Bloomberg's Terminal Troubles
On one of the few paved roads in Cananea, a small Mexican mining town at the Arizona border, an isolated rectangular building of white sheet metal sits in the sun. On its front there are two small windows and two doors. At one time, up to a thousand people toiled in this plant nine hours a day in sweatshop-like conditions for less than 40 cents an hour, manufacturing computer keyboards and video games. And it is here that a company named Maxi Switch Inc. smashed the independent union its workers formed in November 1995.
It is also in this plant that Maxi Switch manufactured special keyboards for Mayor Michael Bloomberg's media company Bloomberg LP. In fact, Maxi Switch has produced these keyboards for years. Bloomberg LP likely was aware of Maxi Switch's attempt to bust its union, and, it seems, did nothing about it.
These keyboards accompany the flat-panel Bloomberg terminals that clients of the Bloomberg Professional service can lease in order to get real-time financial data delivered to them. The service costs between $1285 and $1640 per month per workstationand for an extra 150 bucks a month customers can have the special terminal and keyboard on their desks. Bloomberg clients include all the major private banking firms and central banks, said Chris Taylor, spokesperson for Bloomberg LP. With 166,000 terminals leased to date, the Bloomberg Professional service represents "at least 95 percent" of the company's revenues, according to Taylor, who declined to answer further questions about the origin, the volume, and the nature of Bloomberg LP's business relationship with Maxi Switch.
However, according to Leonel Meneses Encinas, who supervised shipments at Maxi Switch's Cananea plant for four years, and Olga Figueroa Bustamante, who was in charge of its quality-control department, Bloomberg's keyboards and their unmistakable special keys were produced at this plant.
Beside Bloomberg LP, Maxi Switch's clients include major companies such as IBM, Dell, Sega, Gateway, and Lexmark. Based in Tucson, Arizona, the company is a subsidiary of the Taiwanese corporation Lite-On/Silitek Global EMS Group. During a three-month investigation, the Voice interviewed many former Maxi Switch workers, and some still at the company, about their working conditions and the busting of their union.
Maxi Switch opened its Cananea, Sonora, facility in the fall of 1994. "It started with about 300 workers and exceeded 1000" by the end of 1995, said Héctor Tagles, then Cananea's mayor, who recalled inaugurating the plant.
Wages at Maxi Switch were much lower than at other foreign assembly plants, called maquiladoras, said all workers interviewed by the Voice. Workers at Microsistemas, a Cananea maquiladora producing textiles, would get "four times more than what Maxi Switch paid," according to Enrique Treviso Molinares, who worked two years as a Maxi Switch manager before switching to Microsistemas. Former Maxi Switch worker Alicia Pérez García kept pay slips from the time she started working there which show her daily pay was the minimum wage at the time: 18.30 Mexican pesosor $2.98 at the 1995 exchange rate. One week, she worked the regular 48 hours and got $23, bonuses and benefits included.
Workers also complained about a lack of ventilation that caused people to faint, the few cramped buses available to get to the plant, a lunchroom with only two tables and one microwave for up to 1000 workers, and inflexible supervisors who often refused to let workers go to the bathroom or drink water. Finally, in August 1995, a group of workers started to form an independent union, with the help of the Union of Telephone Workers of Mexico, to get better wages and conditions.
When managers learned about the organizing, they threatened to fire workers supporting the union. Rumors spread among management that the company would close the plant if the union got in, said Treviso. "They made me understand that if [workers] imposed a union, they [Maxi Switch] would go," added former Mayor Tagles.
But this didn't discourage employees, who formed the Union of Maxi Switch Workers, and sought official recognition before the Sonora Conciliation and Arbitration Board on November 24, 1995. Four days later, the union's newly elected secretary general, Alicia Pérez, was working on her line when a co-worker punched her in the arm and torso. When she complained to the human resources representative, she was fired. In the following months, several other union leaders were dismissed.
On January 23, 1996, the Conciliation and Arbitration Board denied legal recognition to the union, arguing that Maxi Switch already had a signed collective labor contract with a state union. But workers were never told about this union and Pérez's pay slips do not show that she was paying any union dues. They later found out that on September 20, 1995a month after workers started organizingthe company had signed a contract with a union affiliated with the Confederación de Trabajadores de México (CTM), or Mexican Confederation of Workers, a government union federation.
