Restructuring in
Mexico: economic and social regression
The 1980s stand out in the history of Mexico as some of the most terrible years for working people. Working conditions and living standards were substantially eroded. The bosses and the state imposed an economic policy which, outside of its ideological trappings, meant an increase in unemployment, a continuing cut in wages, a rise in industrial accidents, attacks against a whole series of gains recognised in negotiated contracts, the closure of factories and a lengthening of the working day. What lay behind this policy was the idea of taking advantage of the present crisis to achieve important economic and political changes. It has become known as industrial restructuring.
This process developed in the following context: • The fall in the price of oil. At the end of 1986 oil exports had fallen by 57.6% in real terms and their contribution to the gross domestic production declined by 50% compared to 1985 (from 7.5% to 3.7%). According to official sources there is no chance this situation will change in the next five years. • A renegotiation of the foreign debt which increasingly links the debt to the oil price and at the same time creates a very difficult situation to the extent that most of the interest on the debt has to be paid over the next few years.
Ideological apologists for the Mexican state have on several occasions tried to use the terms industrial restructuring and industrial modernisation interchangeably whereas we are dealing with two distinct processes. In the
Mexican state, at least, restructuring has entailed various aspects:
• modernisation of some productive sectors (telecommunications, banks,
• liquidation of fairly unprofitable companies in the key sectors of the economy (Fundidora de Monterrey, Renault, Acetos Esmaltados, Aceros
• a bankruptcy of small and average sized companies which no longer could get any credit and had increasingly outdated machinery;
• spectacular increase in the number of maquiladoras (assembly plants using components produced abroad), since 1982 268 new companies of
Therefore it is far from evident that restructuring has meant the transformation of Mexico into a 'middle-ranking industrial power'—at least it has not happened yet. We will come back to this discussion further on.
Even as far as the framework presented by the state is concerned there are difficulties which have not been overcome. Among other points the a) The industrialisation model adopted by the state (stabilised development) starts from the idea that trade union stability has to be achieved by making concessions with respect to labour productivity. In other words trade union peace is the priority instead of imposing superexploitation by excessive work-rates (Mexico is the only Latin American country where general strikes are practically unheard of). This gives more guarantees to b) A limited technological development compared to countries at a similar level of development (Brazil, South Korea, Taiwan etc.). This favours dependency. Just think of the development of the microcalculators industry in Brazil which shut the door in the face of the big c) The de-synchronisation of industrial restructuring in Mexico compared to that in imperialist countries, at least in key sectors, like the steel industry. In the imperialist countries the process finished two years ago while in Mexico it only began last year. Consequently the reduction in steel industry costs in these countries has been significantly greater than d) The fact that the world economy is essentially in a phase of prolonged stagnation. This has resulted, among other things, in the gross industrial product increasing more slowly than the gross national product as a whole.
The growth of the black economy is only one expression of this
52 International Marxist Review
Restructuring
Chihuahua etc.);
this sort have been set up, making workers, 158% more than in 1982.
following should be emphasised:
investment.
foreign firms.
here.
phenomenon.
car industry, computers, petrochemicals etc.);
; a total of 853 employing 328,000
Restructuring in Mexico: economic and social regression 53 e) The great uncertainty concerning the future of the foreign debt. The
Mexican government and the bosses have outlined a possible solution of the imperialist banks or companies absorbing the deficit of the Mexican companies that are in debt (see for example the case of the Alfa group). But this process is in its first stages and does not weigh significantly in the overall balance of debt submerging Mexican companies. In 1985 the ten biggest companies in the country had sold goods for 2140 million pesos, their domestic debt was 1810 million pesos and the foreign debt 2148 million pesos. This means that their overall debt was greater than their sales revenue by 23%. According to the magazine Expansion the fortyeight biggest companies have 92.86% of sales, 95.07% of the domestic debt and 98.77% of the foreign debt.
f) Great uncertainty over a series of factors influencing industrial production including the exchange and interest rates. Any devaluation of the peso involves an increase in the foreign debt calculated in pesos. Thus the growth of the debt for the majority of the above mentioned companies is linked to the fall in the peso. Furthermore the very high rates of interest discourage investment instead of stimulating it, since entrepreneurs only judge any production worthwhile if its rate of profit is higher than the rates of interest. In 1985 that had only been the case for half of the most powerful groups of companies. In 1986 the situation became even more difficult since interest rates shot up in a situation of industrial recession and a big squeeze of the domestic market.
g) Deepening competition, not only from the imperialist countries but also from countries like Brazil, South Korea, Taiwan, Singapore, India, Argentina and South Africa. Obviously other countries have drawn the conclusion that they must export in order to pay the interest on their debts. At the same time there has been a contraction of international trade following protectionist measures adopted by the imperialist countries, particularly the United States (the most recent example was the tax on Mexican oil).
