Caterpillar Factory in Mexico Draws Complaint of Labor Abuses

Over the past few years, as major manufacturers have announced plans to ramp up production in Mexico, labor unions have raised concerns that American jobs will be sent abroad.

Now, the concerns have prompted the United Automobile Workers union, a prominent backer of President Biden, to criticize an administration decision not to pursue accusations of labor abuses by a Mexican subsidiary of Caterpillar, the agriculture equipment maker.

In late June, the administration informed a group of unions that it would not pursue a complaint that the subsidiary had retaliated against striking union members by making it difficult for them to find alternative employment, a form of blacklisting.

The government’s ability to police such violations, under a provision of the United States-Mexico-Canada Agreement, the successor to the North American Free Trade Agreement, is meant to reduce the incentive for American employers to move jobs to Mexico in search of weaker labor protections. The U.A.W. argues that, by declining to use its authority under the trade agreement in this case, the Biden administration may be encouraging companies to relocate work.

Caterpillar workers in Mexico “face harassment and blacklisting for daring to stand up, with no help from the U.S.M.C.A.,” Shawn Fain, the president of the U.A.W., said in a statement. The U.A.W. was among several labor groups that brought the complaint.

The Biden administration would not comment on the complaint, but pointed to two dozen other cases it had pursued under the trade agreement. Caterpillar did not respond to requests for comment.

The back and forth comes during a U.S. election campaign in which the protection and creation of manufacturing jobs may again loom large.

When Donald J. Trump ran for president in 2016, he made inroads in Michigan, Wisconsin and Pennsylvania by criticizing the loss of manufacturing work to other countries. Four years later, Mr. Biden’s promise to revive U.S. manufacturing helped him win those states.

According to financial filings, the number of Caterpillar workers in Latin America increased to just over 20,000 last year, from about 11,000 in 2016. The number of Caterpillar jobs in the United States has increased by a similar amount, to about 50,000, over the same period, though that increase is far smaller in percentage terms. The data does not distinguish between production and white-collar workers.

CNH, another equipment maker with a large U.S. presence, recently told the U.A.W. that it was moving more than 200 jobs to Mexico from Racine, Wis. A third manufacturer, John Deere, is building a new facility in Mexico and recently announced layoffs that would affect hundreds of workers in Iowa and Illinois.

Richard Glowacki, the chairman of the bargaining committee at the U.A.W. local that represents workers at the CNH plant in Racine, said offshoring had put his members in an impossible situation.

“American workers are always behind the eight-ball having to take concessions to compete with a country that is not at the same standards we are,” Mr. Glowacki said.

A CNH spokeswoman said the company was “redistributing manufacturing activities that are not central for the Racine tractor production.” A Deere spokeswoman said the manufacturer’s layoffs were related to “lower commodity costs, lower order volumes and a softening construction market.”

Hourly workers tend to earn low wages in Mexico compared with those in countries of similar wealth. Many economists blame the country’s established unions, which have often collaborated with management to negotiate contracts that suppress wages and benefits.

Under the so-called rapid response mechanism that allows the United States to pursue labor cases in Mexico, workers or unions can report rights violations by filing petitions with the U.S. government, which must investigate accusations within 30 days.

If the United States finds sufficient, credible evidence of a violation, it will ask the Mexican government to conduct its own review, and the two sides can work out a remedy. The United States can appeal to a multinational panel if it considers the Mexican response insufficient.

The Biden administration successfully pursued a blacklisting case under the enforcement mechanism when a company discriminated against job candidates who had been involved in union activity.

Another case led to an agreement to reinstate Victor Manuel Vergara García, a worker at the Caterpillar plant who was fired in April 2023 after he had begun organizing co-workers to join an independent union.

“In general, there is positive feedback,” on the enforcement mechanism, said Joyce Sadka, an economist who is an expert on Mexico’s labor institutions, pointing out that many employers have become more careful about following labor law since the mechanism was created.

But, she added, “we’re just starting to scratch the surface.”

Labor abuses like retaliatory firings of union supporters are rampant in Mexico, according to Dr. Sadka, and enforcement actions are scant by comparison, partly because many Mexican workers don’t know their labor rights.

But the Caterpillar case shows how challenges to abusive labor practices can hit an impasse even when workers join unions and bring complaints.

Workers at the Caterpillar subsidiary, which is in the border town of Nuevo Laredo, voted to join an independent union in June 2023, and went on strike in September seeking a raise. At the time, the largest category of workers at the plant made roughly $18.70 a day, below the legal minimum wage in the area.

The company’s latest offer is about $21.70 a day, while the union’s latest demand is about $24.60. The union is also seeking back pay for striking workers.

The U.S.M.C.A. complaint says the workers have been blacklisted for months, making it difficult for them to find other work during the strike. In one example, a Caterpillar worker landed a job at another company, only to have the offer rescinded at the end of the training period for the new job. The complaint says a human resources representative told the worker that the new company had to reject any applicant from the striking Caterpillar plant.

“The blacklist has had a devastating effect on people, and no one is defending them even though it is a blatant violation,” Mr. Vergara García, the Caterpillar worker, said through a translator. He remains out of work during the strike despite the agreement on his reinstatement.

Dr. Sadka, the economist, said blacklisting was so ingrained in Mexican labor markets that it was often difficult to identify the culprit. Blacklists can be mutually enforced by multiple employers, who all benefit because such lists serve to discourage resistance from workers.

Daniel Rangel Jurado, the research director at Rethink Trade, a trade justice advocacy group that joined the petition in the Caterpillar case, said his group had success bringing petitions under the trade law when the accusations were narrow and clear-cut, like the retaliatory firing of a worker trying to unionize.

But he said the enforcement mechanism appeared less able to deal with more diffuse instances of blacklisting, in which there might not be a single illegal action or culprit.

A United States Trade Representative official said the agency was actively looking into more systemic issues. The official said broader instances of blacklisting — in which many employers simultaneously refuse to hire a group of union supporters — could be handled through a variety of tools, including both the rapid response mechanism and diplomatic engagement with Mexico to prompt enforcement.

Liliana Michelena contributed reporting.