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