Balance of the labor reform for the automotive industry

At the time of writing these lines, not only has the tripartite negotiation concluded, between the federal executive, the labor sector and the business leaderships to define the terms of the labor reform regarding labor subcontracting and the participation of workers in profits (PTU), but the initiative resulting from these negotiations was approved by the Chamber of Deputies in the early morning of Wednesday, April 14 with 284 votes in favor, 108 against and 17 abstentions, and sent to the Chamber of Senators that a in turn, it approved the initiative on April 20, with 118 votes in favor, zero against and 2 abstentions.These processes have been more expeditious considering that the issue began to be discussed in September 2019 with an initiative of the PT Parliamentary Group proposing the repeal of various provisions of the Federal Labor Law.

A series of additional initiatives subsequently followed, adding up to a total of 24 on the same topic, the last of which was presented at the beginning of March of this year. In general terms, all these initiatives propose modifying and adding various provisions of the Federal Labor Law in the matter of labor subcontracting, including considerations in the matter of social security and the fiscal part of the subject.

From the point of view of the federal Executive, the modifications to the aforementioned legal framework are necessary due to the abuses committed by different companies in order to evade taxes and not to recognize the labor rights of a part of their workers, using the subcontracting scheme . In this sense, while recognizing that this may be the case in certain sectors, it is a practice outside the companies of the automotive industry grouped in the Mexican Association of the Automotive Industry, AC (AMIA) which follow strict policies corporations that oblige them to comply with the legal provisions applicable in the different countries in which they operate.

There is no doubt that it is a cross-cutting issue, of general application and that concerns companies in the manufacturing, commercial and services sectors, which is why the tripartite negotiations with the federal Executive were carried out with the leadership of business and union representation. ; In our case, we participated through the representation of the Confederation of Industrial Chambers of the United Mexican States (CONCAMIN), and the Business Coordinating Council (CCE), with whom we maintained permanent contact and promptly followed up on the negotiations.

Our interest in the subject is due to the fact that, for years, the shipowners have used the subcontracting scheme extensively, fully complying with the provisions of the legislation in force up to now. We were concerned that the initiative sent to Congress by the federal Executive in November last year prohibited labor subcontracting without making clear the case of specialized services and shared corporate services, these being the figures most used by corporations and companies. automotive. Concerns that we promptly transmit to the president of CONCAMIN, the CCE and in writing to the secretaries of Economy, Tatiana Clouthier and of Labor, Luisa María Alcalde.

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The final result is not what we would have desired, however, we recognize the Federal Government’s willingness to review the issue in a tripartite forum with the participation of the business and industrial sectors and the labor sector, which establishes new rules that provide certainty in the way in which It will be necessary to operate from now on in terms of the relationship between the company and its collaborators.

Now the only thing left is to act expeditiously, since the implementation times of the modifications are tight, only ninety days from their publication, which is estimated to be May 1, to be mandatory as of August 1. The implementation of the changes will not only be the responsibility of the industry but also of the Ministry of Labor, which will have to develop and implement a registry of individuals and legal entities that are dedicated to providing labor outsourcing services.

Additionally, the modifications will also be reflected in the participation of workers in profits, since employers will have to choose one of two modalities: a maximum of 90 days of the worker’s salary or the average of the last three years, which is more beneficial to the worker.

All these changes will have implications in the different sectors and industrial activities, but finally they close a chapter that had generated great uncertainty and concern. From now on, it will be necessary to apply and find the best way to implement the required changes in the shortest possible time.

The debate of the century (I)

The main contenders are, in the realm of economics, the closest thing to world heavyweight champions.

For reasons that seemed to go beyond mere spectacle and sports competition, Muhammad Ali and Joe Frazier fought in a boxing ring for the first time in 1971 in what was dubbed “the fight of the century.” In the context of the everlasting Vietnam War and the fight in the United States against racial discrimination, there were deep divisions among the American population, and the contest in which two world champion boxers appeared, with diametrically opposed styles, somehow the embodied. The fervor transcended borders, leading a world record 300 million people to tune in to the event.   

An analogous network is now taking place among economists given the impact that the American Rescue Plan (ARP) could have – the historic fiscal stimulus package that was approved in the United States at the beginning of March to alleviate the effects of the Covid-19 crisis. . Amid a sway of arguments for and against, mainly due to its possible consequences on inflation, interest rates and the risk of a new recession materializing, the discussion looks to become the debate of the century.

