LABOR: Capital Shapes a New Workforce

September 25, 2007

When the world-wide recession of 1975 hit
full force, hundreds of thousands of workers in
the electrical equipment industry from Flint,
Michigan, to Johannesburg, South Africa, to
Mexico City were left jobless. General Electric,
leading the electrical equipment industry inter-
nationally with annual sales of $13 billion, laid
off 11,000 workers domestically and another
18,000 in its eighty foreign plants. Westinghouse
cut back its workforce by more than 40,000
workers around the globe - 20 percent of its
total employment - and put its U.S.-based
household appliances operation up for sale.
In Mexico, while General Electric scrambled
to increase the productivity of its workers
through speed-ups and production "incentives,"
Philco laid off 300 workers, Phillips shut down
its night shift, and IEM (Westinghouse) frantical-
ly sought to move its household appliances
division to a provincial city where wages are even
lower than in the Mexican capital.
The simultaneous impact of the recession on
the electrical equipment industry internationally
is the result of the continued integration of the
world capitalist economy and its proletariat
under the domination of the transnational
corporations, or of what G.E. proudly calls its
"growing world system."
For the Mexican working class, the most
important changes brought about by the penetra-
tion of the transnational companies have been
those related to the organization of production.'
The presence of foreign monopolies in Mexico,
on the one hand, has provoked the rapid
proletarianization of the work force, concentrat-
ing it increasingly within the most monopolized
sectors of industry, and subjecting the workers to
the most brutal levels of exploitation and
oppression. On the other hand, the same process
has led to chronic unemployment that is
currently pushing 40-50%, forcing millions of
Mexicans north toward the United States in
search of jobs. It is these factors - particularly in
the electrical equipment industry - we now wish
to explore, along with the profound implications
they hold for organizing the Mexican working
class into a revolutionary force capable of
establishing a government serving its own inter-
ests and ending imperialist domination.
Since World War II foreign investments in
Mexico - as in the rest of Latin America -have
concentrated in the industrial sectors whose
growth rate has far outpaced that of agriculture,
mining and other areas of the economy under
foreign control in the pre-War period. One
consequence has been a restructuring of the
Mexican work force along the same lines.
Between 1950 and 1976, the percentage of the
work force employed in industry grew from 12
percent to 18 percent, with an accompanying
decline in the percentage employed in agriculture
from 58 percent to 33 percent.2And at the same
time, within the industrial work force, the
tendency has been towards the rapid concentra-
tion of workers in the monopolized and the
foreign-controlled sectors. Today, nearly one-
fourth of all industrial employment is in sectors
where the largest four companies account for
more than 50 percent of production, 3 and by
1973, foreign companies had doubled their
portion of industrial employment from a decade
earlier to 16 percent. 4 Companies like General
Electric, Westinghouse, Union Carbide, Philco
and Phillips employ thousands of workers each.
NACLA Report 20Sept./Oct. 1977 21
The foreign companies responding to a 1976 Stanford Research Institute survey showed a
180% increase in their net profits between
1970-1974; for the electrical machinery industry
this increase was 130%.5 Those increases are a
direct result of the increasing degree of exploita-
tion of Mexican workers, whose real wages
actually declined in these same years. 6
Competition and the drive for profits in the
highly monopolized electrical equipment sector
has resulted in ever greater efforts to increase the
productivity per worker - through the use of
new machinery and, increasingly, through speed-
ups and a general intensification of the work
process. When the worldwide recession of 1974-
1975 hit Mexico, for example, competition
among the foreign monopolies became fierce as
the market for their products contracted. Gen-
eral Electric was one of the companies hurt by
the combination of recession, inflation, and
labor insurgency. In a March 1976 report,
however, G.E. boasted it had survived the
recession due to increased productivity of its
Through considerable expenditures on modern equipment and processes, and
through the training of personnel in
advanced methods and techniques, we
have been able to make important progress
in productivity.
This was the principal factor which
contributed to the continuation of our
uninterrupted growth in profits despite
inflation, price controls and a strike. 7
Thinly cloaked behind the talk of increased
technical capabilities is the rapid intensification
of the labor process within the industry over the
past years. According to the Stanford survey,
transnational companies in Mexico have been
able to increase the productivity of their workers
by 148 percent over the past ten years, and in the
electrical equipment sector the increase has been
174 percent. 8 Another recent study calculates
the gross profits of the transnationals at 30
percent above those of Mexican-owned com-
panies. This is due largely to the fact that
productivity per worker is twice as high but
wages only 1.7 times higher in the transnational
companies than in Mexican-owned private enter-
prises. 9
16 percent of Mexico's industrial workforce, like this worker at General Electric, are employed by
foreign corporations.