So even though the restructuring project is planned to last some years it has been a very hesitant start. let us look at a few examples: 1. The squeeze on investment. At the end of 1986 the fall in investment will reach 14.2%. This fall has been more accentuated in the public sector. For example whereas public investment represented 12.5% of GNP in 1981, it represented only 4.2% in 1986. During Miguel de la Madrid's presidency public investment was cut by an average of 17.6% a year. More precisely, between 1982 and 1986 public investment in communications and transport was slashed by 26% a year, in the industrial sector by 22.2%, in agriculture by 14.6%, in social spending by 13.1% and in other sectors by 23.5%. This all means that the old idea of Welfare or Social state has been thrown overboard. Only reformists are nostalgic for such a past. 2. Machinery is getting more and more out of date. It has been calculated that Mexican industrial machinery is ten years out of date. There is even a tendency for the situation to get worse because of two factors: on the
54 International Marxist Review one hand, the production of fixed capital goods has hit a total recession (a reduction of 15% by the end of 1986), on the other, a large number of companies find it very difficult to get hold of the foreign currency needed to buy new machines from abroad. 3. The priority de la Madrid had given to the fight against inflation has failed on two fronts. Not only has the rate of inflation not been reduced but even all the record inflation levels have been beaten. Between 1940 and 1976 there was inflation of 299%; between 1983 and 1986 inflation has been 320%. Furthermore his tough financial medicine has pushed the Mexican economy into the recession. Just to take a few examples, 230 companies were closed in Jalisco state and 461 in Monterrey state in 1985. In the four first months of 1986 160 and 163 companies have respectively close their doors for good in these states. As for the printing industry, su companies have gone bankrupt in 1986. The 'Maquiladoras' strategy The selling off of state companies in order to reduce state intervention in the economy and the fact that industrial reconstruction has not up to now at any rate transformed Mexico into a middle ranking industrial power, has produced a slow change from a semi-industrialised, semi-colonial country into a semi-colonial country of assembly plants.
The spectacular development of industries assembling parts produced abroad into a finished product has up to now been the jewel in the crown of the policy carried out by the present government's technocrats. But the real question is what is the significance of such development. Assembly plants of this type are based more on the weakness than the strength of the industrial structure.
What can Mexico offer to the companies interested in establishing maquiladoras? Above all it offers very low wages. In 1986 the average hourly cost of labour in Mexico was $1.30 while in the United States it was $8.30, in Singapore $1.75 and $1.45 in Hong Kong. The cost of setting up business are also cheaper. It is the same story for electricity costs: 4 cents a kilowatt hour in Mexico, 4.1 cents in the USA, 7.5 in Malaysia and 10 in Singapore.
We should add that Mexico is very close to the USA which cuts transport costs so 'twinned companies' are developing more and more on either side of the frontier. At the same time workers in the maquiladoras have not been permitted to organise trade unions and even official trade unions have not been allowed to operate. Consequently, the workers there have no means of defence against very high work rates.
To make the situation more flexible the government adopted a new decree concerning the maquiladoras the 15 August 1983 which allows them to sell up to 20% of their products on the domestic market. The result has been to eliminate from the market national companies that have not
Restructuring in Mexico: economic and social regression 55 reached the same productivity levels.
The maquiladoras have brought new jobs at the rate of 7.5% a year when growth in the economy has been only 2% a year. At the end of 1986 they provided profits equivalent to $2000 million a year and the perspective for 1990 is to reach the $4000 million mark. However everything is not completely rosy in the garden.
One of the ideas that triggered off enthusiasm for developing the maquiladoras was that these companies would use national products as inputs thus producing a multiplier effect throughout industry. In fact only 2.8% of the inputs are resourced nationally. Consequently the effects on the country's industrialisation have been precisely the opposite to those expected.
