ARGENTINA: EMBASSY ASSISTS U.S. CHEMICAL FIRMS AND

UNCLAS BUENOS AIRES 001761 SIPDIS SIPDIS STATE FOR WHA/BSC PASS TO DEPUTY UNDER SECRETARY FOR FNS - KATE HOUSTON USDOC FOR 4322/ITA/MAC/OCAC/PEACHER USDOC FOR 3134/USFCS/OIO/WH/KESHISHIAN FAS/OA/OSTA/OCRA/ONA/OGA/OTP/OCBD/OAO/OFSO E.O. 12958: N/A TAGS: EINV EAGR ECON BEXP ELAB AR SUBJECT: ARGENTINA: EMBASSY ASSISTS U.S. CHEMICAL FIRMS AND SHERATON HOTEL IN LABOR DISPUTES -------------- SUMMARY -------------- ¶1. (U) In July 2007, the Embassy learned that Argentine chemical and petrochemical unions had called strikes in Zarate/Campana region, paralyzing production in that sector, which features four U.S. companies. One of those firms, Monsanto, initially requested no Embassy involvement, as they hoped that the strikes could be resolved peacefully with the assistance of the Ministry of Labor (MOL). After those talks failed, Monsanto sought our help, and we mobilized. FCS and FAS contacted the three remaining U.S. firms in the region, Eastman Chemical, Rohm & Hass, and Merisant, who all reported that their plants had been similarly crippled by the strikes. DCM called the Labor Minister to signal our interest in a solution. After a prolonged period of stalled talks, and with strong continuous Embassy support, industry recently reached an agreement with union leaders. Mission assistance was also involved in the lifting of a taxi blockade of a local Sheraton hotel and providing security to the hotel while the disagreement was in play. Ambassador talked to the Interior Minister, Labor Minister, the Secretary of Tourism and the Mayor of Buenos Aires in support of a SIPDIS solution. Both Sheraton and Monsanto subsequently expressed appreciation for Embassy efforts. These episodes and others not directly involving US companies suggest that Argentina's unions are becoming increasingly militant, beyond the traditionally active. End Summary. -------------- The Establishment of Collective Bargaining -------------- ¶2. (SBU) Last year, chemical and petrochemical companies in the Zarate/Campana region established a local chapter of the National Chamber of the Chemical/Petrochemical Industry and obtained MOL approval for the chamber to negotiate with the unions directly. This allowed the companies to negotiate with the unions collectively as opposed to independently. Nelson Palacios, leader of the Union of Workers in the Chemical And Petrochemical Industries of Zrate/Campana, responded by calling strikes that began in May demanding higher wages and a return to negotiations by individual companies. The companies managed to get government intervention in the strikes transferred from Buenos Aires Province's MOL to the national MOL. Companies believed that this shift in purview would lead to a more effective response from national authorities. -------------- Let the Strikes Begin -------------- ¶3. (SBU) The unions began with one-two hour strikes. On June 10, Palacios organized a general strike that directly affected 15 chemical companies, including four from the U.S. The unions then expanded the strike to ten calendar days, citing an unsafe work environment as the cause. The companies appealed to the MOL, asking the MOL to require the unions to come to the negotiating table. The companies invited the MOL to tour plants to verify whether or not safety standards were being violated. ¶4. (SBU) In response, Minister of Labor Tomada ordered the unions to submit to mandatory conciliation, and gave the Chamber and the unions until July 11 to reach a resolution. On Thursday, July 5, the companies submitted a proposal to Tomada's Chief of Staff offering a wage increase of 15 percent, as opposed to the unions' demand of 16.5 percent. The unions' counteroffer demanded that the companies pay workers' salaries during the 10-day strike. On Friday, July 6, the companies stated that they were willing to consider this offer, on the condition that the unions agree not to organize additional strikes. Unsatisfied with this latest proposal, Palacios immediately called for another strike. In response, Minister Tomada sent the unions a letter demanding that they return to the mandatory conciliation process or face the loss of their legal status as a union. -------------- U.S. Companies at Risk -------------- ¶5. (SBU) The affected U.S. companies included Monsanto, Eastman Chemical, Merisant and Rohm and Haas. The strikes negatively affected the production of agrochemicals, herbicides, fertilizers, foot and mouth disease vaccines, chemical inputs for the leather industry, sweeteners, and solvents for the paint industry. Monsanto estimated that the strike resulted in a US$16 million loss. ¶6. (SBU) In follow-up calls by the Mission to each U.S. company during the strike, all reported that the strikes had paralyzed their operations. The worst case was that of Merisant. A Union employee answered the office phone and explained that the plant had been "taken" by the workers. This was confirmed by the General Manager in a separate call. He stated that the situation was critical with some employees being fired and others having lost salaries due to days not worked. The General Manager also stated that stock was being depleted, and soon there would be no products to export. ¶7. (SBU) Eastman Chemical reported that picketers had blocked entry to the firm's gate and that a police escort was needed in order to enter their own facility every twelve hours to maintain their effluents plant. Without routine entry, the bacteria needed to run the plant would die and require a major reconstruction effort. Rohm & Hass reported a similar situation but explained that they had abstained from trying to cross the picket line, instead transferring essential personnel to their Buenos Aires location. -------------- Embassy Assists U.S. firms with Resolution -------------- ¶8. (SBU) From the onset of the strike, the Ambassador, DCM, Labor Officer, FCS, and FAS advocated on behalf of U.S. companies with the Ministry of Labor in an attempt to reach a quick resolution. Embassy Officials received constant updates from company Executives (often by cell phone, as many were not allowed access to their plants). The DCM coordinated routine calls with Minister Tomada for updates on the situation, to brief him on the daily activities of the U.S. companies involved, and offered constant Embassy assistance when needed. ¶9. (SBU) On August 16, FCS learned from Eastman Chemical that the 15 companies affected by the strikes had reached agreement with union officials late the previous evening. He confirmed that the agreement resolved several issues that preceded the current conflict, as well as most issues arising from the conflict itself. For example, it was agreed to downplay the role of the Chemical Chamber in the collective bargaining. There were also agreements reached on issues such as lost salaries, salary increases, and collective bargaining. It was also stressed that a period of "social peace" was needed in order to recoup heavy losses, to build up depleted inventories, and resolve some of the down-stream damages generated by the strike. Monsanto representative subsequently expressed to Ambassador his company's profound thanks for the consistent support through this period. -------------- Mission Also Assists Sheraton -------------- ¶10. (SBU) During this dispute, the Embassy was also called to assist with a dispute involving Sheraton Hotel, which faced a blockade of its entrances by a taxi firm that wanted an exclusive contract to serve the hotel. Diplomatic Security and Legatt both helped to contact Federal Authorities to ensure that Sheraton's hotel and guests were protected during the taxi protests, and the DCM was in constant contact with Sheraton executives offering assistance. The Ambassador raised this issue with the Secretary of Tourism, twice to the Interior Minister about providing security to the hotel against egg throwing activities, urged the Labor Minister to help find a solution and thanked the Mayor of Buenos Aires for offering to help facilitate a solution. The issue was resolved quickly. The Sheraton's local owner and manager called on the Ambassador and country team to express their appreciation for the support. WAYNE