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September 1, 2007  |  Download PDF  |  Share

The Wal-Martization of Alcoa

A Major Challenge to CAFTA

A Joint Report of The National Labor Committee & COMUN (Community Communication)-HondurasMore on CAFTA abuses:  Two additional reports on gross worker rights violations in apparel factories in Guatemala:

  • Alert--Situation Worsens at Fribo Guatemala
  • Alert--Violation of CAFTA at Sam Bridge SA Guatemala

National Labor Committee    
75 Varick Street, Suite 1500    
New York, NY 10013

www.nlcnet.org    

Tel: 212-242-3002
[email protected] 

COMUN
Apartado Postal #392
El Progreso, Yoro, Honduras

www.honduraslaboral.org

Tel: 504-647-3247
[email protected]

 


 Table of Contents

1.  Introduction 

2.  Letter to Alcoa from Members of the U.S. Congress 

3.  Alcoa-Honduras Profile 

4.  Systematic Pattern of Gross Human Rights Violations at Alcoa's Plants 

5.  Starvation Wages at Alcoa 

6.  Workers Trapped in Poverty 

7.  Hours:  Forced Overtime and Constant Speed-ups 

8.  Chronology of Union Busting at Alcoa-Honduras 

9.  Alcoa Claims There Was No Union & that Union Activists Were Not Targeted 

 


The Wal-Martization of Alcoa

"They call us associates.  We say we're exploited."

by
Charles Kernaghan

One thing is for certain:  Alcoa has taken what were high-tech, good-paying auto parts manufacturing jobs and reduced them to the lowest rung sweatshop production, replete with gross human rights violations, starvation wages and total lack of respect for workers' legal rights.  At least this is the case at Alcoa's four wire harness manufacturing plants in the El Porvenir Free Trade Zone in Honduras.

[Picture]

Alcoa claims it pays the best wages anywhere in the world where its facilities are located.  Alcoa also claims it is not anti-union and insists it is a very ethical company.

The truth is, Alcoa did not arrive in Honduras under the best of circumstances.  After years of worker unrest and blocked organizing attempts left hundreds of workers fired, Alcoa began pulling some of its wire harness production-removing machinery from entire assembly lines-from its plants in Acuña and Piedras Negras, Mexico, and relocating them to Honduras.  In the process, local Alcoa managers told the workers, "we can hire two or three Hondurans for every Mexican."  In mid-2004, when Alcoa arrived in the city of El Progreso in rural Honduras, the workers had never even heard of the company.

One of the first things prospective Alcoa "associates" were told during their training sessions was that quality production was critical since they were "no longer sewing cheap t-shirts,"-but rather would be manufacturing important auto parts for export to the U.S.  What a shock it was for the wire harness workers when they found out that garment workers sewing cheap t-shirts and underpants in sweatshops adjacent to Alcoa were actually being paid wages 60 percent higher than they were!

The base wage of 74 cents an hour at Alcoa's plants meets just 37 percent of a small family's most basic survival needs.  In the last three years, real wages have actually fallen by 13 percent at Alcoa.  Like Wal-Mart employees, Alcoa associates in Honduras have to rely upon charity to survive.  The workers dress their children in clothing and shoes donated to the poor by local churches.  Many Alcoa workers live in small one-room homes that were built by international aid organizations.  Most Alcoa workers borrow money each week to survive.  If an Alcoa worker buys a pair of shoes, they can only afford to do so on an installment plan, paying $2.65 a week.

The workers refer to their small homes, which are constructed with cinderblock walls and corrugated metal roofs, as "microwaves," because with the tropical sun beating down, the rooms quickly heat up like an oven, reaching temperatures of 100 degrees or more.

Even if the wages are below subsistence levels, perhaps decent working conditions and benefits at Alcoa will make up for it?  Unfortunately, it is quite the contrary:  Alcoa is actually lowering standards in Honduras, undercutting even the low end garment sweatshops.

At Alcoa, it is not uncommon for workers to have to urinate, or even defecate, in their clothing after repeatedly being denied permission to use the bathroom.  The bathrooms are also dirty, lacking lights and toilet paper.  Workers who take "too long" may be pulled from the toilet by guards.  There have even been cases of women being made to disrobe and lower their underpants to prove they were having their period so they could use the bathroom more than twice a day.  Workers arriving 15 minutes late can be punished with the loss of two-and-a-half or three days' wages.  With as little as ten minutes notice, workers on the night shift can be ordered to remain working for another six hours, keeping them at the factory from 4:15 p.m. to 6:00 a.m.-nearly 14 hours.  All overtime is obligatory and those who object can be fired.  Many lines work this mandatory 13 ¾ hour shift five nights a week, putting them at the factory 68 ¾ hours a week.  Especially in Plant III, where the air conditioning has been broken for nearly a year, fainting is common as factory temperatures often reach 104 degrees.  Supervisors yell at the workers, "Hey, Donkey, move!" or "Work, you prisoners!"  Security guards patrol the shop floor and if they see someone resting for even a few seconds, they will poke that person with their baton and order them to keep moving.  Especially at night, workers take strong caffeine pills to stay awake and race to meet their high production goals, as well as pills for muscle pain, and later sleeping pills in order to sleep during the day.  Production speed-ups are routine and arbitrarily set by management.  In June, workers were told they had to increase their production from nine harnesses a day to 12.  This was a 33 percent increase in production, with no wage increase.

