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Table of Contents 1 Executive Summary Race to the Bottom: U.S. Free Trade Debacle in Central America 3 4 5 7 8 9 10 12 14 16 18 19 21 23 25 26

What Must Be Done Lear in Honduras: Windfall Tariff Break of $5 Million! Race to the Bottom 419,600 Auto Jobs Lost in the U.S. Tax Breaks for Multinationals That Never Stop Giving Lear Workers Racing Backward into Misery Food Costs Rise as Lear Wages Fall One Percent A Senior Woman Worker Speaks Out: Working and Living Conditions and Wages at Lear Driven by Poverty and Abuse, A Union Is Formed; Lear and Hyundai Retaliate High-Tech Sweatshop and Low Wages Free Trade Zone Wages: 99 Cents and Hour Workers Describe Conditions: Why Can’t Lear Afford Toilet Paper for These Workers? Whom Do You Believe? Lear and Hyundai Factory Management, or the Honduran Workers? Honduran Ministry of Labor: Labor Rights on Paper, But Rarely If Ever Enforced United States Government Economic Assistance to Honduras in 2010 Totalled $112.7 million Washington Lobbyists Support Leaders of Coup that Replaced Honduras’ Democratically Elected President 27 Additional Violations at Lear: Lear, Hyundai Kia Shortchange Workers of Their Legal Wages 28 Lear Corporation’s Global Labor Standards 30 Addenda 30 A. Wire Harness/Auto Parts Export Factories in Honduras 31 B. Wages in Honduras 32 C. Sample Customs Record 33 D. KyungshinLear Cutting Plant Inspection Sheet

December 2012 Author Charles Kernaghan Central America Program Director Sergio Chávez Research Sergio Chávez, Barbara Briggs, Cassie Rusnak, Elana Szymkowiak, Antoinette Carcia, Aaron Freudenthal and Cara Hagen Institute for Global Labour and Human Rights (Formerly National Labor Committee) 5 Gateway Center, 6F, Pittsburgh, PA 15222 , U.S.A. +1-412-562-2406 |  inbox@glhr.org |  www.globallabourrights.org


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Executive Summary

Race to the Bottom U.S. Free Trade Debacle in Central America •

After 29 years of Free Trade agreements with Central America, Lear workers in Honduras producing Hyundai and Kia auto parts for export to the U.S. continue to earn below-subsistence wages of just 99 cent an hour, while being illegally fired and blacklisted for daring to exercise their legal rights, including the right to organize a union at Lear.

The Lear, Hyundai and Kia joint venture in Honduras enjoys windfall tariff and other breaks amounting to tens of millions of dollars. These corporations pay no income tax, no state, county or municipal taxes, and are exempt from all import and export duties.

On the other hand, Lear’s workers in Honduras are trapped in makeshift, dirt-floored huts, lacking potable water, relying on primitive outhouses and cooking with wood, since they cannot afford gas. The workers’ children go barefoot to save their shoes for church and school. Lear workers subsist on rice and beans, and even so, they often must turn to loan sharks to survive.

Lear, Hyundai and Kia workers are on their feet the entire shift, constantly rushing to keep up with the moving rotary tables and typically performing 6,160 operations per shift, or one operation every 4.82 seconds, connecting circuits on the wire harnesses and binding them together with tape.

The workers are drenched in sweat, since factory temperatures routinely exceed 95 degrees. Supervisors threaten and curse at the workers to move faster or face dismissal. Many workers report they experience sharp pains in their wrists, hands and fingers from repeating the same motions, nonstop, throughout the day.

Recently management unilaterally increased the workers’ production quota by 17 percent — with no wage increase.

Workers have to bring their own toilet paper to work.

The Honduran Ministry of Labor is not acting in good faith. When corporations like Lear deliberately and arbitrarily block Honduran labor inspectors from entering the KyungshinLear factory in San Pedro Sula, the Labor Ministry’s only “recourse” is to fine the $14.2-billion Lear Corporation between $10.23 and $102.30 in penalties — which amounts to a pitiful slap on the wrist. When it comes to enforcing labor rights, the system is broken.

Similarly, the U.S. Government’s ironclad commitments to the multinational corporations have blossomed under 29 years of free trade agreements. The multinationals have been lavished with massive tariff and tax breaks, while workers’ real wages are slashed and the workers’ rights to organize and bargain collectively are suppressed. This must change.

KyungshinLear factory in San Pedro Sula, Honduras.

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Lear workers in Honduras live in primitive, makeshift housing and now cook with wood, since gas has become too expensive.

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What Must Be Done To demonstrate that Lear Corporation, Hyundai and Kia are indeed serious regarding Honduran labor law, commitments under the Free Trade Agreement and the International Labour Organization’s (ILO) internationally recognized worker rights standards, the companies should: I. Immediately fire the two most abusive managers at the KyungshinLear factory in San Pedro Sula, Honduras: — Jorge Martinez, human resource manager, who is in charge of illegally threatening and firing the elected union leaders. — Adrian Bonilla, plant manager, who workers report is especially nasty and vicious, constantly cursing and abusing the workers, pressuring them to meet excessive production goals. The termination of these two abusive managers would be an important, concrete step forward, demonstrating that management is ready to bring the KyungshinLear factory into compliance with local and international labor law. II. The legally organized “SitraKyungshinLear” (the Union of Workers of KyungshinLear) must be immediately recognized and afforded all rights, including — especially — the reinstatement of all union officers and members.

III. After 29 years, commitments made under several U.S. free trade agreements with Central America have continued to fail workers miserably when it comes to worker rights protections, including the legal right to organize an independent union. This is not acceptable. We feel strongly that a meeting must be held in Washington, led by the United States Department of State, Department of Labor, the United States Trade Representative’s Office and the U.S. Embassy in Honduras, with representatives of the SitraKyungshinLear union; Ms. Evangelina Argueta, Director of Maquila Organizing at the General Confederation of Workers in Honduras (Confederación General de Trabajadores, CGT); the United Steelworkers union, United Auto Workers; the AFL-CIO Solidarity Center; the Institute for Global Labour and Human Rights and others. After 29 years of failed trade policies, we need a new commitment to recognize and respect trade union rights. IV. Congressional hearings should be conducted, affording Lear, Hyundai and Kia the opportunity to explain what remedial steps they are prepared to take to bring their multinationals into compliance with local and international labor law.

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4 KyungshinLear factory in San Pedro Sula. (Photo from KyungshinLear)

Lear in Honduras: Windfall Tariff Break of $5 Million! The Honduras Electrical Distribution Systems factory, a joint venture of Lear, Hyundai and Kia, was established in June 2003 with a total investment of $23 million. There are some 3,000 Honduran workers at this facility, which exports wire harnesses — automotive electrical systems — to the United States. Honduras Electrical Distribution Systems 27 Calle 300 Mts prolongacion Col. Felipe Zelaya San Pedro Sula, Honduras The wire harnesses are shipped to Montgomery, Alabama and West Point, Georgia. Kyungshin Lear Sales and Engineering LLC 100 Smother Road Montgomery, Alabama 36117 Kyungshin Lear Warehouse 1201 Og Skinner Dr West Point, GA 31833 In 2011, January through December, the Lear, Hyundai and Kia joint venture in San Pedro Sula exported at least 1,002 shipments of “automotive wire harnesses,” weighing an estimated 6,799 tons to Kyungshin Lear Sales and Engineering LLC and

two other Kyunshin Lear facilities in Alabama and Georgia. On average, 83.5 shipments per month were exported to the U.S. The estimated total value was over $100,024,316 for the 1,002 shipments. Ordinarily, there would a 5 percent tariff on the $100,024,316 worth of goods entering the U.S. from Honduras, which is a duty of $5,001,216. But under the Free Trade Agreement, the multinationals like Lear, Hyundai and Kia walk away scot-free, paying no tariffs at all. This tariff break is enormous, equivalent to a little more than half of the annual total payroll for all 3,000 workers at the wire harness factory in San Pedro Sula. The annual wages for all 3,000 Honduran auto parts workers at the Lear facility total $9,979,770. The tariff break of $5,001,216 for Lear, Hyundai and Kia in Honduras in effect cuts the workers’ total annual wages by more than half, to $4,978,554. This is just another example of how the Free Trade Agreement with Central America is skewed toward providing giant multinationals with windfall tariff and other breaks. From January through November 9, 2012, 730 shipments of automotive wire harnesses were exported to Alabama from the San Pedro Sula plant owned by Lear, Hyundai and Kia.

