Union workers for Mexico’s LyFC electric company dismantled

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Protests against Mexico’s LyFC electric company

Union workers for Mexico’s LyFC electric company during a march against Gov. decision. (AP Photo Eduardo Verdugo)

MEXICO CITY, Mexico — Daniel Vazquez will never forget his last night at Luz y Fuerza del Centro, the state-owned electricity company where he had worked for 22 years.

“You and your people are screwed,” the police officer told him as he thrust an AK-47 assault rifle into his chest. “You’re not coming in.”

Vazquez, 59, was attempting to report for work as head of a night shift of 80 workers at one of the customer call centers run by Luz y Fuerza del Centro (known as LyFC), which ran the electricity grid for Mexico City and the neighboring states.

He had seen the evening news that night — October 10, 2009 — which reported that President Felipe Calderon’s government had ordered police to seize the bankrupt company’s facilities and kick out its workers.

Nevertheless, the sight of dozens of heavily armed federal police officers decked out in full riot gear herding his coworkers from their stations and forcing some to line up against a wall at gunpoint was unnerving.

“In Mexico, business does not have to worry about strong unions.”~ Carlos de Buen, labor lawyer
Mexico’s LyFC electric company

Union workers for Mexico’s LyFC electric company fighting for union autonomy. (Photo/ sipse)

My world collapsed,” he says. “There was this massive feeling of impotence, of not being able to do anything. You can’t respond to the abuse because it will just get worse, and they will beat you, even if you have done nothing wrong.”

Now, nearly three years after the police stopped him from reporting for work, Vazquez is one of roughly 13,000 of LyFC’s 44,000 employees, all union members, who have refused to take the payoff offered by the government in the increasingly forlorn hope that they will get their jobs back.

In the meantime, the LyFC’s operations have been folded into Mexico’s Federal Electricity Commission (the CFE) which runs the rest of Mexico’s grid. It has also outsourced the work of maintaining the LyFC’s infrastructure to a fleet of private companies, a move that has allegedly compromised safety and caused horrific workplace accidents, including dozens of fatalities, to soar.

“It’s not about the money. This is an injustice and I don’t want to go along with it,” says Vazquez. “I spent the best years of my life at that company, working hard every single day, working my way up from when I joined, as a laborer. What a way to treat me after 22 years.”

Payoff to union workers not enough

Refusing to accept the government’s payoff has come at a high cost. Vazquez has separated from his wife and is living in a rented room, barely scraping by on odd jobs and family handouts.

His health has also taken a hit, with him now suffering from gastritis, gall stones, depression and a host of other conditions. “I never even went to the doctor before,” he says ruefully.

Mexico’s LyFC electric company

A painting of Mexico’s LyFC electric company logo in main square of Mexico City. (Photo/ xhglc)

Behind Vazquez’s personal story lies a complex web of political intrigue and alleged union-bashing by the administration of outgoing President Calderon, of the conservative National Action Party. Observers say it’s a legacy that Calderon’s recently elected successor, Enrique Pena Nieto, is likely to continue.

All of LyFC’s employees belonged to the Mexican Electricians’ Union, or SME by its Spanish initials, one of just a handful of strong, genuinely independent labor unions in Mexico. Not incidentally, they also enjoyed some of the best pay and conditions in the country. But the SME’s fate could not have been more closely tied to that of LyFC, the sole employer of its members.

In a country where the top 10 percent of society earns 26 times that of the bottom 10 percent — the second most unequal country in the OECD, a group of 34 leading democratic economies — the SME’s efforts to defend its members’ interests stood out like a sore thumb.

Unlike the SME, some 90 percent of unions in Mexico sign “protection contracts” with company management. These contracts typically offer workers the legal minimum pay while guaranteeing employers no strikes will occur.

Most of these so-called “protection unions” charge no membership fees and are instead financed by the employers. Often the company lawyers and union leaders who negotiate them also receive a cut from grateful companies glad to avoid having to field workers’ demands for a better deal.

Selling at a loss

LyFC electric company

Two persons holding a Mexican flag with LyFC electric company logo during a protest in Mexico City. (Photo/ TemasLemasyDilemas)

LyFC had been losing money for a long time, requiring the Mexican government to subsidize it to the tune of around 40 billion pesos ($2.8 billion) a year.

This was one of the principal arguments offered by the Calderon administration for the company’s abrupt liquidation.

But that explanation only begs further questions. LyFC, which only distributed electricity rather than actually generating it, was required to buy and sell power at prices set by the CFE.

LyFC was therefore obliged to sell to its 5.7 million residential, business and industrial customers at a lower price than it paid to the companies who generated it.

Meanwhile, the company was owed billions of dollars in unpaid bills dating back as much as a decade, including by large industrial customers, while thousands, possibly millions of illegal connections also weighed it down and helped prevent the company from ever breaking even.

Yet, many residential clients were also fed up with frequent black-outs and the company’s slow response times, while LyFC workers, stoutly defended by the SME, had acquired a reputation for being pampered and overpaid.

Both the LyFC and the SME became easy targets for drastic measures by the government.

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