VZCZCXRO8283
RR RUEHCD RUEHGD RUEHHM RUEHHO RUEHJO RUEHMC RUEHNG RUEHNL RUEHPOD
RUEHRD RUEHRS RUEHTM
DE RUEHME #6255/01 3551757
ZNR UUUUU ZZH
R 211757Z DEC 07
FM AMEMBASSY MEXICO
TO RUEHHO/AMCONSUL HERMOSILLO 3851
RUEHC/SECSTATE WASHDC 9993
RUEHC/DEPT OF LABOR WASHDC
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEAHLA/DEPT OF HOMELAND SECURITY
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 04 MEXICO 006255 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILCSR, WHA/MEX AND USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON SOCI PINS SNAR PHUM MX
SUBJECT: SONORA MAQUILA UNION BETWEEN A ROCK AND A HARD 
PLACE 
 
 
MEXICO 00006255  001.2 OF 004 
 
 
 
 
 
¶1.  SUMMARY: In the north western Mexican state of Sonora a 
union affiliated with the country,s largest labor 
federation, the CTM (Confederation of Mexican Workers) finds 
itself in a very precarious spot.  The newly elected 
leadership of this CTM union is struggling to balance the 
expectations of 14,000 workers against the need to maintain 
good labor relations with some 40 different manufacturing 
companies grouped together in an industrial complex run by 
&The Offshore Group8 based in Tucson, Arizona.  For nearly 
18 years the independent union which previously represented 
the workers and the Offshore Group had an obliging 
relationship that comfortably suited them but which did 
little to promote the interests of the workers.  After 
winning a bitterly fought struggle to become the union of 
record the new CTM leadership is under pressure from the 
workers to right the wrongs of 18 years of neglect.  At the 
same time, the new leaders are fully aware that in today,s 
globalized world the manufacturers operating in the Sonora 
industrial complex can easily relocate to another site or 
another country in reaction to what they might perceive as 
inhospitable labor conditions.  The Offshore Group appears to 
be a responsible employer but seems genuinely unaware of many 
of the concerns of its workforce.  As a US-based company, if 
The Offshore Group could be encouraged to develop and publish 
a code of conduct, this would undoubtedly help guide its 
labor relations in Mexico.  END SUMMARY 
 
 
THE COMPANY 
----------- 
 
¶2.  During the better part of nearly two decades the Arizona 
based Maquiladora (foreign owned assembly plant), &The 
Offshore Group8 has operated a highly successful industrial 
complex in the north western Mexican state of Sonora.  The 
large complex, known locally as &Maquilas Teta Kawi8, is 
physically located in the adjoining cities of Empalme and 
Guaymas.  As of early December 2007 Maquilas Teta Kawi 
employed some 14,000 workers in these two cities.  In 
addition to its main operations in Sonora &The Offshore 
Group8 (TOG) also has a smaller manufacturing facility in 
Saltillo, Coahuila.  The idea behind TOG,s Mexico operations 
is to provide a range of outsourced manufacturing support 
services.  Its motto is &You manufacture ( We do the rest!8 
 
¶3.  The Offshore Group handles the non-core legal and 
administrative aspects of doing business in Mexico. TOG sells 
its services by assuring its client firms that they will 
control 100 percent of their manufacturing processes and 
quality assurance functions.  Because of the range of 
services that TOG offers its clients via its &Shelter 
Program8 which establishes a direct contract with the parent 
company in Arizona, it claims they are able to quickly 
initiate operations in Mexico without actually establishing a 
legal presence here, and without making many of the 
expenditures typically associated with such start-ups.  TOG 
claims its manufacturers operate in Mexico while always 
remaining within the framework of the US legal system. 
 
¶4.  TOG,s Empalme and Guaymas operations currently have 43 
manufacturing clients, the vast majority of which are US 
owned companies.  The services TOG provides includes such 
things as human resources management (hiring and firing) and 
administration, on-site worker medical care, payroll and 
benefit management, accounting and payroll management, 
logistics and facilities services, procurement and 
environmental services as well as assistance in the areas of 
government and community affairs (read negotiating with 
unions).  TOG,s Maquiladora Teta Kawi operations has 
partnered with medical device, aerospace, automotive, optics, 
electronics and other manufacturers to enable them to 
establish and maintain production facilities in Mexico at 
reduced cost and risk. Some of the companies operating at the 
Maquiladora Teta Kawi facilities include SpectraLink Corp., 
EE Technologies Inc., Cooper Standard Automotive, Ping Golf 
Bags, Medtronic, Delphi, Tyco Electronics, The Phoenix 
Company of Chicago, Avalon Laboratories, Inc., Parker 
Aerospace, Sargent Aerospace and many others. 
 
