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RR RUEHCD RUEHGA RUEHGD RUEHHA RUEHHO RUEHMC RUEHMT RUEHNG RUEHNL
RUEHQU RUEHRD RUEHRS RUEHTM RUEHVC
DE RUEHME #2366/01 2141800
ZNR UUUUU ZZH
R 011800Z AUG 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC 2799
RUEHC/DEPT OF LABOR WASHINGTON DC
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE
RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE
RHMFIUU/CDR USSOUTHCOM MIAMI FL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHEHAAA/NATIONAL SECURITY COUNCIL WASHINGTON DC

UNCLAS SECTION 01 OF 03 MEXICO 002366 
 
SIPDIS 
 
DEPT FOR DRL/AWH AND ILSCR, WHA/MEX AND USDOL FOR ILAB 
 
E.O. 12958: N/A 
TAGS: ELAB ECON EIND SOCI PGOV PINR MX
SUBJECT: UNION SEES BEER BOTTLE FACTORY RELOCATION AS A 
FRONT IN AN IDEOLOGICAL STRUGGLE 
 
REF: (A) MEXICO 2017 (B) MEXICO 0013 
 
 
¶1.  Summary: Partly as a result of a dispute over union 
representation at a beer bottle plant in the northern Mexican 
state of San Luis Potosi (REF A) a portion of the factory is 
now being relocated.  The dispute at the plant was never over 
whether or not the plant would be unionized but rather over 
which of two unions would represent the workers.  The plant 
in question belongs to Grupo Modelo, which reportedly 
controls over 50 percent of Mexico,s domestic beer market 
and who,s internationally known &Corona8 is one of the 
best selling beers worldwide.  The unions initially involved 
in the dispute were the CROC (Revolutionary Confederation of 
Workers and Peasants) and the SUTEIVP (Sole Workers Union of 
the Potosi Glass Bottle Industry).  At present the CROC seems 
to be the short term winner of the dispute in that it now 
controls the collective bargaining contract at the factory. 
However, the longer term winner may well be the CTM 
(Confederation of Mexican Workers); a different union 
entirely from the two original disputants.  The CTM,s 
apparent victory stems from a decision by the plant,s 
management to relocate a large portion of its operation to 
the neighboring state of Coahuila.  In terms of labor related 
issues Coahuila is a state dominated by the CTM.  The leader 
of the Coahuila CTM sees the plant relocation as a victory 
for his federation and the most recent stage of an ongoing 
ideological struggle between labor unions in Mexico.  End 
Summary. 
 
 
A BITTER BREW AT MODELO 
------------------------ 
 
¶2.  Grupo Modelo is one of the largest beer breweries in 
Mexico.  Modelo produces 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 Modelo breweries 
is an in-house glass making plant named Vidriera Industrial 
Potosi located in the northern Mexican state of San Luis 
Potosi (SLP).  Up until late 2006, and for at least ten years 
prior to that, the union representing the workers at Vidriera 
belonged to the Confederation of Mexican Workers (CTM). The 
CTM is the largest labor federation in Mexico. 
 
¶3.  In late 2006, following a protracted inter-union dispute 
the CTM ultimately 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).  As an independent union the SUTEIVP is affiliated 
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). It also has significant 
support from the AFL-CIO. 
 
¶4.  Shortly after winning its contest with the CTM to 
represent the Vidriera workers in early 2007, the SUTEIVP 
successfully renegotiated the then existing collective 
bargaining contract and obtained a record 19 percent wage 
increase.  The new contract greatly exceeded the GOM,s 
recommended wage increase for 2008 of 4 percent (Ref B) and 
surpassed by far the combined wage and benefit package of 6 
or 7 percent most union in Mexico have accepted.   However, 
by late 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 approximately 200-250 of the 
factory,s 800 unionized workers.  This announcement sparked 
a series of events, which, in mid-May 2008, ultimately 
resulted in another union, the CROC (Revolutionary 
Confederation of Workers and Peasants), now being declared 
the legal representative of the Vidriera Industrial Potosi 
workers.  The CROC is the third largest labor union 
federation in Mexico. 
 
 
BOTTLE FACTORY PLANS PARTIAL RELOCATION 
---------------------------------------- 
 
¶5.  One of the events related to Vidriera Industrial,s 
dispute with SUTEIVP and the firing of some 200-250 of its 
SLP workers was a decision by the plant,s management to 
 
MEXICO 00002366  002 OF 003 
 
 
relocate a portion of its operations.  According to several 
press reports carried by both Mexican and US newspapers, 
Grupo Modelo announced plans to build a USD 280 million 
bottle making plant in the nearby Mexican state of Coahuila. 
This Vidriera management decision to relocate a part of its 
operation to Coahuila was recently confirmed to Mission 
Mexico,s Labor Counselor by the leader of the CTM in the 
state, Tereso Medina, who claimed to have direct knowledge of 
the relocation plans. 
 