Let us be more concrete. The crisis of the Mexican car industry is not one that affects the industry as a whole. It hits those companies that produce and sell cars in Mexico. During the first six months of 1986, the car industry produced 23% less units and sold 28% less units. It has been estimated that if such rates continue 40% of the country's car distributors would go out of business in 6 months. This fall in production has meant that there are 45,000 workers in the industry in 1986 compared to 90,000 in 1981. The auto parts industry has cut its workforce from 150,000 workers to 85,000.
However there is another car industry that is not in crisis. This is the industry producing cars for export that does not build whole cars but parts of them, particularly engines. New factories, including Ford's at Hermosillo will have an annual production of 2.5 million engines, of which 85% will go to the United States.
So we really have to understand what is going on. Once again Mexico is becoming a country that assembles parts of products made elsewhere or makes parts for export. This is confirmed by the crisis of the car industry that produces for the home market-the Ford factory at Villa, the Vehiculos Automotores Mexicanos at Vallejo and the Renault factory in Hildago state, have all closed.
It seems that the Mexican government and a key sector of the bosses think the essential thing is to create optimum conditions for foreign investment. In the last four years 150 foreign investment projects where foreign interests control 100% of the shares have been approved. It has been estimated that during the last two years of the Madrid presidency between $3-4000 million of new foreign investment is going to be made. Between 1982 and 1985 the number of companies with foreign capital involved has gone up from 6,129 to 6,978.
But neither is all well in this area. Not only because foreign investment thus becomes the fundamental variable in the restructuring strategy but also due to the fact that up to now investment has been less than the government thought. In 1983 foreign investment projects adding up to $684 million were approved but only $70.2 million were actually invested-that is a tenth of
the amount originally authorised. The figures for 1984-6 were as follows:
It seems the gap between projects and implementation is widening. In spite of the fact that the Madrid government has lifted 88.7% of all protec-
In the thirties the Mexican economy was plunged into another major model of accumulation. Taking a dege ed to interally oral comme th process of industrialisation was stimulated through import substitution.
There was a transition from an enclave economy totally dependent on the price of raw materials on the world market to an economy that had acquired its own form of capital accumulation while being still dependent on imperialism. This policy produced considerable growth for three decades and even led people to think Mexico was no longer a semi-colonial country. The present crisis seems to put such ideas in a real perspective, particularly since the ruling class is aiming more than ever to link the fate of the Mexican economy to the index of raw material prices, especially the oil price, and is banking on the inflow of foreign capital. Industrial restructuring in the last analysis is nothing more than a modernisation of a few productive sectors, notably those forming the infrastructure of the country, with the objective of stimulating and favouring foreign capital.
It is a restructuring that far from making Mexico more independent is ac-
Within the framework of the restructuring project modernisation inside the factory has been put forward as a key element in the national development plan worked out by the government. This process of modernisation began some years ago. During the Lopez Mateos presidency, Mexico went beyond the stage of simple assembly plants and began to set up the whole process of production of a commodity. We could even say the same thing for the Lopez Portillo period when there were big changes in the petrochemical industry (for example the Pajaritos complex in the Vera
The fifties saw the introduction in Mexico of the Ford methods of work
(continuous line assembly) and the Taylor forms of factory organisation
(precise determination of tasks). The so-called import-substitution period was also characterised by substantial changes in workplace organisation.
Mexican workers were brutally thrown into the 20th century without any corresponding changes in trade union organisation, at least at the leader-
1984
1985
1986 conomic crisis.
centuating its dependency.
Cruz region).
ship level.
56 International Marxist Review
Projected
$442 million
$872 million
$2 billion tionist measures over the last six years.
Changes in the organisation of the labour process
37%
Invested
$269.6m (14.4%)
$151m (1st quarter)
Restructuring in Mexico: economic and social regression 57
Following this a much greater process of mechanisation and automation developed in several industrial sectors, particularly by the introduction of information technology (computers etc). This involved a control over the whole productive process and first of all over labour itself. The introduction of numeric control has been as important as the previous introduction of the assembly line. This system functions for example in the Ford plant at Tlanepantia and in the Chrysler one at Toluca.
