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FM AMEMBASSY MEXICO
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INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RUEHRC/DEPT OF AGRICULTURE WASHDC
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RHMFIUU/DEPT OF ENERGY WASHINGTON DC
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RHMFIUU/CDR USSOUTHCOM MIAMI FL

UNCLAS SECTION 01 OF 04 MEXICO 005462 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILCSR, WHA/MEX, USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB EAGR ECON ENRG PGOV PINR MX
SUBJECT:  LEADER OF SUGAR WORKERS UNION ENJOYS THE 
SWEETNESS OF LIFE 
 
REF: REF: (A) MEXICO 0278 (B) MEXICO 0352 
 
 ¶1.  SUMMARY: Observers of Mexico,s organized labor sector 
and media commentators have both reviled and hailed, Enrique 
Ramos Rodriguez, the leader of the country,s largest sugar 
workers union.  In many ways Ramos typifies everything 
average Mexicans most sharply criticize about their 
country,s labor leaders (such as unexplained wealth, no 
accountability, perpetual re-election, etc.). On the other 
hand, he recently negotiated the first major reform in the 
legal framework that establishes the relationship between 
sugar cane workers and sugar mill owners since 1936.  The 
deal he brokered has significant flaws, not the least of 
which is that it openly ensures Ramos will continue to 
exploit, for personal gain, his union leadership position. 
Nevertheless, the deal commits the union to accepting a 25 
percent cut in jobs industry-wide and commits mill owners to 
paying to upgrade worker skills.  Overall, there is no 
question that the deal is much better for Ramos and Mexico,s 
sugar mill owners than it is for most sugar cane workers.  At 
best the deal could be considered very much a glass half 
empty/glass half full kind of arrangement in that it 
preserves many of the average workers, more extravagant 
benefits.  However, given the slow pace of any type of 
meaningful reform of Mexican labor unions, it could be argued 
that limited reform is better than no reform at all.  This is 
the first of two reports on the current state of affairs 
within Mexico,s largest sugar cane workers union, the 
Workers Unions of the Mexican Sugar Industry (STIASRM).  END 
SUMMARY. 
 
 
A SWEET LIFE AT THE TOP 
----------------------- 
 
¶2.  Labor leaders in Mexico are commonly thought of as being 
more interested in their own well being than they are in 
looking out for the welfare of the workers.  One rarely finds 
average Mexicans willing to say anything good about the 
leaders of the country,s organized labor sector.  This 
ill-will most definitely extends to Enrique Ramos Rodriguez, 
the Secretary General of Mexico,s largest sugar cane workers 
union, the Workers Unions of the Mexican Sugar Industry 
(STIASRM).  Ramos has been the Secretary General of the 
STIASRM since 1995 and a leading figure in the union since 
roughly 1975.  The STIASRM is a part of the Confederation of 
Mexican Workers (CTM), the country,s largest federation of 
labor unions, and Ramos serves on its National Executive 
Committee; he is also the CTM,s Secretary General for the 
southeastern state of Veracruz.  Like many labor federations 
in Mexico, the CTM is famous for perpetually re-electing 
union leaders.  Once in union leadership positions, CTM 
officials seldom step down in life and Ramos appears to be 
doing his best to maintain this union tradition. 
 
¶3.  One of the advantages of being a de facto union leader 
for life is that you can get in on the ground floor of many 
arrangements.  In the case of Enrique Ramos, he was a member 
of the STIASRM,s senior leadership in 1976 when the GOM 
expropriated 69 hectares (about 170.5 acres) of land 
belonging to one of the indigenous groups in the western 
state of Jalisco.  This land was then transferred to the 
STIASRM.  The union,s then Secretary General (now deceased) 
established a trust to manage the property for the benefit of 
the members of the sugar cane workers union and their 
families.  When the trust was established, at the request of 
the STIASRM,s senior leadership, sugar mill owners across 
Mexico began deducting a small amount each week from the 
workers, union dues to develop the land as recreational 
property. 
 
