U.S. Company in Mexico Re-examining Values
by Sam Dillon
CIUDAD ACUNA, Mexico Juan Tovar Santos, an assembly-line worker in this border city, will not forget the time he traveled to Alcoa Inc.'s annual shareholder's meeting in Pittsburgh and confronted the chief executive about working conditions in Alcoa factories here. After Paul O'Neill, the Alcoa chief executive who was named President George W. Bush's Treasury secretary last month, trumpeted the company's growing profit, Mr. Tovar stepped to a microphone. Mr. Tovar, who was earning about $6 a day, described Alcoa managers as so stingy that they stationed a janitor at bathroom doors to limit workers to three pieces of toilet paper. He also recounted an incident in which more than 100 workers had been overcome by fumes from a gas leak and hospitalized.
Mr. O'Neill, stunned by the descriptions, defended conditions in Ciudad Acuna.
"Our plants in Mexico are so clean they can eat off the floor," he said. "That's a lie," Mr. Tovar shot back, in Spanish through an interpreter. And he produced news clippings describing the leak.
After Mr. O'Neill's own investigation determined that the chief executive of one of Alcoa's operations had covered up the leak, Mr. O'Neill dismissed him and began to improve conditions at the eight Acuna plants owned by Alcoa Fujikura Ltd., an Alcoa joint venture with a Japanese company. Today, Alcoa pays wages that are among Acuna's highest.
Still, since that meeting in 1996, tensions have continued in this city across from Del Rio, Texas. There have been difficult meetings between Alcoa workers and managers to discuss pay, benefits and bathroom breaks. There was a confrontation last October in a factory parking lot in which Acuna police officers threw tear gas at workers.
In Acuna, as in other border settlements, Mexican workers earn such miserable wages and American companies pay such minimal taxes that its schools are a shambles, its hospital crumbling, and its sewage lines collapsed. Half of Acuna's 150,000 residents now must use backyard latrines.
Over the years, Mexico and its people came to accept these conditions in return for steady jobs. But now, people from Mexican tax officials to environmental experts in both countries are debating the rules, written and unwritten, under which the mostly American corporations have operated on the border. There is rising concern that, as factories making just about anything from sneakers to television sets have spread through the developing world, labor rights and environmental standards have often been overlooked.
"Acuna is a disgrace," said Javier Villarreal Lozano, a Mexican historian who directs a government-financed cultural institute in Coahuila, the state that includes Acuna. "A hundred years ago, U.S. employers would have been ashamed of these conditions. Henry Ford's workers living in cardboard boxes? He'd never have tolerated it."
Executives now say Alcoa recognizes that its responsibilities in Mexico may not end at the industrial park gates.
In an interview last month, Robert Hughes 2d, Alcoa Fujikura's chairman and chief executive, said Alcoa's wages were among Acuna's highest, which local officials confirmed. The average wage for a 48-hour work week at Alcoa's Acuna plants is $83, the company says. The Border Workers Committee, a group that has represented laborers in Acuna, put the average wage at $70.
Mr. Hughes described Alcoa's environmental and safety practices in Mexico as "world-class" and said the company based its policies on "some very clear values around people." But he acknowledged that Acuna's urban crisis was troubling and said Alcoa may step up its modest efforts at corporate philanthropy.
After Mexico's government began offering tax-exempt status to border assembly plants in the 1960s, the then-mayor invited foreign corporations to set up factories here known as maquiladoras.
When Acuna began inviting American corporations south, Alcoa was producing automotive wiring systems at plants in two Mississippi towns, said Jack Jenkins, an Alcoa executive who works with Mr. Hughes at Alcoa Fujikura's headquarters in the prosperous Nashville suburb of Brentwood, Tennessee.
Taiwan and other Asian competitors were beginning to produce wiring components cheaper than Alcoa could in the United States, Mr. Jenkins said.
"For us it was either move to Mexico or cease to exist," he said. Alcoa built the first of its Acuna factories in 1982.
By the 1990s, Alcoa and other companies helped Acuna to grow faster than any other city in northern Mexico, census officials said. Last year's census counted 110,388 residents in Acuna, but state and local officials called that a gross undercount, estimating Acuna's population in the range of 150,000 to 180,000. The city now has 60 plants.
In November, Alcoa announced significant wage and benefit improvements at its plant. Mr. Tovar, who has worked at Alcoa for nine years, said his daily wage rose from $6.70 to $8.50.
With bonuses for perfect attendance, grocery coupons and other benefits, his weekly compensation could now reach $90, he said.
A reporter who toured two of Alcoa's Acuna plants last month saw workers soldering electrical components and weaving the octopus-like wiring systems for automobiles along well-lit and ventilated assembly lines. Cafeterias were clean and workers wore protective eyeglasses.
But despite Alcoa's wage increases and improvements in factory conditions, workers still live in a squalid grid of dirt streets, rotting garbage and swamps of open sewage.
Alcoa's annual reports and other company documents suggest that Alcoa Fujikura's operations in Mexico are quite profitable. In the interview, Mr. Hughes declined to disclose the prices or profits earned on the products manufactured in Acuna, calling that proprietary information.
"Wherever Alcoa operates around the world, we take being a good corporate
citizen seriously," Mr. Hughes said in the interview. "We're wrestling
right now with whether there's more we should be doing around community
support in places like Acuna. Should we do more around housing, education
or health care?"