This modernisation has substantially modified the work process, at least as far as the following aspects are concerned:
a) As in any process of automation there is a process of deskilling of the workforce. Manual workers are the most affected. Indeed they must accomplish tasks that have nothing to do with their previous jobs (for example some are transferred just to clean the factory).
b) The implementation of such a process requires a fundamental modification of the working conditions as defined in the negotiated contracts, particulary when these contracts had introduced some elements of workers control. For example there were clauses which laid down that the unions had to be informed prior to any technological changes or changes to the work speed or loads.
c) The workers daily life in the factory suffered from these changes and previous gains tended to eliminated (for instance, rights to go to the toilet, to enjoy a few moments respite, human social relations etc.)
d) The rate of exploitation was stepped up either through speed up or a lengthening of the working day or by a combination of both.
e) A change was made to the process of industrial hypercentralisation in big traditional industrial towns. Aguascalientes, Saltillo, Ramos Arizpe, Tlaxcala, Hermosillo and others were added to the traditional centres of Mexico City, Monterrey, Guadalajara, Cuernavaca, Toluca etc. The former towns which were previously agricultural or commercial centres were chosen for various reasons: financial and other inducements from local governments, cheaper labour, absence of a trade union tradition.
f) Technological dependency, particularly on the United States, became more important. The technology that one buys now is very carefully selected.
g) Unlike Europe where, according to Ernest Mandel, automation of factories has not, at least up to now, involved a qualitative change in the employment situation, in a country like Mexico the process of modernisation is causing significant unemployment. In fact the introduction of new techniques involving a reduction in labour is not counterbalanced by the creation of new jobs as a result of the production of new machines.
We ought to add some nuances to this point. Mandel has pointed out that in Europe (in many ways in the vanguard of this process) we cannot talk about generalised automation of factories: rather there we are in the phase of semi-automation and he warns against hasty generalisations (particularly concerning robotisation). So there is even more reason not to make
generalisations in the case of a country like Mexico. What we are referring to is something happening in a few industrial sectors which in Europe are
Furthermore as we have already said, modernisation here has to confront one of the most serious problems of the Mexican economy-the low labour productivity. According to Clemex-Wharton, the average productivity is excessively low and is only growing very slowly:
These levels are lower than in countries like Brazil, Argentina, South
Korea, Taiwan and Singapore. This phenomenon does not only affect economic activity inside the factory but also, for example, transport. Its serious deficiencies involves a wastage of social labour.
Industrial restructuring, hand in hand with an ideological campaign on austerity, involves an overall policy of attacking Mexican workers' living standards. This attack developed on the following fronts:
a) Against wages. In 1976 wages amounted to 40.3% of GNP, by 1985 they had fallen to 25%. This reflects both a rise in unemployment and the wage freeze. Between 1976 and 1985 purchasing power had fallen by about 34% going back to the equivalent of 1965 standards. Both superexploitation and transfer of surplus value on the backs of working people are operating. This is where the foreign debt also comes in. The Mexican government and the bosses have been able to pay a bigger part of the interest and service of the debt because salaries have been cut. According to the Trade Union and Labour Centre of Studies (CDESTAC) the losses in wages from 1977 to 1984 have been $1.63 bn, corresponding to 63% of the amortising of the debt and 83% of its servicing. In other words
This is why the fight for a fair wage, recognised as a right by the constitution, is a key political struggle. It is not only an immediate demand, it involves a central aspect of the bosses' political and economic projects.
There is an obvious relationship between an increase in unemployment and a fall in wages. There is also a relationship between falling wages and the growing deterioration in the social services, particularly the health service. Finally there is a relationship between falling wages and the pillaging b) Against jobs. The unemployment problem is a structural feature of countries like Mexico. But in recent years the situation has become increasingly serious. In 1977, when the working population numbered
Social consequences
* International Marxist Review not even considered key sectors.
working people are paying the debt.
of the country as a result of the foreign debt.
1980
1981
1982
1983
+1.9%
+1.2%
+0.4%
-3.9%
Restructuring in Mexico: economic and social regression 59 17,631,000, unemployment affected 1,393,000, that is 7.9%. There was also about 4 million underemployed people. In 1984 the working population had risen to 23,493,000 with 4,150,000, 16% having no work or income. Underemployment now affects 4,833,000 people. During 1986, a year of recession, the situation further deteriorated. According to official figures, only 11,000 jobs have been created whereas a million were needed. Unemployment has thus now reached 25% of the working population.
