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RR RUEHCD RUEHGA RUEHGD RUEHHA RUEHHM RUEHHO RUEHJO RUEHMC RUEHMT
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DE RUEHME #2017/01 1841756
ZNR UUUUU ZZH
R 021756Z JUL 08
FM AMEMBASSY MEXICO
TO RUEHOT/AMEMBASSY OTTAWA 2436
RUEHC/SECSTATE WASHDC 2423
RUEHC/DEPT OF LABOR WASHINGTON DC
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RUEHXI/LABOR COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RHEHNSC/NSC WASHINGTON DC

UNCLAS SECTION 01 OF 04 MEXICO 002017 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILSCR, WHA/MEX, USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON EIND SOCI PGOV PINR PHUM MX
SUBJECT:  BROKEN GLASS AS COMPETING UNIONS CONTEST CONTROL 
OF BEER BOTTLE FACTORY 
 
REF: REF: (A) MEXICO 0013 (B) 07 MEXICO 3444 
 
 ¶1.  Summary:  An extended dispute over which one of two 
unions would represent the workers at a beer bottle plant in 
the northern Mexican state of San Luis Potosi (SLP) now 
appears to be over.  The plant in question employs some 800 
unionized workers and the two unions involved are the CROC 
(Revolutionary Confederation of Workers and Peasants) and the 
SUTEIVP (Sole Workers Union of the Potosi Glass Bottle 
Industry).  The plant belongs to Grupo Modelo, which 
reportedly controls over 50 percent of the country,s 
domestic beer market and who,s internationally known 
&Corona8 is one of the best selling beers worldwide.  The 
dispute between the two labor organizations began this past 
January when, allegedly, the CROC was invited by the plant,s 
management to supplant the existing SUTEIVP.  The competing 
unions both have ties to Mexico,s two main opposition 
political parties.  According to a group of workers who met 
with Mission Mexico,s Labor Counselor, the plant,s 
management as well as state and federal labor authorities 
turned against them when the SUTEIVP negotiated a 19 percent 
salary increase that they feared would become the standard of 
reference for other unions.  This wage increase significantly 
exceeds the GOM recommended raise of just 4 percent for 2008 
(Ref).  Consequently, these workers said, a concerted effort 
was made to replace the SUTEIVP.  Depending on one,s 
perspective, the situation at the beer bottle plant could 
either be seen as a deliberate case of union busting or an 
instance where a private company took (mostly) legal actions 
to maximize its returns.  End Summary. 
 
 
UNION CONTRACT KEEPS CHANGING HANDS 
----------------------------------- 
 
¶2.  Grupo Modelo is one of the largest beer breweries in 
Mexico.  Modelo manufactures a variety of beers, the most 
internationally famous being &Corona8, and reportedly 
controls over 50 percent of the Mexican domestic beer market. 
 One of the main sources of bottles for the Grupo Modelo 
breweries is an in-house glass making plant named Vidriera 
Industrial Potosi located in the northern Mexican state of 
San Luis Potosi (SLP).  Prior to January 2008, the Vidriera 
beer bottle plant employed some 800 unionized workers.  Up 
until late 2006, and for at least ten years prior to that, 
the union representing these workers belonged to the CTM 
(Confederation of Mexican Workers). 
 
¶3.  Following a hard fought campaign the CTM, which is the 
largest labor federation in Mexico, more or less gracefully 
accepted its loss in a union election which replaced it with 
an &independent8 union called the Sole Workers Union of the 
Potosi Glass Bottle Industry (SUTEIVP).  It should be noted 
that the CTM is formally linked to one of the country,s two 
main opposition political parties, the PRI (Mexico,s former 
ruling party, the Institutional Revolutionary Party).  As an 
independent union the SUTEIVP affiliated itself with the 
National Workers Union (UNT), the second largest labor 
federation in Mexico.  The UNT has extremely close ties to 
Mexico,s main opposition political party, the PRD (Party of 
the Democratic Revolution). 
 
¶4.  In early 2007, shortly after winning its contest against 
the CTM to representative the Vidriera workers the SUTEIVP 
successfully renegotiated the then existing collective 
bargaining contract.  From the union,s point of view the 
renegotiated contract was extremely successful in that it 
granted the workers an unprecedented 19 percent wage 
increase.  The new contract greatly exceeded the GOM,s 
recommended wage increase for 2008 of 4 percent (Ref).  Thus 
far in 2008 few, if any, unions have negotiated a combined 
wage and benefit package that has exceeded 6 or 7 percent. 
Thus, although the SUTEIVP achieved something no other union 
in Mexico has been able to accomplish it may well have been a 
pyrrhic victory.  By the end of 2007 the management of 
Vidriera Industrial Potosi decided changes were needed.  On 
December 10, 2007 the plant,s management announced that for 
a variety business reasons it would have to fire somewhere 
between 200-250 workers.  This announcement began a series of 
events, which, in mid-May 2008, ultimately resulted in a 
third union now being declared the legal representative of 
the Vidriera Industrial Potosi workers. 
 