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Race to the Bottom Lear, Hyundai, Kia and other Auto Multinationals Relocate Production to Honduras As the Honduran Government Sets Wages at 99 Cents an Hour in Free Trade Zones Guess who are among the very lowest wage earners in Honduras? The Honduran Government has established 13 separate pay scales for the various sectors of the economy. It turns out that Export Processing Zone workers — producing manufactured goods for powerful and profitable multinational corporations like Lear, Hyundai and Kia — are virtually tied with the poorest of the poor — small agricultural groups of less than ten workers tilling tiny marginal plots, using primitive agricultural methods that go back 100 years. These peasant workers earn 98 cents an hour. Auto parts workers toiling in enormous, foreignowned, high-tech factories producing for Lear,

Hyundai and Kia in Free Trade Zones established by the U.S. and Honduran governments earn all of 99 cents an hour, one cent more than the poorest peasants. As we will document later on, no one, and especially not a single mother with children, can possibly survive earning just 99 cents an hour. The workers are trapped in an endless cycle, borrowing money from local loan sharks each week. Lear workers have had to give up cooking with gas, which they can no longer afford. Conditions are going backward in Honduras, as Lear and other auto workers return to cooking with wood. Their children go barefoot to save on shoes, except when they go to school or to church on Sundays. It is instructive to compare wages at a 100 percent


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locally owned Honduran construction company, Williams and Molina, which has just 150 permanent workers, with the giant foreign-owned Lear/Hyundai/ Kia auto parts plant, which has 3,000 workers. The minimum base wage at the Honduran construction company is $1.86 per hour.

These lower wages can be directly attributed to the Free Trade agreement the United States signed with Honduras and the other Central American countries in 1983. The U.S. Government was obviously the 800 pound gorilla in the room when the Free Trade Agreement was negotiated and signed. When it came to guaranteeing respect for worker rights — including the ILO’s core internationally recognized worker rights standards, especially the right to organize independent unions — the U.S. Government negotiators failed across-the-board. 29 years later, Honduran workers toiling in the Free Trade Zones still earn starvation wages with zero legal labor rights.

Williams and Molina Construction Base Wage (The minimum monthly wage is 6944 Lempiras. Exchange rate: $1.00 USD = 19.55 Lempiras) $1.86 an hour $14.90 a day (8 hour shift) $81.97 a week (44 hours) $355.19 a month $4,262.28 a year

On the other hand, the United States Government’s ironclad commitments to multinational corporations under the Free Trade agreements have blossomed, lavishing the multinationals with massive tariff and tax breaks, while workers’ wages are slashed and workers’ rights to organize and bargain collectively are suppressed.

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The much larger Lear/Hyundai/Kia auto parts factory in San Pedro Sula, operating 24 hours a day on three shifts, pays its workers a base wage of only 99 cents an hour, just shy of being half the wages earned by the local construction workers.

dK ia Just three of the multinationals operating in Honduras — Lear, Hyundai and Kia, with combined annual revenues of approximately $24 billion in 2011 — exceed the entire $17.38 billion Gross Domestic Product of Honduras by 39 percent.

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Jobs (in thousands)

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419,600 Auto Jobs Lost in the U.S. “...direct employment in the U.S. auto parts industry has fallen significantly in recent years, declining by 419,600 jobs (45.8 percent) from November 2000 to November 2011.”

100 916

80 652 60 496 436

As of November 2011, there were just 496,000 workers directly employed in the U.S. auto parts industry.

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- Robert E. Scott and Hilary Wething. Economic Policy Institute. “Jobs in the U.S. auto parts industry are at risk due to subsidized and unfairly traded Chinese auto parts.” January 31, 2012.

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Nov 2000

Nov 2007

Nov 2009

Nov 2011

Direct Employment in U.S. Auto Parts Industry Source: Economic Policy Institute

Top 5 Exporters of Insulated Wire, Cable and Other Electrical Conductors to the U.S.

1. Mexico

According to U.S. Customs records, Honduras ranked #4 among exporters of insulated wire, cable and other electrical conductors (HS 8544) to the United States, shipping an estimated value of at least $426,086,106 in 2011. Source: International Trade Administration, U.S. Dept of Commerce.

2. China Harness circuit used in harness assembly at the Lear factory in Honduras.

3. Canada

4. Honduras

5. Philippines

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Tax Breaks for Multinationals That Never Stop Giving Free Trade Zone laws in Honduras have been in place since 1987, for the last 25 years. It was in 1998* that the government opened the entire land mass of Honduras, so that Free Trade Zones or Export Processing Zones could be located anywhere.

Free Trade Giveaway to Multinationals The Honduran law for Investment Promotion and Protection states: “National and foreign investment is considered a primary interest for the state, and therefore all necessary facilities and guarantees should be offered to foster its growth and development.” But the government’s real target was to attract multinational corporations with lavish tax breaks so they would relocate their production facilities to Honduras. The Honduran Free Trade Zone Law established: 1. Exemption from all fees, taxes, charges and surcharges on both imports and exports; and 2. Exemption from all kinds of fiscal and municipal taxes. This means that multinational corporations relocating to Free Trade Zones or Export Processing Zones in Honduras — including the Lear, Hyundai and Kia auto parts plant in San Pedro Sula — are exempt from all taxes. Corporations like Lear pay no Honduran national income tax, no state taxes, no county or even municipal tax. For example, if a low-wage worker at Lear purchases a ream of paper for her child’s schooling, she would have to pay a sales tax, but not so for the Lear Corporation, if they purchase the same paper. Moreover, for multinationals located in Honduras, there are no import or export duties on raw materials, equipment, machinery, spare parts, plant fixtures or even office supplies. Customs officials are on site to expedite exports and imports.

Finally, under Free Trade Zone laws, corporations are now 100 percent free to repatriate their profits and capital at will, with no restrictions or taxes. Honduran import tariff rules under the World Trade Organization’s Harmonized System have also been superseded by Free Trade Zone laws. In the past, if Lear, Hyundai and Kia wanted to import “plastic material and plastic products” to Honduras to manufacture auto parts, they would have had to pay a 3.53 percent import tariff under Chapter 39 of the WTO Harmonized System. The same holds true for “machinery, electrical machinery and material parts” entering Honduras, which would face an import duty of 3.83 percent of the value of the goods under the Harmonized System Chapter 85. And the “copper and industrial copper” used by Lear and other companies to make auto parts in Honduras would face an import tariff of 0.35 percent under Chapter 74 of the Harmonized System. Honduran Free Trade Zone laws have exempted giant multinationals from having to pay import tariffs. It’s a good deal for the multinational corporations, but does nothing to help the Honduran people.

