Abstract
The relationship between state governments and organized business in Puebla was highly contentious throughout the 1980s and 1990s. Business associations responded to the economic shock of 1982 by supporting opposition PAN candidates for local office, leading to attempts by PRI governors Guillermo Jiménez Morales and Mariano Piña Olaya to co-opt and confront private sector leaders. In this context, coordinated efforts to respond to economic change in Puebla failed. Instead, adjustment to Mexico’s trade liberalization occurred through firm and industry-specific actions, with limited inputs from local government. This pattern of government-business relations can be explained by the organization of the private sector. A traditional, conservative elite dominated local business associations, making organized business a political threat rather than a developmental partner for local governments. Meanwhile, Volkswagen and other large firms did not participate in business associations and instead pursued unilateral actions to adjust to economic change, largely outside of local institutions.
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Notes
- 1.
These figures refer to the years 1981 through 1986. Because Jiménez Morales left office in early 1987, that year’s growth rate is not attributed to his sexenio. Calculations are based on Germán-Soto (2005).
- 2.
The resonance of the conflict in Puebla with deep-seated historical divisions in Mexico between liberals and conservatives is captured in an essay by the writer Carlos Fuentes entitled “Puebla de los Ángeles vs Puebla de Zaragoza.”
- 3.
According to Pansters (1995), land reform in Puebla had mostly come to a halt by 1940, leaving the state with a highly unequal distribution of land. Ávila Camacho also repressed more radical elements of the teachers’ union in the state and promoted moderate, pro-Catholic unions in an attempt to influence public education. Knight (2014) calls Puebla in the 1940s a “laboratory” of the conservative counter-movement in Mexico that became ascendant during the presidency of Manuel Ávila Camacho (1940–1946), the younger brother of Maximino. These attitudes put Puebla governors at odds with national-level politicians during left-leaning PRI administrations. In the late 1950s and early 1960s, the federal government pressured Governor Fausto Ortega (1957–1963) to sever ties with the Ávila Camacho clique, as part of an effort to undermine the influence of regional strongmen (Manjarrez 1991).
- 4.
With their interests thus protected, the local business community saw little reason to be politically active during this period (Sotelo and Amaya 1998).
- 5.
The Junta de Mejoras was officially a private civic organization whose mission was to carry out public works to improve the urban infrastructure in the city of Puebla. However, it received public money from local government to do so, fostering a sense of resentment among many local officials. The precedents of the Junta date back to 1927 (see Manjarrez 1991).
- 6.
The CCE in Puebla would be politically assertive and ideological from its inception, railing against the government’s “opening to the left” and warning of unions becoming “a weapon of socialist revolution” at a conference of Latin American bishops held in Puebla in 1979 (Sotelo and Amaya 1998). See Chapter 3 for more details on Puebla’s business associations.
- 7.
Diario Cambio 8 March 1986, “Una sociedad libre y democrática no requiere de tanta burocracia: Cabañas” and Diario Cambio 20 December 1984, “En términos reales no hubo mejoría económica: C. Textil.”
- 8.
Representatives of foreign capital often tread warily in areas that could be politically sensitive (see Maxfield and Schneider 1997). The highly-politicized nature of Puebla’s local business chambers, in contrast to the less ideological tone in Querétaro, thus represents a likely cause as well as a consequence of the differences in foreign investor participation across the two states.
- 9.
According to Manjarrez (1991), several business leaders took advantage of this position for personal enrichment.
- 10.
In a statement released in the days after the bank nationalization, the national CCE called the move “a definitive blow to business activity and a clear signal of the entrance of the country into socialism” and warned Mexico was on the path to “totalitarianism” See Nexos 1 November 1982, “El reto de la izquierda” https://www.nexos.com.mx/?p=4128.
- 11.
In the final months of the López Portillo administration, Mexico defaulted on over $80 billion of foreign debt, leading to a collapse of economic activity, spiraling inflation, and soaring interest rates (Bazdresch and Levy 1991).
- 12.
State labor leaders had initially proposed a bipartite pact with business to enhance productivity and retain jobs. During his New Year’s address, the governor took up this idea, promising to convene both sides in the coming days (Diario de Puebla 3 January 1983, “Pleno apoyo del gobierno de GJM, al pacto obrero-patronal poblano”).
- 13.
Diario de Puebla 9 January 1983, “Sellado el pacto de solidaridad entre obreros y patrones.”
- 14.
Ibid.
- 15.
Diario de Puebla 19 February 1983, “La iniciativa privada tratará de mantener el empleo: ASG.”
- 16.
