On October 11, 2009, Mexico woke up in confusion. The night before, a midget in Presidential clothing, shielded behind hundreds of soldiers disguised as policemen, abolished the electric company in charge of the most populated part of Mexico, Luz y Fuerza del Centro (LFC). The real reason for the action was that its union was too feisty — the action was a form of privitization meant to transfer power from workers to owners. President Calderón’s excuse was that the company had become a financial burden for the nation.
That morning, the clock ticked for hours but there was nothing but noise. The people in charge of the company had just vanished, no speeches, no nothing, just vanished. The midget was on every TV channel, every radio station, repeating over and over again his lame excuses for dissolving the company. He assured the nation that now, Mexicans would enjoy a first class electric service, with competitive rates provided by a first class company, Comisión Federal de Electricidad (CFE). Six months later, I’m still waiting.
After the announcement there were immediately questions. “Can he do that?”, “Does he have the constitutional power?”, “Will the new company be able to assume control?” The only ones with easy answers were the 44,000 LFC union members. “We will fight” they said.
In the days after the declaration, it became apparent that CFE could not take over the electrical system so easily. Millions of people lost electrical power for weeks. The “highly trained and specialized” CFE technicians couldn’t operate LFC facilities — they didn’t know how. The technology that kept the system operating was too old for them to operate. LFC workers complained that soldiers were arriving at their homes before dawn and kidnapping them to force them to fix problems in every aspect of the electrical service.
Those problems continue to exist right now. It can be a sunny day, no clouds, no wind, no rain, just a perfect day, and suddenly there’s a blackout that lasts for several hours. That’s the “first class” service CFE provides. And the new company is bleeding money, the exact excuse used to legitimate the disappearance of LFC. The reason is because CFE is not collecting fees — people are not paying because they don’t agree with the price. No one is checking meters to see how much energy is being used — instead everything is “calculated”. CFE doesn’t have enough employees to cover the whole service area and the former LFC workers won’t help them.
Historically, electrical service in Mexico was provided by foreign companies. Mexican Light and Power (MLP) was the biggest of all. This company provided electricity for Mexico City and all the states around it since it was created in 1903. By 1911 it was the biggest and most modern electric company in all Latin America but that was never reflected in good salaries and work conditions for their workers. Several attempts were made to create a union but the result were always the same: police repression and the firing from the company of the unionists. This changed in 1914 after a tramway workers strike that represented a great victory for unionism in Mexico. In December, 1914 Sindicato Mexicano de Electricistas (Mexican Electric Workers Union – SME) was formed. During its first 5 months of existence, the union organized two strikes and made substantial improvements in working conditions, salaries, and work hours.
In 1936, the general contract for the workers expired and the company and union couldn’t reach an agreement. The workers demanded increases in retirement payments and access to medical services. MLP denied all of this and also decided to eliminate the right to retire after 35 working years. The union’s General Secretary went to see the President and said “Mr. President, the strike is about to begin but I guarantee that all public services will continue to work.” July 16 the strike began with the support of the most important unions in the country and the Labor Secretary on their side. Ten days later, MLP had to agree to all 107 union demands and sign a contract that would be an example for unions around the world.
By 1958 it became evident that as long as private companies provided the electrical service, it would be impossible for the country to implement a national electrification program. To solve this, on September 27, 1960 the Mexican president nationalized all electrical services.
After the nationalization, there were two national companies and two unions in charge of generating electricity and providing electrical service to the Mexican people. There was the STERM union that was controlled by the government that worked for CFE and there was the SME union that was an independent union that worked for LFC.
In 1970, the government tried to abolish LFC and transfer all its assets to CFE but failed. Instead, LFC was prohibited from building new powerplants and in 1985 its service area was reduced. In 1994, LFC was recognized as a public company with no government links or control.
