May 1, 2001
http://www.nytimes.com/2001/05/01/business/01MEXI.html
Goodyear Cuts Jobs in Mexico
By GRAHAM GORI
TULTITLÁN, Mexico - Gonzalo Ugalde Gámez, a 68-year-old union leader whose right eye
hunkers down into a mean slit during moments of brutal honesty, took the lectern
before a smoke-filled auditorium of 1,357 Goodyear tire makers to deliver bad news.
"I'm here with you today to inform you," Mr. Ugalde began, leaning on one elbow,
right eye crashing down, "that the plant is closed, and it will not open again."
For more than half a century, the Goodyear plant was a steady source of employment
here on the outskirts of Mexico City. That all ended abruptly when the company said
on April 6 that the factory would be shut for good because of high costs and
unfavorable economic conditions.
As the economy in the United States slows, American manufacturers are respondng with
rapid moves to cut costs, cut production and especially, cut work forces. And it is
becoming clear that these days, when America cools, Mexico shivers. Many Mexicans who
thought they had secure middle-class jobs in American-owned factories are discovering
that those headlines about global layoffs often mean them.
In the first three months of 2001, about 240,000 Mexican jobs were eliminated or
scaled back, mainly in manufacturing. Industrial output in February was 3.7 percent
below that of February 2000. Mexico's Central Bank expects economic growth of only 3
percent in 2001, a long way from the 6.9 percent of 2000.
Mexico has weathered its share of economic ills, but this downturn is different. It
is happening while inflation is under control, the peso is strong, consumers are
still spending and no general recession appears to be on the horizon, at least for
now.
Seven years under the North America Free Trade Agreement have wedded Mexico
intimately to America's economy. Just as good times in America fueled a boom here,
any decrease in demand or swell in inventories north of the border quickly translates
into cutbacks to the south.
The automotive industry has been hit hardest. Delphi, the world's largest auto parts
manufacturer, has eliminated 8,000 Mexican jobs the last year. Chrysler is planning
to close three plants in 2001 and may cut up to 2,500 Mexican jobs. Grupo Industrial
Saltillo, Mexico's largest maker of engine blocks, has laid off 450 people in five
months.
Mr. Ugalde and his fellow union officials tried to negotiate a compromise with
Goodyear over the fate of the Tultitlán plant and its workers. Goodyear officials
told them that the slowing American economy was part of their decision but that
productivity and high costs were greater factors. The plant cut back to a four-day
week last October.
Still, employees said they were taken by surprise. "We never thought the plant would
close," said Ricardo Vélez, 58, who worked in the plant for 36 years.
For severance pay, Mexican law calls for three months' base salary plus 20 days' pay
for each year worked at the plant. Mr. Vélez said he could expect enough money to
last him about a year and a half. He will have no pension or retirement benefits and
will need another job when the money runs out.
"But who will hire me at my age?" he said. "Once you hit 35, no one wants to hire you
in Mexico, especially when the market is bad."
Cheap, young labor is what attracted many foreign-owned, labor- intensive companies
to Mexico, and turnover can be very high, more than 100 percent annually at many
assembly factories. But Goodyear was different, with long-term worker loyalty more
like that seen in plants in the United States. According to the union, more than half
the work force had other relatives working at the plant and more than a third had
been there for more than 30 years.
Employees prized a Goodyear job as one that allowed a worker "to have your kids in
school, take a trip every so often, eat well and own a car," said a mechanic with 15
years at the plant, who would not give his name. "That's all come to an end."
Mr. Ugalde said that when he first came to the plant in 1955, there was nothing
around it but cornfields. Since then, Bacardi and Ford Motor have built factories
nearby, and despite the encroaching sprawl of Mexico City, Tultitlán retained the
flavor of a safe, prosperous community with Goodyear at its center.
No longer, Mr. Ugalde fears. "I've always been honest with you," Mr. Ugalde told the
laid-off workers in his impassioned 45-minute speech after last-ditch efforts to win
a reprieve for the plant failed. "I've always looked out for your welfare, and I'll
continue to fight to keep you and your families from the misery and the mediocrity
that waits."
The Goodyear closing also poses a political problem for Mexico's president, Vicente
Fox, who hopes to push through an ambitious tax bill that is growing more unpopular
by the day. To raise more revenue in a country with one of the lowest rates of tax
collection in the world, Mr. Fox has proposed levying a 15 percent value- added tax
on food, medicine, books and other goods. The tax proposal and the plant closings
here and elsewhere are combining to engender a feeling of betrayal in some workers.
"This is not the change that people wanted when they voted for Fox," said Juan
Jiménez, 45, a 23-year Goodyear employee who followed his father into the plant.
Mr. Jiménez is no struggling proletarian. His Goodyear pay let him build a
comfortable home for his wife and five children, with a new computer in the dining
room. His oldest son is studying engineering at a local university; his youngest
attends a professional soccer camp. And he is eager to bounce back from the plant
closing, perhaps by starting a small printing business.
"When there's not enough money, I try not to show it," he said. "If my family sees
I'm mediocre, then they'll be mediocre. My job is to show them that I can support
them."