Under Honduras law, factories are required to provide free transportation to their workers, provide daycare and pay for break time.  Alcoa refuses.  Whereas low-end garment sweatshops in Choloma provide free daycare for their workers' children, Alcoa does not.  While Korean t-shirt sweatshops just a stone's throw from Alcoa provide free transportation to their workers, Alcoa does not.  Alcoa is even blocking access to healthcare for the children of its "associates," despite the fact that these parents are paying for it.  There are also strong unions at some of the garment plants, like the Korean-owned Han Soll factory, which produces for Reebok, and at the U.S.-owned SETISA factory, which produces for Sean Combs.  But Alcoa will use slightly veiled death threats, mass illegal firings, blacklists and threats to close the plant to block workers daring to exercise their legal right to organize.

By early 2007, the Alcoa workers had suffered enough abuse and started a clandestine organizing drive, meeting in small groups of just 20 workers at a time in secret locations.  By April, they had 74 members, and despite the constant fear of mass firings, they had reached 120 members by June.  Then on June 2, 2007, the workers held their constitutional assembly, formed their union and elected their new leaders.  Three days later, after receiving veiled death threats, the fiery woman union leader who had led the assembly was fired.  On June 12, all of the newly-elected union leaders were fired and removed from the factory by armed guards.  On June 15, the mass firings began and by July nearly 90 percent of the union's founding members-the vast majority of whom had seniority-had been fired.

Local Alcoa management told the workers they were completely unaware that there had ever been any attempt to organize a union at Alcoa, and therefore it was impossible for them to have targeted the union members for firing.  Management said that these were just run-of-the-mill layoffs made necessary by fluctuations in production levels.

Alcoa thought it could get away with the firings without a word being raised.  After all, as a Fortune 500 company with over $30 billion in annual revenue, Alcoa is 13 ½ times larger than the Government of Honduras and 1,565 times larger than the Honduran Ministry of Labor.  With the stature of a giant transnational, Alcoa believed it had the right to treat the Honduran government like a Banana Republic.  For Alcoa, this was going to be a walk in the park.

But this time Alcoa may have badly miscalculated.  Alcoa was not counting on so many of the new union's leaders and activists-especially the women-being so fiery, smart and determined.  They were not going to be so easily rolled over.  The fired unionists peacefully occupied the local Ministry of Labor offices for two days, chaining the gates shut.  They held demonstrations blocking the front of the Free Trade Zone.  The workers were able to get support from independent human, women's and worker rights organizations from across Central America, who demanded that the fired unionists be immediately reinstated and who pledged solidarity for their just struggle.

[Picture: Charles Kernaghan at worker press conference in San Pedro Sula]

 

Alcoa was not counting on the fired union leaders organizing a joint press conference in San Pedro Sula, with the local worker rights organization COMUN, the National Labor Committee, the United Steelworkers Union (USW) and Central American Human Rights organizations-which was covered nationally on five television stations, radio and in two newspapers.

Nor did Alcoa count on a USW-NLC delegation traveling to Honduras in early August to meet with the illegally fired Alcoa unionists and visit their homes.

[Picture: USW representative Tim Waters with fired union leaders]

Least of all did Alcoa expect that at the request of the United Steelworkers, 15 members of the U.S. Congress would write to Alain Belda, Alcoa's CEO to urge him:  "to reinstate the more than 50 Alcoa employees who were fired in June...days after organizing a labor union to protest low wages, compulsory overtime hours, substandard working conditions and frequent maltreatment... The dismissal of these workers infringes upon the rights established in Honduran labor law and in the U.S.-Central American Free Trade Agreement.  The right to organize a union is also protected by the labor standards upheld by the UN and the International Labor Organization.  Alcoa's employees should not fear dismissal for exercising the rights that are promised by law and recognized by the international community."

Moreover, the USW and NLC are now providing solidarity and support to the fired Alcoa workers in their struggle for justice and to win their legal rights.  And just last week, the Hispanic Caucus of the Teamsters passed a resolution in support of their Alcoa brothers and sisters in Honduras.  The AFL-CIO Solidarity Center may also provide support.

What is happening at Alcoa-Honduras is not how the global economy is supposed to work.  We were told that when companies like Alcoa, with their higher tech jobs, enter the developing world, wages, benefits and working conditions would all improve, notching up standards across the country.   Certainly this has not been the case with Alcoa's auto parts production in Honduras, which is actually lowering standards and even undercutting low-end garment sweatshops.

[Picture: USW representative Tim Waters and Alcoa workers]

This is a critically important test case.  If Alcoa-a Fortune 500 company-can step on Honduran law and treat the government like a Banana Republic, then the race to the bottom in the global sweatshop economy will have reached new lows.  If Alcoa can so blatantly ignore the U.S.-Central America Free Trade Agreement and ignore the treaty's worker rights provisions as just so many words on useless pieces of paper-then we need to revisit and renegotiate CAFTA, for something is seriously wrong.

Local Alcoa management in Honduras is threatening the workers that if they continue to struggle for their rights, Alcoa will "close the plant and relocate to Nicaragua where labor is cheaper and the workers don't make so many demands or cause problems."

These brave Alcoa workers in Honduras need and deserve our solidarity.

U.S. Central America Free Trade Agreement
Is Supposed to Protect Worker Rights

Excerpts from the agreement:

"A party shall not fail to effectively enforce its labor laws..." 