"I know how to handle unions and how you can protect yourself [from them]," said Salvador Talamantes Torres, director of Maxi Switch's Cananea plant at the time. Talamantes admitted that Maxi Switch sought to protect itself from unions. The company's strategy began with signing a labor contract with a CTM-affiliated union.
"This was a case where the union that Maxi Switch had was what we call in Mexico a ghost union," said Roberto Dagnino, director general of industrial development for the state of Sonora, who was vice-president of the Cananea Chamber of Commerce at the time. This was confirmed by Tagles and Treviso. "The ghost union is really a placeholder," according to labor expert Harley Shaiken, director of the Center for Latin American Studies at the University of California, Berkeley, who added that "it is an institution that the employer itself brings in to avoid a real union coming in."
These ghost unionsalso called protection unionsare illegal, since Mexican federal labor law clearly states that workers have the right to form their own union to defend their interests. In fact, it was also illegal for the Conciliation and Arbitration Board to deny recognition to the workers' union on the grounds that the company already had one, since Mexican labor law doesn't prohibit more than one union in the workplace. The workers' union then asked the help of the Communication Workers of America (CWA), who, on October 11, 1996, filed a submission denouncing the situation with the U.S. National Administrative Office (NAO), an agency set up under NAFTA to review labor law issues arising in Canada or Mexico.
A few days before the NAO hearings on the matter, and under pressure from the Mexican government, the board granted the union's registration in April 1997, and in exchange, the CWA set aside its NAO submission. Still, the union was not granted the right to bargain the Maxi Switch labor contract until five months later, in October.
According to Bloomberg spokesperson Chris Taylor, Bloomberg LP's understanding is that the problem involved the Mexican government and two unions in a dispute over which one would represent workers at the Cananea plant. "As far as we can tell, the dispute was resolved amicably several years ago pursuant to an agreement among union officials and the Mexican government," reads a Bloomberg LP statement sent to the Voice on April 12, 2002. The Voice had received no comment from Mayor Bloomberg's office at press time.
However, by the time the arbitration board gave the workers' union the right to bargain, the company had laid off most of its workers, cutting back to a few hundred, and had transferred most of its production to a plant in Hermosillo, Sonora. Maxi Switch also changed the Cananea plant's name to Conceptos de Maquila. While the company pretended it had sold the plant to new ownersin which case the union's certification would be invalidthe business did not change, according to Talamantes. Conceptos de Maquila never bargained with the workers' union and closed in 1999.
Today, Bloomberg's keyboards are manufactured at the Maxi Switch plant in Hermosillo, according to a manager there who asked to remain anonymous. According to Bloomberg LP's statement, "The company assures us unequivocally that it is in full compliance with the labor laws of Mexico." It further states that, "Maxi-Switch [sic] also assures us that it has in place a collective bargaining agreement with a recognized bona fide union, as is required by Mexican law." Indeed , when asked about the company's labor problems, Maxi Switch corporate counsel Michael Trull said, "I know we have a union, and I know that the contract was bargained for and it has been approved, of course, by the Mexican government. So, we always comply with Mexican labor laws."
Yet, when Maxi Switch opened the Hermosillo plant in June 1996, the company was in the middle of the labor conflict at the Cananea plant. In fact, Talamantes, the Cananea plant director, said he bought the Hermosillo plant buildings and started operations there. At the new site, he once again knew "how to handle unions." The company signed a collective labor contract there with the same CTM-affiliated union with whom it had signed in Cananea to keep out the workers' union.
When the Voice asked the secretary general of this CTM-affiliated union, Guadalupe Gracia, whether her group was acting as a protection union at the Cananea plant, she strongly denied it. "We did a very good job in Cananea. And I can assure you that if I go back to Cananea, people will welcome me with open arms, because we came off well as a union," Gracia added, although minutes earlier she'd been unable to remember whether her union signed a contract with Maxi Switch at that plant.
Javier Villarreal Gámez, CTM deputy secretary general at the state level, gave another version of the story. When asked whether Gracia's union acted as a protection union in Cananea, he said that "at that time, it was approximately true. That is, this union is not a protection union. But neither is it a very active union." He later added, "I recognize that this union had its problems at the beginning, but little by little it has improved its work, and now it is considered, in general terms, a good union."