In fact, Puebla’s labor sector was already divided internally, with confederations such as the Regional Federation of Workers and Peasants (FROC) and Regional Confederation of Mexican Workers (CROM) competing with the CTM for control of the state’s unions (see Pansters 1995). By the 1980s, the FROC regularly feuded with CTM leadership, complicating negotiations between workers and firm managers (Sotelo and Amaya 1998).
- 17.
Diario Cambio 1 August 1984 “Se quiere implantar el socialismo en el país: empresarios.”
- 18.
Diario Cambio 23 March 1986, “Serios conflictos enfrenta la industria textil”; El Sol de Puebla 6 August 1986, “Agenda Empresarial.”
- 19.
Diario de Puebla 4 September 1983, “El precio del pasaje urbano en esta ciudad no se incrementará: GJM”). In Querétaro, this idea was openly embraced by business leaders as part of the compromises and burden sharing that arose from tripartite dialogue (see Chapter 4).
- 20.
Diario de Puebla 2 November 1983, “Hoy protestan los industriales contra las tarifas eléctricas.” Canacintra President Othón Necoechea, who the previous month had called for a tripartite dialogue, led this protest alongside CCE President Herberto Rodríguez.
- 21.
Villa Escalera had been at the frontlines of the university conflict in the 1960s and had served as the first president of the CCE in Puebla.
- 22.
Groups associated with the state’s traditional business leaders, such as the DHIAC and the Women’s Civil Association openly backed Villa Escalera, and many of their members joined the PAN around this time (Sotelo and Amaya 1998). In voicing their support, both groups echoed language frequently employed by the private sector, calling for limits to the “asphyxiating presence of the state” and the abuses of the government (Manjarrez 1991, 139).
- 23.
Interview with former CCE official, 14 January 2016.
- 24.
In early 1985, CCE President Herberto Rodríguez Concha praised the mayor’s team and said the city was better in all respects, citing his management of the city’s public services and new public works (Diario Cambio 15 February 1985, “Eficiente la administración municipal: los empresarios.”
- 25.
The Texmelucan industrial complex, in particular, saw scant progress during the subsequent administration. Upon taking office in 1993, top officials in the government of Manuel Bartlett (1993–1999) found the industrial park in “deplorable” conditions with only ten percent of the lots occupied and without basic amenities such as paved roads, lighting, and electricity (El Sol de Puebla 5 March 1993, “Deplorable panorama presenta el Parque Industrial Texmelucan”).
- 26.
Maquilas are factories that operate under a fiscal regime that allows firms to import inputs duty-free and receive other fiscal incentives provided they export the resulting products. The maquila program had been in place for decades but increased dramatically with Mexico’s trade opening.
- 27.
Canacintra also promoted efforts to identify opportunities for local textile firms to supply the growing number of maquila operations at the US border with inputs. Diario Cambio 13 August 1986, “Las maquiladoras ayudarán a salir de la crisis.”
- 28.
These calculations are based on INEGI (1997).
- 29.
Interview with former CCE official, 14 January 2016.
- 30.
Such comments accounted for nearly a quarter of the total by leaders of Canaco (Cámara de Comercio, Servicios, y Turismo, the local chamber representing commercial firms) during the period covered in this chapter (1981–1993). This figure is based on a dataset of business leaders’ public statements. See Chapter 3 and Appendix I. Former CCE officials also identified the informal vendor issue as a leading concern of local business during this period (Interviews 14 January 2016 and 29 February 2016).
- 31.
While industrial park promotion did represent an important policy tool for states to enhance competitiveness and attract new industries, Puebla’s steps to build industrial infrastructure did not prosper, as subsequent chapters illustrate.
- 32.
These changes were initiated in response to problems that originated outside of Mexico, but they were deepened and expanded during the economic upheaval in Mexico in the 1980s.
- 33.
The union obtained full independence in 1981, having been affiliated with another labor confederation, the UOI, (Independent Workers’ Unit) since leaving the CTM in 1972. Despite the move towards greater flexibility, the Volkswagen union continued to be a powerful actor in Puebla as later chapters show.
- 34.
The lynchpin of this strategy was the outsourcing of many parts of the production process to VW suppliers, which laid the groundwork for the globalized production chain and “just-in-time” model that would prevail in the NAFTA period. See Chapter 7.
- 35.
These efforts are described in greater detail in the second section of this chapter.
- 36.
Actas del Consejo Directivo de la Asociación de Empresarios de la Industria Textil de Puebla y Tlaxcala, 24 January 1994. CITPT Archives.
- 37.
The proposal involved the inclusion of a value-added tax in the final price of goods, which business leaders felt would undermine the ability of the private sector to compete with state-owned enterprises Diario Cambio 3 May 1985, “Traería mayor inflación la inclusión del IVA: Coparmex.”
- 38.