The reasons and explanations
The official campaign to discredit LFC and its workers has been quite effective because its assertion that the company was inefficient was true. LFC was an inefficient company from an economical, capitalist perspective. Every year, several billions had to be transferred to the company for it to continue operating. That definitively sounds like an excellent reason for it to cease operating. That is until you hear the reason it was inefficient. When you are forced to buy a product at a certain price and then you have to sell it at a lower price, you cannot make money. Since 1970, the company has been prohibited from producing the electricity it sold. Instead, it had to buy power from CFE at prices determined by the government. The government blamed the workers, calling them inefficient and saying that the financial problems of the company were because the workers salaries were exaggeratedly high and their contract had many benefits other contracts didn’t have. But if their contracts were better than other contracts, that meant they had a good union and the union did what it was supposed to do. It didn’t mean they didn’t deserve what they had. This chart explains things quite well:
Function in the company Monthly salary
General Director 145,800
Finances sub Director 145,000
General lawyer 145,000
Auditory Director 104,500
Unionized worker 6,000
(One US dollar is around 14 Mexican pesos right now)
Just to compare, the Mexican President gets every month 152,000. So maybe it is not the unionized workers that have exaggerated salaries. Moreover, the largest enterprises and government offices don’t pay for the electricity they use, even though they are charged a lower price that the normal users. Here is a list with some of those big users:
User Debt in millions of pesos
Mexican Congress 4.1
US Embassy 1.7
Attorney’s Office (PGR) 1.5
Mexico City subway 16.6
Foreign Affairs Office 1.5
Estado de México government 1816
Hidalgo government 316.3
Besides the flaws in the government’s arguments, it is also relevant who is making them. The Labor Secretary Javier Lozano has been an active protagonist in this situation, supporting the President’s decision and declaring invalid all of the arguments the SME has presented to support its case. This makes it impossible for SME to win because the person that should be looking out for the workers and unions’ interests, or at least be a neutral judge, is one of the main supporters of the disappearance of the company. For those that believe in God, it is like suing Jesus and letting God be the judge — you just will never have a chance of winning.
The REAL motives
Money. That is always the cause, the need to privatize things. Why give things away cheap when you can privatize and charge whatever you want? People can’t choose — if they don’t like the prices, they can’t do anything about it since there is no other option. For years, one government after the other has reduced the investment in education, public health, and in this case, energy generation. You don’t invest at all at a company that provides a vital service for a country, you force the company to cut the budget and to expand its service, and eventually the company will become financially ineffective. This provides the perfect excuse to privatize it. It has already happened with the telephones, the railways, and now electric energy is the next candidate. But there is something more, something else that can be privatized and that has not been mentioned. There is optical fiber, a huge network of optical fiber that reaches all of the country. Most of it belongs to CFE, but since it is a government-loyal company with a government-loyal union, you will never hear a word about someone inside the company protesting for the privatization of the optical fiber network. But in the center of the country, its most populated region, the network didn’t belong to them, it belonged to LFC and its union would never allow this privatization to occur. So what had to be done was to get them out of the way. A spotless tactic, get one union out of the way and you will be able to privatize two things. Two for the price of one — what a bargain.
The public reaction
Lots of people raised their voices back in October to support SME, great voices, powerful voices. The best lawyers in constitutional rights offered their services to prove that the presidential action was unconstitutional nothing more than a clear and flagrant violation by the government of the union’s autonomy. But it is difficult to prove a violation when the judges do what the boss says, and the boss is the one being accused. There was a lot of hope that millions of people would follow the national strike called for March 16 but nothing happened. Few people went out to show their support to the movement. Once again, television and the cheap entertainment it provides were more powerful than the cries of thousands of families for justice and a decent job. The government’s tactic is to wait for the clock to tick enough for all of the SME workers to get another job or, in the worst of case, for people to forget all of it and only recall it as a dark memory in the past, a story that maybe happened. And then, another injustice will be consummated, one more for the history books, another defeat for the union movements around the globe. Just like a Mexican historian wrote about the 1976 electric workers movement:
“La solidaridad con los electricistas de la Tendencia Democrática fue limitada, se realizaron varias maniobras y actos públicos, hubo desplegados de apoyo, volantes y hasta paros solidarios de agrupaciones sindicales universitarias. Sin embargo la movilización no alcanzó grandes proporciones. Se esperaba mucho más de lo que se dio (sucedió).”
(Solidarity with the Democratic Current electric workers was limited, public acts took place, there were statements being published, flyers, and even solidarity interruptions at universities. But nevertheless, public reaction didn’t reach huge proportions. It was expected a lot more than what finally happened.)