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Labor strike in the US puts Mexican automakers on alert

An extended work stoppage at Ford, GM and Stellantis would affect thousands of jobs in Mexico that depend on the automotive export industry

Isabella Cota
General Motors (GM) recruiting center in San Luis Potosí, Mexico.
General Motors (GM) recruiting center in San Luis Potosí, Mexico.Susana Gonzalez (Bloomberg)

For Sergio Aguilar this feels like déjà vu. In 2019, the businessman and his colleagues faced the repercussions of a 40-day strike by the United Auto Workers (UAW) union at General Motors (GM) assembly plants in the United States. Aguilar lives in the Mexican border state of Coahuila, which relies heavily on the U.S. supply chain to manufacture and export auto parts. Aguilar remembers how the 2019 strike in the US affected thousands of workers here, and it’s likely to happen again. The UAW, an organization representing 146,000 employees of GM, Ford Motors, and Stellantis, is currently on strike as no agreement on expiring contracts has been reached. The UAW’s major demands include a 46% pay increase over four years, a 32-hour work week with 40-hour pay, a better pension plan and compensation for inflation.

“We learned from past experiences, and now we’re fully prepared,” said Aguilar, who is president of the Ramos Arizpe Association of Industrialists and Entrepreneurs, an organization that represents assembly plants and maquilas in the heavily industrial Coahuila. Companies there make headlights, gas tanks, car interiors, door panels, air bags and other vehicle components. In 2019, 48,000 workers went on strike; now 143,000 have walked off the job. Through these experiences, and particularly during the pandemic, Mexican assemblers have gained valuable insights in managing inventories effectively and implementing measures to mitigate any potential disruptions.

Stellantis and GM – two of the three companies with striking workers – have plants in Ramos Arizpe. The third – Ford Motors – also has a factory in Mexico and Aguilar says it will be affected first. “The Ford plant in Chihuahua will be hit heavily since they bring in U.S.-made engines for final assembly,” said Aguilar. “If they don’t have these engines, they will have to shut down the plant.” Companies in Mexico then resort to measures like “sending their employees on vacation,” he said. They also rotate crews to reduce working hours and prevent the buildup of inventory that remains unused in the United States.

Exports are crucial for the Mexican economy. Recent data shows a continuous, three-month increase in the sales of auto parts abroad. Mexico surpassed China as the United States’ top trading partner in the first half of the year. In Coahuila alone, the automotive export industry supports 65,000 jobs. Aguilar estimates that around 10% – 6,500 jobs – will be affected by the strike.

“Mexico’s automotive industry is very worried about the strike,” said Raúl Moreno, who five years ago moved from the Basque Country (northern Spain) to lead a car company in Querétaro (central Mexico), a state with a cluster of global companies that produce vehicle and aircraft parts. Moreno, who now runs his own consulting firm, pointed to a study by the Anderson Economic Group that estimated $5 billion in economic losses for the United States from a 10-day strike. “The impact could be brutal,” he said, “so I don’t think they’ll let it go on very long.”

Using data going back to 1970, Aguilar says the average duration of this type of strike is 10 weeks. “If it does last for 10 weeks, Mexico would start feeling the impact as early as week three,” he said. Although Mexico has a strong commitment to supplying auto parts to its northern neighbor, Aguilar said, “It’s very important not to put all our eggs in one basket – we need a diverse range of industries as economic drivers.”

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