Historic unionization at GM plant in Mexico a good beginning

While few Americans may have heard of the sprawling General Motors assembly plant in Silao, Mexico, almost 400,000 are now driving gleaming Chevrolet Silverado and GMC Sierra pickup trucks that rolled off the assembly line there last year.

The plant and its 6,500 workers are geographically in Mexico but are economically in the United States and Canada under an 18-month-old trade pact, the United States, Mexico, Canada Agreement (USMCA) that succeeded the 1994 North American Free Trade Agreement.

Workers in the Silao plant won an unexpected grand slam victory — 77 percent of almost 5,500 voting — for an independent union on the evening of Feb. 2. They rejected a compliant and arguably corrupt union that in one form or another had controlled the plant since it opened in 1995. They clearly had enough of rock bottom wages and substandard working conditions.

You may be thinking that’s great, but what does this victory have to do with me?

USMCA means that what happens to workers in Mexico impacts workers in the United States — and the other way around. If workers in Mexico have suppressed wages because of a lack of labor rights, workers in Fort Wayne, Ind., or Arlington, Texas, will feel the downward pressure. The mere threat of moving a factory to Mexico can extract concessions from workers, and those in the service sector also feel the fallout. 

The issue isn’t making things in Mexico or expanding trade — both can be good — but rather making suppressed wages and a lack of rights on the job the basis of comparative advantage.

Workers in the state-of-the-art assembly plant in Silao have comparable productivity and quality to GM plants in Oshawa, Ontario, and Fort Wayne, Ind., which assemble the same popular trucks. Yet, in Fort Wayne a senior worker earns $32 an hour on the line compared to $33 a day in Silao.

At the extremes, the cost of a GMC Sierra in the U.S. can approach $80,000, while the starting wage in Silao for an autoworker is less than $9 a day. There is something wrong with this picture, and it negatively affects workers across North America. 

The high wages and better conditions in the U.S. and Canada didn’t simply drop out of the sky. After World War II, the United Auto Workers (UAW) and other unions fought hard in the U.S. and Canada to ensure that workers received a fair share of the high productivity and soaring profitability of automakers and other industries.

The result was highly successful companies and auto workers entering the middle class, blazing a trail for all workers across the economy. Walter Reuther, the legendary president of the UAW, said these high wages created “high velocity purchasing power” fueling strong U.S. and Canadian economic growth for decades.

In contrast, many “unions” in Mexico signed “protection agreements” that protected employers rather than workers but enriched union leaders. Mexico’s Minister of Labor, Luisa Alcalde, said last year that 80 percent to 85 percent of Mexican collective bargaining contracts were protection agreements.

As a result, the Mexican auto industry — light vehicles, trucks, and auto parts — employed 763,000 workers, approaching the 780,000 employed in the U.S. in 2018. Not surprisingly, the U.S. ran a trade deficit approaching $100 billion in this vital sector last year.

The USMCA was overwhelmingly passed in the U.S. Congress with the inclusion of the strongest language yet in a trade agreement protecting workers’ rights. The implementation has been another story.

Having a fair vote in Silao required a Herculean effort — an effort for which the Biden administration deserves considerable credit — as well as the attention and support of the U.S. and Canadian labor movements at the highest levels. 

To date, the labor results under the new trade pact in Mexico have been far from stellar. Under new Mexican labor laws in the wake of the USMCA, only 24 or so protection agreements have been defeated out of some 3,000 voted on. And the new union in Silao will be bargaining only for that plant — not for the other GM factories, let alone the auto industry more broadly.

It is critical for the Mexican government to provide the resources and the political will to speed reform in this critical area — and for the U.S. government and the labor movement to use the provisions of USMCA to protect workers on both sides of the border.

Let’s not forget: Unions serve not only to provide better wages and dignity for their members, they speak for workers more generally and for the most vulnerable in the society. They are pivotal to a democratic society.

Harley Shaiken is a professor emeritus at the University of California, Berkeley, specializing on labor and the global economy. He was Director of Berkeley’s Center for Latin American Studies from 1998-2021.