June, 15 2005 |  Share

Auto Parts Workers in Nicaragua Denied Their Rights & Paid Just 41 Cents an Hour

Arnecom Nicaragua, S.A.

Leon, Chinandega Arnecom union leaders



Click here to read an update of July 15, 2005

Click here to see a model letter to Yazaki North America.

Click here to see one to the Nicaraguan Ambassador.


Arnecom is a joint venture between the Japanese Yazaki Corporation and the Xignux industrial consortium in Mexico. Yazaki has 90,000 workers with operations in over 30 countries. Yazaki describes itself as "a world leader in designing and manufacturing electrical distribution systems for motor vehicles." In Mexico, Arnecom has 10,000 auto parts workers. Arnecom Nicaragua produces "wire harnesses," automotive electrical systems, for Toyota, Nissan and Ford. See the Arnecom website.

A review of U.S. Customs documents, compiled by the Journal of Commerce in the PIERS database shows Arnecom Nicaragua sending 53 shipments of wire harnesses, worth $8.62 million, to the U.S. in the month of November 2004 alone. The shipments went to:

Yazaki North America, Inc.

Lanter Corporation

14 Gateway Commerce Center Drive

Granite City, Illinois 62040

Arnecom in Nicaragua has been granted a 100 percent exemption from all taxes including corporate income tax, state and municipal taxes, all import and export duties, and even local sales taxes. (Arnecom workers have to pay sales tax.)

Arnecom began full scale operations in January 2003, and currently has three plants, Plant I and Plant III in the City of León, and Plant II about 40 kilometers away in the city of El Viejo. Together there are more than 4,800 workers. The workers have been told that a fourth plant will be added.

The vast majority of Arnecom workers are very young, ranging in age from 18 to 25, with the average being 20 years old. Approximately 70 percent of the workers are women.

Before Arnecom opened, the people of León were told they would be paid $50 a week. This was untrue. Once in the job, they received a base wage of just 37 cents an hour and $18.72 a week. These were well below subsistence wages, made even worse by the fact that they had not received a wage increase in over two years, despite an inflation rate of 14 percent for 2003 and 2004.

In early February 2005, in a spontaneous work action, Arnecom workers in both El Viejo and León walked off the job demanding better wages and working conditions. Arnecom management responded with a three cent- an-hour wage increase, while forming a yellow company union. Workers were told if they did not affiliate to the company union, they would be fired. The struggle continues.



Abusive Conditions at Arnecom

  • Mandatory pregnancy tests: After the two-month trial period, all women must undergo a mandatory pregnancy test. If they test positive, they are fired.
  • Forced to model naked: To get a job at Arnecom, all the workers, men and women, must model naked before managers, who check to see if they are fit and show no signed of having had any operations.
  • Need permission to use the bathroom: No worker can leave the production line without first receiving permission to use the bathroom, and then must wait for a replacement to take his or her place.
  • Excessive heat: The workers say the factory is very hot and they sweat a lot all day while working. Sometimes management turns off a number of lights to lower the temperature, but this puts more strain on the workers' eyes.
  • Warnings and suspensions for sitting down: The majority of workers are on their feet all day and have no right to sit down at all. If a worker even leans over to half sit down they get a verbal warning. Verbal warnings lead to a written warning, and two written warnings lead to a suspension of two days or more without wages.
  • Constant pressure to reach production goals: The workers say they must race to meet their production goals. For example, a young woman operating a manual machine must complete 1,000 pieces a day, applying circuits to terminals. She sits on a hard wooden bench, without a back, hunched over, operating a foot peddle all day. At the end of the shift, her back aches.
  • Exposure to dangerous chemicals: In the soldering department, workers are exposed to vapors from the "flux," the caustic solution used to clean the metal parts for soldering to promote a solid bond. These workers have leather suits and masks, but the workers say the vapors still get in and that workers in that department, even those not directly involved with the flux, get "thinner and thinner" and "suffer nervous conditions."
  • Punished for being late: A worker coming in a few minutes late just one day will lose their attendance bonus for the whole month. If this happens three times, they are suspended without pay for one or two days.
  • Atmosphere of repression and fear, suppression of the right to organize: Most Arnecom workers are afraid. Afraid that they will be fired and blacklisted if they attempt to exercise their legal right to freedom of association. Indeed, on May 29, the workers held an assembly to organize an independent union and elect their new leaders. Just two days later, on May 31, three of the newly elected leaders were fired. Only after waging a hard struggle, were the illegally fired union leaders reinstated on June 1st. But the situation remains tense, as management is increasing its threats in an attempt to impose the yellow company union on all the workers.




