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P 292044Z OCT 07
FM AMEMBASSY MEXICO
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INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
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RHMFIUU/CDR USSOUTHCOM MIAMI FL
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UNCLAS SECTION 01 OF 04 MEXICO 005639 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILSCR, WHA/MEX, USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON ETRD KTEX PGOV PHUM PINR MX
SUBJECT: COMPETING TEXTILE UNIONS DRAW NAFTA COUNTRIES, 
ATTENTION 
 
¶1.  SUMMARY: A dispute among three labor unions for control 
of a collective bargaining contract in the southern Mexican 
state of Puebla has drawn the attention of US and Canadian 
NGO,s and labor unions as well as the concern of American 
clothing manufacturers. The dispute began this past May when 
workers at a blue jean factory called Vaqueross Navarra 
protested what they said was the company,s failure to comply 
with the terms of a profit sharing agreement.  In pressing to 
have their concerns addressed the workers were notably 
dissatisfied with their union of record and apparently 
decided to change labor affiliation.  This decision prompted 
two other labor unions to try and win control of the 
collective bargaining contract.  Meanwhile, as the three 
unions fought to &represent8 the workers, the original 
profit sharing issue remained unsolved and a major source of 
friction between the workers and the company.  A variety of 
organizations and labor unions in the US, Canada and 
elsewhere have been drawn into this complicated dispute and 
they have all petitioned the Puebla state government to 
resolve the issue.  The Puebla authorities are very aware 
that this dispute could become the subject of a formal 
submission (complaint) under the terms of the NAFTA side 
agreement on labor which allows any of the signatory 
countries to officially question violations of local labor 
law.  They are, therefore, scrupulously following the letter 
of the law for dispute resolution but at a pace that many of 
the parties involved view as overly cautious.  The first step 
toward a negotiated settlement of the labor union aspect of 
this dispute could take place as early as October 31, 2007. 
END SUMMARY 
 
 
A DISPUTE IS BORN 
----------------- 
 
¶2. This past May a labor dispute broke out at the Vaqueross 
Navarra blue jeans plant in the southern Mexican state of 
Puebla.  Vaqueross Navarra is one of 14 factories in Puebla 
owned by the Grupo Navarra, a major producer of denim for 
such US brands as The GAP, Levi,s, American Eagle, 
Abercombie & Fitch, Target, Walmart and others.  The basis of 
the dispute is a claim by the workers that the company has 
failed to abide by the terms of a profit sharing agreement. 
The roots of the disagreement began earlier in the year when 
the company claimed that it had made no profits in 2006.  The 
workers were not convinced by the company,s claim since they 
were well aware that the firm produced and exported over 
30,000 pairs of jeans per day to the United States. 
Consequently, they insisted on being shown Vaqueros 
Navarra,s income tax declaration for the year 2006. 
 
 
¶3. Vaqueros Navarra was reluctant to make its tax declaration 
public but ultimately presented the workers with a document 
it claimed was its 2006 income tax return.  Upon studying the 
document the workers doubted its authenticity since it failed 
to record significant legitimate expenses they knew had been 
paid out during that tax year.  The workers consequently 
attempted to obtain the company,s income tax declaration 
from the GOM,s federal tax authorities. (Comment: Mexican 
firms (and individuals) are notoriously averse to paying 
taxes and will reportedly go to great lengths to avoid doing 
so.  It is said that Mexico has the lowest tax collection 
rates in Latin America. End Comment.)  This effort failed but 
it prompted the company to offer a compromise payment to the 
workers roughly equivalent to six days wages.  The workers 
countered that according to their calculation of company 
earnings for 2006 a fair profit sharing payment would amount 
to a full month,s wages. 
 
¶4.  The company refused to pay a full month,s wages and 
relations between the roughly 650-700 workers and the 
management of the Vaqueros Navarra plant steadily 
deteriorated.  Since the start of the dispute, the company 
has reportedly fired 150 workers for labor organizing 
activities aimed at obtaining the full benefits of the profit 
sharing agreement.  The exact number of workers fired and the 
reasons for their dismissal are in dispute and range anywhere 
from 50 to 300 depending on whose figures one accepts.  What 
does not appear to be in dispute is that relations between 
the worker and management at the Vaqueros Navarro plant were 
 
MEXICO 00005639  002 OF 004 
 
 
not particularly good even before the profit sharing 
disagreement broke out.  Verite, the independent non-profit 
organization which monitors international labor rights abuses 
in off-shore production sites, found credible evidence to 
indicate that the company has engaged in forced overtime, 
pregnancy testing, abusive treatment and safety and health 
violations and numerous freedom of association issues. 
 
