Will U.S. see unrest like that caused by union in Mexico?

by Kay B. Day

[Image courtesy of NASA.}Labor union anger doesn’t just happen in the U.S. Right now Mexico’s president Felipe Calderón has his hands full because of financial and production problems at state-owned Luz y Fuerza del Centro. The Wall Street Journal said Calderón “sent more than 1,000 riot police to take over operations.” The utility provides light and power to approximately 25 million customers. The president justified his actions by claiming subsidies for the power company were unaffordable, and he said, “Today, we have to change what doesn't work in the country." Expenses were double the amount of revenue—a balance sheet only a bureaucracy could love.  And last year the company lost 1/3 of the energy it bought from Mexico’s main generator said the WSJ.

Mexico wants to “dissolve the company” and pink slip more than 44,000 workers who belong to the Mexican Electricians Union.  The Journal noted analysts believe the utility could be run by far fewer workers.

Labor Notes, an advocacy organization with offices in New York and Michigan, wants Mexico to butt out and apparently keep the subsidies flowing. The website has a form letter posted for people to write to the president in protest.

Problems with the utility are similar to problems in the United States—years of subsidies and cronyism coupled with escalating pensions and union mandates eventually cause losses in profit so steep the company cannot continue. A spokesman for the union workers alleged there was too little investment in the utility and the company also suffered from selling discounted power to industry.

Labor liabilities include 22,000 retirees and pension benefits equaling approximately 66 percent of $18 billion, not a small chunk of change. The Journal said Calderón called the situation “financially impossible.”

Mexico’s power rates are regulated, but rates for households are among the highest in Latin America, a slight harbinger of things to come in the U.S. if expensive energy bills like HR 2454 are rammed through by big-spending Democrats who hold absolute control of all levels of government at present. American unions back HR 2454, promoting it to members as a means of creating green jobs. Obviously many skilled Mexican workers will be looking for jobs soon.

Mexican union workers and leftwingers have held rallies to protest decisions about Luz y Fuerza del Centro, and many believe the president wants to take the utility private because of its dismal performance as a state-run entity.

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