U.S. Auto Unions Side With Fox on Higher Pay for Mexico Workers
Mexico’s President Vicente Fox met recently in Detroit with United Auto Workers President Stephen P. Yokich and International Brotherhood of Teamsters President James P. Hoffa to discuss how to raise wage levels for Mexican workers.
The talks were serious, not a mere public relations gesture. Fox and the U.S. unions share a common need to see Mexican wages and living standards rise. Mexico can’t afford to rely on low-cost labor as a competitive advantage, and the U.S. unions, as well as the U.S. economy, need a growing, prospering neighbor to the south rather than a poor, unstable one.
Fox sees its growing automotive industry as a big opportunity for Mexico. In Detroit, he said his goal is to see Mexican consumers buy 2 million cars and trucks a year, up from about 900,000 at present.
And the UAW agrees. “We would like to see Mexican auto workers able to buy the cars they make,” says UAW spokesman Paul Krell. The UAW makes no bones about fearing the disparity in wages between Mexican auto workers, who earn $6 to $8 an hour at best, and $25-an-hour U.S. auto workers.
But the auto union, along with other U.S. unions, sees the solution in raising the low wages rather than simply fearing that “Mexican workers will take our jobs,” Krell says.
To that end, the UAW works with the International Metalworking Federation, a global labor organization that has offices in Mexico City, and with independent unions in Mexico to press for better wages and working conditions.
The environment is improving for raising living standards because the Mexican auto industry is attracting investment. Auto industry sources say Toyota Motor Co. soon will open a production plant in Mexico, although the big Japanese company has no comment on such reports.
Mexico last year produced 1.8 million vehicles, including such popular models as DaimlerChrysler’s PT Cruiser, Nissan’s Sentra, General Motors’ Chevrolet Suburban, Ford Motor Co.’s small cars Ka and Focus and Honda’s Accord. Canada produced about 2.9 million cars and light trucks and the U.S. produced almost 13 million.
The quality of cars produced in Mexico is still slightly below the industry average in the U.S. But all the products have improved consistently in recent years, reports J.D. Power & Associates, the Agoura Hills firm that polls car buyers on customer satisfaction.
“The Mexican industry is capable now of working on sophisticated parts and sub-assemblies for Delphi, Dana, Lear and other major [auto parts] companies,” says J. Ferron, consulting leader for the Americas for PriceWaterhouseCoopers.
Independent Mexican companies, such as Grupo Vitro, a Monterrey-based glass company, are growing in auto parts production.
“Mexico is attaining the stability needed to move beyond the status of parts supplier to be a full-class participant in collaborative automotive ventures with global companies,” Ferron says.
The prospects are attractive. A country of 96 million people, Mexico could become a market for as many as 6 million cars and trucks a year as well as a potential exporter to Central and South American countries. Fox and the U.S. union leaders were talking about baking a bigger pie.
But good feeling should not be overstated. A cordial meeting with Hoffa in Detroit did not stop the powerful Teamsters union from helping to defeat a Bush administration trucking bill that would have opened U.S. roads to Mexican truckers--and Mexican cargo to U.S. trucking companies.
“U.S. trucks stand to gain more business in Mexico than Mexican trucks will get in the U.S,” Mexico Foreign Minister Jorge Castaneda said shortly after Fox talked to Hoffa on July 16.
Jobs remain an issue. “Yes, there would be increased business for U.S. trucking companies,” says Teamsters spokesman Bret Caldwell, “but they wouldn’t be using U.S. drivers to go into Mexico. They’d hire Mexican drivers at the border.”
Yet the Teamsters also want to help unions in Mexico attain higher wages and better working conditions. The Teamsters see Mexican drivers in forceful independent unions, rather than in traditional government-controlled Mexican unions, as allies, not adversaries, of U.S. workers.
There are sound reasons for such thinking on both sides of the border, as illustrated by a good example from the European Union and a threatening one from China.
U.S. unions today are looking to the example of Spain, which was poor when it entered the European Common Market and began to attract investment from big companies. But unions in Germany and France worked, with aid from European Union development funds, to lift labor and living standards in Spain.
As a result, Spain developed a solid middle-class economy and became a partner of the other countries rather than a low-wage threat.
On the other hand, China is about to enter the World Trade Organization and offer unbeatable competition for almost all goods produced in low-wage countries.
Mexico’s only hope against such competition is to develop the skills of its work force and its partnerships with the U.S., Canada, the European Union and other industrialized countries.
Mexican industry still has a way to go. “The steel that Mexican companies turn out is not of the class A sheet quality needed for top automobiles,” says Peter Greer, the Detroit-based head of the global automotive practice for consulting firm A.T. Kearney.
Mexico chronically has lacked capital resources for Mexican companies to invest long term. But financial and legal reforms are improving that situation, says Richard F. Davis, a partner in Greenberg Traurig, an international law firm with extensive operations in Latin America.
However, for some Mexican development, U.S. government help will be needed, says Foreign Minister Castaneda. “European Union investments helped build roads and water systems for southern Italy, Ireland, Spain and others. And today those regions and countries are prospering,” Castaneda said in an interview.
“Will the U.S. do likewise for southern Mexico?” he asked.
Over time, the U.S. may indeed see such investment in the common interest of North America, just as U.S. unions are beginning to see richer Mexican workers as potential allies.
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James Flanigan can be reached at jim.flanigan@latimes.com