For example, the combative Coparmex leader, Jorge Ocejo, affirmed in 1985 that business people do aspire to power, a sentiment expressed commonly among local business leaders, although he stressed it would be as citizens rather than grouped in private associations. Diario Cambio 13 February 1985, “Los empresarios sí aspiran al poder, dice Jorge Ocejo.”
- 39.
The poor showing of Villa Escalera in 1986 reflects the challenging electoral geography in state-wide elections for the PAN, whose popularity is highly concentrated in the cities of Puebla and Tehuacán. In the mayoral race in the capital, the PAN candidate was Francisco Fraile, another figure closely associated with the traditional business elite, who failed to expand his appeal to a broader swath of poblano society as Villa Escalera had in 1983 and was defeated convincingly.
- 40.
Diario Cambio 20 December 1984, “Los industriales, obligados a colaborar con el Gobierno: Bernat.”
- 41.
Sotelo and Amaya (1998) suggest that this “double discourse” or contradictory rhetoric was a defining characteristic of Puebla business, which depended on government protection for its survival while simultaneously lambasting the state at every opportunity.
- 42.
Morales also served as Secretary of Education in the state governments of both Guillermo Jiménez Morales and Mariano Piña Olaya. His brother, Melquíades Morales, would serve as governor from 1999 to 2005. Diario Cambio 6 December 1984 “Los empresarios deben ser más nacionalistas: Jesús Morales.”
- 43.
Actas del Consejo Directivo de la Cámara de la Industria Textil de Puebla y Tlaxcala, 17 December 1990.
- 44.
A UNAM-trained lawyer, Piña had spent his career in the federal bureaucracy (Camp 1993).
- 45.
This impression was solidified during a disastrous social encounter between Piña and several deacons of the local private sector before his formal nomination as the PRI’s gubernatorial candidate. The soon-to-be-governor told his hosts he would not be wasting his time with them if he knew for sure he would be the party’s candidate. He later mortified the assembled business people by explaining how he once paid off a judge to settle a labor dispute on behalf of a client (Sotelo and Amaya 1998; Manjarrez 1991).
- 46.
The rivalry between Spanish and Lebanese in the Puebla business sector continues to this day. See Chapter 3 for a more complete discussion.
- 47.
Several business people close to the governor would end up implicated in a fraudulent expropriation of land outside the city of Puebla that marred the governor’s term. The pattern of personalistic relations with business leaders extended even to Volkswagen, whose manager in Puebla at the time, Martín Josephi, had a close and controversial relationship with the governor. Piña Olaya intervened to reinstate a legally dubious purchase by Josephi of expropriated ejidal lands (see Proceso 26 December 1992 “Quiere pagar 300 millones por tierras que valen 45,000 proyecto de Piña Olaya para hacer con amigos “la nueva Puebla” en predios ejidales”: http://www.proceso.com.mx/160777/quiere-pagar-300-millones-por-tierras-que-valen-45000-proyecto-de-Piña-olaya-para-hacer-con-amigos-la-nueva-puebla-en-predios-ejidales). The governor traveled to Germany several times at the invitation of Josephi, who also acquired one of the country’s largest coffee plantations during the sexenio (Snyder 2001).
- 48.
Perhaps the most notorious example was the relationship Piña Olaya forged with Kamel Nacif, a controversial textile magnate who would become embroiled in a major corruption scandal at the end of the sexenio and later, in the administration of Mario Marín (2005–2011), was the central figure in the sordid Lydia Cacho affair (see Chapter 9). Nacif acquired major maquila operations in Puebla’s textile sector, and accusations of corruption, abuse of workers, and links to organized crime would dog him throughout his career.
- 49.
Interview, 8 March 2016.
- 50.
At the beginning of the administration of Manuel Bartlett, who succeeded Piña Olaya as governor, the CCE undertook a study that found Puebla’s main industrial parks lacking even the most basic amenities (see Chapter 7).
- 51.
The archives of the CITPT indicate that the issue of public protests and informal vendors in the city center was a consistent preoccupation of the CCE during 1988 and 1989.
- 52.
A native of Guanajuato, Aranda had to request a special exemption from the local congress to stand in the mayoral election.
- 53.
El Sol de Puebla 25 August 1991, “Habrá desconfianza de la ciudadanía en los próximos cómicos porque se siente defraudada de estos: Tenorio.”
- 54.
The governor failed to comply with the federal Law of Human Settlements, meaning the lands never officially passed from federal to state control. The state government proceeded with the transactions despite this situation.
- 55.
Proceso 26 December 1992, “Quiere pagar 300 millones por tierras que valen 45,000 Proyecto de Piña Olaya para hacer con amigos “la nueva Puebla” en predios ejidales.”
