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Cablegate: So Far Union Dispute has Little Impact On Ford

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RR RUEHCD RUEHGD RUEHHM RUEHHO RUEHJO RUEHMC RUEHNG RUEHNL RUEHPOD
RUEHRD RUEHRS RUEHTM
DE RUEHME #5935/01 3311528
ZNR UUUUU ZZH
R 271528Z NOV 07
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 9658
RUEHC/DEPT OF LABOR WASHDC
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RUEHOT/AMEMBASSY OTTAWA 2336
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 04 MEXICO 005935

SIPDIS

SIPDIS

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

E.O. 12958: N/A
TAGS: ELAB ECON PGOV EIND EINV PINR MX
SUBJECT: SO FAR UNION DISPUTE HAS LITTLE IMPACT ON FORD
OPERATIONS

1. SUMMARY: A leadership dispute within what had been the
sole union representing all of the workers at Ford Motor
Co.,s three production plants in Mexico has, for the most
part, had little impact on the car maker,s Mexico
operations. The leadership dispute has lead to the formation
of a new union mainly representing the nearly 3000 workers at
Ford,s Hermosillo plant in the northwestern Mexican state of
Sonora. The Hermosillo plant is Ford,s largest and most
modern facility in Mexico turning out some 280,000 vehicles
per year. The other two plants are in the border state of
Chihuahua and the central State of Mexico (Edomex). Thus far
Ford,s management has successfully stayed out of the union
leadership dispute leaving it up to the GOM,s Secretariat of
Labor (STPS) to the resolve the matter. The STPS is very
much aware of problems this leadership dispute could cause
Ford and is working to resolve the matter collectively before
bargaining contract renegotiations begin separately in the
company,s three plants in January, February and March of
2008. Ford is a major investor in Mexico and its plants
create thousands of jobs in its three production facilities
and many thousands more in the operations of related supplier
companies. A formal meeting to try and work out some sort
of arrangement with the two opposing leaders has been set for
November 29-30. END SUMMARY


LABOR RELATIONS AT FORD DE MEXICO
---------------------------------

2. Ford Motor Company is a major investor in Mexico. The
company has three large production plants in the county in
Hermosillo, Sonora, Chihuahua, Chihuahua and Cuautitlan,
Edomex. Ford employs roughly 2800 workers in Hermosillo and
around 700 workers in each of its two other production
facilities. In addition to these direct hire employees
Ford,s plants also generate thousands more jobs across
Mexico in related supplier company operations. For the most
part Ford has had a cooperative and productive relationship
with its workers and the union that represents them with no
more than the usual ups and downs of any major corporation
operating in Mexico.

3. Until July 2007 a single national union, called the
&National Workers Union of the Ford Motor Company and the
Automobile Industry8 (SINTRAFORD), represented all of the
workers at Ford,s three plants in Mexico. SINTRAFORD is an
affiliate union of the Confederation of Mexican Workers
(CTM), the largest labor federation in Mexico and roughly
equivalent to the AFL-CIO. For at least 17 years a single
individual, Secretary General, Juan Jose SOSA Arreola, has
headed SINTRAFORD. Sosa is typical of many Mexican labor
leaders in that he tended to view his election as the head of
SINTRAFORD as a lifetime appointment. Overall Ford has been
able to work with Sosa through the years and, according to
company officials in both Hermosillo and Cuautitlan, is
perfectly willing to continue working with him if the workers
choose to maintain him in his leadership position.


TIMES CHANGE BUT UNION LEADER DOES NOT
--------------------------------------

4. Although many union leaders in Mexico occupy de facto
lifetime positions they are, nevertheless, required by
Mexican law to run for re-election. The time between
elections varies from union to union but the standard mandate
period for union leaders in Mexico is either three or six
years. In the case of SINTRAFORD, its official leader, Juan
Jose Sosa had all but completed his sixth term as the
organization,s Secretary General and in May 2007 had begun
arranging a union convention to be held in Hermosillo that
was intended to rubber stamp his re-election when he was
unexpectedly surprised. In making the arrangements for the
participation union representatives from Hermosillo, Sosa
learned that almost the entire staff of unionized workers
there planned to vote against him in favor of one of their
own, Ricardo MARTINEZ Herrera, as SINTRAFORD,s Secretary
General.

