From U.S./LEAP February 2, 2001:

Please find below the report on Kuk Dong by the independent monitor that Nike agreed to at the advice of the International Labor Rights Fund. Arturo Alcalde is well respected among independent unions and non-profits in Mexico.

U.S./Labor Education in the Americas Project
P.O. Box 268-290
Chicago, IL 60626
773-262-6502
Fax: 773-262-6602
usleapja@mindspring.com
http://www.usleap.org

OPINION PRESENTED BY ARTURO ALCALDE JUSTINIANI REGARDING THE CASE OF “KUK DONG INTERNATIONAL.”
January 30, 2001

OBJECTIVE OF THE REPORT- To do a thorough evaluation of the conflict using the methods of observation, direct interviews, and analysis of the labor law and practices. It will describe the most important elements of the conflict; it will identify its causes and will present possible solutions.

METHOD- We met personally on the 15th of January with the representatives of KUKDONG INTERNATIONAL in their residence at “Retorno Continentes No. 38, Rancho “los Soles”, Atlixco, Puebla. There were different meetings with various management staff of the company. The representatives of the company we met with included Y.H. Kim, Managing Director of Kukdong Corporation, Park Hoon, Representative, Hugo de la Peña Riveros, Human Resource Manager, and Fernando A. Treviño, legal representative from the “Rivareneyra and Treviño” firm. We had a lengthy meeting with these representatives, in which they identified the origin of the conflict and its current status.

Subsequently, we proceeded to interview different workers as well as people who supported them, including those who had functioned as representatives of the workers. We were able to obtained confidential information from the labor authorities and local observance of the conflict.

We analyzed the different documents such as, the collective agreement between Kukdong and “Sindicato de Trabajadores de Odicios Varios en General de la Industria y el Campo “Gral. Manuel Avila Camacho” from the state of Puebla. FROC-CROC was represented by Jaime Sánchez Juárez (General Secretary) and Constantino Sánchez Juárez (General Advisor). We also analyzed the salaries records and other documents, among them the document titled “paraprocesal” 1/2001, in which appeared the names of RAUL HERNÁNDEZ ARGÜELLES and a worker name GERARDO XOCHICALE GARCIA who presented themselves as representatives of a group of workers.

We also sent the lawyer, Eugenio Narcia Tovar, of our office to informally observe the way in which the workers who were returning to the factory were treated and to see the behavior of the factory representatives who met the workers at the door of the factory. We also made contact with the representatives from the “Unión Nacional de Trabajadores (UNT).

We had a lengthy meeting on the 25th of January with the following representatives:
Mr. S.K. Byun, President of Kukdong Corporation
Mr. Jorge Jiménez Alonzo, government representative from the State of Puebla
Mr. Jaime Sánchez Juárez, General Secretary of the union
Mr. Constantino Sánchez Juárez, General Advisor of the union
Tara Holeman, Manager of the Human Rights Program of Reebok International,
LTD

BACKGROUND OF THE CONFLICT
The factory started with a plant of 890 employees, 60 “confidential employees,” and 23 managers of Korean nationality. It has been in operation for a year and 2 months. It produces sports clothing specially but not exclusively for “NIKE”. The plant is in a location of 6.5 hectares, and it is constantly growing. The company signed a collective contract with the union CROC before labor began at the plant, following the common practice of choosing the leaders that would benefit their own business. This action resulted in the absence of the workers in choosing the union of their choice; as a result it has generated lack of trust from the very beginning. In addition, the union delegate is not chosen by the workers but designated by the union. The attitude of the union from the very beginning has been one of absolute subordination to the company instead of representing the interests of the workers. Based on the information we obtained, the union is committed to subordination to the company and not the will of those who it is supposed to represent. The collective contract was signed on December 9, 1999 and includes a salary revision for January 15, 2001 and a two-year revision on January 15, 2002. The contract abides by the minimal requirements of the law without any additions. Its text corresponds to a format and has a fundamental deficiency that invalidates it, in that it lacks a salary tabulator in violation of article 393 of the Federal Labor Law. In the chapter about tabulating salaries, it states that it will enforce the most minimum salaries valid in the local region. This is an uncommon deficiency, but it explains the absence of negotiations during the signing of this document. Essentially, the role of this contract is more for the protection of the business to impede the entrance of another union, instead of the betterment of the workers.