- 56.
Proceso 26 December 1992, “Quiere pagar 300 millones por tierras que valen 45,000 Proyecto de Piña Olaya para hacer con amigos ‘la nueva Puebla’ en predios ejidales.”
- 57.
The private sector went ahead with the plan anyway, and the resulting oversight committee estimated that $100 million in profits were made by the various parties to the fraudulent deal. Ibid.
- 58.
Bartlett summoned each individual who had purchased land illicitly to his office and duly informed them that they would be returning the land to the state and would receive the initial (lower) price they had paid as compensation. The only business person to protest this arrangement was the Piña Olaya crony Kamel Nacif. Nacif would later accept after being arrested in Las Vegas for tax evasion, leading some to speculate that Bartlett had used his contacts at the federal level to put pressure on Nacif. See La Jornada 16 February 2006, “En 1992, Nacif compró de modo ilegal terrenos de una reserva” http://www.jornada.unam.mx/2006/02/16/index.php?section=politica&article=005n2pol.
- 59.
Tier 1 suppliers refer to firms in the automotive supply chain that sell parts and systems directly to carmakers such as Volkswagen, who are known as original equipment manufacturers (OEMs). Tier 1 auto parts firms are generally large, multinational manufacturers that produce technologically complex products such as braking systems, steering systems, and motors.
- 60.
Many of the workers who lost jobs at the VW plant would be absorbed by the growing numbers of Tier 1 suppliers, although these firms generally paid much lower salaries (Millones Espinosa 2012).
- 61.
According to Martínez (2008), Volkswagen imposed fines of between $600 and $1,000 per minute on providers that failed to meet production and delivery obligations on time.
- 62.
These quotations are taken from comments by Alejandro Couttolenc Villar, Salvador Cué, and Fernando García Teruel, all of whom served as directors of the Chamber of the Textile Industry of Puebla and Tlaxcala (CITPT) or the affiliated Association of Textile Industrialists of Puebla and Tlaxcala between 1988 and 1990. Actas del Consejo Directivo de la Cámara de la Industria Textil de Puebla y Tlaxcala, 17 December 1990, 15 January 1990, and Actas del Consejo Directivo de la Asociación de Empresarios de la Industria Textil de Puebla y Tlaxcala, 4 February 1991.
- 63.
CITPT Actas del Consejo Directivo de la Cámara de la Industria Textil de Puebla y Tlaxcala 15 February 1988.
- 64.
CITPT President Antonio Sánchez Díaz de Rivera complained to Secofi Secretary Héctor Hernández in early 1988 that export quotas were managed “like a state secret” and representatives of the sector were not considered in the negotiations. CITPT Actas del Consejo Directivo de la Cámara de la Industria Textil de Puebla y Tlaxcala, 28 January 1988.
- 65.
The CITPT played a role in winning larger quotas for bedding and carpets in 1988, although these were not the core products of interest to the sector. CITPT Actas del Consejo Directivo de la Cámara de la Industria Textil de Puebla y Tlaxcala 13 December 1988.
- 66.
These meetings were described as tense and progress slow, despite some headway on issues such as allowing the exchange of quotas among exporters. CITPT Actas 21 November 1988.
- 67.
CITPT Actas del Consejo Directivo de la Cámara de la Industria Textil de Puebla y Tlaxcala 4 December 1989.
- 68.
CITPT Actas 4 December 1989.
- 69.
In addition to the credit union project, the chamber also discussed coordination among firms to ensure the availability of cotton inputs and to sanction firms that purchased contraband articles. CITPT Actas 14 April 1986.
- 70.
The chamber needed to hire a consultant to help identify the 20 firms necessary to make the project viable. CITPT Actas 27 June 1988.
- 71.
This decision to go it alone is indicative of a commonly cited aversion to collective action and partnerships on the part of Puebla business people. The mentality is linked to the absence of strong local business groups, or associations of firms, which have been the primary form of large firm organization in most of Mexico (Sotelo and Amaya 1998; and interview with a Puebla business owner, 2 December 2015.
- 72.
CITPT Actas 17 December 1990.
- 73.
Snyder (2001) reports that Piña Olaya failed to appear before congress to deliver his final Informe de Gobierno, in violation of Mexico’s constitution, in order to avoid a final humiliating public appearance.
- 74.
These years correspond to the economic census carried out by INEGI closest to the first and last years of the Piña Olaya sexenio. These figures reflect the auto sector’s share of the state’s industrial output, not total GDP.
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Kahn, T. (2019). Partisan Rivalry Between Government and Business in Puebla, 1981–1993. In: Government-Business Relations and Regional Development in Post-Reform Mexico. Latin American Political Economy. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-92351-2_5
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