5. Rather than risk going into a head to head vote with
Martinez Sosa, who had already informed the GOM,s labor
authorities that SINTRAFORD had called a national convention,

MEXICO 00005935 002 OF 004


apparently changed the location of the election without
telling anyone in Hermosillo. As far as the STPS knew the
convention took place as scheduled and Sosa was &reelected8
with most of the votes from the workers in Chihuahua and a
fair portion of those in Cuautitlan, Edomex. Sosa then
presented the results of the rump convention to the STPS but
reportedly failed to mention that the bulk of the union,s
workers were not represented at the event. Shortly
thereafter, and based on the documentation presented at the
time, Sosa received official GOM recognition of his
reelection. This switch and vote maneuver by Sosa is very
much a tactic from the CTM,s past when the GOM allowed
accommodating union leaders to do almost anything they
wished.


A NEW FORD UNION IS BORN
------------------------

6. In reaction to Sosa,s switch and vote maneuver the
workers in Hermosillo held a convention of their own in late
May, only shortly after the national convention,s originally
planned date. During this convention the Hermosillo workers
voted to form a separate Ford union with Martinez as the new
organization,s Secretary General. They also voted to
petition the GOM to annul Sosa,s election and, failing that,
called for Martinez to formally challenge Sosa for leadership
of all Ford employees in Mexico via a GOM supervised national
union election. The new union formed in Hermosillo was
called the &National Progressive Workers Union of the Ford
Motor Company and the Automobile Industry.8 Although the
workers in Hermosillo decided to form a separate union they
unanimously voted to maintain their overall union affiliation
with CTM. The new union with Ricardo Martinez as its leader
was officially recognized by the GOM on September 20, 2007.

7. During a recent conversation with Mission Mexico,s Labor
Counselor, Martinez explained his reason for forming a new
union. According to Martinez, Sosa has lost touch with the
workers and, more importantly, seems oblivious to the dire
economic situation and the current reality facing Ford. Ford
Motor Co., Martinez said, is struggling to survive in an
aggressively competitive global market. In order to do this,
he continued, the company has had to adapt and he pointed to
the extensive cross training and increased level of
outsourced functions presently in place at the Ford plant in
Hermosillo. Sosa, Martinez stated, is insisting on
negotiating with Ford on the basis of individual workers
doing specialized jobs and only those jobs. This inability
to adapt to Ford,s current reality, Martinez concluded,
would only put the company and all of the workers, jobs at
further risk.

8. Within the larger organization of the CTM the formation
of the new Progressive Workers Union is producing high levels
of ambivalence. At the national level the CTM is aware that
Sosa was officially recognized as the leader of the union of
all Ford workers throughout Mexico. However, it soon became
clear to them that at the state level, the Sonora offices of
the CTM sees Ricardo Martinez as the legal representative of
the workers at Ford,s Hermosillo plant. The national level
of the CTM knows Sosa does not have the support of the
workers in Hermosillo but is reluctant to challenge the
STPS, recognition of him; fearful that doing so would set
bad a precedent undermining the legitimacy of GOM union
leadership recognition. The national CTM is also hesitant to
try and impose Sosa on its Sonora branch because that office
increasingly uses secret ballots to determine union
leadership issues. Secret ballots are a relatively new
phenomena to the CTM and there are many union leaders in the
organization throughout Mexico who are opposed to them.


MANAGEMENT,S VIEW OF THE UNION SITUATION IN HERMOSILLO
--------------------------------------------- ---------


9. Ford,s management, at least in the Hermosillo plant, is
largely supportive of union activities there. In a
conversation with AmConsul Hermosillo,s Labor Watcher and
Mission Mexico,s Labor Counselor, Ford management officials
there stated, &the union is considered part of the

MEXICO 00005935 003 OF 004


company.8 (Comment: This statement seems to reflect the
perception of the company Ricardo Martinez related to Mission
Labor Counselor.) The Ford management officials state they
are making every effort to accommodate the new local
Progressive Union and SINTRAFORD, which are currently both
representing the Ford production workers in the plant. At
this time management is hosting 5 national CTM
representatives and 11 local union representatives in the
Hermosillo production facility. Management acknowledges that
there has been some disagreement between SINTRAFORD and the
local Progressive union that are contending to represent the
workers, but management is willing to work with both. The
next contract negotiations are to be completed by Feb 2008.
According to management the biggest issue being discussed is
the power struggle over union representation. Management is
refraining from taking sides while making themselves
available to representatives from both sides.


