Auto supplier skips severance payments after plant closure
When a metro Detroit-based automotive supplier closed its Mexican factory last year, it left workers in a lurch, with no job and no severance as required by law there.
But the way VU Manufacturing appears to have flouted a mechanism in the agreement covering trade between the United States and Mexico, which was designed to ensure worker rights, could have more widespread repercussions.
Harley Shaiken, professor emeritus at the University of California, Berkeley, and an expert on Mexican labor issues, said it sets a bad precedent.
“A company that has become, appropriately, a symbol for a bad employer in Mexico … underscores a weakness of USMCA,” he said, referencing the abbreviation for the United States-Mexico-Canada Agreement. “When a company flouts it, that is both a very poor sign, (and) possibly more important, it sets an example for other companies to follow.”
The issue is also relevant for U.S. workers, Shaiken said, because they face a labor landscape in the United States affected by suppressed wages in Mexico.
VU Manufacturing had the distinction of being the only company to face multiple complaints under a rapid response mechanism of the USMCA, which is the trade agreement that replaced NAFTA in 2020. The provision has been touted as an effective tool to address some of the labor abuses seen in automotive and other factories in Mexico, where complaints about company unions working to suppress wages and benefits had long been a concern.
The rapid response mechanism was employed in the effort that eventually led to what labor advocates consider a significant victory at General Motors’ Silao Assembly Plant, namely a new union contract with wage increases of 8.5% in 2022.
VU Manufacturing operated a factory in Piedras Negras, which is across the Rio Grande
from Eagle Pass, Texas, supplying plastic and vinyl interior pieces for the automotive industry. Workers, who complained of difficult conditions and low pay, a fraction of U.S. wages, chose a new union to represent them, but the company was accused of not bargaining in good faith and giving the old union improper access to the workers, among a variety of issues.
Workers said they faced intimidation and harassment and told the Free Press that the company made changes at the plant, which raised prices for food and cut worker seniority, affecting pay.
The plant, which at one point employed about 400 people, closed unexpectedly last year after the second complaint was filed. Workers who spoke to the Free Press said more than 70 workers failed to receive severance as required by Mexican law and many were placed on a blacklist, preventing them from getting other work.
Two former plant workers, Cristina Ramirez Salvatierra and Maria Dolores Ramirez Herrera, told the Free Press through an interpreter that the situation had been difficult for them personally, but that they were fortunate to be among workers who did receive severance.
When asked about the message that the situation might send to other workers, Ramirez
Salvatierra said it’s a difficult question.
“(There’s) a lot of fear because of what’s happened, but it’s also demonstrated that you can fight, and it’s demonstrated what can be done,” she said of the effort to bring in a new union.
She said she’s “leaving this experience with a bad taste in my mouth knowing that bosses are willing to … take their company away (rather than) recognize the rights of their workers.”
Still Ramirez Salvatierra said she would support another union movement because of the difficulties faced by workers in the area.
“We as workers need to wake up and demand our rights,” she said.
Ramirez Herrera said the situation has not dissuaded her from supporting future worker campaigns either.
“There is so much injustice in the factories here. Workers … need to work more and more and more just to get by,” she said.
Ramirez Salvatierra said the Mexican government also needs to do more to support workers. She said that there were many issues at VU as the workers were trying to bring in a new union “and the government basically did nothing to respond to those anomalies.”
The Free Press reached out to the Mexican government multiple times about this case. At one point, Victor Juarez, a spokesman for the secretary of economy, did reply with an email asking about a story deadline and whether the request was for an interview or a statement, but he did not respond beyond that.
The VU workers told the Free Press that company officials from Michigan visited the plant last year, and some workers tried but were prevented from talking to them. They said two workers who had tried to talk to the officials were fired after trying to do so.
A Free Press reporter has attempted to reach VU Manufacturing officials, including Don Cunningham and Matt Burkhart, listed as company president and chief operating officer, respectively, numerous times, in person and via phone, email and social media.
The company lists two addresses in Troy, which the reporter visited in the fall.
At one location on Livernois, people in one of the building’s offices directed the reporter to an empty office in the basement, indicating that folks connected with VU had vacated sometime prior. That office was the site of a protest in September from numerous groups decrying the company’s treatment of its workers.
At a second location on Maxwell, a for-lease sign was posted outside the building and the interior office space appeared to have been largely cleared out. There was a VU Manufacturing sticker on one door and a vehicle seat could be seen propped on some type of box. A man walking to a nearby office where he worked told the reporter that he couldn’t recall seeing any activity at the VU office site in some time.
On Monday, the agent for the company that handles leasing at the Maxwell property told the Free Press reporter that the building had just been leased to an automotive company, which he did not name, but said he could provide no information about VU Manufacturing.
Officials with the Office of the U.S. Trade Representative, which heads up the rapid response process for the United States, acknowledged VU’s actions in a statement last year but also defended the track record of the rapid response process in general.
“The United States is constantly working with our partners in Mexico to ensure that our trade is fair and respects workers’ rights,” Ambassador Katherine Tai said in a statement, which references the company by its Spanish name. “The U.S. will continue to monitor the situation regarding Manufacturas VU to verify that the rights of workers previously employed by the company are respected, that outstanding wages are paid, and that neither the company nor any potential successors violate the terms of the USMCA.”
Thea Lee, deputy undersecretary for international affairs, noted that “over the last two years, the U.S. and Mexican governments have worked out several successful courses of remediation under the U.S.-Mexico-Canada Agreement’s Rapid Response Mechanism,” which “has resulted in employers taking significant actions to improve labor practices, benefiting workers’ rights in both countries.”
Lee said the U.S. urges the Mexican government to seek remedies for the affected workers and strategies to prevent retaliation against former VU workers at other facilities.