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Cablegate: Us Automakers' Difficulties Continue in Venezuela

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DE RUEHCV #0600 1212158
ZNR UUUUU ZZH
P 302158Z APR 08
FM AMEMBASSY CARACAS
TO RUEHC/SECSTATE WASHDC PRIORITY 1050
INFO RUEHWH/WESTERN HEMISPHERIC AFFAIRS DIPL POSTS
RUEHBO/AMEMBASSY BOGOTA 7777
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RUMIAAA/HQ USSOUTHCOM MIAMI FL

UNCLAS CARACAS 000600

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SIPDIS

HQ SOUTHCOM ALSO FOR POLAD
TREASURY FOR MMALLOY
COMMERCE FOR 4431/MAC/WH/MCAMERON

E.O. 12958: N/A
TAGS: EAGR ECON PGOV VE
SUBJECT: US AUTOMAKERS' DIFFICULTIES CONTINUE IN VENEZUELA

REF: CARACAS 535

1. (SBU) On April 29 labor negoiations between General Motors
(GM) and its union reached a breaking point. GM Venezuela's
legal counsel confirmed media reports that GM stopped
production as a result of the impasse. In response to the
halt in production, GM workers rioted, damaged 28 cars, and
blew up a gas tank. Two employees were injured. (Note:
Media reports erroneously stated that 780 vehicles were
damaged. End Note.)

2. (SBU) GM then reached an interim agreement with the labor
union "Syndicate of Winning Socialists" on April 30 and
resumed normal production of 400 vehicles per day. GM was
able to resume production when they met the union's demands
for improved cafeteria food and better quality toilet paper.
Production may halt again if GM cannot come to an agreement
with the union on their proposed salary increase of roughly
USD 16 per day versus GM's offer of USD 9.50. Production is
continuing normally at Ford and Goodyear. Both reached
hard-fought agreements with their unions in 2007.

3. (SBU) Chrysler, which halted production in March 2008,
plans to re-start in mid-May (reftel.) Chrysler Venezuela
President Luis Perez De La Cruz told the Embassy Chrysler
halted production because they could not get enough dollars
from CADIVI, the BRV foreign exchange agency, to pay their
suppliers. De La Cruz went to CADIVI weekly requesting the
funds which CADIVI finally released the second week in April.

DUDDY

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