December, 03 2012 |  Download PDF |  Share

29 Years of Failure: U.S. Free Trade Debacle in Central America


Multinational Corporations
Like Lear, Hyundai and Kia Walk off with Millions in Tax Breaks
While Honduras Workers Earn Just 99 Cents an Hour, Racing Backward into Misery

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Executive Summary

Race to the Bottom:

U.S. Free Trade Debacle in Central America

  • After 29 years of Free Trade agreements with Central America, Lear workers in Honduras producing Hyundai and Kia auto parts for export to the U.S. continue to earn below-subsistence wages of just 99 cent an hour, while being illegally fired and blacklisted for daring to exercise their legal rights, including the right to organize a union at Lear.
  • The Lear, Hyundai and Kia joint venture in Honduras e njoys windfall tariff and other breaks amounting to tens of millions of dollars.  These corporations pay no income tax, no state, county or municipal taxes, and are exempt from all import and export duties.
  • On the other hand, Lear’s workers in Honduras are trapped in makeshift, dirt-floored huts, lacking potable water, relying on primitive outhouses and cooking with wood, since they cannot afford gas.  The workers’ children go barefoot to save their shoes for church and school.  Lear workers subsist on rice and beans, and even so, they often must turn to loan sharks to survive.
  • Lear, Hyundai and Kia workers are on their feet the entire shift, constantly rushing to keep up with the moving rotary tables and typically performing 6,160 operations per shift, or one operation every 4.82 seconds, connecting circuits on the wire harnesses and binding them together with tape.
  • The workers are drenched in sweat, since factory temperatures routinely exceed 95 degrees.  Supervisors threaten and curse at the workers to move faster or face dismissal.  Many workers report they experience sharp pains in their wrists, hands and fingers from repeating the same motions, nonstop, throughout the day.  
  • Recently management unilaterally increased the workers’ production quota by 17 percent — with no wage increase.
  • Workers have to bring their own toilet paper to work.
  • The Honduran Ministry of Labor is not acting in good faith.  When corporations like Lear deliberately and arbitrarily block Honduran labor inspectors from entering the KyungshinLear factory in San Pedro Sula, the Labor Ministry’s only “recourse” is to fine the $14.2-billion Lear Corporation between $10.23 and $102.30 in penalties — which amounts to a pitiful slap on the wrist.  When it comes to enforcing labor rights, the system is broken.
  • Similarly, the U.S. Government’s ironclad commitments to the multinational corporations have blossomed under 29 years of free trade agreements.  The multinationals have been lavished with massive tariff and tax breaks, while workers’ real wages are slashed and the workers’ rights to organize and bargain collectively are suppressed.  This must change.


Lear workers in Honduras live in primitive, makeshift housing and now cook with wood, since gas has become too expensive.




What Must Be Done

To demonstrate that Lear Corporation, Hyundai and Kia are indeed serious regarding Honduran labor law, commitments under the Free Trade Agreement and the International Labour Organization’s (ILO)internationally recognized worker rights standards, the companies should:

  1. Immediately fire the two most abusive managers at the KyungshinLear factory in San Pedro Sula, Honduras:

    Jorge Martinez, human resource manager, who is in charge of illegally threatening and firing the elected union leaders.

    Adrian Bonilla, plant manager, who workers report is especially nasty and vicious, constantly cursing and abusing the workers, pressuring them to meet excessive production goals.

    The termination of these two abusive managers would be an important, concrete step forward, demonstrating that management is ready to bring the KyungshinLear factory into compliance with local and international labor law.

  2. The legally organized “SitraKyungshinLear” (the Union of Workers of KyungshinLear) must be immediately recognized and afforded all rights, including — especially — the reinstatement of all union officers and members.

  3. After 29 years, commitments made under several U.S. free trade agreements with Central America have continued to fail workers miserably when it comes to worker rights protections, including the legal right to organize an independent union.  This is not acceptable.  We feel strongly that a meeting must be held in Washington, led by the United States Department of State, Department of Labor, the United States Trade Representative’s Office and the U.S. Embassy in Honduras, with representatives of the SitraKyungshinLear union;  Ms. Evangelina Argueta, Director of Maquila Organizing at the General Confederation of Workers in Honduras (Confederación General de Trabajadores, CGT);  the United Steelworkers union, United Auto Workers;  the AFL-CIO Solidarity Center;  the Institute for Global Labour and Human Rights and others.

    After 29 years of failed trade policies, we need a new commitment to recognize and respect trade union rights.

  4. Congressional hearings should be conducted, affording Lear, Hyundai and Kia the opportunity to explain what remedial steps they are prepared to take to bring their multinationals into compliance with local and international labor law.





419,600 Auto Jobs Lost in the U.S.

“ employment in the U.S. auto parts industry has fallen significantly in recent years, declining by 419,600 jobs (45.8 percent) from November 2000 to November 2011.”
As of November 2011, there were just 496,000 workers directly employed in the U.S. auto parts industry.

- Robert E. Scott and Hilary Wething. Economic Policy Institute. “Jobs in the U.S. auto parts industry are at risk due to subsidized and unfairly traded Chinese auto parts.” January 31, 2012.


According to U.S. Customs records, Honduras ranked #4 among exporters of insulated wire, cable and other electrical conductors (HS 8544) to the United States, shipping an estimated value of at least $426,086,106 in 2011.


Source: International Trade Administration, U.S. Dept of Commerce.


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