¶4.  Once Enrique Ramos became the STIASRM Secretary General, 
he assumed responsibility for administering the land.  In 
time two up-scale hotels were constructed on the property, 
the Blue Bay Village-Los Angles Locos and the Punta Serena. 
Initially the income from these hotels was used to cover any 
outstanding union financial obligations but at present, 
according to an attorney representing dissidents within the 
sugar cane workers union, all proceeds are deposited into 
bank accounts owned by Enrique Ramos.  The first of these 
hotels, the Blue Bay Village-Los Angles Loco has 284 rooms, a 
lobby bar, restaurant, cafeteria, an auditorium, tennis 
 
MEXICO 00005462  002 OF 004 
 
 
courts and a horse riding area.  The other hotel, the Punta 
Serena, has an ocean view, a health spa with a steam room and 
sauna, a gym, tennis courts and a dock area for water sports. 
 The average daily rate for these hotels is approximately USD 
140.00; considerably more than the USD 37.50 a day earned by 
even the most highly paid sugar cane worker. 
 
¶5.  The recent revelation that the profits from these hotels 
is going into bank accounts owned by Ramos have prompted 
calls in some quarters for the GOM,s equivalent of the US 
Attorney General,s Office to launch an investigation into 
his management of union assets.  In addition to controlling 
the income from the hotels Enrique Ramos is also said to 
either control or own outright two sports clubs, two sugar 
mills, two office building and 15 homes in Mexico City as 
well as an undetermined number of warehouses.  An 
investigation of Ramos by the Mexican Attorney General,s 
Office, if it happens, should prove interesting as the 
STIASRM is reportedly the owner of the building that houses 
that GOM agency,s Mexico City Regional office (on the same 
street but several blocks away from Embassy Mexico City). 
 
 
 
 
 
 
RAMOS NEGOTIATES A SIGNIFICANT NEW DEAL 
--------------------------------------- 
 
¶6.  On an individual basis labor relations between employers 
and employees in Mexico are governed by the country,s 
Federal Labor Law which establishes a base of permanent rules 
and regulations.  On a broader level Mexico also has what it 
calls &Contract Laws8 which establish the rules for labor 
relations on an industry-wide basis.  Contract Laws (CL) are 
a type of collective bargaining agreement negotiated by 
industry, union and government representatives.  Since CLs 
are negotiated arrangements they are established for fixed 
periods of time and vary significantly from industry to 
industry.  CLs establish minimum standards that both 
employers and employees are expected to follow over and above 
the permanent guidance contained in Mexico,s Federal Labor 
Law. In theory CLs are periodically renegotiated like any 
collective bargaining agreement but in practice they contain 
any meaningful change.  Until now, Mexico,s sugar industry 
has been operating on a CL that has not been significantly 
changed since 1936. 
 
¶7.  Observers of Mexico,s sugar industry have long pointed 
out that Mexican sugar is one of the expensive sugars in the 
world.  Mexico,s sugar industry is often unfavorably 
compared to the sugar industry in Brazil.  The average cost 
of producing sugar in Brazil is said to be approximately USD 
15.00 per ton whereas the cost of producing that same ton of 
sugar in Mexico is put at approximately USD 40.00 per ton. 
Much of the blame for this substantial price difference is 
placed on the sugar industry,s Contract Law which 
artificially raises the price of producing sugar in Mexico 
over and above the cost of normal market factors. 
To the extent that the sugar industry CL is, in fact, 
responsible for the high cost of producing Mexican sugar, a 
chance now exists to implement a significant change. 
 
¶8.  Approximately nine months ago the STIASRM union, the 
sugar mill owners and the GOM (represented by the Secretariat 
of Labor) began an extended series of discussion to 
significantly change the sugar industry,s Contract Law. 
These discussions ultimately turned into serious negotiation 
and on August 29, 2007 the three sides reached agree on the 
terms of a major revision of the sugar industry,s Contract 
Law.  A successful agreement could not have been possible 
without concessions and compromises on all sides but the one 
person with almost absolute veto power was Enrique Ramos 
Rodriguez.  By most accounts Ramos took the negotiations 
seriously right from the start, and he made sure that if the 
union was being asked to accept genuine change then the mill 
owner would also have to acknowledge that they could no 
longer do business as usual. Ramos made real concessions but 
he obtained something real in return of the members of the 
sugar cane workers union.  Alas, he also made sure to look 
out for number one. 
 
