Labor dispute clouds outlook for Mexican steelmaker Ahmsa

Up to 300 employees of Mexican steelmaker Altos Hornos de México (Ahmsa) in Monclova, Coahuila state, have held impromptu meetings and voted to reject the leadership of their union, local daily El Siglo de Torreón reported.

After the vote, the group moved to Ahmsa's Siderúrgica 1 plant and called for workers there to hold a similar meeting to reject the national democratic union of mine, metal, steel and related workers (SNDTMMS) and asked the company not to send contributions from their wages to the union, according to reports.

The workers also voted to recognize the national union of mining, metal, steel and similar workers (SNTMMSS), headed by senator Napoleón Gómez Urrutia, as the association that represents them with Ahmsa.

Ahmsa employs around 5,500 people at its Siderúrgica 1 and 2 plants in the city. In recent weeks, workers have held marches at the company due to claimed failures to pay savings and bonuses, the newspaper reported.

Switching unions might help improve workers' negotiating position with the company, particularly since Gómez Urrutia is a member of the ruling Morena party.

The labor problems are complicating the troubled outlook for the steelmaker still further, as it is going through an economic crisis and is negotiating a capitalization process to improve its finances, with a possible acquisition even on the cards.

Ahmsa has debts with state-run oil company Pemex that have eroded its working capital, has been subjected to power cuts by State electricity utility CFE, affecting its operations, and has been forced to halt steel production for at least two months.

Earlier this year, Ahmsa iron ore and coal mining subsidiary Minera del Norte (Minosa) reported that it had to file for a bankruptcy protection process under current Mexican law, which implied the suspension of payments, although it stated at the time that mining operations were continuing as normal and the decision did not affect Ahmsa.

In late January, at the request of a creditor, a civil court in Monclova decided to initiate a bankruptcy conversion process against Ahmsa for alleged non-payment of liabilities agreed in 2016 to conclude a previous suspension of payments that was started under a bankruptcy law prior to the current one. 

Local media reported that, after the court requested the firm's bankruptcy declaration, several of its bank accounts were frozen by the financial intelligence unit of the finance ministry.

As a result, the steel company apparently stopped making severance payments to former workers made redundant from its subsidiary Minosa due to mine closures. It also owes savings to the workers since last December, has suspended employee transportation services and stopped paying punctuality bonuses to workers, all thought to be due to its cash flow problems.

The mayor of Monclova, Mario Dávila Delgado, told daily La Vanguardia recently that the steelworkers are demanding the payment of their wages on time and in full, as well as other bonuses.

“It's a municipal and regional problem. And although the impact isn't that strong, it's a delicate problem, since 20% of the local economy depends on the company. It's important for it to comply with the obligations it has, both by law and under the established work contract,” said Dávila.

An Ahmsa spokesperson did not immediately reply to a request for comment on the effect the union dispute might have on negotiations to finance the company.