MONTERREY, Mexico — Labor unrest at auto suppliers along Mexico's border with the U.S. could have a lasting impact on the industry and force North American automakers to seek alternative sources unless a solution is reached, industry officials and analysts said.
"Some automotive companies were losing $500,000 a day because of [lost production] from these strikes," said Ricardo Castro, head of the labor practice at Baker McKenzie law firm in Monterrey, which represents some clients affected by the labor stoppages.
"A significant number of companies, including automotive firms whose names I cannot disclose, are seriously thinking of leaving the country," Castro told Automotive News México.
Since mid-January, the industrial hub of Matamoros in northeastern Mexico has been hit by rolling strikes, as workers from 48 companies affiliated with the industrial and maquiladora workers' union, SJOIIM, walked off the job and demanded a pay increase of 20 percent and a bonus of 32,000 pesos (about $1,650).
According to Castro, suppliers that fail to deliver parts on time are subject to stiff penalties from manufacturers, adding to their financial losses. If the unrest persists, parts buyers in the U.S. and Mexico could run into shortages and seek out new suppliers that can meet just-in-time deadlines, he said.
Affected auto suppliers include Adient, IAI, Tridonex, Toyoda Gosei and Fisher Dynamics.
Many striking workers, most of whom work in auto plants, have settled with their employers and returned to their jobs, but others haven't, and analysts fear a wave of similar actions in other border towns. Factory strikes are rare in Mexico and are usually settled quickly.
Although SJOIIM said in mid-February that it had reached an agreement with factory operators, Castro said more than 30 companies continue to face labor stoppages. He estimated losses over 30 days at around $50 million.
Chinese auto supplier Joyson Safety Systems ceased operations at its Matamoros plant in mid-February. "Many thanks! Goodbye" read a banner hung on the side of the factory. The Matamoros maquiladora trade association, Index, said 550 workers were given severance pay.
The labor action in Matamoros, across the border from Brownsville, Texas, was sparked by an increase in the minimum wage in Mexico's border zone by President Andrés Manuel López Obrador at the start of the year. Workers accused their employers of eliminating fringe benefits to compensate for the hike in the minimum wage to about $9.20 a day from $4.50 per day.
Mario Guerra, head of the Mexican auto distributors association, AMDA, in the border state of Tamaulipas, said new investment in the sector is at risk and suppliers of parts such as steering wheels and electrical harnesses are studying the possibility of moving to a more peaceful labor climate.
He said, "This is paralyzing the industry."