Honduran Government Continues to Go Backward, Opening the Door to Replace Full-Time Workers with Temps “For those companies that require labor by the hour [temporary workers] because of their trade activity, there is a legal framework within the law for a National Program of Hourly Employment, which facilitates this type of hiring process.” — Honduran Maquiladora Association. “Industry in Honduras.” August 23, 2011 This is just another way to undermine and weaken full-time workers, reduce wages and block any nascent union organizing efforts.   * Industrial Export Processing Zone Law (ZIP – Ley De Las Zonas Industriales De Procesamiento Para Exportaciones – Executive Decree 37-38 of April 7, 1987 approved by the National Congress.)

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Lear Workers Racing Backward into Misery The workers’ homes often have adobe walls with sheet metal roofs. It is not uncommon to lack even a door. Instead the workers hang a piece of cloth over the opening, which is much cheaper. The floor can be dirt or cement. The most popular household appliance is a clothes iron. Forget washing machines, dryers or computers. The workers’ children do not wear shoes around the house or to play outside, so as not to wear them out. They go barefoot, except when they go to school or church. If they go to public school, the children will receive a small carton of milk.

Lear workers are racing backward, cooking with wood on primitive adobe stoves as they can no longer afford to purchase gas, which costs $12-$13 for a 25-pound tank that lasts one month. At most, workers will have two pots on the stove, one with beans and the other with rice.

The workers earn so little they do not have the means to open a bank account, to seek loans, or to open an account with a department store. Instead workers must go to loan sharks to make ends meet, which means paying exorbitant interest rates. Despite the claims of multinationals like Lear and Hyundai, signs of progress in Honduras and across Central America are few and far between.

Many Lear workers also lack access to safe potable water. In the worker neighborhoods, there is no such thing as an indoor bathroom with water and plumbing. Outside the workers’ homes are primitive latrines. There are no showers. To bathe, the workers take water in a plastic bucket from the household’s “pila” — a sink-like storage tank — to a curtained off outdoor bathing area. There they use a small plastic bowl to splash water on themselves. Some workers, but by no means all, have a small refrigerator, which will contain water, a few eggs, cheese and fruit. Forget meat, chicken, butter or milk.

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Food Costs Rise as Lear Wages Fall One Percent “The most important reason to form a union is because the wages are so low that no family can possibly live with a modicum of decency. We need to live better so we can raise our children properly.” — A Lear worker in San Pedro Sula factory In 2004, the full-time wage of one Lear worker covered 74.2 percent of a family’s basic food needs. By 2011, the full-time wage met only 65.71 percent of the family’s basic food basket. The highly respected National Statistics Institute of Honduras calculates the food basket of an average Honduran family, based on “the nutritional minimum

needs of a family of five members, based on 2,200 calories per member per day.” The food basket contains 30 basic products, including rice, beans, tortillas, potatoes, cooking oil, cabbage, yucca, sugar, bananas, tomatoes, oranges, three eggs (166.2 grams), a small portion of cheese (1.9 ounces per day), milk (7.2 ounces), meat (5.3 ounces), and chicken (4.1 ounces). In fact, Lear workers and their families very seldom buy meat or chicken. Their diet is based on rice, beans, tortillas, supplemented by eggs and cheese. The food basket does not, of course, include other basic necessities such as housing, transport, health care, children’s school uniforms and books, clothing and shoes, let alone savings, recreation and other basic expenses. In fact, the only way workers can survive is to purchase on credit from small neighborhood stores, or to borrow money from small loan sharks that run their loan businesses near the maquila factories.

Lear workers live in primitive housing with no indoor plumbing.

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A worker’s house in San Pedro Sula.

Lear, Hyundai and Kia Workers Weekly Expenses for a Single Mother and Two Children (Lear workers earn $63.97 per week. $1.00 USD = 19.59 Lempiras) Food

650 Lempiras

$33.25

Electricity Costs

115 Lempiras

$5.88

Water

50 Lempiras

$2.56

Rent

300 Lempiras

$15.35 ($66.50 per month)

Transportation

180 Lempiras

$9.21

Firewood **

70 Lempiras

$3.53

Meals/Snacks at School

75 Lempiras

$3.84

150 Lempiras

$7.67

Shampoo, Soap, other cleaning and toilet items Total

$81.33

** Workers have had to return to cooking with wood rather than the more expensive cooking gas.

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A Senior Woman Worker Speaks Out Working and Living Conditions and Wages at Lear (Interview on July 29, 2012. She will not be named to prevent her from being fired and blacklisted.) “Lear was my first job in a maquila and I started in 2004. “In the beginning, my wage was between 350 to 400 Lempiras [$18.78-$21.47] a week and around 2000 Lempiras [$105.8] a month. I felt happy to be earning this wage. We also started receiving coupons from Lear that were worth around 200 Lempiras [a little more than $10] to use in the supermarket. We got a production bonus and we felt that the management was not so bad with us. At the time the owners and managers were North American. “In 2007, the supervisors explained to us that Lear merged with some Koreans and things began to change rapidly inside the factory, and the benefits began to go down. The company stopped giving us the free supermarket coupons. Our production bonus fell. Also our production goals were raised. We started feeling more pressure to work faster to produce and my income decreased.

Now I have to resign myself to beans, rice, fat and wood because I cook with wood.

“The wages are never enough to buy everything you need because food is always getting more expensive, and you have to buy less. A pound of beans cost 10 Lempiras [53¢] when I started working and now we have to pay 25 Lempiras [$1.26] to buy the same pound of beans. A pound of rice that cost 8 Lempiras [42¢] now costs 22 Lempiras [$1.11]. Powdered milk for my daughter cost 240 Lempiras for a 2-pound carton [$12.18]. Any wage increases are not real if everything is increasing. “Nowadays I’m earn-

ing around 1,000 Lempiras [$50.76] a week. If we were paid 1,400 Lempiras [$71.06], that would help me buy a little bit more food, pay my expenses for water and energy and buy more milk and some disposable diapers for my small daughter. “When I started working I bought chicken or a small piece of meat. But now it is a luxury to eat those things and you have to limit what you buy. Now I have to resign myself to beans, rice, fat and wood because I cook with wood. “Now my mother is taking care of my three-year-old daughter and of course I buy all of what she eats and uses every day. Some workers pay up to 500 Lempiras [$25.38] for someone to take care of their child. I can’t pay that amount. “The truth is that our wages are not enough and we live on credit or loans. There are some people that have those kinds of business outside the factories in an informal way. I get paid every Friday but many times by Monday my money is finished so I have to go to those people and ask for a loan to survive the week. It functions like this. If I receive a loan of 100 Lempiras on Monday, I have to pay 120 Lempiras on Friday when I get paid. I know it’s a lot of interest but that’s their business. Since we need the money, we have to say yes to them so we can survive through the week. Many of the workers, I think more than half of

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13 the workers, survive that way. Another way of surviving is to get credit at the small stores in the neighborhoods, and they don’t ask for those high rates. “During my eight years of working at Lear, I bought a refrigerator, with a weekly credit. I paid 200 Lempiras [$10.73] a week over two years to a local store. I know that the interest rates of those stores are criminal, but that’s the only way you can get your things. “My father gave me a small plot of land outside of San

Pedro Sula. Little by little I’ve bought some metal sheets and I’ve built one single room with no divisions. I’ve put some cement on the floor, but I can’t make improvements because the wages are not enough. “We buy the clothing and shoes by turns. In December when I receive the Christmas bonus, I buy shoes and clothes for my two children. In June when I receive the 14th month bonus, I buy clothes and shoes for myself. So basically we buy clothing for ourselves once a year. “Comparing my situation now with my situation when I started working at Lear, I’ll tell you it’s the same. The wages at Lear are not fair because we work hard but the wages are never enough to live well without constantly feeling needs. Despite the government’s wage increase every year, the basic basket also increases. “When you are very young and you produce a lot, the Lear managers are very happy. But when you start getting sick because of the work, then they don’t like it. To get sick in Lear is a problem because they don’t like to give permission to go to the social security clinic for treatment. I have problems in my right hand and wrist. I feel constant pain and need treatment so I think it is not profitable for them to have me at the factory.”

