Ford Strike a Dilemma for Mexico : Labor: The ruling party must decide soon whether to back union demands for better wages or play hardball in the battle to control inflation.

HERMOSILLO, Mexico —  In the four years that 23-year-old Marco Antonio Gutierrez has worked at the Ford Motor Co. factory here, his supervisors have demanded world-class quality for the Escorts and Mercury Tracers the plant produces for the U.S. market.

Last week, Gutierrez and his 2,100 co-workers walked out of the plant. Their demand: wages closer to world-class for world-class work.

The strike is an irritant for Ford, but a tough dilemma for Mexico’s ruling party, which must soon decide whether to support its union ally at the plant or hang tough on its program to control inflation--a goal the government considers key to its successful participation in a global economy.

The strike itself is an unexpected fallout from the government’s decision to pursue the North American Free Trade Agreement as part of its globalization strategy.

Negotiations for the agreement put Mexican unions in closer contact with organized labor in the United States and Canada, making clearer their role in Mexico’s grand strategy to participate in the global economy. Many Mexican workers see the issue as their government asking them to work harder producing better goods so that Mexico can successfully trade in the international arena, yet denying them a share of the prosperity from the new international economy.

“This is the beginning of a process of comparison,” predicted labor consultant Agustin Arragoiz. “If businesses are going to insist that workers become as productive in quality and output as those in the United States because we need to compete, workers are going to demand competitive wages as well.”

The Ford plant was a logical starting place for that process, he added. The factory is owned by an international company, produces cars for the international market and is located 173 miles south of Nogales, Ariz. Workers here earn good wages by Mexican standards, but they no longer apply those standards to themselves.

“We make 6 pesos (about $2) an hour, while workers in the United States doing exactly the same job earn $15 an hour,” said Gutierrez, a tool and die maker. “Our factory constantly receives prizes for quality. These are not fair wages for skilled workers.”

Ford workers said they are asking for a 35% wage hike. The company has offered 9.5%, workers said. A Ford spokesman would not confirm that figure.

“If we accept (Ford’s) offer, in two or three months, we will be worse off than we are now,” said Gutierrez. Mexican inflation is running at about 12% a year, according to government figures. Because of high inflation and stagnant wages, Mexican workers have already lost more than half the purchasing power they had in 1982.

“It’s not just that U.S. workers earn as much in an hour as Mexican workers earn in a day,” said Arragoiz. “On top of that, Mexican workers cannot make ends meet.”

They also feel that they are being asked to work harder for lower wages to make up for a lack of productivity in U.S. factories, he said.

While a situation such as the Ford strike should have been predictable under those circumstances, the conflict could hardly have occurred at a worse time for the Mexican government or the union.

After years of conflict with a strong dissident movement intent on changing the Ford workers’ union affiliation to a different labor federation, current leaders desperately need a victory. Otherwise, workers may well switch federations.

Because those leaders are affiliated with the Mexican Workers Federation, or CTM, the labor federation that is part of the ruling party, the government needs their support. That support is particularly important because of the upcoming 1994 presidential election.

However, the government also wants to cut inflation to a single digit this year. That requires support for the voluntary program of wage and price controls, which has set the maximum annual wage increase at 9.9%, less than one-third of what the Ford workers are demanding.

If a highly visible company such as Ford gives a bigger increase, especially this early in the year, the entire program is likely to collapse.

As a result, if Ford grants the workers a bigger increase, the company faces the wrath of the government. Labor ministers have been known to rebuke foreign companies that give big wage hikes.

Ford wishes to avoid conflict with the government, but the strike is likely to have little immediate impact on its business. U.S. dealers have sufficient inventories of both Tracers and the four-door Escorts made here, so a short strike would have minimum impact.

Ford has attempted to settle the issue quickly by asking Mexico’s Federal Labor Board to declare the strike illegal, giving the company the right to fire any workers who do not return to their posts.

But that forces the government to choose between supporting its anti-inflation program or supporting its union ally. The board’s decision is expected this week.

“We always have hope the government will support us,” said Martin Valenzuela, technical secretary of the Ford workers’ national committee. “But we also have to recognize that in recent years, the government’s policy has been against workers.”