Eloctrocorp Plant Relocation

The case of the plant relocation

Options

Continue operations in US

Move operations to Mexico

Move operations to Philippines

Move operations to South Africa

Facts ( Manufacturing of computer components for automobiles.)

Complex hydro-carbons used to clean chips and other parts.

Solvent carcinogens must be handled with extreme care.

Strike of union workers to raise wages.

High wages i.e. $15/hour

Safety regulations increasing cost of production.

Environmental regulations increasing cost of production.

Expensive waste management increase cost of production.

Issues

Labor issues

Child labor

Women labor

Union rights

Wages

Safety regulations of the country

Environmental regulations and general public awareness

Waste management regulations of the country

Child Labor

Mexico has not ratified the main ILO Convention on child labor and there is evidence that child labor is a problem in the informal sector. However, the government is engaged in efforts to address the situation.

Mexico has not ratified ILO Convention No. 138 (1973), the Minimum Age Convention.

Child labour laws set the minimum age for employment at 14. This is fairly well observed in the formal sector, particularly in large and medium-sized companies. Enforcement is less adequate at the many small companies and in agriculture and is virtually absent in the informal sector. The ILO reports that 18% of children aged 12 to 14 work, often for parents or relatives. Only six out of ten primary school children actually complete school.

The government has been undertaking efforts to address the problem of child labour, in cooperation with UNICEF. The number of years of free, obligatory school education was increased from 6 to 9 in 1992 and parents were made legally liable for their children's attendance.

In conclusion, the use of child labour is unlikely to be of a scale such as to make a significant contribution to the price of Mexico's exports. There is evidence that the government of Mexico is undertaking efforts to reduce child labour in the informal sector.

The Mexican Constitution establishes 14 as the basic minimum age for work.

The Federal Labor Law (LFT), which is incorporated into the Constitution, includes special provisions concerning the work of children between the ages of 14 and 16. Among these various provisions, minors in this age group are prevented from work that is "dangerous or unhealthy," underground or underwater, itinerant, or which "may affect their morals or good behavior."

In addition, they may not work after 10:00 p.m. in an industrial plant, work for more than six hours per day, or work for more than three hours without a one hour break.

In order to work, children under eighteen are required to have permission from a legal guardian or parent, have regular medical examinations, and their employers must post a list of dangerous tasks not to be performed by minors.

International Conventions

Mexico is party to the UN Convention on the Rights of the Child. The Government of Mexico has not ratified ILO Convention No. 138 Concerning Minimum Age for Admission to Employment or ILO Convention No. 59 Concerning the Minimum Age for Admission to Employment in Industry.

Freedom of Association and the Right to Collective Bargaining

Mexico has a pluralistic trade union situation guaranteed by the 1917 Constitution which provides workers the right to form and join unions of their choice without prior authorization and the right to strike. Collective bargaining is widespread. However, the legal registration of unions in Mexico is impeded by the authorities, specifically by the local Conciliation and Arbitration Boards (CABs) which have sole authority to regulate union elections and handle all phases of labour dispute resolution. Registration by CABs is necessary for trade unions to obtain legal status but these boards act to withhold or delay registration from unions that are hostile to government policy or to vested economic interests, through the improper use of administrative requirements.

Because Mexican labour law makes little provision for the rights of individual union members, workers can be denied access to their own collective agreements and to internal union rules and have few remedies available when internal union procedures are violated in union elections. Where such abuses lead to employer-dominated trade unions, registration requirements and election procedures have been used to prevent workers from forming new unions. Non-registration can subsequently be used as an excuse for prohibiting, or failing to recognise strikes.

Mexican law grants workers the right to strike. But the CABs have the power to declare strikes "legally non-existent" leaving strikers vulnerable to being fired and to suppression of work stoppages by force. Peaceful labour protests are frequently dispersed by the police using force.

Fierce resistance to attempts to organize trade unions by employers, colluding with local officials, remains a major cause for concern at Mexico's maquiladoras plants. While in theory the same union rights exist in maquiladoras as in the rest of Mexico, the rate of unionization is much lower, at between 10 and 20%. Anti-union attitudes on the part of employers and the existence of "company unions" are considered to account for the low rate of unionization. In contrast to other sectors, few maquiladoras have collective bargaining agreements with unions. Few strikes have been attempted; most have been quickly resolved, while others have resulted in the dismissal of strike leaders in cases where the labour courts have declared the strikes illegal.

Discrimination and Equal Remuneration

While