"Each party shall strive to ensure that its laws provide for labor standards consistent with the internationally recognized labor rights...

-- the right of association;
-- the right to organize and bargain collectively;
-- ...acceptable conditions of work with respect to minimum wages, hours of work and occupational safety and health."
  

 


AFL Honduras, S de R.L.
(Alcoa Fujikura Limited)

  [Picture: Alcoa workers]

Zip El Porvenir
Kilometer 7, Carretera a Tela
El Progresso, Yoro
Honduras

Phone: (504) 648-1825
Fax: (504) 648-1829

[Note: Alcoa Fujikura Limited, a joint venture formed by the Alcoa Corporation and Fujikura Limited of Japan, was disbanded in 2005. Fujikura acquired the telecommunications unit, while Alcoa kept the automotive cable division, which is now called Alcoa Electronic and Electrical Solutions (ASEE).]

Production: Automotive wire harnesses, or electrical systems, almost exclusively for Ford, especially the Ford Econovan.

Number of workers: Approximately 1,700 workers-1,000 on the day shift and 700 or so on the night shift. Fifty percent of the workers are women.

Alcoa operates four wire harness assembly plants in the El Porvenir Industrial Park, or Free Trade Zone. Alcoa also has another plant in the city of Choloma, called AFL Automotive Honduras, which manufactures the wire cable.

Alcoa began initial operations in Progresso in July 2004, but production only reached full capacity in 2005.

Alcoa pays no taxes-not one cent:

Despite having profits of $2.25 billion in 2006, the Alcoa Corporation, a Fortune 500 company, does not pay any taxes whatsoever in Honduras. Under the Export Processing Zone Law Alcoa is 100 percent exempt from all import and export tariffs and duties, all corporate income tax, from state and municipal taxes, and even from the local sales tax, which the poorest workers have to pay. Alcoa is also free to repatriate 100 percent of the profits it earns in Honduras. Alcoa's poorly paid Honduran workers often wonder about all the tax breaks the Alcoa Corporation receives: "You know this Alcoa company does not pay any taxes. They're all duty free. Yet we have to pay our municipal taxes. But how is that fair? We pay taxes but they don't."

[Picture: Security guard at Free Trade Zone]

Aloca's revenues increased nearly 60 percent between 2002 and 2006, growing from $19.2 billion to over $30 billion. However, it was Alcoa's profits which really surged, increasing five fold in the last four years, from $420 million to $2.25 billion by 2006. One would think that this Fortune 500 company could afford to pay a few taxes in Honduras. Alcoa pays its Honduran workers just 74 cents an hour.

Wire Harness Production Booming in Honduras

With such lavish tax breaks, extremely low wages and very lax labor law enforcement, the wire harness auto parts industry is booming in Honduras. In April 2006, wire harness exports from Honduras were up 216 percent over the same month the year before.

Honduras is now the second largest exporter in the world of wire harnesses to the U.S., behind Mexico and ahead of China and the Philippines.

In one six-day period alone, in April 2007, the Alcoa AFL Honduras company in the El Porvenir Free Trade Zone shipped 227,189 pounds of wire harnesses to Alcoa's Automotive Division in Schertz, Texas worth $459,958.  Below is U.S. Customs data summarizing one of those shipments.

 U.S. Customs Shipping Record
AFL Honduras to AFL Automotive, April 3, 2007

Shipper: 

Consignee: 

AFL HONDURAS, S. DE R.L. DE C.V. 

AFL AUTOMOTIVE 

ZIP EL PORVENIR KM 7 CARRETERA 

6389 FM 3009 SUITE A102 

SALIDA HACIA TELA LOTES 29 Y 30 

SCHERTZ TX 78154 USA 

EL PROGRESO, YORO 

 

TEL (504) 648-1825  648-1826 

 

 

 

Packaging Information: 

Shipment Detail: 

Weight: 12240 KG 

Country of Origin: HONDURAS 

Quantity: 54 BDL 

US Port: 1902 GULFPORT 

 

Arrival Date: 4/3/2007 

 

 

Description: 

 

HARNESS 1X40' CONTAINER HC BOXES 

 

 


Alcoa Versus Honduras-Who Has the Power?

Alcoa, with its $30,379,000,000 in revenues in 2006, is actually 13.5 times larger than the government of Honduras, whose total budget is $2,612,893,000.

Alcoa is also 1,565 times larger than the Honduran Ministry of Labor, whose budget is $19,413,589. In fact, it only takes about a minute for Alcoa's revenues to equal the annual budget for the very important Ministry of Labor's General Inspections of Labor Department, which is responsible for all plant and factory investigations across Honduras. The General Inspection of Labor's budget-exclusive of salaries-is just $269,707. Obviously, the playing field is heavily tilted toward the transnational Alcoa.


Systematic Pattern of Gross Human Rights Violations at Alcoa's Plants

 

MANY CASES OF WORKERS FORCED TO URINATE, AND EVEN DEFECATE, IN THEIR PANTS:

At Alcoa there are many cases of workers who have been forced to urinate in their pants, and some have even defecated, after being denied permission to use the bathroom.  Workers cannot leave their work stations without first asking permission from the team leader or a supervisor to use the toilet.  Permission is never granted unless someone else is available to take that person's place, as the revolving work table where the wire harnesses are assembled never stops.  The problem becomes even more acute when someone from the production line is absent, leaving a single worker assigned to two or even three tasks.