 
MEXICO 00006255  002.2 OF 004 
 
 
 
THE UNION 
--------- 
 
¶5.  The union representing the TOG workforce is known 
informally as the Maquilas Teta Kawi Workers Union. 
Officially its name is, the &Union of Workers and General 
Employees in the Maquiladora, Shipping and Manufacturing 
Industries8.  The union is affiliated with the Confederation 
of Mexican Workers (CTM) which is Mexico,s largest labor 
federation and is roughly equivalent to the AFL-CIO.  Up 
until about a year ago an independent union had been the 
bargaining agent of record for workers employed by TOG almost 
since the company started its operation in Mexico some 18 
years ago.  For most of that time this independent  union and 
the management of TOG had an accommodating relationship that 
comfortably suited the company and provided financial 
incentives to the then union  but which did little to either 
protect or promote the interests of the workers. 
 
¶6.  Over time worker resentment against the complacency of 
its local union leadership in dealing with TOG grew to the 
point where a dissident group formed to challenge the 
long-time leaders for control of the union.  Ultimately the 
dissents won control of the union when they received the 
support of the state-level offices of the CTM.  The 
state-level offices of the CTM helped the dissidents obtain a 
secret ballot election for control of the union (a rarity in 
 
SIPDIS 
Mexico) that was closely monitored by federal labor 
authorities.  The new leadership of the Maquilas Teta Kawi 
Workers Union has been in place for approximately a year.  It 
has been an adjustment for both them and for TOG. 
 
 
THE SITUATION 
------------- 
 
¶7.  The new head of the Maquilas Teta Kawi Workers Union, 
Carlos Enrique Gomez Cota, is in his early thirties and most 
of the union delegates (the equivalent of union shop 
stewards) who support him are not any older.  Gomez has a 
degree in labor law but lacks extensive experience practicing 
law; many of the union delegates have not completed high 
school.  Their collective labor union experience is 
relatively limited but they struck Mission Mexico,s Labor 
Counselor as dedicated individuals doing their best to 
improve a bad situation.  Specifically they are attempting to 
change the behavior of company management which has done as 
it pleased for the past 18 years and to moderate the 
expectations of thousands of union members whose grievances 
have gone unaddressed for nearly two decades. 
 
¶8.  With some 14,000 employees the Maquilas Teta Kawi 
industrial complex in Empalme, Sonora is in many respects a 
small city with problems similar to those of a small 
municipality.  These problems include such things as crime, 
sexual harassment, drug trafficking and abuse, the need for 
adequate day care, class conflicts as well as a full range of 
differing political and economic agendas.  Added to all of 
this is the difficulty of changing an 18 year relationship 
with TOG management and its client manufacturing companies. 
One union delegate compared the labor organization,s 
relationship with TOG as being similar to that of a parent 
who did nothing to teach their child morals for the first 18 
years of its life and then suddenly expecting that child to 
know the difference between (labor) right and wrong. 
 
 
RECURRING PROBLEMS AT MAQUILAS TETA KAWI 
---------------------------------------- 
 
¶9.  One of the long term problems at Maquilas Teta Kawi is 
unclear lines of authority.  TOG sells itself by offering its 
clients human resources services while leaving them free to 
manufacture their products.  In practice this means that TOG 
hires, but , according to many of the workers, both Maquilas 
Teta Kawi and its client manufacturers can fire.  This 
perceived dual authority to fire employees is probably not 
correct but it is what many workers believe.  Because of this 
misperception, if an employee has a problem that it wants to 
discuss with management they are often unsure who they should 
go.  There is a real fear, probably unfounded, that if they 
 
MEXICO 00006255  003.2 OF 004 
 
 
go to the wrong one they may be fired for neglecting their 
responsibility to the other.  This has created an atmosphere 
in which the workers do not know who to trust and as such 
they are reluctant to trust any level of management. 
 
¶10.  For example, the union delegates, who worked for 
different client manufacturers, told Mission Labor Counselor 
of pervasive drug trafficking within the industrial complex. 
They are all aware of the dimensions of the problem and would 
like to do something about it.  Unfortunately they are unsure 
of whom to trust and so far have preferred to avoid 
confronting this situation. 
 