So the problem of unemployment is as serious as the wages question. The bourgeoisie and its government is trying to inflict a defeat on the workers and to paralyse their militancy. At the beginning of the 1980s the bosses have asked the trade unions to make a choice: either wage increases and job cuts or no wage increases and a promise' to try and hold off cuts. Of course it is a false dilemma as wages have been cut and jobs slashed.
Working people in manufacturing have been worst hit. While between 1975 and 1981 jobs in this sector increased by 30%, by 1982 the tendency was going backwards with a vengence. In 1984 employment in this sector was 13.5% below the 1981 level. The situation seems even more serious if we look at the number of hours worked. Between 1982 and 1984 the number of hours put in per worker was 5.5% down, in the first quarter of 1986 it has fallen by 6.2%.
The fight for jobs therefore becomes a struggle for the survival of a fundamental part of the working class. Obviously the bosses have taken the opportunity to sack the most militant workers first. This has already happened in the car, electric goods, steel and nuclear industries.
c) A fall in the state's social spending. The 'welfare' state is in the process of disappearing, leaving the free competition state in its place. The idea is very simple. Investment in services must be reduced to the minimum with the aim of economising on production costs.
It is especially true for the health service. Workplace accidents are more frequent than ever (709,000 in 1985). It is obvious that the government and the bosses are not so worried about it because there is an army of unemployed ready to step into the shoes of the victims. As for industrial invalidity a few years ago it was relatively easy to obtain certification, but now health service doctors have been issued with very strict instructions. A worker with a 39 degree temperature can be sent into work after having taken medication. Getting into hospital is a fearful odyssey. Hospitals do not have enough beds and the number of doctors and nurses are far below the number needed to treat all those hospitalised. The doctors' and healthworkers' increased work schedules means a greater risk of mistakes and negligence.
Investment in public housing has also declined. Today the shortfall in the houses required add up to a staggering 4.5 million. Rents take on average about 40% of a person's wage. In certain cases rent is as much as 65% of the minimum wage. Furthermore an increase in electricity prices (10.2% higher than the 1986 inflation rate) has been announced.
d) Against collectively negotiated agreements. The process of moder-
nisation is considered by the government and the bosses as the occasion for eliminating those agreements that often, despite the involvement of corrupt trade union bureaucrats, express working class gains. This is what happened with the new General Motors factory in Ramos Arizpe, at Dina
Renault or at Nissan. It also applies to Fundidora in Monterrey.
Nevertheless they have not suceeded in achieving all their objectives. In those industrial sectors with the strongest union traditions collective agreements have not been dismantled and struggle has brought results.
This is the case notably with the struggle of the electricians union (SME)
Finally working class living standards have been hit hard. The most significant indicators of this are the figures for the consumption of a basic food like maize. In 1983 the average Mexican ate about 236 kilos a year, in 1986 he/she ate only 196 kilos, 40 kilos less. So we can see how this government carries out a policy of increasing the people's misery and success. But this does not mean that the working class has not struggled in different ways to counter the attack, despite its weakening by the spec-
A fundamental point to clarify is the question of working out the degree of continuity in the struggles of recent years. Even if we maintain that the cycle of struggle begun in Mexico by the 1968 student movement has not entirely run its course it would be quite ridiculous to think the process has been a continuous upward one. At least for the working class we should
Clearly the phase of independent trade unionism, that is the Lido,
General Electric and Spicer strikes had a big impact on the class consciousness of Mexican workers. This was even more true with the struggles of the electricity workers-led first of all by STERM and then by
SUTERM-and of the university trade unions. However with all these processes it is fair to say that there was as much continuity about them as rupture with the past. This was because all these conflicts resulted in defeats—some more serious than others—and because these struggles, although pulling other sectors of workers behind them, did not lead to new stable organisational structures challenging the control of the bureaucrats.
This process is even clearer among the workers's vanguard. Here also
One of the sectors most affected by the bosses' attacks has been the car industry. Trade unions here have been among the most radical and, as they were outside the control of the trade union bureaucrats, forms of trade
60 International Marxist Review which did not win new gains but agreements.
hunger.