A Lear worker’s home on the outskirts of San Pedro Sula.

Under the Free Trade Agreements Multinational Corporations Pay No Municipal Taxes While Honduran Workers Earning 99 Cents an Hour Must Pay Taxes Yes, it is true. Under the Free Trade agreements between the U.S. and Honduras, giant multinationals like Lear, Hyundai and Kia are exempt from paying any municipal taxes in Honduras. But the workers employed by these multinationals, who earn a base wage of just 99 cents an hour, must pay municipal taxes. The poorly paid workers must pay 3.75 Lempiras (19 cents) for each 1,000 Lempiras ($51.51) they earn. The workers earn an annual wage of 65,034.76 Lempiras ($3.326.59). (This is the monthly base wage of 4,645 Lempiras multiplied by 14 months, including “13th Month” Christmas bonus and “14th Month” bonus, given in June.) On average each worker must pay $12.47 a year in municipal taxes on the full-time wage. But including overtime, the municipal tax is more like $17.46. For all 3,000 workers, the municipal tax totals around $52,380. On the other hand, the Lear/Hyundai/Kia factory in San Pedro Sula earns a profit of at least $20 million a year, but does not have to pay any municipal taxes on income.

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Workers’ houses are right by a dump.

Driven by Poverty and Abuse A Union Is Formed; Lear and Hyundai Retaliate. Management Vows to Destroy the Workers’ Union A group of Lear, Hyundai and Kia workers at a large auto parts factory in San Pedro Sula began to meet in May 2011 to talk about their wages and working conditions. Everyone agreed their wages came nowhere near providing a decent living. They were stuck in poverty, along with their children. Also, labor rights violations were rampant at the plant.

Just three months later, in September 2011, a union was formed and a nine-member executive board was elected.

conditions. We also need to have a voice inside the plants to defend our rights, because managers do what they please when daily problems arise in the factory. One manager told us that with a single wire harness we make, the company gets enough money to pay a full line of workers…”

One manager told us that with a single wire harness we make, the company gets enough money to pay a full line of workers…

With assistance from union representatives of the General Confederation of Workers (Confederación General de Trabajadores, CGT), the Lear workers followed the legally mandated procedure of “notifying,” or informing factory management that a local union has been formed.

One union worker explained: “Wages are very low. We believe we are not working for a poor company. We need to live better and raise our children in decent

But Lear, Hyundai and Kia management had no intention of allowing a union. Management simply ignored the “Notification” that a union had been

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15 formed, by refusing — with ridiculous excuses — to allow any Ministry of Labor inspectors from entering the factory. On four occasions, Ministry inspectors were turned away, told by factory guards that all members of management were “out of the country” and could not attend them. Blocked from entering the KyungshinLear plants, Ministry inspectors could not complete the necessary administrative steps and therefore were unable to officially declare that a union had been formed in Lear. If this sounds ridiculous, it is. This is an official document of the Honduran Secretary of Labor, signed by the labor inspector, Mr. Jose Angel Portillo, dated October 4, 2011: “On October 4, 2011, I went for the third time to the KyungshinLear company… to fulfill the warrant of the Regional Inspec-

tor’s Office to notify a union has been formed… Once inside the workplace, I reported to a security guard, who did not want to give me her name, but once she knew why I was visiting, she told me that the human resources manager was not in the company and was not in the country and that she had no idea when he was going to return to the company. I want to record that also on the 28th and 29th of September, 2011, I was not received, obstructing by this way the fulfillment of our duties that legally correspond to the Labor Inspectors.”

According to the Honduran Labor Code: • All workers have the right to organize a union; • A union typically covers a single workplace and must have at least 30 founding members; • From the moment the union is founded, its founders are legally protected from being fired, transferred or demoted.

The Ministry of Labor’s notice published in the governmental newspaper “La Gaceta” announcing the legal registration of the KyungshinLear Union (SitraKyungshinLear). The union was registered on January 27, 2012 and the ad was published on February 20, 2012.

As Lear management repeatedly refused to accept the Notification that a legal union had been formed at the KyungshinLear plants, members of the union board took a bus from San Pedro Sula six hours to the capital city of Tegucigalpa to demand from the Secretary of Labor that their legal union be recognized. On January 27, 2012, the Honduran Secretary of Labor recognized that a legal union had been formed at the Lear, Hyundai and Kia joint venture in San Pedro Sula. Less than a month later, on February 20, 2012, the Ministry of Labor placed a public notice in the official, governmental newspaper, “La Gaceta,”

recognizing the legality of the Lear union. However, in the next crucial step, Ministry of Labor officials still had to personally inform Lear management that a union had been formed and that the union members enjoyed the legal protections under Honduran law. As of November 2012, Lear, Hyundai and Kia management still steadfastly refuses to allow Ministry of Labor officials to enter their plants, meaning the union is still not officially recognized!

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High-Tech Sweatshop and Low Wages The KyungshinLear factory in San Pedro Sula, Honduras, owned by Lear, Hyundai and Kia, assembles wire harnesses — automotive electrical systems — for duty-free export to both domestic and foreign car manufacturers in the United States. The Lear, Hyundai and Kia factory operates around the clock, on three shifts, Monday through Friday. Three thousand workers work at the factory.

It does not sound too difficult until one realizes that the mandatory production goal is 6,160 operations in the eight-hour-and-15-minute shift, or a staggering one operation every 4.82 seconds non-stop! Not only are workers standing throughout their shift, but the speed at which they are working is determined by how fast the rotary work table revolves, which is of course, set by management. Moreover, the moving

Shift I 5:50 a.m. to 2:50 p.m. 9 hours Working 8 hours and 15 minutes Two breaks: 30 minutes for lunch, one 15-minute break Shift II 2:50 p.m. to 11:15 p.m. 8 hours and 25 minutes Working 7 hours and 40 minutes Two breaks: 30 minutes for supper, one 15-minute break Shift III 11:15 p.m. to 6:00 a.m. 6 hours and 45 minutes Working 6 hours and 30 minutes One 15-minute break at midnight There are three assembly plants and one cutting plant with 464 workers. At the cutting plant, two groups of workers alternate 12-hour shifts from 6:00 a.m. to 6:00 p.m. and 6:00 p.m. to 6:00 a.m. The work is grueling and monotonous while workers must stand for their entire shift. The workers assemble automotive electrical systems for cars, SUV’s and pickup trucks. These wire harnesses operate the lights in our cars, lock and unlock the doors, play the audio, set the temperature, adjust our seats, operate our airbags and more. The workers join two electrical circuits using a vinyl adhesive tape to bind the wires. They then carry the taped circuits to a moving “rotary table” where they connect the taped cables to another cable by joining their connectors. After joining the two cables, they again use tape to guarantee that the circuits are solid. The final step is to attach clips to the wire harnesses which are then ready to be snapped onto the interior car body.

