The use of the Industry-wide agreement inhibits investment

Note published on July 21 in Reforma, Negocios [Business] Section by Verónica Gascón.


The prevalence of the industry-wide agreement of the rubber industry in Goodyear is a bad precedent for tire companies and other industries, as it inhibits investment due to the high cost of the benefits that it includes, warn labor lawyers.

Óscar de la Vega, labor lawyer, said in an interview that this situation in Goodyear is perceived as a disincentive for investment in the tire industry, due to the cost that the application of the industry-wide agreement can represent.

The remediation plan formulated by Mexico and the United States to resolve the labor complaint against Goodyear in San Luis Potosí includes the acknowledgment of the Industry-wide Agreement of the Rubber Transformation Industry, above the collective bargaining agreement, that includes other benefits for the workers.

“It is an unfortunate precedent that forces Goodyear to apply the Industry-wide Agreement, which is anachronistic, out of touch with any reality, that stopped being reviewed eight years ago; not only because of the labor costs of the benefits, the most important thing is that it limits operational flexibility, which is highly important for the efficient development of companies in Mexico.”

“Not only will it regulate operations at Goodyear, but it is a precedent against the entire sector in the country”, he stated

Jorge Sales, a specialist in labor matters, agreed that the decision does not provide a happy ending for the tire industry or for investment in the country.

“They are setting an unfortunate precedent that can become a disincentive for different industries that fall under industry-wide agreements, not only the rubber industry”, he said.

Additionally, he added, this agreement for the rubber industry was nullified because its last revision was conducted in 2015 and, therefore, it cannot be applied retroactively.

“The industry-wide agreement applies to six or seven industries in the Country, today this precedent could also affect other agreements, they have the disadvantage of giving the same legal treatment to a complete industry”, Sales pointed out.

In accordance with Article 404 of the Federal Labor Law, an agreement is a covenant by and between one or various workers’ unions and employers that belong to a certain branch of industry with the objective of establishing working conditions.

There are several industries in which this type of agreements prevail, such as the textile industry of silk and all types of artificial and synthetic fibers; radio and television; sugar, alcohol, and similar industries; the textile industry of wool, among others.

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