The main contenders are, in the realm of economics, the closest thing to world heavyweight champions. In one corner we have Larry Summers: chief economist of the World Bank, secretary of the Treasury under the Clinton administration, director of the Obama White House National Economic Council, and professor and president of Harvard University. In the other, to Paul Krugman: professor of economics at MIT, professor emeritus at Princeton University, author of 27 books, columnist for the New York Times and winner of the Nobel Prize in economics.

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The significance of the debate is enhanced because both economists are of the school of thought that advocates Keynesian interventionist role of the state, especially in a crisis. Also because, oddly enough, for each of the two positions have expressed mixed groups of economists renowned and political figures, implying that the discrepancies go beyond the ideologies of left or right, liberal or conservative, neo-classical or Keynesian. And also because, even though 75% of the population, including most Republicans, supports ARP, the Treasury, Federal Reserve and other authorities have made repeated statements in defense of the tax package.

The volume of resources approved and the short implementation time are in themselves a milestone. It is 1.9 trillion dollars that will be distributed in a matter of months. Although the historical and cross-country comparisons are not always obvious, the figure is more than double the economic recovery package approved by the US Congress in the 2008-09 crisis (then a record). In the Mexican context, it is equivalent to 236 times the fiscal support that the federal government gave to the economy as a result of the pandemic; It is also equal to 1.6 times the entire gross domestic product of our country in 2020. Notably, the 1.9 trillion is in addition to various other fiscal stimuli that the United States implemented in the last year, adding up to a total of 27% of its GDP.

The broad coverage of the programs is also extraordinary. They contemplate, among other things, an extension of support for unemployment, support for the health sector and public investments in transportation, internet services and for the reopening of schools. They also include generous resources for state and municipal governments, in contrast to 2009, as well as the distribution to millions of households of at least $ 1,400 in cash each.

To understand the controversy, it must first be pointed out that there is indeed quite a consensus that the response to the 2009 crisis was insufficient, and that given the current crisis, that mistake should not be repeated. The labor market remains very weak despite the robust recovery that occurred with the reopening of the economy after lockdown and with the trillions of previous stimuli. Figures from the United States Bureau of Labor Services show, for example, that last month there were still 4.2 million people classified as long-term unemployment (looking for work for 27 weeks or more), 3.1 million more than before the Covid crisis. . Given the great economic slack, it is better to implement extensive fiscal support.

The divisions thus arise around the definition of “extensive” (although also a little with respect to the type of programs contemplated by the ARP). Summers warns that the 1.9 trillion amount is excessive, perhaps twice what is required, and that the economy will hardly be able to efficiently absorb the expenditure that is generated. We would then see strong upward pressure on prices, which some equate to those of the 1960s and 1970s, when annual inflation rates reached double digits. Inflation expectations would rise, the Federal Reserve would react with sharp increases in the interest rate, and this could lead to a recession.

On the other hand, Krugman and those who support the ARP say that inflation is not a cause for concern; not with such a depressed job market. The resources simply replace the lost income, and in fact a good part would not be spent. It would rather be possible to see greater savings given, on the one hand, the recognition of the population that transfers like this will not be repeated, and on the other, the uncertainty of a pandemic that does not end. If anything, the cost of not doing enough and leaving millions of people in poverty and in a more unequal society would be far greater, and it would leave long-term scars.

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The differences in the repercussions of both scenarios are dramatic. In the world envisioned by Krugman, in a few months not only will the United States have emerged from the deep crisis caused by the pandemic, but the trajectory of economic growth would be even higher, with greater well-being of the less privileged socioeconomic groups. However, Summers envisions a “substantial collision risk” scenario, which could return us, economically speaking, to the era of Ali-Frazier. If he is right, this would have very negative effects on world stability, especially after the significant indebtedness of advanced and emerging economies that occurred due to the pandemic.

In a future installment, I will delve into the arguments offered by both sides and explain why, without being completely persuaded by Krugman’s reasoning, I see fairly limited risks of excessive inflation.

Adrián de la Garza is Chief Economist and Director of Economic Studies at Citibanamex *

Working together behind a canned beer

Hand in hand with the metal packaging industry, the beer agribusiness continues its growth and develops value for our country.

The value chain of the beer agribusiness brings together a wide diversity of sectors and resources. The high level of integration of inputs of national origin is a source of pride, since of the total supplies that agribusiness requires, 73% are Mexican. This generates an important economic spill in our local and national economy.

One of the main national suppliers of supplies is the light metal container manufacturing industry. This sector is responsible for producing various useful materials for the beer agroindustry, such as cans.

Towards the middle of the 20th century, one of the main beer companies implemented the use of the can for the first time, providing an innovative alternative to guarantee the conservation, quality and hygiene of beer.

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As of today, cans are the second most popular form of packaging, representing 36% of all beer container methods in our country.