A rotary table is used to hold the har-

ness in place as it is being assembled. rotary table is not flat, but rather vertical. This means some workers must constantly bend over awkwardly while assembling wire harness segments at the bottom of the rotary table, less than 20 inches off the ground.

The workers use their thumbs, index fingers and wrists constantly, which causes cramps and pain in their wrists and hands. Workers feel under constant pressure to keep up with the mandatory production goals. One especially nasty manager at Lear’s Yojoa plant, Adrian Bonilla, is always pushing the supervisors and team leaders, threatening, shouting and cursing at them, demanding more production. “This son of a bitch,” he yells, “doesn’t understand how we should work.” Or, “Because this son of a bitch won’t work faster, our productivity is way short. Bastard!” Lear and Hyundai should immediately fire the manager, Adrian Bonilla.

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Does This Make Sense? Allowing Lear, Hyundai and Kia to Slash Workers’ Wages by $5 Million! We know that wages at the Lear/Hyundai/Kia auto parts plant in San Pedro Sula are just $1.45 an hour (when the two annual bonuses are included). Workers earn $277.22 a month and $3,326.59 for the year. Given that 3,000 workers are employed at the Lear factory, their total payroll is approximately $9,979,770. Now let’s compare the multinational Lear Corporation to a small domestic construction company called “Williams and Molina Construction,” which with 150 workers is just five percent the size of the Lear plant. It may come as a shock, but counting the 13th and 14th Month bonuses, the domestic workers at their small business earn $2.17 an hour and $4,972.66 for the year. These domestic industry workers earn 72 cents an hour more — nearly half again as much as the $1.45 an hour paid by the giant multinationals. Imagine if Lear paid its workers the same wages as small domestic businesses in Honduras did. The Lear workers would earn $2.17 per hour and $4,972.66 for the year. Given that there are 3,000 workers at Lear, the total payroll would be $14,917,980. The Honduran Government knew exactly what it was doing when it slashed wages for some of the largest multinationals in the world. Instead of obligating international companies to pay at least $2.17 an hour, the same as that small domestic companies pay in Honduras, the Honduran Government through its Free Trade Zones slashed the multinational wages by over 33 percent. In effect, the Honduran Government’s special Free Trade Zone laws has slashed the wages the multinationals Lear, Hyundai and Kia must pay by nearly $5 million ($4,938,210)! Why is one of the poorest countries in the world subsidizing giant multinational corporations?

A KyungshinLear weekly pay stub of a Shift II worker in March 2012.

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Free Trade Zone Wages —99 Cents an Hour— At Lear/Hyundai/Kia plant in San Pedro Sula

The monthly base wage at the Lear factory in San The effective annual wage, including these bonuses, is Pedro Sula is 4,645.34 Lempiras ($237.61) per month. $3,326.59 per year, or $1.45 an hour. Lear/Hyundai/Kia Base Wage (Exchange rate: $1.00 = 19.55 Lempiras) L 19.36 per hour L 154.84 per day (8 hours) L 1,072.00 per week (44 hours) L 4,645.34 per month L 55,744.08 per year

Lear/Hyundai/Kia Wage (13th and 14th Month Bonuses included)

$ 0.99 per hour $ 7.92 per day $ 54.83 per week $ 237.61 per month $ 2,851.36 per year

Under Honduran law, even the Free Trade Zones and Export Processing Zones must pay what is known in Central America as the 13th and 14th Month — bonuses given before Christmas and in June. This raises the annual real wage to L 65,034.76 ($3,326.59). (L4,645.34 x 14 = L65,034.76; L65,034.76 ÷ 19.55 = $3,326.59.)

$1.45 per hour $11.63 per day (8 hours) $63.97 per week (44 hours) $277.22 per month $3,326.59 per year

Stagnant Wages Leave Workers Behind From 2006 through July 2012, Free Trade Zone workers’ real wages have stagnated, actually falling backward one percent. Over the last seven years, workers have made no real wage gains. (From 2006 through July 2012, the compounded inflation rate was 47.61 percent, while nominal wages rose just 46.11 percent.)

A KyungshinLear weekly pay stub of a Shift I worker in March 2012.

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Workers Describe Conditions

At the Lear, Hyundai and Kia Plants in San Pedro Sula Why Can’t Lear Afford Toilet Paper for These Workers? We asked assembly line workers to describe a day of their life in the factory. No names will be used, to protect workers from being fired for daring to speak the truth.

Standing During Their Entire Shift •

“You feel tremendous pressure not to move from your position and to focus all your concentration on your operation. You can’t move from your station. You only get a break for 15 minutes in the morning and lunch time which is for 30 minutes. You have to race to eat and go to the bathroom during your break. It’s always stressful.” “Everybody is very tired, exhausted from the stress and difficulty of the work, and everyone has a lot of pain. We have pain in our feet and in our hands. We have bone spurs. Especially women get it more.” (It appears many workers are suffering from inflammation of the plantar fascia, caused by having to stand for long periods of time, especially if one cannot afford supportive shoes to absorb shock or if one is overweight.)

“The majority of supervisors shout at us. They tell us we are ‘inept.’ ‘You are here to work; you shouldn’t be smiling or looking at other workers. You must be in your place, working, and not talking to anyone.’”

No bathroom breaks during a shift •

“There is absolutely no permission to go to the bathroom during the shift — that’s totally prohibited. There are some water coolers but we refrain from drinking the water because we are not allowed to use the bathroom during working hours.”

“There are some cases where women wear Pampers or sanitary napkins because they are not permitted to go to the bathroom during the shift. That’s not humane. Even animals can relieve themselves when they need to.”

There is absolutely no permission to go to the bathroom during the shift.

“We all have pains in our feet, legs and knees. Our hands, fingers and shoulders are sore.” (Women who are on their feet all day at work, especially pregnant women, suffer from painful varicose veins.)

Women report that they have a lot of pain in their wrists and fingers. The constant repetitive motions involved in taping the cables irritate the wrists. Connecting circuits on the rotary bench affects their fingers. (Performing the same motions every day, it is possible that some workers may be suffering from carpal tunnel syndrome.)

• “Also the bathrooms are in bad shape. Many of the bathrooms are locked because they’re out of order and management fails to repair them. There are no soap, toilet paper or towels in the bathrooms.”

Management provides each worker with one small roll of toilet paper per month. When this runs out — which happens very quickly — workers must purchase and carry their own toilet paper to work. (Note: There has been a slight improvement in the last several weeks regarding workers’ access to use the bathrooms. There are now several “multifunction workers” who in real emergency cases can substitute for a worker if she or he desperately needs to use the bathroom.)

Dripping in sweat •

“We begin sweating from the time we start working at 6:00 a.m. The heat is worse during

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the afternoon shift. You can’t complain about the heat because the supervisors threaten to fire us.” Members of the union were able to smuggle a thermometer into the factory and found that afternoon temperatures reached more than 95 degrees Fahrenheit. Even outside the factory, in May, June and July, afternoon temperatures averaged 92 to 95 degrees Fahrenheit. Workers report that inside it is “much hotter.” Factory temperatures can soar to 96 or even 100 degrees in some afternoons. Despite the excessive heat, management prohibits workers from taking off their work jackets. •

Lear management recently increased production goals unilaterally from 1,200 small wire harnesses to 1,400 per shift, an increase in 200 wire harnesses — a 17 percent increase in production with no increase in pay. Management can do this very easily by simply speeding up the revolving work table, over which workers have absolutely no say or control. This is one of the reasons workers recently tried to organize a union at Lear, which resulted in illegal firings and blacklisting.

