U.S. weighs labor probe into Stellantis Mexico plant, Mexican officials say

© Reuters. FILE PHOTO: A view shows the logo of Stellantis at the entrance of the company's factory in Hordain, France, July 7, 2021. REUTERS/Pascal Rossignol

By Daina Beth Solomon

MEXICO CITY (Reuters) - The U.S. government is considering filing a trade deal complaint over alleged labor abuses against a car parts plant in Mexico owned by Netherlands-based Stellantis, two Mexican labor officials told Reuters.

If the U.S. Trade Representative takes up the probe into Teksid Hierro de Mexico, in the northern border state of Coahuila, it would mark the fourth labor complaint against a foreign company in Mexico since the United States-Mexico-Canada Agreement (USMCA) went into effect in 2020 with the aim of improving conditions at Mexican workplaces.

The U.S. Trade Representative's office and the Department of Labor declined to comment.

When asked about the possible labor inquiry at the Coahuila plant, Stellantis said it respects collective-bargaining rights and will comply with local laws. The conglomerate became the world's fourth-largest auto group in last year's merger of Peugeot (OTC:PUGOY) maker PSA and Fiat Chrysler.

Under the tougher rules of the new trade pact, which replaced NAFTA, factories that violate worker rights could lose their tariff-free status on exports. Companies have been closely watching these early cases to see how the new rules play out.

Since 2014, Teksid - which employs nearly 1,500 people and makes iron castings for heavy vehicles - has been embroiled in a union dispute that labor activists say has blocked workers from being represented by a group of their choice known as the Miners Union.

Activists also say workers were fired after supporting the Miners Union.

U.S. labor authorities told Mexico's government in early May they were looking into opening a complaint at Teksid after unions flagged the case, said Alejandro Encinas, head of policy and institutional relations at Mexico's Labor Ministry.

"The United States is reviewing the case," he said.

Encinas did not name the unions that raised the matter with U.S. officials.

He and the head of Mexico's federal labor center, Alfredo Dominguez, said U.S. authorities had 30 days from receiving the unions' petition to evaluate whether to pursue the case under the USMCA's Rapid Response Mechanism that aims to swiftly resolve disputes.

Prior complaints also targeted the auto sector with probes into U.S. automaker General Motors (NYSE:GM), Japanese conglomerate Panasonic (OTC:PCRFY) and U.S.-owned factory Tridonex.

Stellantis runs seven other plants in Mexico spanning assembly, engines and stamping, and last year produced more than 400,000 vehicles in the country.