 
UNION REPRESENTATION; OR LACK THEREOF 
------------------------------------- 
 
¶5.  Officially, the workers at the Vaqueros Navarra plant in 
Puebla are represented by the CROC labor union (Revolutionary 
Confederation of Workers and Peasants.  The CROC is perhaps 
Mexico,s third largest federation of labor unions and it is 
closely associated with the PRI (Institutional Revolutionary 
Party), Mexico,s former ruling political party.  At the 
national level, the CROC is a labor organization with 
legitimate accomplishments in gaining and protecting worker 
rights but like many institutions in Mexico it has its bad 
elements.   Senior CROC officials in Mexico City have 
unofficially acknowledged to Mission Mexico,s Labor 
Counselor that they are less than pleased with the way in 
which their union leaders in Puebla conduct their operations. 
 
¶6.  According to American and Canadian labor observers active 
in Mexico, the CROC operation at the Vaqueros Navarro plant 
in question is a &protection contract.8  Protection 
contracts are bogus collective bargaining agreements signed 
by a company and a union (or individuals claiming to 
represent a union) for the sole purpose of creating a 
management friendly organization that will control the 
workers.  In the case of the jeans factory in question, there 
are credible reports to suggest that the CROC has never had a 
presence in the plant, the workers there have never been 
allowed to actually see the collective bargaining contract 
their &representatives8 have agreed to on their behalf, the 
workers have never participated in any type of union assembly 
nor have they ever been allowed the opportunity to elect 
their union leadership. 
 
 
NEW UNION PLAYERS ENTER THE SCENE 
--------------------------------- 
 
¶7.  As the labor situation at the Vaqueros Navarro plant 
deteriorated the workers began to look for new union 
representation.  The representation they appear to have 
settled on is the September 19 Union which filed a petition 
with the Puebla state government labor authorities to serve 
as the workers representative on July 10.  The petition was 
reportedly signed by 551 of the plant,s estimated 650 
workers.  Mexican Federal Labor Law allows the workers at any 
plant or company to change union representation at any time 
whenever a majority of those workers petition to do so.  In 
theory, this petition process is relatively simple.  In 
practice, changing from one union to another is a contentious 
process during which coercive methods can and often are used 
to get workers to vote one way or another. 
 
¶8.  The September 19 Union is affiliated with the Authentic 
Workers Front (FAT), which is a part of the National Workers 
Union (UNT).  UNT is Mexico,s second largest labor 
federation and refers to itself as being an &independent8 
organization.  The UNT is independent in the sense that it 
has no official ties to any political party but unofficially 
it is closely tied to Mexico,s main opposition party, the 
PRD (Party of the Democratic Revolution). 
 
¶9.  At roughly the same time that the September 19 Union 
petitioned to become the legal representative of the workers 
at the Vaqueros Navarra plant, another union appeared on the 
scene.  This union, the CROM (the Regional Confederation of 
Mexican Workers), is perhaps Mexico,s fourth largest labor 
federation and, like the CROC, is officially associated with 
the PRI political party.  The CROM is claiming that it can 
represent the real interests of the workers at the Vaqueros 
Navarro plant better that either the existing union of record 
(the CROC) or the one that most workers seem to want as their 
representative, the September 19 Union.  The only element 
that the CROM has in its favor is that it appears to be the 
 
MEXICO 00005639  003 OF 004 
 
 
union that the company would prefer to deal with; which is 
probably an indication of whose interests it would really 
represent.  The CROM, which has also petitioned the Puebla 
authorities for recognition as the workers, representative, 
has reportedly been given access to the Vaqueros Navarro 
factor in order to solicit worker votes.  If true, this would 
be violation of Mexican labor law. 
 
 
INTERNATIONAL ATTENTION FOCUSES ON VAQUEROS NAVARRA 
--------------------------------------------- ------ 
 
¶10.  The ongoing situation at the Vaqueros Navarra plant has 
drawn considerable international attention including such 
organizations as the Canadian based Maquila Solidarity 
Network, the Ontario Public Service Employees Union, the 
AFL-CIO, United Electrical, Radio & Machine Workers of 
America (UE) and various other US and Canadian NGOs. All of 
these organizations have contacted both the labor authorities 
in Puebla and the US companies doing business there.  The US 
and Canadian labor organization have expressed their concerns 
that the Puebla government, which is controlled by the PRI, 
will be swayed in its efforts to resolve the dispute at the 
Vaqueros Navarro plant in favor of either the CROC or the 
CROM because both of these unions are officially associated 
with that political party. 
 