Factory audits for Lear, Hyundai and Kia are a joke. At the end of July, two inspectors, “a gringo and a Chinese” — by which the workers meant a North American and a South Korean — walked through the plants to monitor factory conditions. The only problem is that the “monitors did not speak with any of the workers.” In fact, the workers told us, “They didn’t even turn their heads to look at the workers.” According to the workers, “…it appears they just inspect the products,” and not the human beings who make them. Most multinationals go through the charade of coaching and threatening workers regarding how to lie to auditors. In the case of Lear, the auditors never speak with the workers, making everything that much easier. When the Lear, Hyundai and Kia monitors visit the plants, management turns up the air conditioning. When the auditors leave the factory, the air conditioning is turned down and workers are again drenched in sweat. According to the workers, Lear’s social code of conduct is not posted in any of the four factories.

General Confederation of Workers The Honduran General Confederation of Workers (Confederación General de Trabajadores, CGT) was founded on May 1, 1970. The union federation has organized teachers, industrial workers, public sector employees and others. The CGT’s Director of Maquila Organizing, Ms. Evangelina Argueta, has played a leading role in several remarkable union victories in Honduras, organizing Fruit of the Loom factories, while also, along with United Students Against Sweatshops, directing a successful campaign to re-open a Russell Athletics plant which had closed in 2009, saving 1,300 union jobs. The CGT works closely with the Honduran Center for Women’s Rights (Centro de Derechos de Mujeres, CDM), which carries out trainings on worker, human and women’s rights. The majority of Lear unionists were trained by the CGT and the Center for Women’s Rights. Trainings are held on Saturdays, including education on “what is a union,” “the rights of workers” and “the values of trade unionists.”

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Whom Do You Believe? Lear and Hyundai Factory Management, or the Honduran Workers? From the very beginning Lear supervisors calmly explained: “If a union comes in, the company will leave. Don’t believe these people. We’ve searched on the Internet and the information they’re giving is false. The union doesn’t exist. These people made up a false notice in the La Gaceta newspaper. It’s all a lie.” Here is what Evangelina Argueta, a woman leader with the CGT, had to say: “Again in February 2012, we asked the Ministry of Labor’s regional office to intervene to begin a dialogue between the union and company management. The Ministry has to make more of an effort to explain to KyungshinLear management that they must respect the union. It seems the Ministry of Labor limits themselves to making acts and reports, which go nowhere. When a company obstructs the legal work of a labor inspector, as they are doing now, all that happens is that the Ministry levies some ridiculous fines of 200 to 2,000 Lempiras [$10.23 to $102.30] which are so tiny for an international company like Lear, that paying these petty fines is more cost effective than to respect the labor code mandates.”

the press secretary, Adela Azucena Aguiriano Melgar, was fired on January 27. The auditor, Javier Alexander Flores Ruiz, was fired on February 10, while Wilmer Mauricio Dominguez Maradiaga was dismissed on March 16. The only union leader left was María Estela Centeno Arévalo, who was the cooperative secretary. Earlier on, in November 2011, management had fired Silvia Raquel Miranda Aguilar, who was one of the founders of the union and extremely popular with all the workers, who looked up to her.

The Ministry has to make more of an effort to explain to KyungshinLear management that they must respect the union.

Lear Management Retaliates, Lashing Out to Destroy the Union At a general assembly on December 13, 2011, nine union board members were popularly elected by the workers. Starting in January 2012, eight of the union workers were fired on trumped up charges, leaving just one union officer standing. The union president, Maria Consuelo Aguiriano Melgar, was fired on January 26, 2012. On the same day both the vice president, Olga Marina Dubon Campos, and general secretary, Laura Dolores Rosales Romero, were also terminated. Then

Six elected union board members were illegally fired over the course of three months, from January through March 2012, along with 15 founding members of the union. As of July 2012, at least 27 workers who had been actively involved with the their legal union were fired. In addition, one union officer, Yadira Ivonne Caceres Ortiz, quit as she could not stand the constant threats and pressure by management. She was terrified and fled without the legal severance pay due her. Another union board member, Miriam Ruiz, was illegally fired on August 31, 2012. She worked on a Hyundai line making wire harnesses for a crossover SUV, Santa Fe, and a mid-size car, Sonata. Ruiz was terminated by a supervisor called Erica. That same day, Maria Estela Centeno was also called in by human resource manager Jorge Martinez, who tried to persuade her to sign a resignation form. Martinez was attempting to trick Centeno, telling her that she could be “immediately rehired, while still enjoying her severance pay” of 10,000 Lempiras ($511.51). Centeno refused to sign or accept any check from the human resource manager. (In fact, Maria Centeno had worked for seven years at Lear and if she had been terminated, her correct severance pay should have amounted to between 32,500 to 40,000 Lempiras. ($1,662.40 to $2046.04))

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Many workers believe it is possible that several officers or staffers at the Ministry of Labor in Tegucigalpa have “sold” the names of the union leaders to Lear management. Lear’s human resource manager Jorge Martinez was in charge of illegally threatening and firing the elected union leaders. Two company supervisors, Wilfredo Paz and Claudia Paredes, assisted Martinez. Human resources manager Martinez called union leader Wilmer Mauricio Dominguez Maradiaga to come to his office. Wilmer reported the following: “The human resource manager had a lot of workers’ files and he started questioning me: ‘Why are you in the union? What are your demands? What do you want to change in the factory? I’m worried for all the families in San Pedro Sula that are going to be left without jobs because the company is going to leave if a union gets established inside KyungshinLear… If you don’t want to collaborate, it’s okay. But I’m going to call you later on…’ He called me on Friday, March 16th, at 2:40 p.m. just before the end of the shift and told me: ‘Here’s your termination letter and your check, but don’t worry, you’re not the only one that is going to be fired this time. We have some more people who are going to be fired…’” Jorge Martinez also frequently spoke about Nicaragua. “Look, in Nicaragua there are better conditions for the company because wages are lower… The conditions are better. If a union is established in the company, our first option is Nicaragua.” Martinez also questioned two other union leaders, Laura Dolores Rosales Romero and Javier Alexander Flores Ruiz. “‘I’m furious about the union,’ Martinez told me. I told him that having a union was the workers’ right. He then asked: ‘How many are there in the union? Go and tell each one of them that I want to speak with them.’ He got increasingly angry and asked me: ‘How much money do you want? Why are you doing this?’ The manager then grabbed my company

badge from my blouse and said: ‘But you started working in 2004! Go back to your line and I’m giving you 30 days to find out everything about the union!’” Another union leader was harassed by a Lear company supervisor. “One of the supervisors kept harassing me for three days, asking me to give him the names of all the workers in the union. The first day he spoke about a ‘trade’ with me. If I gave all the names of my compañeros in the union, they would give me my complete check with benefits. [Meaning that they would still fire her, but she would at least be paid her correct wages, including outstanding wages, severance pay, vacation pay and the correct percentage of the Christmas bonus and her 14th month bonus.] “The second day I was called to a conference room, which is the place managers meet with workers to go over quality issues and to scold the workers. One of the plant coordinators, Gabriel, kept harassing me, asking me to give names, and he was trying to get me to confirm if certain workers were members of the union. The third day they continued with the same questions and, since I refused to give names, I was fired from the plant.” There continues to be a complete breakdown in Lear, Hyundai and Kia’s responsibility to monitor their plants and enforce legal labor rights protections. It is no secret that the vast majority of workers at Lear are not aware of their legal rights, since absolutely nothing is posted anywhere in the factory explaining the legal rights the workers have under Honduran law, let alone commitments under the Free Trade Agreement or the ILO’s internationally recognized worker rights standards. Workers in Honduras would be genuinely shocked to learn that Lear actually does have a “Code of Business Conduct and Ethics” which states that “Lear Corporation is committed to conducting business in accordance with applicable laws, rules, and regulations and in an ethical manner.” If Lear were even half serious, they would immediately demand the reinstatement of the fired union leaders and recognize their legal union.

