FedEx/UPS Discuss Challenges with Truckers Union

UNCLAS BUENOS AIRES 000849 SENSITIVE SIPDIS USDOC FOR 4332/ITA/MAC/OLAC/APEACHER USDOC FOR 3134/USFCS/OIO/WH/JLEBLANC E.O. 12958: N/A TAGS: EINV ECON ELAB EAIR OVIP BEXP AR SUBJECT: FedEx/UPS Discuss Challenges with Truckers Union ¶1. (SBU) Ambassador met on June 6 with executives from UPS and FedEx to discuss challenges they face with the local Truckers Union. FedEx and UPS were recently forced to sign a 20 percent salary increase with this union, the second sizable increase in a matter of three months. The companies highlighted the fact that unlike the other Couriers, both foreign and local, they already offer their employees above-average salaries, benefits and compensation packages. FedEx and UPS would like to try to establish a more active working relationship with the Ministry of Labor to avoid future challenges and promote themselves as companies dedicated to expansion in Argentina, with a framework in hand. Company officials expressed some concern about the apparently close relationship between the Labor Minister and Trucker's Union, and requested Embassy advice on how to best work with them both to resolve their labor issues. Post will remain engaged to support both companies. END SUMMARY -------------- -------------- Couriers Forced to Sign 20 Percent Salary Increase with Trucker's Union -------------- -------------- ¶2. (SBU) Present in the meeting for UPS were Oscar de la Fuente, Director of South American Operations, Germn Riccardo, General Manager in Argentina and Enrique Antonini, Government Affairs Consultant to UPS in Argentina. FedEx's representatives were Marilyn Blanco-Reyes, Managing Director of Regional Affairs for Latin America and Caribbean Division and Elizabeth Freidenberg, outside Legal Advisor to FedEx in Argentina. FedEx and UPS officials told the Ambassador that on May 26, they felt that they had no choice but to agree to a 20 percent salary increase with the Truckers Union, given that the latter had blockaded the company the previous day, after the company initially rsisted signing the agreement. This increase was the second in three months. In March 2008, all Argentine courier firms agreed to a 19.5 percent salary increase, retroactive to February 2008, which FedEx and UPS officials thought would cover all of 2008. This last increase actually amounted to a 24 percent increase, when including other benefits. These two salary increases are on top of the 2007 increase of 23 percent that the Trucker's Union had demanded and obtained. (Note: Total 65 percent pay raise for truckers over 2007 and 2008). ¶3. (SBU) Interestingly, the companies said that the latest salary increase contract contained language that the increase was due in large part to labor costs related to transportation, traffic and environmental issues. The unions were reportedly under instructions not to state that inflation was the reason for this increase, due to the GOA's sensitivity on inflation matters. ¶4. (SBU) FedEx and UPS explained that Netherlands-based TNT might have inadvertently begun this latest round of salary increases, as they had earlier agreed unilaterally to this latest salary increase for their workers, which caused the employees of the other firms to press for similar increases. On top of this, TNT allowed the same increase to non-trucker employees as well, members of the Commercial Union and allowed the teamsters to incorporate these workers into their union. FedEx and UPS officials said that this latter action could in turn cause its own non-trucker employees to press for a similar increase, and for all Commercial Union employees to join the Trucker's Union as the teamsters want. This would greatly increase teamsters membership numbers and the number receiving higher salaries. ¶5. (SBU) FedEx, UPS, TNT and Germany-based DHL are the major courier companies operating in Argentina, of the nine total companies, and together control 90 percent of the market. FedEx and UPS said that the four couriers distinguish themselves from their competition with their excellent benefits and compensation plans, and above all, higher salaries. FedEx was ranked the sixth best company to work for in Argentina last year, according to the Great Place to Work Institute. Unfortunately, from a union perspective, these incentives did not seem to be taken into consideration when demanding the same increase from all Couriers, as well as the 184 local firms under this agreement, as they simply applied the same, across-the-board percentage increase. -------------- Options to Move Forward with Greater Clarity -------------- ¶6. (SBU) FedEx and UPS officials explained that as illegal and unacceptable as the Truckers Union's action might appear, under Argentine law (and custom),they will not face any penalties. FedEx and UPS expressed their frustration with the situation. FedEx and UPS also expressed their desire to grow their business in Argentina, while also creating a work plan with the Government and union that could serve as a basis to avoid such situations in the future. They expressed their concern about the current lack of stability and predictability in Argentina. ¶7. (SBU) FedEx and UPS also said that they would like to brief GOA Labor Minister Carlos Tomada about this situation, and establish a closer working relationship with him. They are also concerned that this latest Trucker's Union demand will not be the last. They would like to inform the Minister of their desire for a long term and stable presence here. They would also like to inform him that they offer much higher salaries, benefits and compensation packages than the local companies do. They asked for advice on how to proceed with a potential meeting with the Minister and whether it would be beneficial or detrimental to their long-term ability to operate. They said that he has a close relationship with Trucker's Union who might not appreciate such an approach. (The Union leader is under great pressure to increase the salaries of his members due to upcoming elections in July.) ¶8. (SBU) Embassy officials recommended that as FedEx and UPS are also considered to be airlines, they could also consider approaching the Secretary of Transportation Ricardo Jaime and/or his boss, Planning Minister Julio De Vido, to explain their situation. ¶9. (SBU) Post has remained in touch with both companies and will continue to provide appropriate support and counsel. WAYNE