In April 2007 on Line 086 at around 8:00 p.m., a woman working on the night shift repeatedly asked for permission to go to the bathroom.  Despite her pleas the supervisor, Reyna López, refused to let her go, saying there was no one to replace her. 

This is how a co-worker described what happened:

"The woman asked permission to go to the bathroom because the food had upset her stomach, it had made her sick, and she had to use the toilet.  She [the supervisor] didn't give her permission and the women defecated right there on the line.  She went to the bathroom later and washed out her pants as well as she could.  But there was no electricity, no light in the bathroom.  She had to use water from the toilet tank to wash her pants and then go back to work.  They didn't let her go home and she defecated again."

Worker after worker told us that, "Inside the factory, if a person must go to the bathroom, they [the supervisors] either say, ‘no, keep working' or ‘stay here.' They want you to pee at home." Bathroom visits are limited to twice per shift.

THERE ARE CASES OF WOMEN FORCED TO DISROBE TO PROVE THEY ARE HAVING THEIR PERIOD IN ORDER TO GAIN ACCESS TO THE BATHROOM MORE THAN ONCE OR TWICE IN A DAY:  

As one woman described it, "The supervisors say the women are lying about their periods just to get into the bathroom.  There have been cases when women supervisors took women to the office and made them disrobe and drop their underpants, to prove she was having her period."

BATHROOMS ARE FILTHY, LACKING TOILET PAPER AND LIGHT, AND WORKERS CAN BE PULLED FROM THE STALLS FOR TAKING "TOO LONG": 

One Alcoa worker described the conditions in this way:  "They never put a light in the bathroom because they say people will just go to entertain themselves in there....[at night to see], we have to have the door open and we hold the door open with one foot, and when we have our periods, it is difficult.  Often I have complained that this is a violation of our rights."

The toilets the workers are referring to are several individual cubicles with a common sink outside.

"They have always been dirty," another worker explained.  "They don't use disinfectant and they don't put paper [out].  They put one roll for the whole night for the whole plant." (This would be 500 workers on average.)  "They are big rolls, but they only last an hour.  There are bathrooms that don't have a door.  Other ones where the locks are broken.  There are cases when compañeras have gotten stuck, locked inside. There are 12 toilets for the women, but only three, sometimes four, are any good.  We have to make a line to enter those bathrooms, and we only have five minutes.  It is quite difficult, and if we delay very much, there is a security guard who has the keys to the bathrooms, who would open the door and pull us out.  Even if people have their underpants down...  [Last week,] the leader was knocking on the door and yelled, ‘Get out.  You don't have any more time!'  It seems incredible because pulling a person out of the bathroom seems like lack of respect.  They knock on the door as if they are pulling a criminal out of their house, and they scream."

Two team leaders in particular, Mainol and Claudia Moreno often go into the bathrooms, shouting and yelling, to bring the workers back to their production line.

In Plant #3, the largest Alcoa plant, for example, there are seven toilets for men, but only two toilets and two urinals are functioning.  There are 12 toilets for the women, but only three are now working.  Also, the workers have started taking up collections to purchase Clorox and other disinfectants to clean their work areas and bathrooms.  Some have chipped in to purchase brooms.

Workers who take "too long" in the toilet are also threatened with fines, which could cost the worker the loss of four-and-a-half days' wages.  The system works like this:  If a worker is written up for taking too long in the bathroom, when that worker eventually leaves the factory, 500 lempiras ($26.46) will be deducted from the final wages and severance pay due to the "offending" worker.

FAINTING IS "NORMAL":

The air conditioners in Alcoa's Plant #3 have been broken for nearly the last year and have not been repaired.  Plant #4, the warehouse, also lacks air conditioning.  During the summer months, this means that the workers are toiling in temperatures that normally range between 97 and 104 degrees Fahrenheit.  The factories are sweltering and fainting is normal.

For example, in March 2007, it was so hot in Plant #3 that a woman worker fainted on Line 086 at about 6:00 p.m.  She was carried to the clinic where they waited for her to come to and then sent her back to her post.

(In Honduras, which is near the equator, the hottest months are March and April, but even during winter-November, December and January-the average daytime temperature is 86 degrees.

ALCOA ASSOCIATES CAN BE DOCKED NEARLY THREE DAYS' WAGES FOR ARRIVING JUST 15 MINUTES LATE TO WORK:

This happened to a woman worker we interviewed.  She missed her bus and as a result arrived at work 15 minutes late.  As punishment, her supervisor sent her home and docked her 300 lempiras ($15.87), a loss equivalent to nearly three days' wages-which is illegal.  The Alcoa "associates" earn just $5.94 a day.

WORKERS ALSO REPORT THAT THERE HAVE BEEN A NUMBER OF CASES OF SEXUAL HARASSMENT IN THE ALCOA PLANTS:

CONSTANT HARASSMENT..."WORK, YOU DONKEYS!"

The workers say they face constant harassment and humiliation at the hands of their supervisors, foremen and team leaders, who shout at the workers things like:

-- "Hey, stupid.  Get moving!"

-- "Hey, idiot, hurry up!  You're like garbage."

-- "Work, donkeys!"

-- "Work, you prisoners!"