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Honduran Ministry of Labor Labor Rights on Paper, But Rarely If Ever Enforced On paper, workers do have the right to labor protections.

added one additional labor inspector to enforce labor rights laws.

Article 469:

By the way, the Honduran Ministry of Labor receives approximately a million dollars a year from U.S. taxpayers. This has been going on for years with no improvement in respect for worker rights in Honduras, and if anything, conditions have gotten worse.

“Protection of the right of association — It is prohibited for any person to attack [act against] the right of union association.” Article 96 (3): Prohibition of management to “fire or harm in any way their workers because of their union affiliation or their participation in legal union activities.” Article 95 (8): Management must “permit and facilitate the inspection and oversight that labor, health and administrative authorities are to carry out in their company, establishment or business, and give them the information necessary to this effect when they request it in compliance with their duties.” — Labor Code of Honduras That’s the good news. From here on in it is all downhill. In 2010, the Honduran Ministry of Labor conducted 14,355 factory inspections, while filing just 324 sanctions against employers. This means that just two percent of all inspections resulted in fines or other sanctions. It gets worse. Under Article 469 of the Labor Code: “All persons who through violence or threats attack in any way the right of free association will be punished with a fine between 200 and 2000 Lempiras” – or a whopping $10.25 to $102.54! What billion-dollar multinational — like Lear, Hyundai or Kia — would not love fines like these? From 2005 through 2010 — over six years — the Honduran Ministry of Labor has increased its labor rights enforcement budget by two percent, or 0.33 percent per year. During that same six-year period, the Honduran Ministry of Labor has

The United States Government, under the Free Trade Agreement with Honduras, the rest of Central America and the Dominican Republic, has allocated $136.33 million dollars between 2005 and 2010 for “labor capacity-building activities under the labor cooperation and capacity building mechanism.” This averages about $22.72 million a year in assistance. The good news is that more than 3 million flyers, posters and manuals were printed (including 620,210 flyers in Honduras alone), paid for by the U.S. Government to improve worker rights conditions across Central America and the Dominican Republic. The bad news is that much of the assistance is simply not working. Worker rights conditions are going backward, not forward, in Honduras and throughout Central America. We should start with the Lear, Hyundai and Kia joint venture in San Pedro Sula, Honduras, demanding that the legal rights of the workers to organize a union and bargain collectively must finally be respected. Over 90 percent of the Honduran Ministry of Labor’s 2012 budget of $32,709,925 goes to cover staff wages and benefits. Honduran labor rights inspectors are largely underpaid, some earning just $500 a month and $6,000 a year. There is little or no respect for labor inspectors on the part of factory management. In the case of the Lear, Hyundai and Kia factory in San Pedro Sula, management simply refuses to allow the inspectors to enter the factory. They can try as many times as they want, but they will not get in. Only serious and steep fines by the Honduran government will convince Lear to allow the labor inspectors to enter their San Pedro Sula plant. But we should not hold our breaths.

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Honduran Labor Law Article 469, 96(3), 95(8) Workers Have Rights, at Least on Paper Article 469 “Protection of the right of association — It is prohibited for any person to attack [act against] the right of union association.” “All persons who through violence or threats attack in any way the right of free association will be punished with a fine between 200 and 2000 Lempiras.” ($10.25 to $102.54) Article 96 (3) “Prohibition on management from… “firing or harming in any way their workers because of their union affiliation or participation in legal union activities.” Article 95 (8) Management must “permit and facilitate the inspection and oversight that labor, health and administrative authorities are to carry out in their company, establishment or business, and give them the information necessary to this effect when they request it in compliance with their duties.”

Workers have the legal right to organize a union and negotiate a collective contract, under: • Honduran law, • The U.S.-Honduran Commitment under the Central American Free Trade Agreement (CAFTA), • The International Labour Organization’s internationally recognized worker rights standards, and • Lear’s Code of Business Conduct & Ethics.

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U.S. Spending on Worker Rights Capacity Building 2005-2010 Ministry of Labor

$26.75 million

Compliance with labor rights

$37.10 million

Combating child labor

$43.79 million

Judicial reform

$22.94 million

Anti-discrimination efforts Total

$5.75 million $136.33 million

Source: U.S. Department of Labor. “Progress in implementing Chapter 16 [labor] and capacity building under the Dominican Republic-Central America-United States Free Trade Agreement.� Second Biannual Report Submitted to Congress. May 11, 2012.

United States Government Economic Assistance To Honduras in 2010 Totaled $112.7 million (in millions USD) 1980

53.1

1996

25.7

1981

36.4

1997

28.8

1982

80.7

1998

21.5

1983

105.9

1999

126.6

1984

95.0

2000

40.9

1985

229.0

2001

51.0

1986

136.6

2002

48.2

1987

197.8

2003

69.1

1988

157.0

2004

61.2

1989

88.4

2005

258.3

1990

192.8

2006

85.5

1991

124.0

2007

59.6

1992

98.4

2008

68.9

1993

62.5

2009

34.0

1994

49.0

2010

112.7

1995

28.1

Source: U.S. Overseas Loans & Grants, USAID. Accessed August 2012.

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Washington Lobbyists Support Leaders of Coup that Replaced Honduras’ Democratically Elected President The June 28, 2009 coup against President Manuel Zelaya was orchestrated by the Honduran Latin American Business Council (Consejo Empresarial de América Latina, CEAL), which is composed of approximately 21 private businesses. The aftermath of the illegal coup brought a wave of political killings. Lanny Davis, a powerful lobbyist with the Washington, D.C. law firm of Orrick, Herrington & Sutcliffe, lobbied “on behalf of a private Honduran business organization, providing facts relating to the removal of Mr. Zelaya,” who just happened to be the elected president. Mr. Davis went on to state, “My clients represent CEAL, the Business Council of Latin America [Honduran Chapter]… My main contacts are Camilo Atala and Jorge Canahuati. I’m proud to represent businessmen who are committed to the rule of law.” Former U.S. Ambassador Robert White — now with the Center for International Policy — responded very differently: “Coups happen because very wealthy people want them and help to make them happen, people who are used to seeing the country as a money machine and suddenly see social legislation on behalf of the poor as a threat to their interests.” The Coup Brought a Wave of Political Killings On May 2, 2012, BBC news reported that, “Honduras has the world’s highest murder rate.” A violent death happens every 74 minutes in Honduras, with an average of 20 murders a day. In 2011, there were approximately 6,670 violent homicides in Honduras, with a population of a little less than eight million people. To illustrate how out of control the situation has become in Honduras, the number of violent deaths per capita in Mexico is nearly 80% lower than in Honduras! Mexican drug cartels have pushed south and gained a foothold in Honduras. 23 Honduran journalists have been assassinated in the last three years. No one is safe, not activists, journalists, union leaders or lawyers, who continue to be the target of assassins. Many activists believe that the elite families in Honduras — including the owners of maquila export factories and Export Processing Zones — played a key role in financing the coup to remove president Manuel Zelaya.

