Wildcat Strikes Hit UK Energy Plants In Response To Foreign

UNCLAS SECTION 01 OF 02 LONDON 000305

SENSITIVE
SIPDIS

E.O. 12958: N/A
TAGS: ECON ELAB ETRD EINV UK
SUBJECT: Wildcat Strikes Hit UK Energy Plants In Response To Foreign
Workers Dispute

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1. (SBU) Summary: Workers at the UK's third largest oil refinery
went on strike January 28 in protest at the use of foreign labor for
a new construction project. A wave of wildcat strikes across the UK
followed, with workers demonstrating support for those at French oil
company Total's refinery in Lindsey, in northeast UK. Media reports
indicate the dispute could become a diplomatic incident, with the
Italian government threatening the employment of British workers
there. Business Secretary Lord Mandelson defended EU labor laws
during an emergency session at the House of Lords February 2 and
said Total had given assurances that it did not discriminate against
British workers. Mandelson said the dispute was fuelled by the
"politics of xenophobia." PM Gordon Brown publicly called the
strikes indefensible and counter-productive - a sharp contrast to
his 2007 Labour party conference statement calling for "British jobs
for British workers" (which has become the unofficial slogan of the
strikes),a statement which the opposition Conservative party
attacked as "irresponsible." A trade union official told the
embassy that Total's lack of transparency fuelled concern and
suspicion amongst workers and that Mandelson's comments were
unhelpful. End summary.

Foreign Labor Strikes Spread Across UK
-------------- --------------


2. (U) Workers at the Lindsey oil refinery in North Lincolnshire,
the UK's third largest, walked off the job on January 28 in protest
at the use of foreign labor at the site. This strike began
following a dispute about Total's decision to award Italian company
IREM part of a GBP 200 million contract to build a new hydro
desulphurization facility at the Lindsey refinery. (Note: The main
contract for the hydro desulphurization unit was awarded to Jacobs,
a U.S. company, which sub-contracted some work to IREM. End note.)
Five British companies and two other European contractors bid for
the work before it was awarded to IREM, which at the time of the
tender indicated it would supply its own permanent workforce from
Italy and Portugal.


3. (U) Workers and their union representatives accused Total of
discriminating against British workers. Total rejected the
accusation saying: "IREM was selected, through a fair and
competitive tender process, as the most appropriate company to
complete the work." Officials from Unite, the UK's largest union,
said workers were angry that labor was used from outside the UK when
British workers near the refinery were out of work. They dismissed
Total's claim that the foreign labor was in specialist trades and
said most of the work could be done by UK workers.


4. (U) Since January 28, workers at energy plants across the UK
have shown support for the action in Lindsey through a series of
wildcat strikes. Workers at Ineos Group Holdings' Grangemouth
refinery in Scotland, BP's terminal at Kinneil in Scotland, and RWE
AG's Didcot power facility in southern England joined a wave of
strikes across the country. Most recently, workers at two nuclear
sites, Sellafield and Heysham, joined the strike action.
Approximately 900 contractors in Sellafield and 300 in Heysham
agreed to walk out for 24 hours in sympathy with the Lindsey
protest.

Economic, Political Consequences
-------------- --------------


5. (U) Despite the walk outs, the UK Department of Energy issued a
statement that it was unaware of any current or potential impacts of
the strikes on gas, electric or fuel supplies. Lord Mandelson
confirmed there was no disruption of production at any of the sites.
The Department for Business asked ACAS, the UK's independent
arbitration service, to meet the employers and unions to examine the
accusations and mediate the dispute. Workers have so far rejected a
February 3 deal proposed in ACAS talks that would have given 25
percent of the new jobs to British workers. Negotiations will
continue.


6. (U) Some media commentators note the dispute threatens to
escalate into a major diplomatic incident. The Italian government
has described the strikes as "indefensible" and the Governor of
Sicily warned that the employment of Britons on the Italian island
may be threatened. The British Ambassador in Rome was reportedly
sent to reassure the Italian government that Italians would not face
discrimination in the UK.

Mandelson Warns Against "Politics of Xenophobia"
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7. (U) Business Secretary Lord Mandelson defended EU labor laws in
a statement to the House of Lords, February 2. He said HMG is

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determined to uphold European rules governing the operation of
companies and mobility of labor throughout the EU. In the
statement, he said Total had given assurances that it had not
discriminated against British workers. He highlighted the
importance of Europe to the UK, particularly with regards to trade
and investment, and noted that there are 300,000 UK companies
operating elsewhere in Europe. Separately, Mandelson claimed the
dispute was fuelled by "the politics of xenophobia." He said
protectionism would be a "sure-fire way of turning recession into
depression." Gordon Brown said the strikes were indefensible and
counter-productive. However, the dispute has caused a split in the
Labour party. Two former Cabinet ministers, Peter Hain and Iain
McCartney, led a chorus of Labour MPs who said HMG urgently needed
to recognize there was a problem. Peter Hain said something had
gone "badly wrong" with the UK's labor laws, which did not seem to
have "adequately protected local workers."

Reaction: Tories and Unions
--------------


8. (U) Gordon Brown's "irresponsible" comments at the 2007 Labour
party conference calling for "British jobs for British workers"
stoked the wildcat strikes, argued Shadow Business Secretary Kenneth
Clarke. (Note: Placards held by striking workers displayed the PM's
statement. End note.) Clarke said understandable worries over the
UK's economic climate have turned into direct action as a result of
the PM's statement. He said: "This was populist nonsense at the
time he used it and part of some curious 'Britishness' agenda...
(he)was more concerned with his job security than anybody else's job
security in this country." He said however aggrieved people felt,
industrial action at power stations and oil refineries at a time of
"national crisis" was not the way forward.


9. (SBU) A lack of transparency around the IREM contract fuelled
concern amongst workers, according to the Trades Union Congress'
International Affairs Director Owen Tudor. Tudor told the embassy
that Total's initial reluctance to confirm how many Italian,
Portuguese and British workers would be employed under the new
contract proved unhelpful and increased suspicion. He said Lord
Mandelson's xenophobia comments were equally unhelpful and could
stir up further disagreement. He noted, however, that when members
of the BNP, a far right-wing British political party, turned up at
the Lindsey demonstration, they were turned away by workers. While
the TUC is not sure how long the dispute will last, officials noted
that IREM's work is set for completion in April, so action is
unlikely to continue beyond then. He commented that the strikes in
Sellafield are "mildly ironic" as work in nuclear stations requires
security clearance and the workforce will therefore be 100 percent
British.


10. (SBU) Comment: Growing concern about the length and depth of
the UK recession has heightened tension in this foreign labor
dispute. Rising unemployment coupled with slowing output has
sparked concern about the impact of EU labor laws on British
workers. The TUC, which has monitored the effect of the European
Commission directive on the right to move and reside freely since
2004, had only seen sporadic outbreaks of concern regarding foreign
workers until the Lindsey case. As the recession deepens,
industrial action may become more widespread.

TUTTLE