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Cablegate: Union Sees Beer Bottle Factory Relocation As A

VZCZCXRO1796
RR RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG RUEHNL
RUEHQU RUEHRD RUEHRS RUEHTM RUEHVC
DE RUEHME #2366/01 2141800
ZNR UUUUU ZZH
R 011800Z AUG 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 2799
RUEHC/DEPT OF LABOR WASHINGTON DC
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS SECTION 01 OF 03 MEXICO 002366

SIPDIS

DEPT FOR DRL/AWH AND ILSCR, WHA/MEX AND USDOL FOR ILAB

E.O. 12958: N/A
TAGS: ELAB ECON EIND SOCI PGOV PINR MX
SUBJECT: UNION SEES BEER BOTTLE FACTORY RELOCATION AS A
FRONT IN AN IDEOLOGICAL STRUGGLE

REF: (A) MEXICO 2017 (B) MEXICO 0013


1. Summary: Partly as a result of a dispute over union
representation at a beer bottle plant in the northern Mexican
state of San Luis Potosi (REF A) a portion of the factory is
now being relocated. The dispute at the plant was never over
whether or not the plant would be unionized but rather over
which of two unions would represent the workers. The plant
in question belongs to Grupo Modelo, which reportedly
controls over 50 percent of Mexico,s domestic beer market
and who,s internationally known &Corona8 is one of the
best selling beers worldwide. The unions initially involved
in the dispute were the CROC (Revolutionary Confederation of
Workers and Peasants) and the SUTEIVP (Sole Workers Union of
the Potosi Glass Bottle Industry). At present the CROC seems
to be the short term winner of the dispute in that it now
controls the collective bargaining contract at the factory.
However, the longer term winner may well be the CTM
(Confederation of Mexican Workers); a different union
entirely from the two original disputants. The CTM,s
apparent victory stems from a decision by the plant,s
management to relocate a large portion of its operation to
the neighboring state of Coahuila. In terms of labor related
issues Coahuila is a state dominated by the CTM. The leader
of the Coahuila CTM sees the plant relocation as a victory
for his federation and the most recent stage of an ongoing
ideological struggle between labor unions in Mexico. End
Summary.


A BITTER BREW AT MODELO
------------------------

2. Grupo Modelo is one of the largest beer breweries in
Mexico. Modelo produces a variety of beers, the most
internationally famous being &Corona8, and reportedly
controls over 50 percent of the Mexican domestic beer market.
One of the main sources of bottles for the Modelo breweries
is an in-house glass making plant named Vidriera Industrial
Potosi located in the northern Mexican state of San Luis
Potosi (SLP). Up until late 2006, and for at least ten years
prior to that, the union representing the workers at Vidriera
belonged to the Confederation of Mexican Workers (CTM). The
CTM is the largest labor federation in Mexico.

3. In late 2006, following a protracted inter-union dispute
the CTM ultimately accepted its loss in a union election
which replaced it with an &independent8 union called the
Sole Workers Union of the Potosi Glass Bottle Industry
(SUTEIVP). As an independent union the SUTEIVP is affiliated
with the National Workers Union (UNT), the second largest
labor federation in Mexico. The UNT has extremely close ties
to Mexico,s main opposition political party, the PRD (Party
of the Democratic Revolution). It also has significant
support from the AFL-CIO.

4. Shortly after winning its contest with the CTM to
represent the Vidriera workers in early 2007, the SUTEIVP
successfully renegotiated the then existing collective
bargaining contract and obtained a record 19 percent wage
increase. The new contract greatly exceeded the GOM,s
recommended wage increase for 2008 of 4 percent (Ref B) and
surpassed by far the combined wage and benefit package of 6
or 7 percent most union in Mexico have accepted. However,
by late 2007 the management of Vidriera Industrial Potosi
decided changes were needed. On December 10, 2007 the
plant,s management announced that for a variety business
reasons it would have to fire approximately 200-250 of the
factory,s 800 unionized workers. This announcement sparked
a series of events, which, in mid-May 2008, ultimately
resulted in another union, the CROC (Revolutionary
Confederation of Workers and Peasants), now being declared
the legal representative of the Vidriera Industrial Potosi
workers. The CROC is the third largest labor union
federation in Mexico.


BOTTLE FACTORY PLANS PARTIAL RELOCATION
----------------------------------------

5. One of the events related to Vidriera Industrial,s
dispute with SUTEIVP and the firing of some 200-250 of its
SLP workers was a decision by the plant,s management to

MEXICO 00002366 002 OF 003


relocate a portion of its operations. According to several
press reports carried by both Mexican and US newspapers,
Grupo Modelo announced plans to build a USD 280 million
bottle making plant in the nearby Mexican state of Coahuila.
This Vidriera management decision to relocate a part of its
operation to Coahuila was recently confirmed to Mission
Mexico,s Labor Counselor by the leader of the CTM in the
state, Tereso Medina, who claimed to have direct knowledge of
the relocation plans.