HOW FORD VIEWS THE DISPUTE BETWEEN THE TWO UNIONS
--------------------------------------------- ----

10. According to Ford,s Labor Director in the Mexico City
area, The company is well aware of ongoing competition
between SINTRAFORD and the Progressives. This awareness is
based on a number of factors; one of the most prominent of
which is the fact that Hermosillo is Ford,s largest plant in
Mexico with about 2800 workers whereas Chihuahua and
Cuautitlan (Edomex) each have about 700 workers. Ricardo
Martinez, the Ford Labor Director said, ultimately petitioned
the STPS to have the National Progressive Union recognized as
the union for the Hermosillo and the Cuautitlan plant.
Martinez did not attempt to extend his union to Ford,s
Chihuahua plant, which is probably recognition of where Sosa
has his stronghold

11. The Labor Director opined that if a vote were held at
each of the plants, that Martinez would get near 100 percent
support in Hermosillo, Sosa would get near 100 in Chihuahua
and, Cuautitlan would be about 70/30 in favor of Sosa.
(Comment: According to various media reports there appears to
be a consensus that an actual vote in Cuautitlan wouold 70/30
in Martinez, favor.) Ford is well aware that Martinez has
the support of the workers in Hermosillo, as well as the
governor and the Sonora CTM. Ford knows that under Mexican
law it is possible to have separate unions in different
plants, but the 50 1 rule applies for voting on union
representation. Assuming that the Labor Director,s
assessment of the situation Cuautitlan is correct, this would
mean that even if 30 percent of the workers there support
Martinez, SINTAFORD would still be the bargaining unit.
12. To date there has only been stoppage for one shift
nationwide so far - in Hermosillo. The Labor Director
described it as Martinez, way of saying that he controls the
workers in Hermosillo no matter who the STPS recognized as
the leader of Ford,s unionized workers in Mexico. The head
of the national CTM, Joaquin Gamboa Pascoa, has refused to
meet with Ford on the leadership dispute issue (see para 8
above). Consequently, Ford has been working through the STPS
for a resolution of the union leadership dispute.


GOM EFFORTS TO RESOLVE THE LEADERSHIP QUESTION
--------------------------------------------- -

13. The GOM,s labor authorities, STPS, have scheduled an
&audience8 on Nov 29-30 hear the case. At that time the
two competing unions will meet with STPS officials and try to
work out settlement. The most likely outcome of the audience
will be an administrative recount of all union votes
(including Hermosillo this time) to determine if a single
union will represent all Ford workers in Mexico. This
recount would be supervised by the GOM.

14. Either party could file an Amparo (roughly equivalent to
an injunction) if they don,t like the outcome of the
audience or a possible recount. This worries both the STPS
and Ford because the yearly collective contract negotiations
are scheduled for January in Chihuahua, February in
Hermosillo, and March in Cuautitlan. Ford by law has to
negotiate with the current legal union leader, and if the
issue isn,t solved by then, there,s a chance that workers

MEXICO 00005935 004 OF 004


in Hermosillo won,t abide by the contract.
In a recent meeting between Mission Mexico,s Labor Counselor
and high level STPS official it was made clear that the GOM
is fully aware of the consequences of protracted union
leadership dispute at Ford and is working hard to make sure
such a fight does not happen.

COMMENT
-------

15. The STPS is very much aware of problems this leadership
dispute could cause Ford and is working to resolve the matter
before separate collective bargaining contract renegotiations
begin in the company,s three plants in during the first
three months of 2008. Ford is a major investor in Mexico and
its plants create thousands of jobs in its three production
facilities and many thousands more in the operations of
related supplier companies. The STPS will not quietly
accept a situation that might put these jobs at risk. One
way or the other the GOM will do everything it can ensure
that the November 29-30 meeting between the two competing
unions produces some positive results.

16. This message was jointly drafted by Embassy Mexico City
and AmConsul Hermosillo.


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 /
GARZA

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