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 EXPLOITATION AND PROFITS 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 workers: 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 produced. 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 23 t a q) Q a, I- 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. STRATIFICATION OF THE WORK FORCE 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. THE TRANSNATIONALS AND EMPLOYMENT 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 TABLE 5 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 Trans nationals 27% receive 12% 45% receive 36% 28% receive 53% Nationals 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. CONCLUSIONS 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- ment. WORKFORCE 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, 1976. 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.