One woman explained:  "They harassed me and they transferred me to another post.  The supervisor changed my post and passed me to another one.  And then I couldn't work with the speed that other people who had worked at that post had.  Someone called Escobar came from human resources and she said that if she wanted, she could fire me with no rights [i.e. no severance pay]...She screamed at me, everything against me.  She screamed as if I were an animal.  It makes me ashamed.  They call everybody ‘asshole.'

When we asked a large group of Alcoa workers if others were also humiliated, the workers responded, "Yes.  The majority."

"Alcoa does not tolerate any form of harassment. Harassment can take many forms, all of them unacceptable...insults, threats,...unwelcome sexual advances...verbal or physical conduct that upsets another's work performance or creates a fearful or hostile work environment."

Alcoa Guide to Business Conduct 


When the workers approached Alcoa's general manager for help to end the constant harassment, his response was, ‘I'm not going to cry if you leave.  If you want to work, you have to work under the pressure that exists in the factory.  The gate is wide and many people outside want to work."

Alcoa uses the lack of jobs and very high unemployment in rural El Progreso where the plants are located, combined with a total distain for and repression of all legal worker rights, to hold the company's "associates" in the position of "prisoners" or "donkeys."

HONDURAN LAW REQUIRES FACTORIES TO PROVIDE DAYCARE, BUT ALCOA REFUSES TO DO SO:

Honduran law is very clear.  According to Article 142 of the Labor Code:  "Every employer who has more than 20 employees at their operation is obligated to set up a space to allow mothers to feed their children under three years of age without danger and to allow them to leave their children in a daycare center during working hours under the care of appropriate person(s) assigned and paid for by [the employer]."  The Law for Opportunities for Women states that such employer daycare facilities should cover children up to seven years old.

Treating Honduras as a Banana Republic, the multinational Alcoa corporation treats Honduran law as just so many pieces of useless paper.  This has a huge negative impact on Alcoa's approximately 1,700 workers, half of whom are women.  Lacking the required daycare center at Alcoa, many workers have no choice but to pay up to 250 lempiras a week ($13.23) to place their children in informal daycare.  Alcoa's wages are so low that daycare alone, for a single child, can absorb 32 percent of a worker's weekly wages.

Again, as improbable as it may sound, the presence of Alcoa-a giant Fortune 500 corporation-is actually lowering standards in Honduras by undercutting conditions in even the low-end garment sweatshop maquila factories.  For example, while Alcoa illegally refuses to provide daycare for its workers' children, in the nearby city of Choloma, the garment maquila factories are funding a large child care complex in the San Carlos neighborhood that can care for up to 500 of their workers' children.  Also in the Lopez Arellano neighborhood, other garment maquila companies are paying for another child care center for children of the maquila workers.  Sooner or later, the garment sweatshop owners are going to look around and declare that what is good for the powerful Alcoa transnational should also be good for them, and hundreds more children will lose daycare.

ALOCA BLOCKS HEALTHCARE FOR ITS WORKERS' CHILDREN:

By law, children under 11 must have access to healthcare under their parents' Social Security plan for which fees are deducted from the Alcoa workers' wages.  Many workers shared the same frustration:  "But in Alcoa, they never give us the documentation.  They should have it, but the paperwork is not there.  There are always excuses-that there are no forms, that the person in charge is not there right now.  There is always an excuse.  It's always like that."

In practice-in what can only be a conscious effort-Alcoa is blocking access to Social Security healthcare for its workers' children.  Local Alcoa management never lifted a finger to help..."and they don't even explain to the workers what it is necessary to do to be attended at Social Security." In short, Alcoa not only doesn't help the workers and their children to apply for the healthcare due them (and for which they have paid), company management has actively gone out of its way to block the process, by never having the necessary forms or the personnel available to allow employees who are parents to inscribe their children.

The workers say this happens to the majority of workers, leaving them no choice but to use the government-run hospitals set up for the poor, or to somehow come up with the money to go to a private doctor to care for their kids.

The workers also say that it is standard practice at Alcoa to delay providing workers' Social Security validation documents, which in effect creates long gaps when the workers themselves are without access to healthcare.

Alcoa also signed its workers up for "company medical services," meaning the workers can only use the small Social Security clinic in the free trade zone and not the larger and better-equipped Social Security hospital in the town of El Progreso.  Workers report that treatment in the free zone clinic is often not good.  For example, one woman on the night shift experiencing sharp pains in her chest was quite frightened that she might be having a heart attack.  She asked the nurse on duty how they would be able to help her if it was serious.  The nurse responded, "We just open your mouth and give you a pain killer, and if it's your turn to die, it's your turn and there is nothing we can do."   If a worker wants to use the hospital in El Progreso, she first has to travel to the free trade zone clinic, hoping to receive a referral and then turn around and trek back to town.  The free trade zone clinic is not open on weekends, nor is a doctor available at night.  So when hundreds of workers are toiling on the night shift-there is no doctor.

Social Security does not pay for medicines, which are another costly expense for the poorly paid workers.  And when workers do go to Social Security, they are docked more than two days' wages as punishment if they miss any time at work.

VIDEO CAMERAS TO SPY ON THE WORKERS:

The minute Alcoa found out that its workers were attempting to organize, they installed video cameras to spy on the workers.  The workers explained:  "They have a camera.  They put a camera above the bathrooms to see how many times we go to the bathroom.  To see if we are working.   They say that this camera goes directly to the office.  They are placed in all the plants.  They said it was for security."