Arnecom operates around the clock, 24 hours a day, six days a week, using three 8 ½ hour shifts.

Shift 1             6:00 a.m. to 2:35 p.m.
Shift 2  2:00 p.m. to 10:25 p.m.
Shift 3  10:00 p.m. to 6:00 a.m.

The night shift is alternated every 15 days. In the 8½; hour shift, the workers get a 30-minute lunch break. (According to Nicaraguan law, it appears that the workers should be paid for their 30-minute break, which they are not. Arnecom could be shortchanging the workers of three hours of wages due them each week.)



Below-Subsistence Wages

Before the spontaneous work action in February, the Arnecom workers were earning a base wage of just 39 cents an hour, and $18.73 a week. If what is known as the "7th Day" attendance bonus is included, the workers could earn 44 cents an hour and $21.21 a week. If a worker missed a day of work, of course, they would lose the 7th Day's pay. These wages fall well below subsistence levels, meeting just 52 to 65 percent of a family's basic needs, according to both the Nicaraguan government and respected non-governmental research organizations.

Arnecom Wage Before February

   Base Wage  Base Wage Including 7th Day Attendance Bonus
 Per Hour  39 cents  44 cents
 Per 8-hour Day  $3.12  $3.52
 Per 48 hour Week  $18.72  $21.21
 Per Month  $81.12  $91.91
 Per Year  $973.44  $1,102.93

After deductions for Social Security health care, the Arnecom workers take home 40 cents an hour and $19.27 a week. The Nicaraguan government sets the cost of providing a family's most basic needs at $141 a month. Respected local independent nongovernmental organizations put the cost of a family's basic needs at $176.25 per month, or 25 percent higher than the government figures. The Arnecom wage of 44 cents an hour, $91.91 a month, meets just 52 to 65 percent of a family's most basic needs.

In desperation, in late 2004 and early 2005, the workers sought several meetings with Arnecom management, all of which went ignored. As mentioned earlier, the inflation rate, which totaled 42.3 percent between 2000 and 2004—14 percent in 2003 and 2004 alone—was further eating away at the real purchasing power of their already below-subsistence-level wages. They were shrinking into ever-deeper poverty.

This all boiled over in February. A spontaneous work action started in Plant III in El Viejo on February 1, and spread to Plant II in León on February 3 and 4. For two days, in a spontaneous uprising in León, the workers walked off the job and stayed in the factory without food or water. The workers went out over the extremely low wages and poor working conditions, and because management refused to meet with them.

The workers were demanding a doubling of their wage, or 88 cents an hour and $42.42 a week. This would bring their wages close to what they were promised at the beginning, and would at least meet the most basic needs of their families.

Management responded to the work stoppage by hand picking a "Commission" of workers who were then locked behind closed doors in a negotiation obviously controlled by the management. Two days later, the workers "Commission" and management emerged to announce a wage increase of three cents an hour--$1.52 a week. No vote was allowed, despite the fact that all the workers were stunned and rejected this. The company seemed to imply that if the workers did not accept this settlement there would be trouble, which meant firings. The workers are now earning a base wage of 41 cents an hour, $19.68 a week, an including the 7th Day's attendance bonus they can make 47 cents an hour, or $22.78 a week.

Wage after February Work Action

  Base Wage  Base Wage Including 7th Day Attendance Bonus 
Per Hour  41 Cents 47 Cents
Per 8-hour Day   $3.28 $3.76
Per 48-hour Week  $19.68 $22.78
Per Month  $85.28 $98.73
Per Year  $1,023.36 $1,184.73

The 47-cent-an-hour wage remains well below-subsistence levels, falling 30 to 44 percent short of meeting a family's basic needs. If a worker maintains 100 percent punctuality and does not arrive even a few minutes late once during the entire month, they can receive an 80 Cordoba bonus—which would come to $4.85 per month, $1.12 a week, or two cents an hour. Following the walk out and "negotiations," management provided the workers with a 250 Cordoba food coupon to be spent at the company store. This adds $15.15 a month, or $3.50 a week, seven cents an hour, to the workers' wages. With every possible bonus—attendance, punctuality and the food coupon—the very highest wage in the factory would be 56 cents an hour.