¶6.  In talking with Medina, Labor Counselor could not help 
but note his obvious satisfaction with Vidriera,s decision 
to relocate to Coahuila. By its own admission the CTM 
controls upwards of eighty percent of all collective 
bargaining contracts in Coahuila.  Consequently, it is almost 
a forgone conclusion that the workers hired to first to build 
and then those who will ultimately be contracted to work at 
the new bottle plant will be represented by CTM.  Medina 
implied, but did not specifically state, that the Coahuila 
CTM would directly benefit from the relocation of the 
Vidriera bottle plant. 
 
¶7.  Post has previously reported that some labor observers 
believe that both the Coahuila state government and the 
dominant union there, the CTM, have what could best be 
described as an excessively pro-business slant.  The Coahuila 
CTM does not specifically see itself as being pro-business; 
rather it thinks of itself as an organization that knows how 
to reach mutually beneficial accommodations.  However, Labor 
Counselor has talked with both American labor observers and 
Mexican labor union officials (some of whom are even high 
level CTM officials in other parts of Mexico) who believe 
that the CTM in Coahuila is prepared to go to great lengths 
to maintain its prominent position in the state.  It is 
therefore conceivable that the Coahuila CTM may well have 
encouraged the bottle factory to relocate to the state. 
 
 
COAHUILA CTM LEADER SEES IDEOLOGICAL STRUGGLE 
--------------------------------------------- 
 
¶8.  Continuing his comments about the relocation of the 
Vidriera plant to Coahuila, Teresa Medina suggested that it 
would only be right for the company to resume its 
relationship with the CTM.  Medina noted that prior to the 
current labor problems at Vidriera,s SLP bottle plant the 
workers there had been represented for many years by the CTM. 
 He then averred that the actions prompting the SLP Vidriera 
workers, decision to switch union representation from the 
CTM to the SUTEIVP, and by extension to the National Workers 
Union (UNT), were no doubt supported and quite possibly 
initiated by the &independent8 labor federation. 
 
¶9.  Medina opined that the CTM, which has close ties to one 
of the country,s two main opposition political parties, the 
PRI (Mexico,s former ruling party, the Institutional 
Revolutionary Party) is much better, suited to represent 
workers than the UNT. (Note: Coahuila is currently governed 
by the PRI.)  When Mexico was governed by the PRI the CTM was 
the government,s official labor federation.  During that 
period the CTM developed a particular way of operating in 
which accommodation in order to maintain social peace, as 
opposed to confrontation with the private (and public) sector 
was the rule of the day.  This is not say that the CTM sought 
accommodate simply for the sake of accommodation.  Rather the 
goal of this accommodation was to give every bit as much 
weight to maintaining social peace as it gave to promoting 
worker rights and interests. 
 
¶10.  The Coahuila CTM leader underscored that the vision of 
his labor federation and that of the UNT were very different. 
 Medina suggested that the UNT and its affiliated unions 
tended to adapt a more confrontational approach when dealing 
with employers without looking at the bigger picture.  He 
then stated that the CTM and UNT were in an ideological 
struggle and that the issues surrounding the decision by 
Vidriera SLP to relocate a part of their operation to 
Coahuila was a real victory (for the CTM) in that dispute. 
 
¶11.  As a labor organization, the UNT places a high value of 
social justice.  The UNT, like the CTM, is very concerned 
with social peace.  In its dealings with employers the UNT 
realizes that its affiliated workers have a great deal to 
lose if the union drives businesses away by being overly 
 
MEXICO 00002366  003 OF 003 
 
 
aggressive.  However, there is no question that the UNT is 
much more prepared to sacrifice a bit of social peace in 
order to win a better deal for workers than is the CTM.  This 
difference in perspective, as well as the fact that the two 
federations are affiliated with different political parties, 
is the underlying cause for what the Coahuila CTM leader was 
an ideological struggle. Having talked with some UNT members 
associated with the original dispute between SUTEIVP and 
Vidriera,s management, Labor Counselor saw little indication 
that they considered themselves in some sort of struggle with 
the CTM.  However, they were leery of the CTM and considered 
that federation,s approach to promoting the interests of 
workers to be outmoded and obsolete. 
 
 
COMMENT 
------- 
 
¶12.  It may be something of an overstatement to say that the 
CTM and the UNT are in an ideological struggle.  The two 
labor federations certainly have different perspectives.  The 
CTM is still very much the corporatist organization it was 
during the approximately 70 years that the PRI ruled Mexico. 
The UNT, although not officially linked to the PRD as the CTM 
is with PRI, is very much like that political party in that 
it is more that ready to challenge the status quo.  The 
UNT,s position regarding social justice is very much in 
keeping with Mexican political traditions but its positions 
on worker rights and interests are probably more in line with 
how these issues would be defined in the US.  Because of this 
the UNT is often supported by the AFL-CIO in its organizing 
efforts.  AFL-CIO support of the UNT probably is another 
reason why the CTM (at least in Coahuila) sees them as an 
ideological adversary.  However, it is just as likely that 
the differences between the two federations has more to do 
with competition between the organizations in first and 
second place as it does with any deeply held ideological 
beliefs. 
 
 
¶13.  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 / 
BASSETT