DOMINICAN GRUPO M SHUTTING DOWN MANUFACTURING

UNCLAS SANTO DOMINGO 003424

SIPDIS

DEPT FOR WHA/CAR, DRL; DEPT PASS USTR

E.O. 12958: N/A
TAGS: BEXP BTIO DR ELAB ETRD EINV HA
SUBJECT: DOMINICAN GRUPO M SHUTTING DOWN MANUFACTURING
OPERATION IN HAITI



1. SUMMARY. Dominican apparel company, GRUPO M, is close to
shutting down their apparel plant in Ouanaminthe, Haiti due
to "Workers' Struggle," a group of activist employees who
have made the plant inefficient and ineffective. GRUPO M
President, Fernando Capellan, stated that the company plans
to let go 200 employees this Friday, June 11, with another
500 on Monday, June 14. A total shut down of the plant could
occur shortly thereafter. Capellan says that GRUPO M had
received no assistance from either Haitian or Dominican
authorities on the matter and that the company would be
willing to reopen its operations if it gets the appropriate
support. END SUMMARY.


2. In the fall of 2003, in a move that was hailed by many as
a catalyst for more integration between the Dominican
Republic and Haiti, Dominican apparel company GRUPO M began
operations in the Haitian town of Ouanaminthe, which is
located directly across the border from the Dominican town of
Dajabon (a major trading area). Less than one year later, on
June 9, local dailies have reported that GRUPO M is
relocating their operation from Ouanaminthe in order to
ensure the safety of its employees and comply with its
contractual obligations. GRUPO M President Fernando
Capellan says the main reason for the shutdown is the
pressure the company has been receiving from a group of
activists within the plant who call themselves "Batay
Ouvriye" ("Workers' Struggle"). The group, led by a Ms.
Yanneck Etienne, has been harranging other employees and
making claims of worker exploitation over the last few
months. Attempts by GRUPO M to discuss issues of concern
with Ms. Etienne have been unsuccessful, Capellan said.


3. Capellan stated that the group has made normal plant
operations impossible. As an example, Capellan explained, in
February the plant assembled 30,000 pants with 400 employees
but that last month the plant managed to only assemble 15,000
pants with 700 employees. The plant currently has 1,000
employees. As things stand, the company expects to lay off
200 workers and move out some sewing machines and textile
equipment by Friday, June 11 with another 500 workers to go
on Monday, June 14. The remaining employees will be phased
out over the next few days until a total shutdown is achieved.


4. Capellan complained that the company had received no
assistance on the matter from either Haitian or Dominican
authorities. Since these activities have taken place on
Haitian soil, the Embassy has been unable to assess the
situation directly. Capellan indicates that he would be
willing to reopen the apparel plant if working conditions
improve, but the current situation is untenable.


5. COMMENT. GRUPO M's decision is a potential set back for
trade and investment between the Dominican Republic and
Haiti. The move also suggests that the cross-border
subcontracting strategy may not be a viable approach for
GRUPO M and other Dominican apparel companies seeking to
improve competitiveness vis-a-vis China in preparation for
the ending of quotas under the Multi-Fibre Agreement. GRUPO
M's operation was the first attempt at co-production with
Haiti. END COMMENT.


6. Port-au-Prince minimize considered.
HERTELL