Until a year ago, Álex — who, along with six other auto workers interviewed by Rest of World, asked to remain anonymous to avoid retaliation — did not know that the cars he assembled needed between 100 and 150 chips to work. He has been working as an operator at the General Motors (GM) assembly plant in San Luis Potosí, in north central Mexico, for more than 10 years.
Álex learned of this in February, when the first technical shutdown at the assembly plant was announced. He thought that the factory closure would result in a few days off, but it has continued throughout the year. “The three days of unemployment turned into a month,” the 40-year-old worker told Rest of World.
In Mexico, GM’s factories have been the hardest hit of any auto company, due to the stoppages caused by the global shortage of chips. Current production numbers contrast starkly with the company’s figures last year, when GM ranked first in both vehicle production and exports in Mexico, while the country ranked seventh in production and fourth in exports globally, with the United States being Mexico’s main export destination. In the second half of 2021, the domestic production of light vehicles fell by 25.51% compared to the same period in 2020.
The chip shortage has meant that, from January to September of this year, GM in San Luis Potosí has been shut down for 166 nonconsecutive days, according to estimates given to workers by their supervisors. In September, workers stopped receiving these estimates. Workers are now coming forward to denounce salary cuts and exhausting longer hours. All of these measures were previously agreed on by the car company and the auto workers’ union, but without the workers’ consent, say the employees who spoke to Rest of World.
Production in the automotive sector had already experienced difficulties before the chip shortage during the first months of the pandemic. To Fernanda, a 28-year-old GM employee, those Covid-19 shutdowns had “felt like a long vacation.”
This was because, by May 2020, the Mexican government had declared the automotive sector to be essential, allowing the automakers to resume production. GM said it actually reverted to pre-pandemic layoff numbers by the end of 2020, employing a total of around 21,000 workers across its four manufacturing plants.
But, in those same last months of 2020, as a consequence of global industrial closures and the increase in demand for electronic products prompted by the pandemic, buyers of video games, cell phones, and cars began to hear that the supply of chips was running short.
Guido Vildozo, an analyst at IHS Markit, told Rest of World that automakers are now having to wait an average of 26 weeks for their chip shipments to be delivered, which, for the companies, is too long. By this November, GM in Mexico decreased its year-on-year production by 43.71%, according to the National Institute of Statistics and Geography (INEGI).
“They cut my salary, but the expenses remain the same,” said Álex. “I don’t have children; I don’t have other responsibilities, but I do notice a lot of despair in my colleagues with families.”
For a normal work week, Álex is paid a salary of 2,100 pesos ($99). During a week of factory shutdowns, he earns approximately 750 pesos ($35), while taxes and other deductions remain the same. Unionized workers are paid 55% of their salary, while supervisors and managers, who deal directly with GM, are paid 85% of their salary or are given the option of taking the stoppages as vacation days, to avoid pay reductions.
For the salary cuts to be agreed upon, they first had to be approved by the union. In the case of the GM plant in San Luis Potosí, the workers are represented by the Confederación de Trabajadores de México (CTM), one of the oldest and strongest unions in the country. Ernesto Gutiérrez, a labor rights activist, points out that the CTM is often closer to the companies than to the workers, offering corporations like GM “employer protection contracts,” which, rather than protecting union members, provides nonconfrontation clauses to the company on its labor decisions.
The leader of the CTM in San Luis Potosí, Emilio de Jesús Ramírez Guerrero, said that the cuts were ensuring that no jobs would be lost. The salary cuts “were being applied in conjunction with additional benefits that bring them practically to the equivalent of 70% of a worker’s salary,” he told Rest of World. “It is not the best option, we know, but the situation can only be salvaged with the workers’ cooperation.”
Rest of World had access to two of the San Luis Potosí GM employees’ payment receipts, corroborating their statements. The deposits reflected about half their normal pay, and the “additional benefits” mentioned by Ramírez Guerrero were in fact government-mandated savings funds and grocery vouchers; requirements that long preceded the pandemic.
Rest of World’s request for comment from GM Mexico went unanswered. However, the company has previously stated that none of its employees have been laid off. This has been confirmed by local industrial bodies and the labor department of the state of San Luis Potosí. Yet the workers said that the practice of firing and hiring carried out by the company has resulted in increased workplace stress.
For workers like Alberto, the salary cuts combined with the difficulty of the chip crisis translates into a further feeling of job instability. The 25-year-old has been working for GM for three years and now remembers those early days with nostalgia. Months before the pandemic, he rented an apartment and took on a large debt to furnish his new home. But his halved salary has not allowed him to pay off his debts, so he was forced to move back into his mother’s home.
“Those chips lost me my freedom,” says Alberto.
Fernanda, a 28-year-old GM employee, said that “with so many expenses, we couldn’t even afford the formula for my baby.” In April, she began selling beauty products by catalog to her friends and co-workers. Now, Fernanda makes jokes about leaving her strenuous day job, which keeps her at the GM plant from 6:00 in the afternoon to 6:00 in the morning, and dedicating herself to the sales that have allowed her to match her salary before the crisis.
“We understand that, for the company, we are only numbers,” said Fernanda.
Around 145 kilometers away, lies the General Motors plant in Silao, Guanajuato, a larger assembly operation that employs a workforce of around 6,500 people (San Luis Potosí hosts just over 4,000). This August, the chip crisis brought workers at this factory to a breaking point. Frustrated by what they considered the excesses of the union and the company, they voted against the ratification of the union contract negotiated by the Miguel Trujillo López branch of the CTM.
“The shutdowns allowed more workers to realize that our salary was already very low and that the union was not helping us,” said a member of the Executive Committee of the Independent Trade Union of Workers of the Automotive Industry (SINTTIA), a union recently created in opposition to the CTM. “On the contrary, they discount their dues, which add up to millions of pesos, even though we are earning less.”
At the San Luis Potosí plant, information is trickling down to the workers slowly. They don’t know if and when they’ll be hit with yet another shutdown.
Vildozo, the IHS Markit analyst, thinks that the chip crisis will continue well into 2023, perhaps recovering until the second half of the year. He expects that this will be the defining factor affecting the industry, at least during that period of time.
Meanwhile, in this environment of uncertainty, labor unrest increases, and the economic concerns of auto workers continue.
“I know it’s not in GM’s hands to fix the chip crisis,” Fernanda said. “[But] they keep you in the dark. We’re surrounded by rumors here in San Luis, but there is no real information, and it stresses a lot of people out. It makes you feel like you’re being excluded from your own workplace.”