[Picture: Security guards at Free Trade Zone]

Having stripped the workers of their legal rights under Honduran law, internationally recognized worker rights standards and the U.S.-Central America Free Trade Agreement, Alcoa now wants to spy on its workers to keep it like this.

ALCOA: THE GOOD CORPORATE CITIZEN?

Alcoa executives like to describe their company as a very good corporate citizen, always ready to lend a helping hand to local communities in need.  In Honduras, Alcoa refers to this effort as its "Project Bravo."

For example, in El Progreso, Alcoa supports a childcare center called Emmanuel, supposedly donating over $20,000 to the center.  In such cases a plaque goes up on the wall recognizing Alcoa's beneficence.

But the real sacrifice falls on the shoulders of Alcoa's "associates," who are pressured to put in 50 hours of "voluntary" social work each year.  Alcoa claims that participation in Project Bravo is strictly voluntary.  But the workers report facing veiled threats to participate or face reprisals later on.

One worker described it like this:  "I worked in Project Bravo with some children who needed special education.  I worked with those children and we had to train them to cut paper drawings, to draw figures.  Training?  I didn't receive any training-they just took us from the factory and sent us to the project.  They told us:  ‘We have to go and work for the company', and they started giving explanations.  The supervisors got angry and threatened some workers saying they would punish them if they didn't accept working on the project.

Many workers questioned why Alcoa was making a show of supporting a daycare center in El Progreso while at the same time refusing to provide daycare for the children of its workers as legally required under Honduran law.  Shouldn't Alcoa's "Social Responsibility" begin with its own workers, or "associates"?  The right thing to do would be for Alcoa to build a daycare center for its own workers' children.

One worker observed: "After I did all the work [on the Bravo project], I asked myself, why doesn't Alcoa begin with their own workers?  We don't receive any benefits from the company-just the minimum according to the law, and even here it sometimes falls short.  The extra benefits we receive are one plastic glass for May Day and a cup of coffee on Children's Day.  That's it."

More workers wanted to comment:  "I started to think further about the project and came to the conclusion that the money Alcoa gives to the projects comes from the pockets of the workers who are fired with just a small part of the severance due them.  So this is the money they give for the projects. -They give our money and claim it is their money, their socially responsible charity."

Alcoa also loves trees.  One worker described leaving the plant at 6:00 a.m. after being forced to work a 14-hour night shift beginning at 4:15 p.m. the night before, only to go directly out to plant trees all day in one of Alcoa's reforestation projects.  For all their "voluntary" efforts, the workers received only a small sandwich for lunch.


Starvation Wages at Alcoa

  • Base wage of 74 cents an hour meets just 37 percent of a small family's most basic needs;
  • Alcoa's wages have actually fallen 13 percent over the last three years;
  • Like Wal-Mart "associates," Alcoa workers are dependent upon charity from local churches and international aid organizations to build their small homes and dress their children;
  • Amazing as it must sound, workers sewing cheap underwear in garment factories alongside Alcoa earn 27 to 60 percent more per hour than Alcoa's high-tech auto parts workers;
  • Alcoa cheats its workers at every turn:  By law, Alcoa is supposed to pay for break time-it does not;  it is supposed to pay for workers' transportation-it does not; 
  • Alcoa refuses to pay double-time for work on Sundays or holidays;  Alcoa shortchanges the workers on their legal bonuses, and when a worker misses time to attend a Social Security medical appointment, she can be docked up to 3 ½ days' wages as punishment;
  • Alcoa's CEO, Alain Belda, paid himself $11,569,694 last year, which is more than three times the combined wages of all 1,700 wire harness workers at Alcoa's plants in Honduras.
"They call us associates; we call ourselves exploited."
-Alcoa worker

Workers sewing cheap underwear earn 60 percent more than Alcoa's high tech auto parts "associates."

One of the first things prospective Alcoa workers are told during their training sessions is that "quality is important, because it is not t-shirts that are being made.  The lives of thousands of people who will drive the cars that carry these harnesses depend upon the quality of these harnesses."

How odd it is, and how grossly unjust it appears to the Alcoa workers, that in low-end underwear factories adjacent to Alcoa's plants, the underwear workers earn $26.92 more per week than the high-tech Alcoa associates do.  The underwear factories pay wages nearly 60 percent higher.

"I think the garment workers earn more because they work by production [piece rate] and they're better paid than us.  We know there are workers who earn 1,400 lempiras a week ($74.07) and with normal working hours, let's say---but they do work like donkeys...They work from 7:00 a.m. to 5:00 p.m.  It's not fair that garment workers earn more than harness ones.  Remember that a car costs more than a t-shirt, and the harnesses we make cost $200 and a t-shirt only $8 or $10, and the auto parts go to the U.S.  Those cars cost huge amounts of dollars and the t-shirts don't cost much...So it's not fair that they pay us so cheap and that we don't get the right to a doctor, or to a meal, or to transport.  The truth is that these people have come to exploit the poor from here." -Woman Alcoa worker

Workers in El Porvenir Free Trade Zone sewing t-shirts and underpants in factories right next to Alcoa are being paid 1,400 lempiras a week, or $74.07 for a 50 hour workweek (from 7:00 a.m. to 5:00 p.m., Monday through Friday) if we include paid break time as Honduran law demands.  The underwear workers earn $1.48 per hour.