The conflict originates from a series of accumulated complaints that were linked to the food service. It became a serious concern in the last days of the past year, before the holidays. Five workers that have exercised the leadership position based on their coordination of the line of work as supervisors, but also members of the union and workers in the factory, were dismissed on January 3, 2001. These 5 workers are: SANTIAGO PEREZ, JOSEFINA HERNÁNDEZ PONCE, MARIO NICANOR ZETINA, MARCELA MUÑOS AND EDUARDO “N.” This dismissal was a result of the workers’ refusal to eat the factory food on December 15, 2000. The workers came to work on January 2 and were dismissed on January 3, 2001. Of these five workers only one signed a letter of resignation and received severance payment, while the others were verbally dismissed without being informed in writing the reasons for their dismissal as the law requires (stated at the end of article 47 of the Federal Labor Law).

As a result of the dismissal of the five workers, all the workers conducted a work stoppage and made a list of demands, which included the reinstatement of the dismissed workers, a change of union, and better working conditions including salary and food service.

On Tuesday the 9th of January 2001 the negotiations were broken off, and as a consequence the workers began a series of protests that resulted in an evacuation by the police, which resulted in violence. Some workers were hurt and sent to the nearest hospital. We were unable to confirm the damaged received by those who were hospitalized.

The company pressed criminal charges for damage caused to the factory and for illegal deprivation of freedom of movement on the morning of the 9th of January 2001. The negotiations broke off at 4pm on that same day.

After the police evacuation took place, a series of mobilization protests were generated. At the same time, the legal representatives of the company, with the support of local labor officials, proceeded to encourage workers to agree to a voluntary dismissal, in return for which they would receive salary, which include payments for benefits they are entitled to. The total amount that workers would receive is approximately $1,500.00 pesos (about $150 in US dollars), which does not provide the same level of compensation that a worker would receive if dismissed since this is considered a voluntary dismissal.

CENTRAL POINTS OF THE CONFLICT-

Our observation is that the conflict originates from various elements. The first one has to do with the low salaries in contrast with the labor market. In addition, their low salaries are inadequate to provide the workers’ basic needs. It is sufficient to look at the text of the collective agreement, which confirms that it tries to maintain the minimal salary required by the law without any additional benefits. The contract states that the minimum salary should only be $38 pesos a day (approximately $3.80 US dollars). The salary structure of the plant consists of 400 employees who work as general helpers and receive the minimum salary, 400 who work as “operators” and earn $43 pesos a day (equivalent to $4.30 US dollars), 50 who work as supervisors and earn $53 pesos a day (about $5.30 US dollars), and an additional 20 who are head managers and earn $53 pesos a day (about $5.3 US dollars). The salary structure already creates an unsettled environment and even more so with the fact that the union from the very beginning operates with a very minimal democratic process as if it is running a personal business. One of the most important services is that of the cafeteria with prices that generate important benefits. All indicated that the food in the cafeteria is not to the satisfaction of the employees and this discontent has generated other discontents, such as periodical promotions that were promised, and a nursery, which appears in the propaganda distributed by the company in order to get employees through their recruitment campaign. The most obvious difficulty in this situation is that of an inability to count on a legitimate union; therefore, it creates a bad situation and it can stir extreme and spontaneous actions.

We receive different versions regarding the origin of the conflict and that the workers' actions were provoked by external agents, such as workers from other factories, citizens, foreign organizations including political parties. Undoubtedly in a factory this large, the most important of the Atlixco zone, there exist various external forces which can act on the Korean personnel in this situation.

Regarding the hours of work, they are from 8am to 6pm from Monday to Friday, and the days off are Saturday and Sunday. The workers have one hour for lunch, which they consume at their workplace. Taking into account what the Federal Labor Law states, that workers must receive a half hour daily break, according to this schedule these employees are working forty-five hours per week. We believe that this is the maximum legal hours permitted. Regarding the age of the workers, according to the documents that we reviewed, currently there does not seem to be any employees under the age of 16. This is a controversial issue because some workers point out that at some point there were underage workers, although we did not find any evidence.

Regarding the treatment of workers by the Korean employees, some of the workers I had the opportunity to talk with during my second visit to the factory informed me that there is a harsh treatment towards the local workers by the Koreans. The treatment is so severe that it has caused some serious incidents, for which some of the Koreans had to be sent back to Korea. We were unable to find proof about these assertions.

RECOMMENDATIONS-

We divided our recommendations in three priority aspects, in seeking to reconcile the preservation of jobs and the contracts of maquila with respect to the rights of the workers in a long-term strategy.