6. In talking with Medina, Labor Counselor could not help
but note his obvious satisfaction with Vidriera,s decision
to relocate to Coahuila. By its own admission the CTM
controls upwards of eighty percent of all collective
bargaining contracts in Coahuila. Consequently, it is almost
a forgone conclusion that the workers hired to first to build
and then those who will ultimately be contracted to work at
the new bottle plant will be represented by CTM. Medina
implied, but did not specifically state, that the Coahuila
CTM would directly benefit from the relocation of the
Vidriera bottle plant.

7. Post has previously reported that some labor observers
believe that both the Coahuila state government and the
dominant union there, the CTM, have what could best be
described as an excessively pro-business slant. The Coahuila
CTM does not specifically see itself as being pro-business;
rather it thinks of itself as an organization that knows how
to reach mutually beneficial accommodations. However, Labor
Counselor has talked with both American labor observers and
Mexican labor union officials (some of whom are even high
level CTM officials in other parts of Mexico) who believe
that the CTM in Coahuila is prepared to go to great lengths
to maintain its prominent position in the state. It is
therefore conceivable that the Coahuila CTM may well have
encouraged the bottle factory to relocate to the state.


COAHUILA CTM LEADER SEES IDEOLOGICAL STRUGGLE
---------------------------------------------

8. Continuing his comments about the relocation of the
Vidriera plant to Coahuila, Teresa Medina suggested that it
would only be right for the company to resume its
relationship with the CTM. Medina noted that prior to the
current labor problems at Vidriera,s SLP bottle plant the
workers there had been represented for many years by the CTM.
He then averred that the actions prompting the SLP Vidriera
workers, decision to switch union representation from the
CTM to the SUTEIVP, and by extension to the National Workers
Union (UNT), were no doubt supported and quite possibly
initiated by the &independent8 labor federation.

9. Medina opined that the CTM, which has close ties to one
of the country,s two main opposition political parties, the
PRI (Mexico,s former ruling party, the Institutional
Revolutionary Party) is much better, suited to represent
workers than the UNT. (Note: Coahuila is currently governed
by the PRI.) When Mexico was governed by the PRI the CTM was
the government,s official labor federation. During that
period the CTM developed a particular way of operating in
which accommodation in order to maintain social peace, as
opposed to confrontation with the private (and public) sector
was the rule of the day. This is not say that the CTM sought
accommodate simply for the sake of accommodation. Rather the
goal of this accommodation was to give every bit as much
weight to maintaining social peace as it gave to promoting
worker rights and interests.

10. The Coahuila CTM leader underscored that the vision of
his labor federation and that of the UNT were very different.
Medina suggested that the UNT and its affiliated unions
tended to adapt a more confrontational approach when dealing
with employers without looking at the bigger picture. He
then stated that the CTM and UNT were in an ideological
struggle and that the issues surrounding the decision by
Vidriera SLP to relocate a part of their operation to
Coahuila was a real victory (for the CTM) in that dispute.

11. As a labor organization, the UNT places a high value of
social justice. The UNT, like the CTM, is very concerned
with social peace. In its dealings with employers the UNT
realizes that its affiliated workers have a great deal to
lose if the union drives businesses away by being overly

MEXICO 00002366 003 OF 003


aggressive. However, there is no question that the UNT is
much more prepared to sacrifice a bit of social peace in
order to win a better deal for workers than is the CTM. This
difference in perspective, as well as the fact that the two
federations are affiliated with different political parties,
is the underlying cause for what the Coahuila CTM leader was
an ideological struggle. Having talked with some UNT members
associated with the original dispute between SUTEIVP and
Vidriera,s management, Labor Counselor saw little indication
that they considered themselves in some sort of struggle with
the CTM. However, they were leery of the CTM and considered
that federation,s approach to promoting the interests of
workers to be outmoded and obsolete.


COMMENT
-------

12. It may be something of an overstatement to say that the
CTM and the UNT are in an ideological struggle. The two
labor federations certainly have different perspectives. The
CTM is still very much the corporatist organization it was
during the approximately 70 years that the PRI ruled Mexico.
The UNT, although not officially linked to the PRD as the CTM
is with PRI, is very much like that political party in that
it is more that ready to challenge the status quo. The
UNT,s position regarding social justice is very much in
keeping with Mexican political traditions but its positions
on worker rights and interests are probably more in line with
how these issues would be defined in the US. Because of this
the UNT is often supported by the AFL-CIO in its organizing
efforts. AFL-CIO support of the UNT probably is another
reason why the CTM (at least in Coahuila) sees them as an
ideological adversary. However, it is just as likely that
the differences between the two federations has more to do
with competition between the organizations in first and
second place as it does with any deeply held ideological
beliefs.


13. This message was cleared by AmConsul Monterrey.
Visit Mexico City's Classified Web Site at
http://www.state.sgov.gov/p/wha/mexicocity and the North American
Partnership Blog at http://www.intelink.gov/communities/state/nap /
BASSETT

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