Seglo Logistics to Terminate Volkswagen Deal, Lay Off 1,000 Staff

Seglo Logistics, the logistics provider for Volkswagen in Puebla, will be terminating its contract and laying off 1,000 employees by the end of 2024. The decision comes after the company lost a 24-year partnership due to a new bidding process in which another supplier offered more competitive pricing. This development impacts 83% of Seglo’s workforce in Puebla, which currently numbers 1,200 employees.

"Volkswagen Mexico decided to transfer the project to a Spanish company that provides the same services at lower costs. This means that we will lose our most important client, resulting in the dismissal of 1,000 workers, including 600 from the operational area and 400 administrative staff," said Aarón Espinosa López, General Secretary, Seglo Logistics Union. 

The layoffs will begin gradually, with Seglo expected to hand over its operations to the new provider by Dec. 15, 2024. Employees are faced with three options: transition to the new supplier without retaining their seniority, request their severance packages, or relocate to other locations where Seglo has contracts, such as Mexicali, Hermosillo, or San Luis Potosi.

“It is challenging for some of the union members in Puebla to move to other states where we provide logistics services, as they want to keep their seniority,” Espinosa López acknowledged.  He added that some employees have been with the company for 10 to 15 years and are hesitant to accept new positions under less favorable conditions.

Despite the union’s efforts to support workers during this transition, there are reports of pressure tactics being used against employees. Some workers mentioned that they are being coerced into resigning, either by being forced to work additional shifts or by being asked to sign their resignation with promises of being rehired by the new company.

“We are aware that there are pressures on the workers, and we urge them to stand together to ensure that their severance is granted according to the law,” said Espinosa López.

The primary reason for the loss of the Volkswagen contract, according to Espinosa López, was Seglo's high labor costs. The new provider, Sesé, is reportedly willing to hire Seglo’s employees, but Espinosa López emphasized that the terms of employment would differ significantly from those previously offered by Seglo.

"We have high wages and benefits, which makes our offer less competitive. As a result, Volkswagen Mexico decided to give the project to the Spanish company. The company must provide fair severance packages and retain the remaining positions because it is not the workers' fault that the contract was lost," he stated.