MEXICO 00002017  002 OF 004 
 
 
 
¶5.  The new union representing the Vidriera workers is 
affiliated with the CROC (Revolutionary Confederation of 
Workers and Peasants).  The CROC is the third largest labor 
federation in Mexico.  Until 2006 the CROC was formally 
linked to the PRI but since then claims that will seek 
political alliance with whatever party that is prepared to 
help promote the interests of its union members.  In SLP that 
has meant being linked to Mexico,s current ruling National 
Action Party (PAN). Overall the USG has had a positive 
relationship with the CROC which has received funding from 
both USDOL and USAID for its work in combating the child 
commercial sex trade.  That said, like many large 
organizations, the CROC has both its good and bad elements. 
 
 
A COMPLICATED LABOR TALE CHANGES WITH EACH TELLER 
--------------------------------------------- ---- 
 
¶6.  The details of the events which led to a third union 
representing the Vidriera Industrial Potosi workers in as 
many years varies greatly depending upon the source of the 
information.  There are at least three different versions of 
what transpired at the SLP beer bottle plant.  The differing 
versions of events come from (a) the Vidriera plant 
management; (b) the SUTEIVP; and (c) GOM federal and SLP 
state labor authorities. 
 
¶7.  The Company,s Side: According to the Vidriera Industrial 
Potosi plant managers, any problems in SLP are the result of 
the union,s failure to understand current economic realities 
and a rejection of legitimate company offers to fully comply 
with Mexican Federal Labor Law.  Vidriera Industrial Potosi 
asserted that the December 10 announcement came after a 
realistic analysis of harsh economic conditions that forced 
it to shut down one of its glass making ovens and 
significantly reduce staff for sound business reasons.  Of 
the approximately 800 unionized workers at the beer bottle 
plant the company took steps to fire somewhere between 
200-250 employees.  The initial reason given for this cutback 
in production and staff was that the company was compelled to 
downsize in order to deal with the consequences of low sales 
and reduced profits.  Interestingly, when workers and the 
SUTEIVP questioned the company,s claim of low sales as the 
reason for the downsizing, they said the reason given by the 
company then changed to a claim that the oven was being shut 
down for extensive maintenance and then changed again to an 
assertion that low international exports were hurting the 
bottle plant,s bottom line.  It is difficult to judge the 
validity of any of these claims.  That said, once the company 
announced the staff reductions it also offered those losing 
their jobs a severance package, called &liquidation8, that 
it averred was fully consistent with established Mexican 
Federal Labor Law. 
 
¶8.  The Union,s Side:  The SUTEIVP states unequivocally that 
Vidriera company management decided to break the union once 
it saw that it would not be as complacence as its 
predecessor, the CTM.  In order to bolster this assertion, 
lawyers and various spokesmen associated with the union 
presented information which they claim shows that the reasons 
given for the announced staff reductions were false.  Perhaps 
the most telling argument made by the SUTEIVP against the 
company management,s claim of harsh economic conditions 
compelling sharp staff reductions were the February 2008 
reports, in both Mexican and US newspapers that Grupo Modelo 
was building a USD 280 million bottle making plant in the 
nearby Mexican state of Coahuila. It should be noted that 
post has previously reported on what could be described as an 
excessively pro-business slant of both the Coahuila state 
government and the dominant union there, the CTM (Ref B). 
 
¶9.  SUTEIVP spokesman have also pointed out that from 
2000-2006 Grupo Modelo as a whole grew 5.14 percent and that 
international exports rose 11 percent per year. 
Interestingly, Grupo Modelo does not dispute these figures 
but does claim that the growth of the company and the 
business success of the Vidriera Industrial Potosi beer 
bottle plant are not one and the same.  The SUTEIVP also 
points out that among the 200 plus persons fired to date are 
every single member of the union,s executive committee plus 
every single person who served in any capacity as a union 
 
MEXICO 00002017  003 OF 004 
 
 
official. Finally, in a meeting in Mexico City with Mission 
Labor Counselor a group of fired workers asserted that the 
Vidriera management had received tacit support from GOM 
federal and SLP state labor authorities to fire anyone 
closely associated with SUTEIVP because they feared that the 
generous 19 percent wage increase negotiated by the union 
might become the new standard of reference in contract 
negotiations in the state and throughout Mexico. 
 
