In the old days, employers in the city of Chihuahua recruited workers by word-of-mouth. If jobs opened up in this northern Mexican city, employees brought in their relatives. But this year, Visteon Automotive Systems had to advertise for workers.
'It's just becoming more difficult to contract people,' says Fernando Belden, human resources director. 'Now there are new plants, or expanded plants, and a rapid demand. When we were one or two companies, it was fine. Now that there are many plants, it is difficult.'
Visteon, a Ford Motor Co. parts subsidiary that employs 11,000 Mexican workers, is reluctant to acknowledge a labor shortage. Belden says labor instability is a demographic issue that 'has been going on for two decades.' Nevertheless, the company admits the phenomenon has become more acute in the past two years. That is especially true in Chihuahua, where it employs 4,500 workers, and in Ciudad Juarez on the border with the United States, where it has 4,000 workers. Ford announced in April it will spin off Visteon, making the subsidiary an independent supplier.
A KEY ATTRACTION
Nearly 373,000 people worked in Mexico's auto parts industry in 1999 - 85 percent doing manual labor. Now experts wonder if the country's crucial attractions - a large labor supply and low wages - can be taken for granted along the country's U.S. border. A surge of industrial growth is beginning to bite at the thriving auto industry. It is creating new options for people seeking work, especially in the maquiladora plants near the U.S. border. In extreme cases, major companies are seeing annual employee turnover as high as 70 percent.
'Auto suppliers are having problems with employee turnover and it's especially acute in the maquilas. You can find it in Saltillo and Monterrey, also in San Luis Potosi,' says Michael Robinet, director of forecasting at CSM Worldwide, an automotive consulting firm in Northville, Mich. 'What's happening is a tug-of-war between auto suppliers and other U.S. companies (in northern Mexico).'
Siemens, whose automotive division in Mexico employs about 5,500 workers, has suffered a high turnover in manual workers. 'Its origin is in the development of certain industrial regions,' says Francisco Beyer, human resources director. 'Some regions have sufficient labor force and some don't. Workers have to be close to the factory. Industrial parks are built, and then the labor gets scarce. And after all, a well-trained and educated work force in Mexico is scarce to start off with.'
Robinet, painting a more generalized picture, observes it has been this way for a decade. But the different regional conditions observed by Siemens - whose main Mexican plants began operations only in the past five years - reveal some of the contradictions posed by the labor shortage. The industry consensus is the issue is aggravated in the north, near the USA border, where there is a floating population. Turnover is greatly reduced in the center of the country.
Luis Lopez, director of human resources for Autotek, a unit of Canada's Magna International, says he has no trouble attracting workers to the 1,450-employee Puebla plant in central Mexico. 'In my opinion, the problem of scarcity of personnel is felt more by the companies in the north, for example those in Saltillo, owing to the great number of industries which are locating there and which require a specialist labor force,' he says.
Yet it is not always so clear. Siemens has plants in the northern city of Ciudad Juarez and in the central cities of Aguascalientes, Guadalajara and Puebla.
'In Puebla, you have the industrial park around Volkswagen,' Beyer says._'Suppliers are absorbing workers who are not even from the region - up to 30 kilometers away - and this is all be- cause of the growth of the industry in a concentrated spot.'
In Siemens' Ciudad Juarez plant near the U.S. border, the problem has different roots. There is high worker turnover, Beyer notes, 'but that is because many people arrive there with the intention of emigrating to the U.S., legally or illegally.'
The workers' gender is another variable. Siemens' Puebla factory provides harnesses for the New Beetle. Because this requires manual dexterity rather than heavy work, 80 percent of employees are female. 'Women employees present an extra turnover problem,' Beyer complains. 'Many are single mothers, so they tend to have lots of family commitments and that means a high rotation of workers.'
Visteon also notes a greater turnover among female employees. 'Our Laredo plant is purely men,' Belden says. 'But Chihuahua, which represents the electronics part of the industry, employs 70 percent women, and women are less stable.' On the other hand, Belden acknowledges, women are less likely to migrate to the United States.