¶11.  Another long term problem related to hiring and firing 
is the practice of client manufacturers essentially trading 
workers from one to another.  Officially, TOG does the hiring 
and firing of all workers and as such, in theory, they all 
have the same employer regardless of the client manufacturers 
where they may actually work. However, whenever a client 
manufacturer has to shut down for retooling or changes a 
product line it often fires large numbers of workers.  The 
workers do not receive the severance pay legally mandated 
under Mexican because they are promised they will be rehired 
by another client manufacturer if they go quietly. 
 
¶12.  In the overwhelming majority of these cases the workers 
are ultimately rehired by someone but they know that if the 
first manufacturer does not recommend them to a second 
manufacturer they will not be rehired.  Also, whenever a 
manufacturer offers fired workers a job they rehire them as 
brand new employees; this means the worker comes in as an 
entry level employee with entry-level wages.  These traded 
workers have no possibility of ever gaining seniority or the 
higher wages that come with it.  Moreover, should they work 
for Maquilas Teta Kawi long enough to reach retirement the 
amounts of their pensions under Mexico,s social 
security/retirement system will be determined by the level of 
their wages when actually employed. Since TOG has been in 
Mexico for almost 18 years there are now workers employed by 
the company who will soon face the prospect of &retiring8 
on a pension that will be insufficient to meet even their 
most basic needs.  Mission Labor Counselor personally spoke 
with a woman who after 16 years of working at the Maquilas 
Teta Kawi complex had never been employed by the same 
employer for more that two years. 
 
 
WAGES: A MUTUAL PROBLEM 
----------------------- 
 
¶13.  Another long term problem for the TOG, the union, and 
the workers, is the question of wages.  Mission Labor 
Counselor talked to a woman who worked seven days a week, 
endured 12 hour shifts for at least three of those days, and 
still earned the equivalent of less than USD 400.00 a month. 
The woman was not required to work such a grueling schedule 
nor was she required to work 12 hour shifts.  The woman, who 
is a single parent, volunteered to work these long hours in 
order to earn the overtime pay that enabled her to pay school 
fees for her two high school age children. The situation of 
this woman was somewhat extreme but not unique because of the 
low base salaries paid to TOG workers. 
 
¶14.  Without exception the workers at Maquilas Teta Kawi 
believe that TOG should be paying better wages and they 
expect the union to get these higher wages for them.  An 
average wage for a worker with six years of employment with 
the various TOG client manufacturers is roughly equivalent to 
USD 13.00 per day.  This is more than three times the daily 
Mexican minimum wage but it is not a salary that would allow 
Maquilas Teta Kawi Workers Union members to one day join the 
ranks of Mexico,s middle class. That said, the wages are 
nevertheless considered competitive for this and many other 
regions of Mexico. 
 
¶15.  The union would very much like to get higher wages for 
its members and, interesting, it seems that TOG management is 
relatively sympathetic to this goal.  However, TOG,s money 
comes from its client manufacturers and not all of them are 
prepared to pay higher wages.  The client manufacturers know 
that they can pay cheaper wages in other parts of the world 
than those they are currently paying in Mexico.  The union 
 
MEXICO 00006255  004.2 OF 004 
 
 
and TOG are well aware that client manufacturers can quickly 
pick up and move their operations elsewhere and this point 
was clearly underscored for them in early December when 
several manufacturers who jointly employ 2,000 workers 
informed them that they would be moving their operations to 
another country. The Maquilas Teta Kawi Workers Union and TOG 
are working cooperatively together to attract new 
manufacturers to replace these departing jobs as soon as 
possible. 
 
 
COMMENT 
------- 
 
¶16.  Although The Offshore Group has clearly gotten its way 
on any labor issue of substance for most of the past 18 years 
it does not appear to be an irresponsible employer. There is 
no doubt that TOG pays more than the minimum wage and 
provided such benefits as on site emergency medical care for 
workers and free day care services for the high number of 
single parents that it employs.  That said, until recently 
TOG seemed genuinely unaware of many of the concerns of its 
workforce.  It has gracefully accepted that it has to deal 
with a new more proactive union leadership and seems to be 
adapting well to the new reality.  The examples above 
indicate that TOG still has a long way to go but it appears 
to be open to change.  If the company could be encouraged to 
develop, publish and fully implement a code of conduct this 
would undoubtedly help guide its labor relations in Mexico. 
 
¶17.  This message was cleared by 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 / 
BASSETT