CONTENTIOUS CLOSING OF JERZEES DE HONDURAS MAQUILA

UNCLAS SECTION 01 OF 02 TEGUCIGALPA 000158 SENSITIVE SIPDIS DEPARTMENT OF STATE FOR: MMITTLEHAUSER, DEPARTMENT OF LABOR FOR: PAULA CHURCH E.O. 12958: N/A TAGS: EAID ELAB ETRD HO KDEM ECON SUBJECT: CONTENTIOUS CLOSING OF JERZEES DE HONDURAS MAQUILA ¶1. (U) SUMMARY: Jerzees de Honduras (JDH),a textile factory located north of San Pedro Sula in Choloma closed in January following a labor dispute. The Fair Labor Association (FLA) has determined that while plant management did violate the workers, freedom of association, the decision to close the plant was based on market demand. Since January, a union representative has received multiple death threats, 13 U.S.-based Universities have cut all ties with U.S. owners of JDH (the Russell Corporation) and the Russell Corporation has promised to help its ex-workers find new jobs. END SUMMARY. JERZESS DE HONDURAS MAQUILA PLANT -------------- ¶2. (U) JDH, which is owned by the Russell Corporation (a subsidiary of Fruit of the Loom which is owned by Omaha-based Berkshire Hathaway Inc.),closed its doors on January 31 following over five months of dispute between management and the union at the plant. The JDH plant employed 1,800 workers, but from October 2008 to January 31 2009 JDH had been operating intermittently. These sporadic operations began after management decided to end all collective bargaining negotiations with the plant,s union, SitraJerzees, in October 2008. SitraJerzees represented 750 workers at the plant and was granted juridical status by the MOL in July 2008 after months of delay. THREATS OF VIOLENCE -------------- ¶3. (SBU) In January 2009, the General Workers Confederation (CGT) representative representing SitraJerzees, Evangelina Argueta, claims she began receiving death threats. She also alleged that she was followed by men on motorcycles, had her car examined by masked men while she shopped, and was followed to and from work by cars with blacked out windows - all acts which she found extremely intimidating. The Workers, Rights Consortium (WRC) and the Solidarity Center filed a Request for Precautionary Measures with the Inter-American Commission on Human Rights in the hope that the GOH would be forced to provide protection for Argueta. The U.S. Embassy notified the Ministry of Security of our concern for Argueta. SITRAJERZEEZ ALLEGATIONS AGAINST MANAGEMENT -------------- ¶4. (SBU) SitraJerzees has accused JDH management of spreading rumors of an imminent closing due to the union,s existence, illegally barring Argueta from entering the factory, tasking employees with making lists of unionized and non-unionized workers at the plant, and threatening the loss of benefits or preferred work schedules for suspected union members. In October 2008, when JDH announced it would be closing the factory in March 2009, workers claim they were told informally that the unionization was to blame while management insisted publicly that the global financial crisis was to blame. ¶5. (SBU) Laboff met and discussed the case with SitraJerzees,s executive board, Argueta, the WRC, the AFL-CIO,s Solidarity Center, the Honduran Manufacturing Association (AHM) and JDH management between August 2008 thru March 2009. JDH insisted that the closing of the plant was solely related to deteriorating demand in the U.S. market. JDH also denied claims that the items previously produced at JDH would be subcontracted out to other non-union operations. ¶6. (SBU) Throughout December 2008 and January 2009, SitraJerzees tried to pressure the owners of JDH into reopening the factory. On February 20, SitraJerzees and Argueta met with executives from the Russell Corporation,s headquarters, local JDH management and the president of FUNDARSE, a Honduran social responsibility organization, to discuss the case. There were no discussions of reopening the TEGUCIGALP 00000158 002 OF 002 factory. Argueta subsequently accused JDH management of distributing a "blacklist" of union leaders to other textiles plants throughout the region. ¶7. (U) In February, with the support of the Solidarity Center, members of SitraJerzees visited college campuses throughout the United States to seek support against the Russell Corporation. Since then, over 13 U.S. universities (including Wisconsin, Michigan, Harvard and Georgetown) have cut all ties with the Russell Corporation. The FLA has also commissioned three independent investigations to review the plant,s closing. Based on these investigations, the FLA concluded that while plant management did violate the workers, freedom of association, the decision to close the plant was based on market demand. ¶8. (U) The FLA determination has urged the Russell Corporation to meet with all key stakeholders, publicly acknowledge that workers, rights were violated, assist former JDH workers to find new jobs at Fruit of the Loom factories in San Pedro Sula area, provide financial compensation to all JDH workers, speak out against any blacklisting of former JDH workers, discipline those found to be violating workers, rights and strengthen formal internal grievance systems in its factories. In response to the FLA,s recommendations and meetings with SitraJerzees, JDH has since offered to open a help office for ex-employees offering emergency medical services, transportation services, job training and job placement assistance. BACKGROUND: UNIONS, EMPLOYERS AND THE LABOR CODE -------------- --- ¶9. (U) The Honduran labor code was adopted in 1959 after a series of strikes against the Standard Fruit Company and the Tela Railroad Company. Currently, despite a decline in union density (now at 9 percent of the economically active population),unions continue to exert political pressure, a recent success being the increase in the minimum wage by 60 percent for urban workers and 18 percent for rural workers. Many workers report that they find it difficult to unionize in Honduras due to the delay it takes for the unions to receive legal status from the Ministry of Labor (MOL). The FLA and the Solidarity Center report that many employers in the textile industry have used this delay period to fire all employees determined to be union sympathizers, turn non-union workers against the unions, and/or threaten plant closings. Lack of enforcement of the labor code by the MOL, coupled with an inefficient labor court system, leaves fired workers with little legal recourse. Union leaders claim that they have been subsequently "blacklisted" and informally barred from working in the textile industry. ¶10. (SBU) COMMENT: The case illustrates a disconnect between corporate headquarters, which understand the importance of respect for workers' rights and local management, which does not want to allow a union onto its floor. In the medium term, however, the contracting world economy is likely to mean more job losses, in plants with and without labor disputes. END COMMENT. LLORENS