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Additional Violations at Lear

Lear, Hyundai, Kia Shortchange Workers of Their Legal Wages The Honduran Labor Code is very clear: “Effective work time is that during which the workers remain at the orders of the employer or cannot leave the place where she/ he gives service during hours of rest or meal times.” Lear workers are strictly prohibited from leaving the factory at any time to go outside. Technically the workers are being shortchanged of 45 minutes’ pay per shift, or three hours and 45 minutes over the fiveday workweek. Since they are prohibited from leaving the factory, the workers should be paid $3.71 a week, and $193.05 for the year.

Management Manipulates Vacation Days to Their Advantage The Honduran Labor Code is very clear, stating that after one year of work with the same company, a worker has the right to 10 consecutive days of paid vacation. After working two years at the same factory, workers are due 12 vacation days, after three years 15 days, and after four years, workers have the right to 20 consecutive days of vacation. Lear, Hyundai and Kia make their own rules. Rather than providing consecutive vacation days, management, without notice, from one day to the next, informs the workers that they will have two or three days of “vacation” next week. Vacation days are allocated not according to the law, but rather when management foresees a lull in the work. Without the union — which Lear management crushed — workers have no collective voice to demand their legal rights.

Workers Cheated of Legal Right to Transportation The Honduran Labor Code mandates that companies like Lear and Hyundai provide free transportation

to workers living more than 1.2 miles from their workplace, or in lieu of that, the company must pay the workers 20 Lempiras ($1.20) a day or more depending upon the cost of the round trip transport to their homes. But, Lear fails to provide transportation or pay for round trip bus fare for workers on the third shift, which begins at 11:15 p.m. and ends at 6:00 a.m. the following morning. Honduras, and San Pedro Sula in particular, now has among the highest levels of violent crime in the world. Moreover, all public transportation stops after the last 10:00 p.m. buses finish their routes. This means that the workers have to board the last available bus at 10:00 p.m., which arrives at around 10:30 p.m. Not only are the workers not paid for their bus fare as they legally should be, but they have to wait sitting on the ground in the Export Processing Zone before they can enter the factory at around 11:05 p.m.

Factory Clinic at Lear is Limited The factory clinic is open for just two hours a day, Monday through Friday, with two male doctors attending the 3,000 workers. On average each day, the two doctors can see seven workers from each of the four plants, or a total of 28 patients. The workers believe that management set up the clinic to prevent workers from going directly to the social security clinic, which costs factory management time and money. One woman worker told us, “The company started with the doctors to keep the workers from going to the social security clinics or hospitals, where the medical attention is much better.” For workers to go to a social security clinic, they first need authorization from their supervisor to go to the factory clinic. At the clinic only minor problems are dealt with, such as headaches, stomachaches and colds. For anything more serious, the workers must receive authorization from one of the factory doctors to allow her to schedule an appointment at a social security clinic or hospital.

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Lear Corporation’s Global Labor Standards Lear’s joint venture factory in Honduras with Hyundai and Kia has failed miserably in enforcing even the most minimal legal worker rights standards over the last nine years.

venture factory in Honduras, workers report: —— Being paid below-subsistence wages; —— Having no voice and no rights; —— No right to organize an independent union, bargain collectively or negotiate a collective contract; and,

Lear’s compliance monitors do not even speak with their Honduran workers. Lear Corporation 21557 Telegraph Road Southfield, MI 48033

—— No access to the ILO’s internationally recognized labor rights standards.

Matthew J. Simoncini President and Chief Executive Officer Carla Sarti Director of Global Business Process, U.S. •

Lear manufactures and distributes electrical systems for automobiles.

Lear is ranked #189 of the “Fortune 500” companies in 2012.

In March 2012, General Motors named Lear “Corporation of the Year.” Lear also won “World Excellence Silver Award” from Ford Motor Company, “Corporation of the Year” and “Global Supplier of the Year” from General Motors, “Supplier Award / Connecting Excellence” from Porsche, “Best Supplier TACLE Award” from Nissan and “Quality Award” from Renault in 2011.

Lear’s “Global Labor Standards” (next page) are extremely vague and weak. For example, “Lear Corporation considers its employees to be its most important resource and is committed to treating all employees with dignity and respect.”

While the 3,000 Honduran workers are trapped in poverty, denied their legal rights, illegally fired and blacklisted for daring to exercise their right to organize, Lear and its joint venture partners, Hyundai and Kia, have been the recipients of a constant stream of lavish tax breaks. •

Lear’s revenues in 2011 were $14.2 billion.

The Hyundai-Kia Automotive Group ranks 5th in global car sales with approximately $10 billion in sales.

The Lear/Hyundai/Kia joint venture has seven production facilities in China, two or three plants in Honduras and one factory each in India, South Korea, Malaysia and Spain. There are three joint venture plants in the U.S.

The Kyungshin Corporation, made up of Hyundai and Kia, is headquartered in South Korea, with annual revenues of $688.64 million in 2010.

Lear must describe in detail exactly what “Global Labor Standards” Lear is ready to concretely enforce.

Kyungshin Headquarters 7-1, Songdo Dong Yeonsu-Ku, Incheon, South Korea

For the last nine years at the Lear/Hyundai/Kai joint

Chairman: Kim Hyun Sook Photo from Lear Corporation

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Lear Corporation. Global Labor Standards.

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Addenda A. Wire Harness/Auto Parts Export Factories in Honduras There are Five Wire Harness/Auto Parts Export Factories in Honduras 1. Honduras Electrical Distribution Systems-Kyungshin-Lear 300 mts, desvio Col. Felipe Zelaya, San Pedro Sula, Cortes, Honduras Contact: Gustavo Saucedo, gsaucedo@lear.com Ownership: USA/Korea 2. Lear Automotive EEDS Km. 22, Carretera a Occidente Naco, Santa Barbara, Honduras Ownership: USA 3. Delfingen HN Cortes, S de RL ZIP Bufalo, Building 35, Villanueva, Cortes, Honduras Ownership: USA 4. Empire Electronics de Honduras ZIP Calpules, San Pedro Sula, Honduras Ownership: USA 5. FCI Honduras, S de R.L. FZ Green Valley Industrial Park, Quimistan, Santa Barbara, Honduras Ownership: France

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B. Wages in Honduras Among workers in all major industries in Honduras, Free Trade Zone workers earn almost the least amount of wages, only second to peasants who farm on marginal plots, using primitive agricultural methods that go back 100 years.

Agriculture

Free Trade Zones

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C. Sample Customs Record According to U.S. customs records, Honduras ranked #4 among exporters of insulated wire, cable and other electrical conductors (HS 8544) to the United States, shipping an estimated value of at least $426 million in 2011. Below is a sample custom record of wire harness shipments from KyungshinLear in Honduras to the U.S. Import Bill of Lading Details Shipper:

Honduras Electrical Dist System 27 CLL 300 MTS Prolongacion Col Felipe Zelaya San Pedro Sula, Honduras

Consignee:

Kyungshin Lear Sales & Engineering 100 Smothers Road Montgomery, AL 36117

Country of Origin: Honduras

Arrival Date:

07/18/2012

Port of Departure: PTO Cortes

Estimated Value:

$61,415.50

Port of Arrival:

Quantity:

8376 CTN

New Orleans

Auto Wire Harness HS Code 8544

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D. KyungshinLear Cutting Plant Inspection Sheet

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29 Years of Failure: U.S. Free Trade Debacle in Central America