GM FACES CONTINUED LABOR PROBLEMS

C O N F I D E N T I A L CARACAS 001177 SIPDIS HQ SOUTHCOM ALSO FOR POLAD COMMERCE FOR 4431/MAC/WH/MCAMERON E.O. 12958: DECL: 08/19/2018 TAGS: ECON EINV EIND ELAB PGOV VE SUBJECT: GM FACES CONTINUED LABOR PROBLEMS REF: A. CARACAS 600 ¶B. CARACAS 991 Classified By: Economic Counselor Darnall C. Steuart, for reasons 1.4 ( b) and (d) ¶1. (C) SUMMARY: Despite its intention to re-open its assembly plant on August 18, General Motors (GM) de Venezuela remains closed in the face of a plant takeover by radical workers who have refused to accede to either a court order ordering them to grant the company access or to pressure from the Ministry of Labor. GM met August 18 with Vice Minister of Labor who ordered the strikers to allow access to the plant which they have refused. The company is seeking a meeting with Vice President Carrizales in the hopes he will give the Labor Ministry political cover to find in favor of a multinational company in an election year. End Summary. -------------- BACKGROUND -------------- ¶2. (C) As reported reftel B, on July 11, GM closed its assembly plant because of difficulties in receiving foreign exchange, spare parts, etc. The plant was scheduled to re-open on August 18. However, radical members of the SINVENSOC union (Sindicato de Vencedores Socialistas or Union of Winning Socialists) seized the plant on July 28. According to GM de Venezuela President Ronaldo Znidarsis (protect),GM obtained a court order (amparo) ordering the re-opening of the plant and requested police support to implement it which it did not receive. On August 15, GM went to the plant with a judge. The judge ordered the release of the premises which the union members refused. On August 17, GM de Venezuela published a press notice addressed to its workers, suppliers, contractors, dealers, and the general public in which it explained that it could not assure the physical protection of its workers on August 18 in the face of actions taken by the union. -------------- THE UNION -------------- ¶3. (C) Talking about GM's labor problems, Znidarsis described a situation that has been steadily worsening since its employees voted for a parallel union, SINVENSOC, in 2007. GM now has two unions with a third in the process of formation. The SINVENSOC president, he said, is not a GM employee. SINVENSOC has pledged to get employees over a 1,000 percent increase in benefits. The recent violence started, Znidarsis said, when it became apparent how much the union had over-promised. -------------- NEXT STEPS -------------- ¶4. (C) Znidarsis told EconCouns August 18 that GM is not willing to compromise with the radical strikers who number some 50-60 out of a 3,500 employee workforce. Not only had the strikers seized the plant (and done who knows what damage to the facility),he said, but they had also "kidnapped" members of his negotiating team (three female managers were prevented from leaving the plant for several hours at one point) and made death threats against management employees. ¶5. (C) Znidarsis added that GM had elevated the issue to the Labor Ministry with a request for the dismissal of eight employees. GM has been requesting a meeting with Vice President Carrizales for the past month, with the thought that his support would give the Labor Ministry the political cover it needed to support a multinational company in an election year. The company has reached out to Venezuelan Ambassador to Washington Bernardo Alvarez to ask his help with the requested meeting with the Vice President. The President of GM Latin America has also written to President Chavez. Finally, GM had decided to go public with the August 17 notice to the public. ¶6. (C) On August 19, Znidarsis confirmed press reports that the Vice Minister of Labor had met with the parties the afternoon of August 18. Saying that Vice Minister Abrahan Mussa had behaved in a "very professional manner," Znidarsis reported that Mussa had told the union members they must allow access to the plant before he would allow any negotiations to proceed. If not, Mussa said he would use the power of the Ministry to force them to grant access. (The press reports on August 20 that the strikers have refused to grant access to the plant.) Znidarsis also reported that he had met with the Ministry of Industry on August 18 which seems to want to stay clear of labor disputes. He added that senior Industry Ministry officials, the President of CADIVI, and other senior government officials have signaled that the government has no intention to nationalize GM. He added that senior officials informed him that they understand the importance of GM's presence in Venezuela as one of the few companies that has actually continued to invest and that they recognized that any action against GM would have a cascading effect on other multinational companies. -------------- COMMENT -------------- ¶7. (C) Despite the intervention by the Vice Minister of Labor, Znidarsis noted he did not expect the union to agree to grant the company access and that union members are actually trying to instigate other workers to take action against GM. He claimed that the striking workers have called on the BRV to take over GM operations as it did Argentine steel producer Sidor in 2007. While Znidarsis said he hoped that commonsense would prevail as thousands of GM employees call for their return to work and both GM's domestic and international suppliers face increasing difficulties, this incident presents a difficult issue for the BRV as the November elections approach. The BRV has generally shown itself as unwilling or unable to rein in the excesses of the radical labor movement. This may be especially difficult in support of a well-known U.S. multinational. DUDDY