Puebla, Mexico: Is Volkswagen Mexico ripping off its employees?

Did Pancho Villa speak any Spanish?

About 100 VW employees gathered at the SAT (the tax folks) office in Puebla at 8:00 this morning to deliver a formal complaint about not receiving their profit sharing checks from VW this year. Here in Mexico it is, by federal law, a requirement that a company distribute profit sharing checks to its employees in the month of May for profits from the preceding year.

This profit sharing requirement, along with the various and onerous tax schemes promoted by the government, the crumbling or never-existed-in-the-first-place infrastructure, third rate educational system, law of the mordida and all the way down to business executives and/or family members being picked off the streets in kidnapping operations, contribute to the sad fact that hardly any Mexican businesses make a profit even when they do make a profit, if you catch my drift.

The workers group was met at the door by . . . nobody. There was no one there to receive their complaint. Possibly because they had arrived at 8:00 AM. In Mexico you will be hard pressed to find any public servant at any staff level at his/her desk at 8:00 in the morning. So they spread out into the street which is a major thoroughfare that links Puebla to Cholula (where the airport is) and blocked it. After about an hour someone inside the SAT offices reluctantly agreed to receive their useless and soon-to-be-archived-in-File #13 complaint.

Volkswagen AG announced breathlessly to its shareholders that its 2006 profit more than doubled over 2005's numbers, to $3.61 billion. 2005's paltry profit was only $1.47 billion. VW's shares rose more than 9% on the news. And this profit was weighed down by some 2 billion euros in restructuring costs and severance pay to some 20,000 fired workers throughout the company's various operations.

However, back in August, 2006, VW de Mexico had announced a 1 billion peso loss for the first half of 2006 at the Mexico plant in Puebla. That plant employs somewhere between 16,000 and 20,000 employees.

You would think that with massive losses like this the Puebla plant would soon be scheduled for closure. In fact, however, VW is in the middle of a $2 billion investment program at the Puebla facility so that it can continue to bleed money, I guess.

We all know that ain't so. Why is VW sinking so much cash into a money losing facility? Because it is not losing money. In fact, VW brags that it is making money. This from VW's own VW Goup Supply.com:

VW de México plays a pivotal role for the Volkswagen Group. Highly qualified employees produce top-notch quality products for global markets and implement our objectives successfully: Cost-cutting, productivity enhancement and maximized profit. (emphasis mine)

Here is one way they do it. This is especially favored by the multi-nationals. ACME International's (or fill in any company's name) Official Spokesperson for the Board of Directors:

"Yasss, we lost a billion dollars at our Mexico facility last year. We also lost a billion dollars each at our facilities in France, Germany, Russia, China and Afghanistan. I am pleased to announce, however, that the company earned a record 50 billion dollars in overall profit in spite of losses at each and every one of our facilities.

The company accomplished this by earning 60 billion dollars at our Caribbean operations center, located in a broom closet in an otherwise abandoned warehouse on a rotting quay in Georgetown, Cayman Islands. Our Cayman Islands broom closet contains our Design Center, our Finance Center, our Engineering Center, our Human Resources Center and our Operations Command and Control Center. Our private landing strip and executive jet fleet hangars are also located close by.

The Cayman broom closet bills each of our manufacturing centers 10 million dollars per day for services rendered to the manufacturing facilities and they are all happy to pay.

We look forward to implementing the Cayman broom closet's directives in 2007 and 2008 to reduce our inefficient and bloated workforce at our manufacturing centers by 20,000 jobs each of the next two years as well as wage and benefit cuts of 15%, also each year.

This is also called "skimming".






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