1. A RETURN TO THE JOB WITHOUT ANY DISCRIMINATION.

Based on the characteristics of the conflict, we consider it fundamental that all the workers, without any exception, be rehired in order to bring about the possibility of correcting the practices and conditions in the workplace which caused the current situation. There should not be any use of discrimination in the process of rehiring, neither through salary, conditions of work or seniority, etc. Also, the rehired workers should include the five workers who were originally fired, taking into account the agreement that the company made on the 13th of January 2001 before the Local Conciliation and Arbitration Board of the State of Puebla, in which the company committed to the rehiring, in order to bring a climate of stability and respect to the conditions in the workplace. It is important to set such conditions taking into account that there are legal cases pending, which has spread fear among the workers. It is fundamental that these legal charges be dropped and that the authorities make a commitment that they will not take any action or regulations that will make it difficult for employees in the workplace. It has come to our attention that arrest orders have been made against 4 or 5 people to teach the employees a lesson. It should be recognized that the CROC union will try in some way, direct or indirect, to generate an environment of fear against those workers who wanted to remove them. In order for any recommendation to be implemented, it is important that the company comply efficiently with its commitments, including having a legal representative that has the ability and is committed to the intention of finding a solution. This person should not succumb to local influences such as the obvious links that exist between the CROC union and some local labor authorities and government representatives who for many years have worked under common practices. The experience in the last few days was that some workers were admitted back to the company and others were rejected based on a list that the representatives of the company and CROC had with them at the doorway entrance to the factory. This action clearly demonstrates that in order to have an efficient recommendation, it is necessary the CROC union not be allowed to intervene in the distribution of job assignments or hiring and dismissals. Otherwise it would not be possible to carry out the recommendations and it will be unclear who is the responsible for not fulfilling the commitments. I get the impression that the company is committed to reinstate the workers; however, their lack of firmness toward the representatives of the CROC impedes the fulfillment of their commitments. I recommend that a legal representative be hired who is equipped with the capacity to make decisions without any interests created in the local environment and obviously this representative of the company should be bilingual.

2.- RESPECT FOR THE RIGHT OF ASOCIATION AND FREE ELECTION. Taking into consideration that the conflict originated out of the discontent of an important sector of workers toward the CROC union because it did not represent their interests, I propose as a solution that an honest meeting be made in which the workers choose their future union, where they choose in an open and safe environment whether they want the CROC to continue representing them or if they wish another organization, either another existing union or a new one of their own. Before such meeting takes place, it is important that all the workers dismissed be rehired including the first five who were dismissed.

This meeting should take place under a framework of respect for the physical integrity and security of the workers. The company, the CROC and the local labor authorities should commit to this framework and respect the results and be instrumental in its compliance. Also, they should commit not to pressure the workers before, during, or after the election. To assure that there is no pressure put upon the workers, I recommend the presence of observers and the participation of all the workers including those who were dismissed. The voting process should be free, universal and by secret ballot.

All parties involved should commit to respect the results of the election to make sure that is implemented. For example, if the majority of the workers vote for a new union, the CROC union should respect this decision and accept it in a peaceful and immediate fashion. The company should also recognize the new union as the direct representative of the workers' collective bargaining committee. If the workers vote to continue have the CROC as their representative, the union should agree that it will not take any reprisals against the workers who voted against them.

It is also important that the execution of the election results have the commitment of local labor authorities and government representatives of the state and that they will not place any obstacles against the decisions made by the workers. Having this commitment will obligate the company to make sure that the election results are carried out. It is important that high level negotiations with state government take place so that they can understand the dimension of the conflict and can assure that the work situation will get back to normal using a long-term scheme directed toward the growth of employment. This can be possible based on the importance of the company in the region and the interest of the local government in granting demands to companies. As of now the conflict has not led in this direction not only due to the lack of a company representative that has professional autonomy and authority to make decision but also due to the fact that meetings have been held with low level government officials that do not understand the complexity of the problem and are usually connected and dependent on the leaders of the region.

3.- REVISION OF THE SALARY STRUCTURE, CONDITIONS OF WORK AND TREATMENT OF PERSONNEL

Every time that the salaries of a business are very low in comparison to the market, a revision with possible improvements is necessary, which provides, without threatening the source of employment, a salary that can allow the workers to fulfill their basic needs. It is fundamental that the promises that the company has expressed to the workers ("guarderías" and promotions) be kept; otherwise it will be considered a lack of compliance by the company.

Regarding the conditions of work, specifically that of the cafeteria, a change of "concession" is necessary to a provider that has greater approval and that provides a diet in agreement with the local culture.

Regarding to the treatment of the personnel, is fundamental to develop a revision of rules that favor the growth of mutual respect. It might be necessary to conduct an introductory training for the Korean employees so that they can learn the customs from one country to another.

These recommendations without a doubt should be accompanied with a process of normalizing the labor relations in which the workers and the community understand the importance of promoting employment growth and assure their collaboration. I also recommend monitors to oversee the enforcement of these recommendations. These monitors must be independent observers who are overseeing and certifying the execution of the recommendations.

LIC. ARTURO ALCALDE JUSTINIANI.