The agreement in Goodyear is a dangerous precedent, a risk of closures and a failure of the government vs the US

Note published on July 21, in El Sol de México, Análisis [Analysis] Section by Alberto Aguilar.

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Since the USMCA was signed, the pressure exerted by US unions to discourage investment in Mexico and taking it to the US was known. The Rapid Response Labor Mechanism adjusts to this interference with the objective of eliminating “salary dumping”.

The reparation plan for the Goodyear plant located in SLP [San Luis Potosí] under the direction of Luis Cuéllar  was announced on Wednesday. Without considering the consequences, particularly the history of the tire industry at the end of the 90s and the early 2000s, the Industry-wide Agreement of the Rubber Industry was revived.

Under US pressure, the STPS [Department of Labor and Social Welfare] headed by Marath Bolaños and the Department of Economy headed by Raquel Buenrostro agreed to revive this legislation that will hurt competitiveness not only within the industry, but also in other industries linked to rubber, such as automobile engine drive belts.

When speaking about “nearshoring”, Joe Biden is delighted that the tire companies return to the US. In the past, because of this agreement, Goodyear closed an enormous factory in Tultitlán, where more than 1,500 people used to work.

Today, it imposes a year-end bonus of 44 days, a social pension fund of 14.8% of the salary, plus vacations, a vacation bonus of 25 days and the imposition of having the company pay non-deductible worker’s IMSS [Mexican Social Security Institute]  dues.

Even though it was modernized in 2015, it still places padlocks on production. If the movements to be made during the workday are modified, a bonus must be paid.

Expert Oscar de la Vega brings to our attention that the rubber industry will lose flexibility and what has been agreed with Goodyear will set a precedent for this industry. He acknowledges that there is a risk of returning to the past as production becomes more expensive, which is what the US unions are seeking.

If tire companies returned to Mexico, such as Michelin, headed by Matthieu Aubron, or Pirelli headed by Enrico Verdino, it was because they used the loophole of “unique agreements”.

In this sense, the government opened the valve for returning to the industry-wide agreements by industry. There was an obvious lack of expertise in the negotiation process, and now the closing of companies cannot be ruled out, again.  The line between joy and despair is thin.

RUSSIAN POLICY HAS NULL EFFECT ON GRAIN HERE AND THE DOLLAR FALLS TO 17

After the rise in the price of grain since Monday, there was a respite yesterday after Vladimir Putin announced that Russia will not attack civil boats. The step back, says Juan Carlos Anaya, head of the GCMA [Agricultural Markets Advisory Group], is explained by the risks also faced by that country as an exporter of wheat and fertilizer. The question is whether the improvement in prices can help the domestic producers. The increase is not sufficient. Additionally, Anaya himself highlights the impact of a dollar that is at less than 17 pesos.

A STOP IS PUT TO VERTEX TOURIST COMPLEX AT BAHÍA DE BALDERAS [sic.]

The constant. The blockage of investment projects by communities, This is the case of a tourist complex that is being built at Bahía de Banderas. The residents there, in Nayarit, headed by Miguel Ángel Navarro, applied pressure. It is argued that it blocks free circulation. The attorney general’s office closed down the work of the Vertex Real Estate fund headed by Ricardo Zúñiga Massieu. Four years of effort and a great deal of money are at risk. Vertex has placed various bonds on the BMV [Mexican Stock Market] since 2011 and has participated in around 100 real estate transactions with a value of around 6,800 million dollars, among them the Punta Mita St Regis with MRP, headed by Jerónimo Gerard. Impossible to work like this.

STOCK MARKETS TOUT STOCK OFFERS IN FACE OF STRUCTURAL WEAKNESS

Given the marked absence of primary offers, stock markets have had no choice but to tout stock placements that were routine in the past.  Yesterday, the BMV headed by Marcos Martínez “celebrated” the issue of  stock certificates by HIR (headed by Justino Hirschhorn) for 1,500 million pesos. There was talk of a “milestone” for the real estate company. There are structural problems that have been ignored for years by the SHCP [Department of Finance and Public Credit] in order to stop the weakening of capital markets.

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