In light of the absenteeism of female workers, it is perhaps surprising neither Siemens nor Visteon provides nurseries. 'Nurseries are only for pre-school children, so they wouldn't do much good,' Siemens' Beyer says.
However, improved work conditions are considered essential now that employers are competing for workers. CSM's Robinet makes the following comparison: 'Look at Honda's situation in Ohio, where labor is so scarce that it cannot expand. There is beginning to be a similar problem in Mexico. If VW offers higher wages in Puebla, then this transfers the problem to suppliers, and basically affects them (the car manufacturers) anyway.'
RESISTING WAGE PRESSURE
Despite the labor shortage, manufacturers are trying to maintain steady wages, and they have been mostly successful. 'Wages are not going up,' says Omar Zuniga of the National Autoparts Industry, 'only in line with inflation.'
In part, that is because the annual 'el pacto,' in which industry, government and unions agree wage increases should not exceed a certain amount, usually near predicted inflation levels. 'It is not a very forceful suggestion, but then, neither is it a mere suggestion,' Zuniga says.
All companies give legal benefits, such as national holidays, a Christmas bonus, Social Security and maternity leave. In addition, worker loyalty is encouraged, says Beyer of Siemens. 'We try to reduce the turnaround as much as possible, by providing a good cafeteria, lockers, transport and letting workers know we are an important international company which gives security to its employees.'
In Ciudad Juarez, companies such as Delphi offer employee housing. 'If people are content, they don't leave,' Belden says. To ensure this, he says companies should offer:
Competitive wages, good working conditions, safe machinery and comfortable dining facilities
Plans for personnel assistance, such as transportation and perhaps nurseries
Company events that involve the family, which Visteon does five or six times a year, 'like sports, or celebrating Day of the Child, holding parties on Mother's day'
'Training is very important,' emphasizes CSM's Robinet. But it is costly. 'I know companies have a 30 percent labor turnover,' he adds. 'That's extreme, and added to training for 30 percent of the workers, you have a large expense.'
Beyer of Siemens claims suppliers are not losing workers to the automakers._'There are always examples, but it is not a critical matter here,' says Beyer. 'One of the reasons is that the automakers tend to need people who are more highly trained than the suppliers.'
Certainly the automakers tend to offer better conditions, including training. As a result, workers are more loyal. DaimlerChrysler and BMW, for example, report little or no employee turnover. BMW's small operation in Puebla has people lining up for jobs. The largest DaimlerChrysler plant in Toluca, about 50 kilometers west of the capital, has annual turnover of less than 1 percent among its 6,000 employees, says Leopoldo Silva, director of marketing.
Automakers pay more, too. In auto parts plants, the average pay for unionized manual labor is 120 pesos per day, or $13. Employees work a six-day week and are paid for seven days, according to the legal stipulation of el septimo dia, 'the seventh day.' Parts makers pay their workers roughly $370 a month, while automakers pay manual laborers about $540 a month. However, Sally Fuentes of BMW says there are great variations in levels of salary and skill.
In 1998, the Mexican government statistics department predicted that automotive suppliers' wages would be about 50 percent of automakers' wages in 1999. But the National Autoparts Industry's Zuniga believes these figures may be skewed by the small auto suppliers. 'My feeling is that a large auto parts company can pay almost as well as the automakers,' he says.
Zuniga claims worker turnover is 'not that bad a problem' for automotive suppliers. However, conservative predictions call for 10 percent growth in the $14 billion annual Mexican auto parts industry, which would likely increase competition for workers. The answer, Zuniga says, is to move trained people to the north, where the industry 'simply has to be' for reasons of proximity to the United States. What is needed is efficient communication between the companies demanding labor and the schools and training centers in the middle of the country, where there is a labor surplus. To address this, the National Autoparts Industry wants to create a communications link between the auto industry and private universities.
Meanwhile, regional patterns speak for themselves. Visteon reports 70 percent employee turnover in Ciudad Juarez on the border, and 4 percent turnover in Monterrey, with its more mature industrial culture. It is evident that, as Robinet says, suppliers and manufacturers 'have to be very strategic about where to put their plants.' ANI
You can e-mail free-lance writer Barbara Kastelein at [email protected]