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Mexico labor unrest could get worse -- maybe a lot worse, some warn

Web Posted: 05/02/2006 04:49 PM CDT

Sean Mattson
Express-News Mexico Correspondent

GUADALAJARA, Mexico - In the early hours of April 20, some 1,000 riot police raided a striker-occupied steel mill in the Pacific port city of Lázaro Cárdenas.

A tumult of Molotov cocktails and burning vehicles ensued. Police shot and killed two steelworkers, left a dozen more with gunshot wounds - but failed to oust the strikers.

The botched raid stoked nationwide union unrest that had first flared in February with the deaths of 65 miners in a coalmine explosion in Coahuila state.

Strikers have since shut down the steel mill and four mines. Union members paralyzed Mexico City streets Friday to support them. And critics say outgoing President Vicente Fox's administration is being ham-fisted in its attempts to defuse the growing unrest.

It's an election year and upsetting Mexico's unions is never a good idea, politically. But experts are divided over how much worse things could get. The presidential candidate most unions support, Roberto Madrazo of the Institutional Revolutionary Party, or PRI, needs a boost to improve his third-place spot in the polls. He warned last week that "a great worker-employer crisis" could spiral out of control if something wasn't done soon. At a Labor Day rally Monday in Mexico City, the leader of one union umbrella group, Francisco Hernández Juárez, threatened a nationwide strike if Labor Secretary Francisco Salazar did not resign.

Labor unions are nine parts threat to one part action, said Ricardo Pascoe, a political expert with the National Autonomous University of Mexico, who thinks widespread the unrest is unlikely.

"The only thing that could change the situation is (that) the PRI, thinking that it needs to radicalize its discourse in the face of its electoral fall, might propose a strike in solidarity with the miners to recover its image as a party of opposition and struggle," Pascoe said.

The PRI established its tight relationship with Mexico's unions during seven decades of rule that ended when Fox won the presidency in 2000. But presidential politics would not be the only motive behind a broader strike, said Jephraim P. Gundzik, the president of Condor Advisers, a California-based consulting firm specializing in emerging markets.

"My opinion is that this type of industrial action will probably spread into other sectors of the economy," said Gundzik, pointing at years of declining social welfare, stagnant salaries and deteriorating industrial safety conditions. "You could be faced with a nationwide strike across many industries."

Ousted union leader

When the Pasta de Conchos mine exploded at 2 a.m. on a Sunday morning in February, the union leader who appeared on the scene was Napoleón Gómez Urrutia, who essentially inherited the post from his father, who had it for four decades.

But the government said it had documents proving the union voted in a new boss two days before the explosion and Gómez was no longer the leader.

Some miners back the new chief, Elias Morales, but his control is tenuous. Miners and steelworkers striking in four states say the government imposed Morales to benefit Grupo Mexico and Villacero, operators of the striking mines and the steel mill, respectively. They want Gómez reinstated, plus better wages and working conditions.

"The government deposed (Gómez) illegally," said a union member by phone from Mexico City, speaking on condition of anonymity. "Because he had fought for salary increases and benefits."

Company spokesmen said the strikes are the only illegal part of the dispute, and said they can't negotiate with a handful of union dissidents because the government no longer recognizes Gómez as union leader.

Reinstating Gómez "has nothing to do with collective contracts, the conditions of the mine or labor relations," said Juan Rebolledo, a Grupo Mexico spokesman.

"The company in this case has absolutely nothing to do with it," agreed Villacero spokesman Ignacio Treviño. "We are facing an illegal act. It is an illegal work stoppage."

Gómez is also being investigated for suspicion of embezzling part of a $55 million payoff to the union for a mine privatization deal, which his supporters deny.

Fox spokesman Rubén Aguilar said last week the strikers were blackmailing the government. But after videos surfaced showing riot police shooting at striking steelworkers, the government said it would begin talks.

The investigation into who was responsible for the shooting has state and federal authorities pointing fingers at each other.

Economic, social uncertainty

Grupo Mexico is one of the world's leading copper producers and the strike at one of its copper mines may force it to suspend deliveries, Rebolledo said.

Villacero spokesman Ignacio Treviño said the steel mill, Mexico's largest, normally produces $3 million worth of steel daily but has lost more than 100 days of production since 2004 due to strikes.

"The signals we are sending abroad ..... are harmful and detrimental to the development of investments and job creation," Treviño said.

Neither corporate spokesman could guess when the strikes might end or if they might spread.

Gundzik, the consultant, said Mexico's economy could be put at risk by a prolonged dispute. Investor uncertainty is already high given the prospects of presidential candidate Andrés Manuel López Obrador, a populist who some fear could threaten Mexico's recent economic stability.

But stability has come with a price, said Gundzik, who traces the origins of the present industrial action back to the early 1990s.

Mexico "is moving forward in industrialization but backwards in social welfare," he said, pointing to the poor enforcement of safety regulations at Pasta de Conchos as the most recent example.

"There's a backlash going on and the government is so weak it doesn't even have the capability to respond," Gundzik said. "It doesn't know what to do."


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