Sept./Oct. 1977 2122
NACLA Report
The electrical equipment industry has em-
ployed at least six common tactics in their drive
to increase this exploitation of its workers:
* The employment of mostly "temporary"
workers who are maintained on 28-day con-
tracts, even though they may have worked at a
given company for as many as ten years, is
common throughout the industry. At General
Electric's plant outside of Mexico City, for
example, two-thirds of the workers are "tempo-
rary," and consequently vulnerable to all com-
pany pressures.' 0 These workers are forced to
work at an exhausting rhythm for miserable
salaries even lower than those of the "perma-
nent" workers, whose average wage in the
electrical equipment industry was less than $200
per month even before the 1976 peso devalua-
tion. They are placed at the front of the assembly
lines where, in order to achieve permanent status,
they work at breakneck pace, thereby intensify-
ing the work of the entire line. And because of
their temporary contracts, these workers are
understandably reticent to participate in union
activities. The company, naturally, openly fos-
ters hostilities which arise between the tempo-
rary and permanent employees.
* Related to the use of temporary workers is the
general practice of speed-ups, familiar to workers
in the U.S. over the years. Workers at the Phillips
subsidiary in Mexico claim that the rate of
production was increased by 300 percent in only
one year!'" While this figure is exceptionally
high, increasing the rate of production has been.
common in other industries as well. General
Motors, for example, was producing 150 cars per
day in 1971. Two years later they had increased
the output to 200 cars per day with the same
equipment - an increase in production of 33
percent. Yet during this same period, the
company added only 20 percent more workers,
and wages increased by only 15 percent - despite
official government statistics showing an 11
percent increase in the cost of living during the
first five months of 1973 alone. 2
* One of the common ways to induce speed-ups
is through the use of "incentives. " In companies
like Westinghouse and Phillips, workers are paid
extra per unit of production over the established "norm." In Westinghouse, for example, a worker
in 1975 produced an average of 50 components
for an electrical iron per day, for which he/she
made $6.40, or $.12 per piece. To earn the
incentive, the worker increases his/her output to
55, and the company pays him/her $6.68 - or
$.05 per extra piece produced instead of the
normal $.12! An additional profit for the
company of $.07 for every extra component
But as soon as the workers with greater ability
- or several temporary workers with greater
reasons to produce more - begin to average 60
pieces a day instead of 50, the company revises
the production norm to 60 and keeps the wages
at $6.40."
* The companies also carry out continual
campaigns to "reduce costs, " a common system,
referred to as the "Scanlon Plan" in the U.S., whereby the company consults with the workers
about how to increase production. The wages
of course, remain unchanged, or at best a small
bonus is given to the worker with the new idea of
how to increase his/her own exploitation!
General Electric, Union Carbide, and Kelvinator
(a subsidiary of White Consolidated Industries),
all carry out such campaigns.
* An increasing phenomenon within the indus-
try is the tendency to "runaway" - that is, to
move the more labor-intensive parts of the
company's operations out of Mexico City and
into lower wage areas in the provinces. Westing-
house, for example, wanted to move its house-
hold appliances operations to Cuernavaca in
1975, while ACROS transferred a large part of its
production of stoves and refrigerators to Celaya.
* Anti-union activities are an important part of
company efforts to increase exploitation, espe-
cially in this industry where the militant Demo-
cratic Tendency of the SUTERM has made
important gains in recent years. (See the final
article of this Report) Company tactics vis-a-vis
the unions have ranged from simple repression
and harassment, to firing of temporary workers
who engage in union activities, to much more
devious and sophisticated measures of continu-
ing the division of the workers among a
multitude of unions.
Workers have responded to these tactics of the
companies with increased militancy in recent
years. When Westinghouse announced that their
household appliances operations would be relo-
cated, workers in the union determined to
organize the new plant as well, and called for the
formation of a national union of all electrical
workers. Westinghouse workers also forced the
company to agree to an equivalent pay increase
for extra production under the incentives plan.
22 NACLA ReportSept./Oot. 1977
And at Kelvinator, one of the demands won by
the SUTERM in their September 1974 strike was
the establishment of a labor-management com-
mission on productivity in which workers will
have more say in setting the levels of production.
One significant result of the penetration of
the transnational companies into Mexico is only
recently becoming clear: the increasing stratifica-
tion of the work force within the monopolized
sectors of industry. In an effort to keep wages
down, the companies have not only introduced
labor-saving technology, but in the process have
also created a division of labor requiring a very
large percentage of nearly unskilled workers and
a very small number of highly trained, well-paid
technicians. 1 7
A recent study on the impact of the trans-
national corporations on Mexican labor shows
that the foreign companies have a much more
stratified work force, in terms of wage differen-
tials, than do the national companies. The greater
use of technically more advanced machinery and
production methods by the foreign companies
requires "a more polarized work division, with a
large quantity of workers and minor employees
with low incomes serving as feeder to the
equipment, machinery, technicians and highly
specialized executives . . ." 8 As a result, in the
254 transnationals studied, 12 percent of the
employees received 28 percent of the wages, while 18 percent received only 7 percent of the
wages. 19
Such stratification poses obvious political
problems for organizing the working class, by
creating a small but influential sector of highly
trained, well-paid workers - as in the advanced
industrial nations - who may no longer share the
same class perspective as the majority of the
industrial work force.
