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Cablegate: Union Strike in Cavite Closes Walmart Supplier

VZCZCXRO3537
OO RUEHCHI RUEHDT RUEHHM
DE RUEHML #1949 1640645
ZNR UUUUU ZZH
O 130645Z JUN 07
FM AMEMBASSY MANILA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 6925
INFO RUEHC/DEPT OF LABOR WASHDC IMMEDIATE
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS IMMEDIATE
RHHMUNA/CDR USPACOM HONOLULU HI//FPA//

UNCLAS MANILA 001949

SIPDIS

SIPDIS

SENSITIVE

STATE FOR EAP/MTS, DRL
LABOR FOR ILAB

E.O. 12958: N/A
TAGS: ELAB PHUM EINV RP
SUBJECT: UNION STRIKE IN CAVITE CLOSES WALMART SUPPLIER

REF: 06 MANILA 4558

1. (U) Summary: In face of an ongoing strike by "United Workers of
Chong Won Fashion" in the Cavite Economic Zone (CEZ), Walmart has
canceled its orders with the Korean-owned firm, which has shut down
operations altogether. The labor difficulties in Cavite have not
scared off foreign investors, and other Korean and Chinese investors
in particular will likely continue to open up shop in the
Philippines. End Summary.

------------------------------------
DWINDLING STRIKERS AFTER A LONG HAUL
------------------------------------

2. (U) Fired union members of Chong Won Fashion, which recently
changed its name to C. Woo, Inc., continue to strike outside the
premises of the factory in the CEZ. However, the number of strikers
present at the site has dwindled to between only two and five
strikers per day. Many of the discharged union workers have since
found other sources of employment due to the prolonged nature of the
strike, which started on September 25, 2006.

3. (U) Management of the CEZ has barred all union strikers from
entering the zone, forcing the few remaining striking workers to
build shacks, which serve as temporary homes, inside the CEZ. These
strikers depend on colleagues and friends outside the zone to
deliver food and other basic necessities, using fake identification
badges to gain entrance to the zone. They are subject to
imprisonment if caught by the CEZ security force, which has
happened, but usually only for overnight.

4. (U) The union originally requested certification in 2002, but
the company responded by terminating more than half of the union
members and the majority of the union's officers. The firing
included senior workers, some of whom had worked for Chong Won since
its opening in 1990. The union eventually received certification in
July 2005, when the Department of Labor and Employment (DOLE) issued
a judgment certifying it as sole and exclusive bargaining
representative of the workers at the factory.

5. (U) Despite the union's numerous letters of intent to management
in order to start collective bargaining negotiation, Chong Won
refused to negotiate, and appealed the DOLE certification decision.
A resolution by the National Labor Relations Commission canceled the
union's certification on February 6, 2007. The union has filed an
appeal and awaits a decision.

-----------------------------
WALMART CANCELS FUTURE ORDERS
-----------------------------

6. (SBU) Walmart, which indirectly purchases Chong Won's products
through One Step Up, a Korean supplier, signed a Memorandum of
Understanding with One Step Up in March 2007 stipulating, among
other conditions, that Chong Won would reinstate all striking
workers and negotiate a collective bargaining agreement with the
union members. According to Edwina Reunilla, Walmart's
representative in the Philippines, Chong Won refused to abide by
Walmart's memorandum with the supplier. Consequently, as of April
2007, Walmart ceased all orders originating with Chong Won.
According to CEZ Administrator Cecille Velena, Chong Won
subsequently closed its operations indefinitely.

-------
COMMENT
-------

7. (SBU) Labor unions have represented a declining percentage of
Philippine workers for many years, in large part due to their
inability to deliver on promises. Chong Won's approach in dealing
with its unionized workers is not atypical of how some companies in
the Philippines deal with labor disputes. Companies, especially
those hiring low-skill workers, can often end operations, opening
again elsewhere, rather than work with union groups. Thus, despite
some media attention here, the Chong Won case has probably not
scared off foreign investors. Other investors, particularly Koreans
and Chinese, likely will continue to open up shop in the
Philippines, especially in the relatively "safe" zones under the
Philippine Economic Zone Authority.

KENNEY

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