Human Capital Management and Challenges of New Labor Standards

You can watch the video of this panel here.

USMCA brought tougher rules of origin for automotive goods. Conciliation and effective union representation under USMCA’s Chapter 23 are now the new normal. At the same time, the pandemic forced the industry to rethink how it managed its workforce, bringing challenges but also great opportunities for companies, agreed panelists at the Mexico Automotive Summit 2021 on Mar. 25. 

“The changes in the new treaty are aimed at a concept that for most companies in Mexico is difficult. However, for those that have already experienced a trade union environment, it is easier: the democratization of labor relations,” said Luis Monsalvo, Founding Partner at Monsalvo Duclaud, a law firm specialized in labor, employment and social security.

According to Monsalvo, the current administration in Mexico has understood this concept quite well. However, the change began with the previous government. Although reforms to the Federal Labour Law, focusing on union representation, collective bargaining and the labor justice system, came into effect in May 2019. "It was all the result of a constitutional reform pushed by Enrique Peña Nieto,” he noted. “This reform was one of the requirements to access the Trans-Pacific Partnership (TPP). We were going to deal with the US and Asian countries and we knew we had areas of opportunity in this regard.”

These changes, Monsalvo added, are positive but also bring challenges. “This will force us to respect the labor rights demanded by organizations, such as the UN. In addition, USMCA has a verification mechanism and the US can demand that we comply with what we committed to.” In addition, he mentioned, the pending outsourcing reform will also bring major challenges.

Faced with these changes, companies like Daimler have had to rethink the way they manage human capital. “Our main resource is always human capital. We have handled these changes gradually. During the pandemic, we have reacted in different ways and we are not the only ones who have faced this," said Marcela Barreiro, HR Director at Daimler. She said the company currently has around 8,000 employees spread across the country and each of them has a union representing them. “This union has helped us to think of ourselves as a team. We each have different roles but our relationship is not just as business partners but as a family. We have a close relationship, we listen to each other's perspectives and we always find a solution. This has made us grow and understand each other's needs.”  

Accordingly, Evelyn Gonzalez, Sales Director of Lavartex, said her company has union delegates at each of its plants, with whom they organize quarterly meetings to establish strategies. “As a supplier to the automotive industry, by having this system in place and complying with these regulations, we are one step ahead in being able to offer certainty to our customers.” 

At Scania, a Swedish company that manufactures heavy trucks and buses, the transition has been smooth, said Maite Delgadillo, HR Director of SCANIA. “The practices required by the new treaty were already in place and we do not have anyone outsourced.” Delgadillo pointed out that one of the characteristics that has allowed the company to move forward is flexibility, agility and change management. "These are success factors for any organization. Companies facing radical change without these qualities are unlikely to survive,” she said.

Mental health has also been a concern for companies during these months. “When we started to notice that the pandemic was going to last longer than expected, the first thing we asked ourselves was what was happening to the emotional health of our employees," said Barreiro. Among the actions Daimler implemented, she said, were forums to communicate directly with everyone in the company so they could feel heard despite the distance. The company also launched online yoga and meditation courses and other activities to take care of employees’ mental state.

Meanwhile, Scania focused on more flexible working arrangements. “People in the company have their objectives. They can log in and out whenever they want; we only ask them to deliver results,” said Delgadillo. In addition, the company provided training to all their leaders, as it is not the same to lead from behind a screen. She added that the most dangerous thing for an organization is the people who resign but do not leave, referring to people who are no longer committed to the company. 

Having happy co-workers at companies, according to Luis Monsalvo, also reflects in the legal environment. “All practices in a company at the end of the day have a human resources focus. If a group of employees is healthy and happy, it will be easier to dialogue with them and therefore it will be easier to legitimate the collective labor contract required by the new treaty,” he pointed out.