MEXICO 00005462  003 OF 004 
 
 
 
 
A NEW CONTRACT LAW FOR MEXICO,S SUGAR INDUSTRY 
--------------------------------------------- - 
 
¶9.  Under the terms of the sugar industry,s new CL, the 
STIASRM agreed to allow mill owners to permanently cut jobs 
by up to 25 percent. Depending on the source consulted this 
will translate into a reduction of somewhere between 7-10,000 
jobs among unionized workers in the Mexico,s sugar industry. 
 The union also agreed to the establishment of more flexible 
work hours (meaning mill owners can require work on Saturdays 
and Sundays), when needed the mill owners will now be allowed 
to hire non-union workers (outsourcing) and the union and 
mill owners agreed to implement a new wage scale based on 
worker productivity and not just seniority as it now the case. 
 
¶10.  In return the mill owners agreed to accept the union,s 
terms for the conditions of retirement of some 3,000 workers. 
 This issue was supposedly resolved earlier this year 
(Reftel) but it came up again in the CL discussions.  The 
mill owners also agreed to invest USD 1 billion over the next 
five years in plant modernization and to upgrade worker 
skills, particularly with regard to ensuring that workers are 
cross-trained to perform a variety of jobs; in addition the 
mill owners agreed to an across the board 4.5 percent wage 
increase for all STIASRM members and to continue the current 
practice of granting three months of paid vacation. 
 
 
UNION LEADER GETS EXTRA HELPING OF SUGAR 
----------------------------------------- 
 
¶11.  In addition to practice of three months of paid vacation 
that Ramos was able to keep as a standard benefit for the 
workers, he also maintained an annual cash payment from the 
mill owners to the union of 50 million pesos (approximately 
USD 4.6 million). Supposedly these funds are to be used for 
the operation of a hospital for the exclusive use of STIASRM 
members.  So far there is no firm evidence to document the 
existence of this hospital, nor is there any accounting of 
what is done with the money given by the mill owners to the 
union. 
 
¶12.  Finally, the new Contract Law allows Ramos to charge, on 
behalf of the STIASRM, a fee for all outside workers 
contracted by the mill owners.  The fee established was 2.5 
percent of the monthly wages of any non-union worker hired by 
the mill owners.  At the currently anticipated wages for 
these workers, this would mean that if the mill owners 
ultimately filed 10,000 outsourced positions the union would 
receive 2-3 million pesos a month (approximately USD 
278,000.00).   Reportedly these funds would be used by the 
unions national executive committee for the benefit of the 
workers but since neither Mexican Federal Labor Law nor the 
Contract Law require unions or their leaders to account for 
the use of union funds there is no way to know if this money 
will in fact be used for its intended purpose. 
 
 
COMMENT 
------- 
 
¶13.  Although (as yet) there is no court room quality 
evidence to definitively indicate that Enrique Ramos 
Rodriguez has abused his union leadership position for 
personal gain there are certainly a significant number of 
credible allegations.  To date Ramos has done little to 
dispute these allegations, which further adds to the 
widespread speculation that he is just another corrupt labor 
leader looking out for himself.  That said, Ramos has at 
least attempted to spread the wealth to a limited degree 
among the members of the sugar cane workers union.  Moreover, 
Ramos has committed himself and the union to the first real 
changes in the sugar industry,s Contract Law since 1936. 
The changes are not perfect and there is much that could have 
been done.  Nevertheless, the promise of work hour 
flexibility by the union and commitment to invest in both new 
plants and work skill upgrade creates a very real possibility 
that Mexico,s sugar industry may become more competitive. 
These changes are unlikely to put Mexico sugar production on 
a par with that of Brazil,s but they do appear to be steps 
 
MEXICO 00005462  004 OF 004 
 
 
in the right direction. 
 
 
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