On the other hand, the regular wage at Alcoa, including the "Seventh Day" attendance bonus, is just $41.60 a week.  In Honduras, the regular week is 44 hours, but by law the workers are paid for 48 hours.  If we add six hours of overtime, which is paid at 92.5 cents an hour, to bring the total hours worked to 50-equivalent to the hours worked by the underwear workers-the Alcoa workers would still earn just $47.15 for the week.  The Alcoa workers would be earning an average of 94 cents an hour.  This means that the underwear workers are indeed earning $26.92 more per week-57 percent more than the high-tech Alcoa auto parts workers.  Astonishing as it may sound, the low-end garment workers are earning $1.48 per hour compared with Alcoa's average wage of 94 cents, which includes the attendance bonus and the overtime premium.

One of the temporary workers fired by Alcoa in late April went immediately to work in a t-shirt factory in the same industrial park.  Even as a new worker, in her first week she earned 1,000 lempiras ($52.91), which is $11.31 more than she earned at Alcoa.  Her wages sewing underwear were 27 percent higher than her wages at Alcoa.  At Alcoa she earned 94.5 cents an hour, while at the t-shirt plant, she earned $1.20.

As we will show, again and again, Alcoa is actually lowering standards in Honduras.  Alcoa is undercutting the garment sweatshops.


The Wage at Alcoa is 74 Cents an Hour:

Under Honduran law, the regular work week is 44 hours, but workers should be paid for 48 hours.  Moreover, in Central America, it is traditional to pay what is called the Seventh Day's pay, which functions as a sort of attendance bonus.  If a worker does not miss a day or arrive late, he or she will be paid for seven days.  But, if a worker misses time at work, they will take that day's wage along with the Seventh Day's pay and possibly-at Alcoa-even additional illegal fines.  Including the Seventh Day's pay, the hourly wages is 95 cents.

Base Wage at Alcoa 

 

  • 74 cents an hour
  • $5.94 a day (8 hours)
  • $35.64 a week (44 hours paid as 48 hours)
• $154.32 a month 

 

 

Wage Including Seventh Day Attendance Bonus

 

  • 95 cents an hour
  • $7.56 a day (8 hours)
  • $41.60 a week (44 hours paid as 48 hours)
• $178.30 a month 

 

Overtime during daytime hours is paid at a 25 percent premium above the base wage, or 93 cents per hour.  By law, the day shift is any time between 5:00 a.m. and 7:00 p.m., and everything beyond that is a night shift.  Night shift workers must be paid a 25 percent differential, or 93 cents per hour.  Overtime at night is paid at a 75 percent premium above the base wage, or $1.30 per hour.

The base wage paid by Alcoa of 112.33 lempiras a day ($5.94) and 74 cents an hour has actually declined, in terms of real purchasing power, by 13 percent over the last three years.  In 2005, when Alcoa plants reached full production capacity, the base wage was 68 cents an hour.  As we have seen, the current base wage of 74 cents an hour-which will remain in place at least through 2007-represents a nominal wage increase, six cents per hour over a three year period.  But it is even more dismal that it appears, as the compounded inflation rate in Honduras from 2005 to date is 21 percent, meaning that the Alcoa workers' real wages have actually fallen by nine cents an hour or 13 percent.  As bad as it has been for the Alcoa workers, it is getting worse by the day. 

[Picture: Alcoa worker outside her home]

 

The Honduran government has recently actually lowered the country's legal minimum wage in the country's Southern departments from 74 cents an hour to just 57 cents-a 30 percent decline.  In nominal terms, this will drop the minimum wage back to the level of five years ago, but in real terms it will represent a much larger wage cut for the already very poor workers.  Alcoa and the Honduran government are buying into the race to the bottom hook line and sinker, giving corporations a license to pit workers around the world against each other, competing over who will accept the lowest wages, least benefits, and most miserable living and working conditions, just to be lucky enough to have a job. 

It Does Not Have to Be This Way

Alcoa, a Fortune 500 company, has seen its annual revenues rise almost 60 percent between 2002 and 2006, growing from $19.2 billion to over $30 billion.  However, Alcoa's net income really soared, raking in a fivefold increase in the last four years, from $420 million in 2002 to $2.25 billion in 2006.  Two and a quarter billion dollars profit is a lot of money, so there is no good reason why Alcoa's wire harness workers in Honduras should see their real wages decline, especially as production speed-ups are routine.

Is Alain Belda, the CEO of Alcoa really worth 5,407 Honduran harness workers?  Is he really that important and valuable, as a single individual, to be worth more than thousands of Honduran workers combined? In 2006, Alain Belda paid himself $11,569,694, which is more than three times the combined wages of all 1,700 harness workers Alcoa employs in Honduras!

Surely there is money enough here to treat the Honduran workers with at least a modicum of respect and to pay, at least, the legal minimum wage-rather than cheating the workers, as Alcoa routinely does, at every turn. 


Some examples of Alcoa workers' wages: 

On Shift A, the day shift, a review of pay stubs shows the workers earning the minimum wage of just $41.60 a week.  With eight or ten hours of mandatory overtime included, an Alcoa worker can earn $49.74 a week.

