Here's what you need to know
- First Brands Group is in the throes of a Chapter 11 bankruptcy, waves of layoffs internationally and weathering the indictments of two former executives.
- First Brands owns 36 plants in Mexico, mostly maquiladoras along the northern border. When those plants idled, workers missed paychecks and federally required severance payments.
- Mexican law around the purchase of those plants may make a sale more difficult.
When First Brands Group suddenly shuttered plants in Ohio, Kansas, Texas and more, news cameras and state workforce groups descended on plants to help thousands of displaced workers.
“The immediate focus is on connected affected employees with local job opportunities and training programs,” says a statement from Robin Emley, Emporia (Kansas) Regional Development Association. “The Emporia community has faced challenges before and demonstrated strength and resilience each time. With the collaborative efforts of local organizations and support from residents, we are confident in our ability to overcome this challenge and emerge stronger.”
When news of possible closures hit the company’s maquiladoras along the Mexican border, the workers took over some of the company’s 36 plants in Mexico. The company had about 14,000 employees in Mexico and 6,000 in the U.S. before it declared bankruptcy in September, followed quickly by an announcement it was up for sale and indictments of two brothers the U.S. government alleges committed massive fraud using the company.
Susana Prieto Terrazas, leader and legal representative of independent labor union Sindicato Nacional Independiente de Trabajadores de Industrias y Servicios Movimiento 20/32 (SNITIS), urged the workers to keep a presence at that plant and any other First Brands facility and not allow anyone to remove anything from the premises.
What are maquiladoras?
Maquiladoras are foreign-owned manufacturing plants set up in Mexico that enjoy special tax and customs benefits. They must be registered with the Mexican government and can import raw materials and export finished products. These plants, which exploded after the enactment of the North American Free Trade Agreement and continued to thrive under the United States-Mexico-Canada Agreement, are mainly clustered in the Mexican states along the northern border, including Baja California, Chihuahua, Coahuila, Neuvo Leon, Sonora and Tamaulipas.
These factories are one of Mexico’s largest industries. Nearly 3 million people were employed in maquiladoras, which are skewed toward electronics and automotive industries, as of December 2025, the University of Arizona says. Reflecting larger macroeconomic doldrums, employment in maquiladoras was off as much as 13% year over year, data from the university shows. Only one state, Neuvo Leon, saw an uptick in maquiladora employment in the last three months of 2025.
Working in the maquiladoras
While maquiladoras are covered by special tax and other laws and exemptions to laws, they are subject to Mexico’s general labor law framework, which holds a minimum wage, standard 48-hour work weeks, prescriptive overtime rates and paid time off. There also are guarantees in case of termination without cause, such as by a reduction in force.
The Federal Labor Law establishes the right to severance pay, which Morgan Lewis says as a general rule, is three months of integrated salary with a seniority premium of 12 days of salary for each year of service, capped at twice the minimum salary. Employers may apply for a reduction in force from the local labor board, but Morgan Lewis recommends employers negotiate directly with employees and unions instead.
Prieto Terrazas maintains all maquiladora workers — not just the ones employed by First Brands Group — can face harassment, persistent poverty and lack of security. She has led several protests against conditions in the factories, including in a dispute over severance pay at a Johnson Controls maquiladora in 2016.
Now, again, Preito Terrazas says employees are ready to strike again, possibly as early as March 3, at Matamoros’ Tridonex plant.
“We are ready for the strike to break out and to defend ourselves against fraudulent employers,” she says in El Sol de Tampico, a local newspaper. She says she intends the workers to take their compensation in the form of First Brands’ assets in the plants should the company not be forthcoming with wages and severance owed. “The outbreak of the strike is crucial because afterwards we will demand accountability, the appraisal and seizure of all assets, from a nail to the largest machine. … We are not used to begging, we are used to winning.”
A lawyer from one of the First Brands subsidiaries spoke to protesting workers outside of a Ciudad Juarez maquiladora earlier this year, telling them First Brands’ collapse was “due to malice or bad faith, they simply ran out of money they were working with and there is no way to meet their labor commitments,” La Jornada reported.
Another union, the Autonomous Federation of Independent Trade Unionism in Mexico, called for a strike at the plant and seizure of assets there, too, to recoup workers’ pay.
“Due to the First Brands Group’s Chapter 11 bankruptcy proceedings in the United States, the real drop in sales, poor financial management and the impact of tariffs on outputs from China, the company has decided to close most of Brake Parts Inc. (BPI)’s operations in Mexico, given the lack of interested parties to acquire these plants,” a strike notice reads at the plant.
Purchasing the Mexico plants
All of First Brands’ assets are up for sale as part of its bankruptcy, though no deals have come close to fully materializing. Nor has the company found suitable financing to continue operations, which has led to the shutdowns and layoffs. Furthermore, some of financing deals that led to indictments in the First Brands collapse may involve the equipment and products in Mexico.
Mexican workers are not only pursuing state relief and causing unrest, they’re also pursuing court claims that may scare off any potential buyers. Under Mexican labor law, when a plant is purchased by a new owner and continues similar operations, new owners can be treated as successors and held responsible for outstanding obligations, including back wages or severance payments, according to Article 41 of Mexico’s Federal Labor Law. The new owners may not dismiss employees in connection with a sale.
“In connection with the sale of a business or transfer of undertaking, the (Federal Labor Law) generally requires the acquiring entity to retain the selling entity’s workers, as well as to assume existing benefit liabilities,” ICLG says. “As a corollary of this retention obligation, the acquiring entity must recognize the workers’ length of service, to ensure that changes in the legal structure or ownership of the employer do not undermine the workers’ vested rights.