A Worker's Weekly Expenses

Some examples:

Round trip transportation to work: 12 cordobas a day or $4.38 per week.

Rent: 600 cordobas a month or $8.39 per week.

Utilities (gas, electric, water): $10.60 a week.

Food for a family of five: $375 to 700 cordobas or $22.73 to $42.42 a week.

Even these very limited expenses come to $46.10 to $65.79, which is in excess of the $22.78 a week the workers actually earn. Some workers who were parents told us that they frequently have to go without eating so they can purchase cereal for their children. The workers told us that they can afford to eat chicken just once or twice each week but only if they worked overtime. Their staple diet consisted of rice, beans and tortillas.



Fighting Back

After management came back on February 4 with a three-cent-an-hour take-it-or-leave-it wage increase following the walkout, the workers immediately started to organize. By February 7, 815 workers in Plant III in León had dared to sign a list of demands that again called for higher wages and better working conditions. In fact, in a sign of real strength, 300 workers marched to the local Ministry of Labor office to deliver the demands. The next day, one by one, the eight workers who had drawn up the list of demands and circulated the petition were called in for individual meetings with management. They were told that if this happened again, they would be fired. They were asked to apologize to the company and to sign a statement that they had violated company rules and would never do so again. The eight refused and were threatened with firing.

Management knew that the wide popular support for these demands was the first step toward organizing a union. It was at that point in early February that management moved quickly to form their companycontrolled union. They used the workers they had already hand-picked for the "Workers Commission" to build their union. There were no union dues. The company would pay for everything, giving the union $850 a month, which is a lot of money in Nicaragua. Next, management let it be known that if the workers did not join their union they could be fired—affiliate or be fired. With no options, many workers joined the company union. The yellow union has presented the agreements "negotiated" with the company in February as their contract.

When a group of Arnecom workers held an assembly on May 29 to organize an independent union and elected their new union leaders, management responded two days later by firing three of the newly-elected leaders. After a struggle, the leaders were reinstated on June 1.

Now Arnecom management is pressing very hard for the Nicaraguan Ministry of Labor to invalidate the independent union, allowing for there to be just one union in the plant, the company's yellow union.

The workers now feel very alone, isolated and vulnerable. They can be fired and blacklisted. Arnecom represents the only factory jobs in the rural area of León, where farming has collapsed and unemployment is rampant.

The greatest hope of the Arnecom workers would be for international solidarity to help support their just struggle to win respect for their basic legal rights.

Arnecom is also setting up auto parts plants in Haiti, where the company will be able to pay wages as low as 30 cents an hour.

Wages Shrink While Exports Soar

Between 1998 and 2004, Nicaragua's apparel exports to the U.S. surged 257 percent, growing from $232 million to $595 million in value. In 2004, Nicaragua's apparel exports were up 23 percent over 2003, growing by $111 million. Nicaragua sent 175.2 million garments to the U.S. in 2004.

In the first two months of 2005, Nicaragua's garment exports to the U.S. continued to grow and were up by 26 percent over the same period in 2004. Nicaragua's total exports to the U.S. were up 29 percent in 2004 over the previous year, reaching $990.5 million. The U.S. actually runs a $398.8 million trade deficit with Nicaragua.

Employment in the free trade zones in Nicaragua has quadrupled over the last six years, growing from 15,000 in 1998 to 61,090 maquila workers in 2004.

A compounded inflation rate of 42.3 percent between 2000 and 2004 has eaten away at the real purchasing power of Nicaragua's workers. An inflation rate of 7.4 percent is forecast for 2005.

The Economist Intelligence Unit reported on January 15, 2004 in its "Country Profile Nicaragua" that "maquila production expanded rapidly after 1997, taking advantage of extremely cheap labor costs."