But are the Hermosillo workers any better off? These workers, including a few who were brought from Cananea by management, are also underpaid, according to most managers and workers interviewed, who were afraid to allow use of their names. The wages at this Maxi Switch plant are still lower than those of other maquiladoras. In fact, according to Villarreal Gámez, today maquiladoras pay workers, on average, two to three times the daily minimum wagethat is, between 80 and 120 pesos ($8.85 to $13.30), a figure confirmed by various labor experts. Yet, according to a copy of the contract Maxi Switch signed with Gracia's union and obtained by the Voice, the company pays starting workers 44 pesos a day ($4.76), increasing to 63 pesos ($6.82) when they reach six months' seniority. Wages at Maxi Switch are thus very close to today's daily minimum wage, which is 40.10 pesos ($4.45) in Hermosillo.
If Maxi Switch's wages barely satisfy the legal minimum and are below the industry average, the company doesn't even fully comply with the law. When Maxi Switch revised its contract last January, it raised the daily wage from 50 to 52 pesos for workers with three months on the job and from 60 to 63 pesos for workers with six months in. Even though the contract was applicable from January 31, 2002, a worker's pay slips show she received no increase until March 1, and no retroactive pay, which is illegal, according to labor experts.
In fact, a closer look at the labor contract itself shows that it openly violates several articles of Mexican federal labor law, according to Graciela Bensusán, a political science professor specializing in labor relations at the Latin-American Faculty of Social Sciences. For instance, by stating that the number of positions offered at the plant will vary according to the company's needs, the contract disregards labor law. "This is extreme flexibilitythat is, the company can do whatever it wants," she added. This shows the union doesn't really defend its workers, according to Bensusán. These violations to the law are mild in comparison to the one that concerns Gracia's remuneration by Maxi Switch. When asked whether workers had to pay union dues, Gracia answered that union dues are exclusively for the workers.
"So, who pays us, if that's what you want to know?" she added. "The company pays us like a fee, like they'd pay any lawyer. But don't think that because the company pays us a fee, we'll do what the company wants. That is, it's like a punishment for the company to have to pay us so that we act as consultants to the workers."
However, Maxi Switch's contract doesn't say a word about paying the secretary general or other members of the union executive committee a fee to give professional advice to workers or for any other purpose. "This would be absolutely abnormal that the company pay any amount to the union leader," said Bensusán. In fact, if Maxi Switch paid Gracia, as she said it does, this payment would be illegal and unethical. "This would precisely be like a protection union," Bensusán said, before adding that this shows Gracia "is acting more as a representative of the company than of the workers."
When interviewed by the Voice, Bloomberg LP's Taylor said the company had looked into the issue of its relationship with Maxi Switch during Bloomberg's campaign for mayor. The company's attorney, Thomas Golden, also mentioned that he had read information about the demand presented to the NAO by the CWA on behalf of the Maxi Switch Workers' Union. This submission, which is available on the U.S. Department of Labor's Web page, clearly describes the poor working conditions at the Cananea Maxi Switch plant, how Maxi Switch engaged in anti-union practices, and how it sought to sign a contract with a protection union. This should certainly have pushed Bloomberg LP to question Maxi Switch's labor practices.
Eight months have passed since Bloomberg's campaign ended with his election, and Bloomberg LP's reaction is to say that "if Bloomberg did learn of any unfair or illegal labor practices by Maxi-Switch [sic], it would promptly take appropriate action," according to the company statement. In fact, Golden told the Voice, "Whether or not the union is acting in the best interest of the workers, I have no idea."
During his campaign, Bloomberg was much more assertive about his subcontractors' labor practices. Once, he was asked how he would face New York's complex and powerful union machine given his lack of experience in dealing with unions, since his own media company is union-free. "I deal with unions all the time," Bloomberg replied. "We negotiate contracts. We employ nothing but union labor in our company for all of our subcontractors. I know how to balance a budget. I know how to get things done on time. That's what being a mayor is all about."
Whatever action Bloomberg takes now will show New Yorkers whether the claim that all his company's subcontractors are union shops does mean something to him. If that's really what being a mayor is all about, workers, unions, and New Yorkers in general should be interested in knowing whether Maxi Switch's workers see their wages and conditions improve.
Research assistance: Peter G.H. Madsen and Catherine Worth.
Laurence Pantin lives in Mexico and her research was partly funded by an award from the Foreign Press Association in New York.
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