Railroading Mexican Workers: Privatization and Rebellion in Mexico's Railyards

by Dan La Botz

In a desperate protest against the forces of globalization and neoliberalism -- World Bank policies promoting privatization of railroads in countries throughout the world, the Mexican government's sale of the Mexican National Railways (FERRNONALES) to new private parties and the depredations of the new owners, consortiums of Mexican and U.S. capital which include such multinational corporations as Kansas City Southern Industries and Union Pacific -- Mexican railroad workers engaged in a series of strikes in February and March in an effort to preserve their jobs, union contract, wages and working conditions.

"We organized a work stoppage on the railroad, and we blocked the International Highway," says Gustavo Lopez R., a member of the executive board of Local 8 of the Mexican Railroad Workers Union (STFRM). The International Highway parallels the Pacifico Norte line and carries virtually all truck traffic down the west coast of Mexico.

"We had the support of the telephone workers, the teachers and the other unions," Lopez says.

For almost three weeks, members of the Mexican Rail Workers Union in the towns of Empalme and Benjamin Hill, Sonora, stopped all railroad traffic on the Pacifico Norte line which serves western and northern Mexico. The strike stopped shipments from the Ford Motor Company in Hermosillo and the Cananea copper mines and left tens of thousands of passengers stranded along the route. This was the biggest railroad workers' rebellion in decades.

Lydia Cano, a 66-year old widow of a railroad worker, organized 2,000 women and children in a "march of the pots and pans" in support of the strikers. "The empty pot symbolizes unemployment and hunger," she says.

Cano also led a demonstration in support of the strike by retired railroad workers and other government pensioneers. "All we want," says Cano, "is that the railroad workers be treated as they deserve."

Local political leaders helped too. The mayor of Empalme, former railroad worker Jesus Avila, supported the railroad workers, as did Sara Valle, the mayor of the nearby town of Guaymas. "We tried to prevent the government from using force to break the strike," says Mayor Avila. "We worked to keep the communications open between the strikers and the authorities."

Meanwhile, in the Sonora legislature, the strike led three political parties--the ruling Institutional Revolutionary Party (PRI), the conservative National Action Party (PAN), and the left-of-center Party of the Democratic Revolution (PRD)--to join together and back the railroad workers. Even the governor of Sonora, Armando Lopez Nogales of the PRI, offered words of support to the workers.

Behind the Strike

Underlying the railroad workers' rebellion were World Bank-backed plans of the Mexican government to break up and sell off the country's railroads to private parties.

World Bank advocacy of railroad privatization meshed with the designs of Mexico's ruling elite. Since 1982 Mexican presidents Miguel de la Madrid, Carlos Salinas de Gortari and Ernesto Zedillo have advocated the privatization of Mexico's state-owned companies, with the exception of the Mexican Petroleum Company (PEMEX).

In May 1992, a World Bank team recommended that Mexican National Railways adopt a program to modernize the Mexican railroad system. The Bank's recommendation called upon Mexican National Railways to begin subcontracting shops and other services.

Two years later, in May 1994, Mexican National Railways subcontracted the shops in Monterrey, the Valley of Mexico, and Jalapa to the French-English firm GEC-ALSTHOMS. In June 1994, Mexican National Railways subcontracted the Chihuahua and Torreon shops to GIMCO, a consortium which includes the Canadian VMV firm. Later, the railway subcontracted the San Luis Potosi and Acambaro shops to the U.S. firm Morrison Knudsen.

Substantial downsizing accompanied the subcontracting process. For example, the shop in San Luis Potosi had about 4,500 workers in the 1980s. But when the "modernization" process began, many workers were pressured into accepting "voluntary retirement." By 1994, only 1,172 workers remained. When the shop was subcontracted, Mexican National Railways kept on 170 workers, while Morrison Knudsen recontracted only 275. By 1996, the number of Mexican rail workers had plummeted to 43,000, down from 100,000 in 1988.

While some categories of workers received higher wages from their new employers, in general workers' wages and benefits declined.

New Private Owners

To pave the way for privatization, the Mexican government cut the national railroad system into five separate lines: Northeast (3,961 kilometers, 19.3 percent of the national system); North Pacific (6,200 kms, 30.3 percent); Southeast (2,200 kms, 10.7 percent); a northern line (1,090 kms, 5.3 percent) and the Valley of Mexico railyards.

The first big privatization came on December 5, 1996, when the Mexican government sold the Northeast Railway to Mexican Railway Transportation (TFM), a consortium which included Kansas City Southern Industries (KSCI), for $1.4 billion.