The alternative presented by the use of the can in the marketing of a beer guarantees that its flavor and freshness are preserved. Likewise, its portability and adaptability is convenient for distribution, storage at points of sale and even for consumption.

An outstanding feature of metal packaging is that they are 100% recyclable and can be used continuously without compromising quality. In Mexico there is an efficient system for the separation, collection and recovery of aluminum cans and in a context where every day we are committed, both as consumers and industries, with the efficient use of resources, this attribute offers a conscious alternative with the planet.

With data from the National Chamber of Manufacturers of Metallic Containers (CANAFEM), this industry also generates ample value to our country by using 95% of Mexican inputs. Likewise, its supply chain directly and indirectly employs 30 thousand people in Mexico.

Mexican manufacturers of aluminum containers and lids are one of the strongest links in the beer sector and also in other canned beverages. Thanks to this strength, in 2020 the production of aluminum containers reached a historical record of 19,748 million pieces, which represented a growth of 12.5% ​​compared to 2019. An important fact to highlight is that 80% of these cans It was used for the beer agro-industry.

Given all these qualities, we can observe a trend that more and more breweries are joining the use of cans to offer their products and as a consequence, continue promoting key sectors for the economic development of our country.

Return to the Core to be successful

Some of the changes in professional matters open a range of complications and difficulties for organizations at an economic and human capital management level.

Undoubtedly, the Mexican labor ecosystem is undergoing an unparalleled transformation with the multiple changes that we are experiencing in laws and proposed decrees that have come to give a 180 ° turn to strategies and actions in the field of human resources within the Business.

The reform of the Pensions Law, the new Telework Law, the Reform in the matter of Labor Subcontracting, as well as the proposed Law for Equal Pay, are some of the modifications in professional matters that open a range of complications and difficulties for the organizations at an economic and human capital management level.

In this way and, in relation to what we discussed in previous texts, it is necessary for corporations to analyze the business objectives from now on with a view to the future.

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And why is it essential to start with the business objectives ? For three main reasons:

1.- Given the new reform to out-in sourcing, by mandate it must now be clear what the core business of any organization is in order, as a result, to take the necessary measures to comply with the new legislation, which is why it is also of an aspirational and organizational issue, mandatory.

2.- Because we are in an environment in which under the scenario of companies that performed well in 2020 and in the first quarter of the year, it is important to understand those capabilities, businesses, products or services that are more resilient and will have greater potential for success in the market and thus align the above to its objectives and those that are not, and therefore there is a potential exit / sale of the asset.

From the point of view of firms that went through or are successfully going through the pandemic, then it has also become evident in the market those businesses that stood out and can go, depending on their position of leverage and capital, to acquire those companies that perhaps did not they were in his portfolio, the so-called timely purchases.

3.- The third argument is somewhat more philosophical, however, not of less relevance. In the heart of the organization and the employees there will always be the desire to have a purpose for which to work, for which it is important that owners, directors and managers give themselves a moment of reflection on the matter, what was the purpose for which the company originated? What is my personal purpose within it? We are sure that this element is essential for the future of any of them, specifically speaking of entrepreneurship, investment, M&A, etc.

It is true that more and more corporations, private funds, banks, etc. seek that ventures have more substance than just the financial one, and it is here where we believe that this element is just as or more fundamental for their future success, reason by which to be clear about the organizational objectives as a way out of the untimely crisis that has been with us for more than a year.

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Returning to the core objective of the business, of high value for the organization and all its stakeholders, is fundamental for the next and the following years to come, there are mandatory, strategic and “philosophical” elements for which we must take this basic resource that is, tell and reaffirm an organizational (or individual) objective that we are sure will accompany any of them on their path of success, either to divest where it no longer corresponds, to acquire in a timely and intelligent way and / or to be an asset each more attractive for investors in any undertaking.

Definitely, the environment in which we are as a country in this 2021 considering the pandemic, government proposals and the need to keep organizations generating income not only to survive, makes us ask ourselves the question: how much do we want our country to continue being attractive and offer a field of opportunities in the future? For this reason, we urge you to do this exercise further from the financial point of view, but thinking about the ultimate impact on individuals.

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Uncle Oscar stopped being the favorite

Reasons why the public is no longer faithful to the golden statuette.

None. This was the option that got the most votes in a poll I conducted this week on my Twitter account. In it I asked my fans (mostly moviegoers), how many of the films nominated for the Oscars this year they had seen. These were the results:

To be honest, I wasn’t surprised at all.