¶11.  The inquiries/pressure from these organizations and 
companies on the Puebla state government has had an effect in 
the sense that the authorities there are very much aware that 
they have become the focus of international attention. 
 
 
THE POSITION OF THE PUEBLA STATE GOVERNMENT 
------------------------------------------- 
 
¶12.  On October 26, Mission Mexico,s Labor Counselor called 
on the Puebla state government,s Secretary of Labor and the 
President of Labor Conciliation and Arbitration Board to 
discuss the situation at the Vaqueros Navarro plant.  The two 
state officials carefully explained the concerns of the 
Puebla government and what the authorities there were doing 
to resolve this protracted labor dispute.  They seemed very 
keen to reach a negotiated settlement to the dispute but were 
equally (perhaps excessively) concerned to appear even-handed 
with all of the parties concerned. 
 
¶13.  According to the two state officials the Puebla 
government is doing everything it can resolve the problems at 
the Vaqueros Navarra plant.  They state that they have meet 
repeatedly with all of the parties concerned and stressed 
upon them the need to resolve their differences in strict 
accordance with Mexican labor law.  They state that the 
Puebla government has gotten all sides (meaning the three 
competing labor unions) to acknowledge the need for an 
election by the workers to determine which labor organization 
will serve as their legal representative.  What is still at 
issue is the what, where, when and how of this election. 
 
¶14.  In scrupulously following the letter of Mexican labor 
law the where, when and how of the union election might not 
take place for several months; an outcome that is not 
acceptable to the September 19 or CROM union since this would 
mean the CROC is still officially the workers, legal 
representative.  What the Puebla government proposes, and 
what seems to be acceptable to the September 19 Union and 
international interest groups, is the holding ofan interim 
election known as an &administrative recount.8.  If all 
three unions accept an interim election, its results would 
authorize the winning union to serve as the workers, legal 
representative until a formal election, conducted in full 
accordance with all the tightly control procedures of Mexican 
labor law.  The Puebla authorities have scheduled a meeting 
with all three unions for October 31, to try and get them all 
to agree to the interim election. 
 
¶15. In the meantime, Puebla labor authorities were carefully 
looking into the circumstances surrounding the fired workers. 
  According to the two Puebal state officials with the Labor 
Counselor met, media reports of hundreds of workers being 
fired are gross exaggerations.  (Comment: This assessment is 
probably true since in a meeting with a September 19 official 
 
MEXICO 00005639  004 OF 004 
 
 
on October 25, post,s Labor Counselor was told that at most 
the Vaqueros Navarra plant in question had only 700 
employees.  End Comment.)  Continuing on, the officials said 
that only 35 fired employees had filed formal complaints 
about their dismissal and of that number 7 have had their 
cases resolved to their satisfaction. 
 
¶16.  Perhaps the most significant detail the two Puebla state 
officials related in their meeting with post Labor Counselor 
was related to the right to vote in any labor elections that 
are ultimately held.  According to the officials, any worker 
who was employed by Vaqueros Navarro back in May when the 
labor dispute first began, and only those employed by the 
company at that time, will be allowed to vote to determine 
which labor union will serve as the workers legal 
representative.  This means that the company will not be able 
to pad their employment rolls with people whose votes they 
control and that even those workers who have been fired since 
May can vote in the union election if they so choose.  The 
limitation on new employees voting and the eligibility of 
fired workers to participate in any union election should, 
theoretically, go a long way toward ensuring that the Vaquero 
Navarra workers obtain the union representation of their 
choice. 
 
COMMENT 
------- 
 
¶17.  The situation at the Vaquero Navarra plant in Puebla is 
complicated and the information available to date tends to 
indicate that not all of the competing unions have the 
workers, best interests at heart.  The Vaquero Navarra 
company has not been the ideal employer and it is still not 
clear whether it will honor its profit sharing agreement or 
properly address the labor issues raised by the non-profit 
organization Verite.  The state labor authorities in Puebla 
appear to be sincerely working to resolve this labor dispute 
but at times they seemed more interested in staying on 
everyone,s good side than in quickly resolving an issue that 
could hurt the image of their state as a good place to 
invest.  If the authorities are able to get the competing 
unions to agree to a properly monitored interim election the 
situation at the Vaqueros Navarra plant could take a 
significant step in the right direction.  If a satisfactory 
interim election is not held this dispute could ultimately 
become the subject of a formal submission (complaint) under 
the terms of the under NAFTA,s North American Agreement on 
Labor Cooperation allow any of the three signatory countries 
to question violations of local labor law. 
 
 
 
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