One of the major arguments put forward by
apologists of imperialism is that foreign invest-
ment creates jobs for Mexican workers. Yet the
Mexican working class currently suffers from
chronic unemployment and underemployment
of between 40 and 50 percent of the econo-
mically active population, 2 0 the single major
cause of the massive waves of migration into the
United States each year.
One need only take note of two factors in
order to understand why foreign investments
have not in fact, made a major contribution to
employment creation. First, the level of capital
intensity of the transnational companies is far
greater than that of national industry. While the
Sept./Oct. 1977 2324 NACLA Report
Income Stratification of Mexican Workers:
Transnational Subsidiaries vs. National Companies
Annual Income Groups
$750-$2,200 $2,201-$4,400 over $4,400
employees / income employees / income employees / income
nationals 27% receive 12% 45% receive 36% 28% receive 53%
of compa-
rable size 9% receive 4% 70% receive 54% 22% receive 42%
Note: Figures may not add up to 100% because they are rounded to nearest percent.
Source: Victor Bernal, The Impact of Multinational Corporations on Employment and Income,
The Case of Mexico.
foreign companies account for a full 31 percent
of the total value of Mexico's industrial produc-
tion, they employ only 16 percent of the
industrial work force.
And second, as we have already seen, foreign
investments in Mexico increasingly represent
take-overs of already existing companies. The
transnationals are not creating new employment;
they are simply purchasing existing companies
and turning them into "modern" - i.e., capital-
intensive - industries. Total employment by.
foreign companies increased by 180,000 be-
tween 1963 and 1970, but 105,000 of these "new jobs" represented the employment of
already existing firms acquired by foreign capi-
tal! 2 l
Added to the problems of an increasingly
capital-intensive industry in a country with
nearly 50 percent un- and under-employment is
the instability of employment generated by the
foreign companies. Mexican industry, dominated
as it is by the transnationals and dependent as it is
upon the U.S. market, is hypersensitive to
periodic recessions which have rocked the
international capitalist economy over the past
decade. As shown above, during the 1974-1975
recession, massive layoffs by U.S. companies
took place throughout Mexico, especially in
electronics and electrical equipment.
The penetration of the Mexican economy by
the transnational companies has subjected the
Mexican working class to ever greater levels of
exploitation; as productivity has continued to
increase, real wages actually declined in the first
four years of the '70s, and have barely kept pace
with inflation since '73. At the same time, this
penetration has also reshaped the class structure
of Mexico and consequently outlined new
dimensions for the future political struggle in
that country.
On the one hand, the process of monopoliza-
tion has concentrated the industrial working
class into large, socialized industries from which
workers can wield far greater leverage in their
struggle for wages, unionization and political
power. On the other hand, while the working
class is being objectively unified in this fashion, it
is also becoming increasingly stratified. The
polarization of the work force between a mass of
low-paid, unskilled workers and a smaller group
of highly paid and technically skilled employees
with petty bourgeois aspirations makes the task
of organizing around commonly perceived class
interests all the more difficult.
Clearly the panorama of class struggle in
Mexico today is very different from that of the
1910 Revolution when peasant armies carried a
new industrial class to power, or that of the
1930s when a populist bourgeois government
mobilized the working class for its confronta-
tions with U.S. imperialism. Through the ex-
ample of the electrical workers' struggle, the
following articles explore the new dimensions of
class conflict in Mexico, and the historical
transcendence of the growing workers move-
1. See Alejandro Alvarez and Elena Sandoval,
"Desarrollo industrial y clase obrera en Mexico,"
CuadernosPoliticos (Mexico), #4, April-June, 1975.
2. Bernal, op. cit., p. 142.
3. Fajnzylber and Martinez, op. cit., p. 354.
4. Bernal, op. cit., p. 146.
5. Robinson and Smith, op. cit., p. 80.
6. Rolando Cordera, "Los limites del reformismo:
la crisis del capitalismo en Mexico," Cuadernos Politicos
(Mexico), #2, October-December, 1974, p. 57.
7. General Electric de Mexico, Annual Report,
8. Robinson and Smith, op. cit., p. 218.
9. Fajznylber and Martinez, op. cit., pp. 356-357.
10. UnificacionProletaria (Mexico), 10/28/74.
11. Unidad (Mexico), first half of July, 1974.
12. Ibid., first half of August, 1973.
13. UnificacionProletaria, 6/24/75.
17. For more about the efforts to reduce the value
of labor power through an increased division of labor,
see Karl Marx, Capital, Vol. I, especially Chpts. 14 and
17, Penguin Books, England, 1976, and Harry Braver-
man, Labor and Monopoly Capital, especially Part II,
Monthly Review Press, N.Y., 1974.
18. Bernal, op. cit.,p. 137.
19. Ibid.,p.134.
20. Ibid.,p.143.
21. lbid.,p. 160.

Tags: Mexico, transnationals, working class, exploitation

Like this article? Support our work. Donate now.