The Oscar Awards ceremony has been for decades an event that unites all movie lovers in a desire to know if their favorite movie, actor, soundtrack, animation, etc., will be recognized in a glamorous night, full of Movie stars. For many years this award reached a great level of popularity , reaching audiences of up to 40 million viewers during its broadcast (up to 46 million in 2000 in the United States). However, with the incorporation of the internet and streaming platforms into consumers’ everyday lives, the rules began to change, and the public’s interest did not remain faithful to the golden statuette.

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Last year the Academy Awards had the worst performance in history, with a total of  23.6 million viewers in the United States. A figure that represented an approximate 20% drop compared to the 2019 broadcast (29.6 million viewers). And this year the forecast is not good, since it is estimated to reach a total of 12 to 15 million viewers in response to the havoc that the pandemic has caused in the film industry. 

The decline in the interest of these awards is a mixture of ingredients that results in a rather disastrous cocktail. Some of them are: the pandemic, streaming platforms, social networks, among others.

The acceleration that caused the pandemic towards the lack of interest in the ceremony, works as the other side of the coin in terms of the haste with which the public, assumed as the main source of content, streaming platforms. Surely it has happened to you that when you recommend a movie they ask you Is it on Netflix?

It is incredible to think that just a few years ago, there was no option to consume content through these services such as Netflix, Amazon Prime Video, Disney +. And now we are facing an award where native titles such as Mank, The Trial of the 7 of Chicago or Sound of Metal , are being considered for Best Film. A place that the film by Mexican Alfonso Cuaron , Roma, had a much harder time reaching.

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Faced with the crisis of the exhibitors, the Academy was flexible and modified (temporarily, or so they say) the rule that required those interested to be eligible for said candidacy, to release their film for at least seven days in a commercial cinema in the county Los Angeles, with at least three daily performances. This was driven by the quest to keep the cinematographic experience alive, and that cinema was not relegated little by little into a small screen consumer art.   Obviously, the rules of the game have changed and the Academy knows it, so this year is the exception to the rule.   And in my opinion, once you roll the dice in a different game, there is no going back * the drums of Jumanji * are heard.

In fact, it has been reported that this rule imposed by the Academy will now allow films (interested in competing for an Oscar) to be shown also in theaters in New York, San Francisco, Chicago, Miami and Atlanta and not exclusively in Los Angeles. I get the impression that it won’t take 5 years for that rule to change again. Whether it extends the cities where they can be screened, limits the days and functions, or just becomes an “option”.

On the other hand, the imminent closure of cinemas for months, caused the logical decrease in consumption of these films and the absence of conversation around them . Finally, we must not forget that much more than a recognition of productions, the Oscars are a spectacle. And part of the entertainment is the pools, the passion around certain titles or actors and the excitement of knowing what will go well or badly during the transmission (I’m talking to you, James Franco).

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Today we are facing a scenario where most of the people have not seen the nominated films this year, therefore the conversation drastically diminished. To this we must add that this year a title that raises national pride is not in competition, as was the case of ‘ The shape of water’ by Guillermo del Toro or ‘ Roma’ by Alfonso Cuarón . Regardless of whether or not you liked the film, the curiosity to know if our compatriots would win the statuette was a trigger to see the ceremony. Outside of nationalisms, the curiosity to know if finally Leonardo Di Caprio would win an Oscar in 2016 for ‘The Revenant’ or‘Joker’ would become the first film with a DC Comics character to win it.

Let’s not forget social media, an alternative to live streaming. Finally, spaces like Twitter allow the audience to find out minute by minute about the highlights of the event. You don’t even need to turn on the television anymore. In fact, many millennials who already live alone or with roommates, do not even pay for cable television . In such a way that social networks become the first option . Reason why since a couple of years ago, these Awards had already begun to lose the interest of the audience.

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And like cherry on the cake, the algorithm both in streaming services and in social networks (TikTok, Instagram, Twitter), have personalized the consumer experience and replaced the “tax content”. In other words, the user now almost exclusively consumes only the content that has been designed for him. Spending 3 hours on a broadcast that you “don’t know” if it fits your interests or expectations is considered a waste of time. It is more satisfying to watch 200 Tik Toks in that time or 3 episodes of your favorite series.

The producers of this event definitely do not have an easy task. They recently announced that they will bring a different experience that will include a musical pre-show and a post-show that will recap the most important moments of the ceremony. But the verdict on whether these actions will be enough to satisfy the audience’s appetite for different experiences will only be revealed through the numbers. Let’s see if Uncle Oscar, who was once that funny figure that brightened a beautiful Sunday afternoon, has known how to adapt to new trends and forms of consumption. Otherwise, your once faithful relatives will begin to forget to visit you once a year.

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