On the night shift, due to the night differential of 25 percent, a worker can earn $50.52 a week.  Someone on the night shift, putting in a 60 hour week-including 13 to 18 hours of overtime-which exceeds the legal limit in Honduras by over 30 percent or more-can earn up to $84.48, meaning the worker is earning between $1.41 and $1.54 per hour.  (Note that according to Article 231 of the Honduran Labor Code: "The maximum hours for a night shift are 7 hours a night and 42 hours a week.")   In April, when the night shift was on a four day schedule from 6:30 p.m. to 6:00 a.m., the workers earned $64.38 a week.  In May, when the workers returned to a five-day schedule-4:15 p.m. to 11:45 p.m. four nights a week and 4:15 to 11:15 p.m. one night-they earned $93.85 for 62 ¼ at the factory.

 

[Picture: This pay stub shows the base wage of a worker on the night shift.]

 

[Picture: Working the night shift from 4:15 p.m. to 6:00 a.m., 13 ¾ hours a night for four nights, and from 4:30 p.m. to 11:45 p.m. on Fridays, this worker earned $90.26 for the week, including 25 hours of overtime, the special night differential, and the attendance bonus.  This worker was at the factory 62 ¼ hours and earned an average of $1.45 per hour.]

Alcoa: Cheating the Workers at Every Turn:

We have already seen, in clear violation of the Honduran Law, that Alcoa does not provide daycare for its workers' children, and even goes out of its way to obstruct these same children's access to Social Security health care, despite the fact that the parents are paying for it.  Unfortunately, many more examples exist of Alcoa shortchanging its ‘associates.'

The right to transportation:  Article 42 of the Honduras Labor Code, mandates that companies provide free transportation to workers living more than 1.2 miles from the workplace.  Alcoa blatantly violates this law as well, leaving the workers to pay between 15 to 20 lempiras a day ($0.79 to $1.06) depending on the distance, for round trip bus fare.  Each day this costs the workers an average of 93 cents, which might not seem like much, but it actually means the loss of one and one quarter hours of base pay. 

This is just another example of Alcoa actually lowering standards in Honduras.  In contrast to Alcoa, even the Korean-owned garment sweatshops in the nearby Continental Free Trade Zone either provide free busses for their workers or pay stipends to cover bus fare. 

The right to paid breaks:  Here too, the Labor Code is quite clear.  Article 323 states: "Effective work time is that during which the worker remains at the orders of the employer or cannot leave the place where he/she gives service during hours of rest or meal times." By refusing to pay for break time, as the law demands, Alcoa is cheating the workers of another hour of wages per day.  This adds up, as more than two hours base wages a day are already gone due to Alcoa's failure to provide free transportation or pay for breaks.   

Refusing to pay double time:  In March and April 2007, when the night shift was on a four-day schedule, Tuesday through Friday, working from 6:30 p.m. to 6:30 a.m., it was also common for at least 100 workers to be obligated to work on Saturday and Sunday as well, and in some occasions even on Monday.  When these workers were forced to toil on Sunday, Alcoa never paid the double-time premium demanded by law. 

Similarly, on Line 405 of the night shift, some 60 people were forced to work on May 1, the Labor Day holiday.  Management said they would receive double pay, but it never showed up in their pay, and in fact, they were not even paid straight time.

It was more or less the same on Holy Thursday, which is a national holiday in Honduras.  Workers obligated to work were again promised double pay, as required by law, which they did not receive, but at least this time they were paid straight time.

Workers shortchanged on their bonus:  After they have worked at least one full year,  workers have the right in June to what is called a 14th Month bonus.  By law, the bonus should be calculated as an average of the last six weeks' wages earned by the worker.  But Alcoa does not operate like that, and they pay just the month's minimum wage of $178.30.  Particularly on the night shift, where an additional 13 to 18 hours of overtime a week would not be uncommon, the bonus-if it was calculated according to law-should have been at least $365, and not the $178.30 minimum.  In this case the workers were cheated of $187.50, meaning they earned less than half of what was legally owed to them.

In a similar vein, many workers also complain that when they leave Alcoa, or are fired, they do not receive their proper legal severance pay.  For example, someone who has worked at Alcoa for two years is due two months' salary in lieu of notification of the firing, plus one month's pay for each month worked, and a proportion of the vacation pay and of the 13th and 14th month's bonus.  Former workers we spoke with said they were rarely, if ever, paid correctly.

Illegal deductions:  If a worker misses a day, by law the company can deduct two days' wages-the day missed and Seventh Day's pay.  This apparently is not enough for Alcoa.  One worker we spoke with had recently suffered from a badly infected tooth.  His jaw was swollen and he was in a lot of pain, but when he asked for time off to go to the clinic, his supervisor refused.  When he could no longer bear the pain, he left for the clinic.  As we said, by law, for missing work Alcoa could take away two day's base wages, or $11.88.  However, in the case of the man with the infected tooth, as punishment for leaving, Alcoa illegally docked his wages by $21.95, or nearly twice the amount permitted by law.  Alcoa management clearly wanted to send a strong message to its workers discouraging sick days.

Now, someone must deliver a strong message to Alcoa that even a Fortune 500 transnational is not above the law.

"Do What's Right"

"Since the Alcoa guide to business conduct was first released in 1992, I have continued to see Alcoa's values in action...maintaining the high level of integrity that has helped Alcoa gain the admiration and respect of our shareholders and success in a global environment...We should always act based upon the highest ethical principles, never compromising our values...When in doubt, stop and ask yourself... ‘Am I being fair and truthful?'... ‘Will my actions stand public disclosure?'"

Alain Belda
CEO of Alcoa 

 

 

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