse of the current Sitemex
union leaders employed by the dissidents cannot be justified
under any circumstances. All of this is being made worst by
the overly cautious behavior of the Puebla labor authorities
and their failure to even investigate the abuse allegations
against the dissidents and their Antorcha Campesina
13. Post will continue to monitor the Mexmode situation and
report as appropriate. We note that labor problems in Puebla
generally take an extended period to resolve. For example,
in 2003 Mexmode was in part the subject of a submission
(formal complaint) under NAFTA,s labor side accord, the
North American Agreement on Labor Cooperation (NAALC), for
alleged labor rights violations. The basis of this submission
centered around complaints of failure to observe such
principles as freedom of association, occupational health and
safety requirements, and minimum employment standards (with
regard to payment of back wages or worked overtime). A final
resolution of this submission is still outstanding although
as recently as this past April (Ref B) the governments of the
US, Canada and Mexico renewed their commitment to using the
NAALC to resolve these types of Labor disputes.

Visit Mexico City's Classified Web Site at and the North American
Partnership Blog at /

© Scoop Media

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