The workers fightback
The government's and the bosses' tacular increase in unemployment.
rather talk about a process of continuity and rupture.
there has been continuity, rupture and recomposition.
managed to preserve previous policy has undoubtedly met with some
Restructuring in Mexico: economic and social regression 6l union organisation closely linked to the process of production were set up
(shopfloor committees) aiding radicalisation and politicisation. In a great number of cases trade union executives did not serve out their usual period in office because they were under the total surveillance of the shopfloor committees. Thus trade union currents organised without great problems and actively participated in the life of the trade union. There were more and more bulletins coming out from such currents and there was a lot of political activity. It was the period when the working class vanguard met together to discuss and educate each other on the significance of the Mex-
The government and the bosses have hit this vanguard very hard. Many activists were sacked and others were bought off. If we take today the vanguard that led the most important strikes at Renault, Nissan,
Volkswagon, Masa and General Motors we cannot just say that a page has been turned-the overwhelming majority of this vanguard has been broken up. A similar situation exists now at General Electric, Kelvinator,
Nucleares, certain sectors of the textile industry and even in the mining and metal industries. Nevertheless what is striking is the way the workers manage to rapidly rebuild vanguard nuclei. For example in the mid 1970s there was an offensive against the trade union vanguard at Fundidora in
Monterrey, but there has been a resurrection of this vanguard in the recent conflict. The same thing has happened in trade unions like the ones at
Renault. There they suffered attacks for four years resulting in the sacking of the most conscious workers on several occasions. However later we
This process of continuity and recomposition of the vanguard has been seen in various struggles of resistance. Unlike struggles of the past they have mobilised the big battalions of the working class. It is not the case, as in 1970, of small trade unions becoming radical. During the last few years we have had mobilisations of telephone and electricity workers, various car indusrty trade unions, several sectors of the metalworkers and miners, textile workers, teachers and other school workers. This shows that key workers want to struggle. The problem is that the struggles were isolated, atomised and took place in particular circumstances.
However in all these conflicts methods of struggle were adopted which merit closer attention since they show the sort of consciousness developing
• Pachuca miners who stood together naked in the town square;
• the Dina workers who occupied the Arbitration and Concilliation board
• the electricity workers who did not take payment of electricity bills;
• the Caxaca teachers who toured the whole of Mexico organising
• the Chihuahua steel workers who stripped off in their workplace in the saw a vanguard developing.
• telephone operators working a go-slow;
offices;
meetings;
freezing cold;
ican revolution, the federal labour laws etc.
among working people. Let us take a few examples:
62 International Marxist Review • the Fundidora workers who won the soliarity of the Monterrey people by burning 5,000 of the ruling party's membership cards; • the Chiapas teachers who linked their conflict to the peasant struggles of that area; • the call of the Sicartsa workers to the left opposition parties in parliament; • the workers organised in the 19 September trade union who, with great audacity, succeeded in getting their organisation officially recognised without undergoing any dirty tricks by the Labour Ministry secretariat; • and finally the heroic struggle of the Pascula workers who succeeded in getting solidarity from everybody passing at the great road junctions in Mexico City and who then won their battle, transforming the company into a workers co-operative.
Many of these struggles resulted in defeats, others in honourable draws and a minority were won. But in all cases we can see the unambiguous will to struggle of key sectors of the proletariat.
It is important to point out a deepening dynamic of workers' politicisation since 1977 it was significant but quite limited. In nearly all the struggles mentioned above the workers lost no time in linking up with the left. More often than not they took the first step in this link up. This is a very significant change. Even just a few years ago the trade union bureaucrats always recommended workers in struggle not to link up with left sectors since according to them the government would see this as a challenge and the struggle would then become a lot more difficult. In many cases this recommendation had the desired effects. But workers could see that the government still attacked them anyway. Today workers no longer aćcept this blackmail so easily. The old bureaucrat Fidel Velasquez could discover this for himself-his attempt to twist the arms of the Monterrey Fundidora workers with such arguments failed abysmally.
Nevertheless while workers consider that the left can support their struggle they do not see it yet as a key factor in their struggle. This is yet another proof of the weakness of the left. The revolutionary left on the other hand is in a more favourable position than in the past. Its problem is to make a leap forward in rooting itself among working people.
MICHAEL LOWY