¶10.  The GOM,s (Federal and State) Side: The SUTEVIP has 
sharply criticized the role of GOM state and federal labor 
authorities for their actions or lack thereof in the events 
that took place at the Vidriera beer bottle plant.  The 
authorities, at both the federal and state level, assert that 
they have scrupulously applied Mexican Federal Labor law.  To 
begin with, the authorities assert (correctly) there is no 
legal reason why Grupo Modelo cannot reduce staff and/or 
build a new bottle plant elsewhere in Mexico as long as it 
does so in accordance with the law.  In this case that means 
that the Vidriera management would have to pay the severance 
package, or &liquidation8 required my law.  The authorities 
have pointed out that the company did offer liquidation as 
required and at least 100 of the fired workers have accepted 
the package. 
 
¶11.  The SUTEVIP claims that the authorities have imposed a 
new management friendly union (the CROC) on the Vidriera 
workers.  In response, the authorities claim that as a result 
of the clear and ongoing dispute between SUTEVIP and Grupo 
Modelo some of the workers independently organized to invite 
another union to represent them.  The authorities claim they 
simply responded to a request from the workers to give them 
an opportunity to choose their representation.  Consequently 
the authorities organized a union election on May 9, 2008 
which the CROC won. 
 
¶12.  The claims by the authorities sound reasonable but 
credible press reports have undercut some of the statements 
by GOM state and federal labor officials.  Among the possible 
irregularities was the fact that the CROC was allowed to 
campaign inside the factory which SUTEVIP supporters were 
prevented from entering the plant at any time by both state 
and federal police.  The authorities were legally required to 
inform both of the competing unions that they had been 
approached, supposedly by unhappy workers, with a request to 
hold new elections.  The SUTEVIP claim that they were never 
officially informed by the labor authorities of the decision 
to hold new union elections.  The authorities appear to have 
rushed to certify the CROC as the new representatives of the 
Vidriera workers without waiting for a court ruling on the 
appeal filed by SUTEVIP to invalidate the election because of 
the above mentioned irregularities. 
 
DEPOSED UNION HAS NATIONAL AND INTERNATIONAL SUPPORT 
--------------------------------------------- ------- 
 
¶13.  The situation at the Vidriera Industrial Potosi beer 
bottle plant had generated considerable national and even 
some international support for the SUTEVIP.  Nationally at 
least 16 other unions affiliated with the UNT have come out 
to support the SUTEVIP and to condemn Grupo Modelo and the 
GOM state and federal labor authorities.  Internationally the 
SUTEVIP it is also being supported by the AFL-CIO affiliate 
the Glass, Molders, Pottery, and Plastics & Allied Workers 
International Union (GMP).  A US and Canadian delegation of 
GMP members recently traveled to San Luis Potosi following 
which they met with Mission Mexico Labor Counselor to protest 
the situation that has occurred at the Vidriera beer bottle 
factory.  The GMP delegation advised Labor Counselor that 
they would be discussing the San Luis Potosi situation with 
their membership and contacting their elected representatives 
in their respective to lobby for more international 
involvement against what they said was a clear case of union 
busting. 
 
 
COMMENT 
------- 
 
¶14.  Barring a court approval of the appeal to invalidate the 
union election because of process and voting irregularities, 
the CROC is now the legal representatives of workers at the 
 
MEXICO 00002017  004 OF 004 
 
 
Vidriera Industrial Potosi beer bottle plant.  It will 
probably be difficult for the SUTEVIP and it supporters to 
prove that Grupo Modelo intentionally set out to bust the 
union but as things now stand that will be the clear end 
result.  Nevertheless, even by local standards, it is very 
suspect to have union representation in a factory change 
hands three times in three years. Under current Mexican 
Federal Labor Law it does not appear as if Grupo Modelo did 
anything (obviously) illegal. The company was/is certainly 
free to move or rearrange its operations in any way it sees 
fit as long as it meets its legal obligations to any fired 
workers; which it apparently did.  The AFL-CIO, its affiliate 
and the Mexican unions supporting the SUTEVIP can probably 
make a compelling argument about the ethics of what happened 
at the beer bottle factory in San Luis Potosi but legally 
there appears to be little that can be done other than to 
await the decision of the now deposed union,s court appeal. 
 
¶15.  This message was cleared by AmConsul Monterrey. 
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