With the approval of the Mexican labor authorities, the old state-company and the new TFM railroad management laid off the workers and nullified the old collective bargaining agreement. To keep a job, workers had to accept termination and their severance pay and be re-contracted without their previous seniority, pay or benefits. Many hundreds of the Northeast Railway workers lost their jobs altogether.

The privatization that sparked the big strikes was finalized on March 7, 1997, when a new private company called Mexican Railways (FERROMEX) bought the state's Pacific-North railway line for $524 million.

FERROMEX is a consortium made up of Mexican and foreign capital: Grupo Mexico, ICA and Union Pacific. Grupo Mexico is dominated by Jorge Larrea, the magnate who owns the Cananea copper mines. Associated Civil Engineers (ICA) is one of Mexico's biggest construction companies. Union Pacific is one of the largest railroad companies in the United States.

FERROMEX purchased 6,200 kilometers of track, railroad stations, roundhouses, 405 locomotives and 12,591 railway cars of various sorts from Pacifico Norte.

But FERROMEX failed to guarantee either the job security or the collective bargaining agreement of the workers. With the approval of the Mexican labor authorities, the new company informed workers that it would both terminate the labor union agreement and rehire only some of the workers. This was the primary cause of the wildcat strike which began on February 16 in Empalme, Sonora.

Opposition Emerges

Since 1959, when the Mexican Army crushed a general strike of the railroads, the Mexican Railroad Workers Union has been an "official" union, controlled by the ruling party and the state. But even the loyal "official" union tended to favor a nationalized railroad system and preservation of a traditional union contract.

The privatization plans divided the union leadership into rival factions and led to a violent battle for control of the union in the early 1990s. In June 1993, in the course of the struggle, Lorenzo Duarte Garcia, who had been general secretary of the union from 1989 to 1992, died in a mysterious automobile accident. Many believe he was murdered. Just three weeks later, on July 17, 1993, Praxedis Fraustro Esquivel, then general secretary of the union, was assassinated in what remains an unsolved crime.

The death of those two officials cleared the way for Victor Flores to assume leadership of the Mexican Railroad Workers Union. The Institutional Revolutionary Party (PRI), which has ruled Mexico for the last 70 years, then helped to elect Flores to Congress.

Victor Flores completely embraced the program of privatization and railroad reorganization. He even helped to carry out the privatization plan, urging workers to accept early retirement and termination.

When some local union officials or workers challenged Flores, he threatened or bribed them. When workers organized meetings to discuss the privatization issue, he personally led a 100-man goon squad to break up workers' meetings.

When members of the Mexican House's Labor Committee attempted to investigate the railroad situation, Flores brought his goon squad to the Congress. Flores himself reportedly attempted to strangle a member of Congress, while members of his goon squad threatened to murder congresspersons who mettled in the railroad issue.

Finding Flores and the union leadership allied with the government and management, rank-and-file workers created an alternative. Salvador Zarco, former head of Local 15 in the Valley of Mexico railroad yards, founded the Committee to Defend the Collective Bargaining Agreement in 1996.

The Committee organized a caravan of 2,000 railroad workers in November 1997 which traveled throughout northern and western Mexico, informing other workers about the privatization program and its impact. The caravan sowed the seeds for the strike by Local 8.

Settlement of the Strike

Local 8 began the strike on February 16 as a wildcat, but, after two weeks, Flores declared the work stoppage an official union strike, even though it remained illegal. In early March negotiations between the old state company (Mexican National Railways), the new private company (FERROMEX), the Mexican Railroad Workers Union (STFRM) and STFRM Local 8 of Empalme, the companies agreed to protect some of the workers' jobs.

According to Local 8 general secretary (top officer) Carlos Figueroa, the companies agreed to protect nearly 200 jobs. In addition, Mexican National Railways will continue to operate the repair shops, which do not form part of the privatization deal, and will keep 1,200 shop workers on the payroll. Still, hundreds of workers had already been pressured into signing their severance papers or had been forced into early retirement. Many await rehiring, but with no guarantees for their future.

While the settlement of the February-March strike was less than a complete victory, Local 8 in Empalme did succeed in saving some workers' job and keeping some under the old contract. And the Mexican railroad workers showed they would not go down to defeat without a struggle.

Dan La Botz is the editor of Mexican Labor News and Analysis, a biweekly electronic news bulletin, and the author of several books on U.S. and Mexican labor unions, including Mask of Democracy: Labor Suppression in Mexico Today (Boston: South End Press, 1992) and Democracy in Mexico: Peasant Rebellion and Political Reform (Boston: South End Press, 1995).