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Cablegate: Fedex/Ups Discuss Challenges with Truckers Union

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UNCLAS BUENOS AIRES 000849

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TAGS: EINV ECON ELAB EAIR OVIP BEXP AR
SUBJECT: FedEx/UPS Discuss Challenges with Truckers Union

1. (SBU) Ambassador met on June 6 with executives from UPS and FedEx
to discuss challenges they face with the local Truckers Union.
FedEx and UPS were recently forced to sign a 20 percent salary
increase with this union, the second sizable increase in a matter of
three months. The companies highlighted the fact that unlike the
other Couriers, both foreign and local, they already offer their
employees above-average salaries, benefits and compensation
packages. FedEx and UPS would like to try to establish a more
active working relationship with the Ministry of Labor to avoid
future challenges and promote themselves as companies dedicated to
expansion in Argentina, with a framework in hand. Company officials
expressed some concern about the apparently close relationship
between the Labor Minister and Trucker's Union, and requested
Embassy advice on how to best work with them both to resolve their
labor issues. Post will remain engaged to support both companies.


END SUMMARY


--------------------------------------------- ---------
Couriers Forced to Sign 20 Percent Salary Increase with Trucker's
Union
--------------------------------------------- ----------

2. (SBU) Present in the meeting for UPS were Oscar de la Fuente,
Director of South American Operations, Germn Riccardo, General
Manager in Argentina and Enrique Antonini, Government Affairs
Consultant to UPS in Argentina. FedEx's representatives were
Marilyn Blanco-Reyes, Managing Director of Regional Affairs for
Latin America and Caribbean Division and Elizabeth Freidenberg,
outside Legal Advisor to FedEx in Argentina. FedEx and UPS
officials told the Ambassador that on May 26, they felt that they
had no choice but to agree to a 20 percent salary increase with the
Truckers Union, given that the latter had blockaded the company the
previous day, after the company initially rsisted signing the
agreement. This increase was the second in three months. In March
2008, all Argentine courier firms agreed to a 19.5 percent salary
increase, retroactive to February 2008, which FedEx and UPS
officials thought would cover all of 2008. This last increase
actually amounted to a 24 percent increase, when including other
benefits. These two salary increases are on top of the 2007
increase of 23 percent that the Trucker's Union had demanded and
obtained. (Note: Total 65 percent pay raise for truckers over 2007
and 2008).

3. (SBU) Interestingly, the companies said that the latest salary
increase contract contained language that the increase was due in
large part to labor costs related to transportation, traffic and
environmental issues. The unions were reportedly under instructions
not to state that inflation was the reason for this increase, due to
the GOA's sensitivity on inflation matters.

4. (SBU) FedEx and UPS explained that Netherlands-based TNT might
have inadvertently begun this latest round of salary increases, as
they had earlier agreed unilaterally to this latest salary increase
for their workers, which caused the employees of the other firms to
press for similar increases. On top of this, TNT allowed the same
increase to non-trucker employees as well, members of the Commercial
Union and allowed the teamsters to incorporate these workers into
their union. FedEx and UPS officials said that this latter action
could in turn cause its own non-trucker employees to press for a
similar increase, and for all Commercial Union employees to join the
Trucker's Union as the teamsters want. This would greatly increase
teamsters membership numbers and the number receiving higher
salaries.

5. (SBU) FedEx, UPS, TNT and Germany-based DHL are the major courier
companies operating in Argentina, of the nine total companies, and
together control 90 percent of the market. FedEx and UPS said that
the four couriers distinguish themselves from their competition with
their excellent benefits and compensation plans, and above all,
higher salaries. FedEx was ranked the sixth best company to work
for in Argentina last year, according to the Great Place to Work
Institute. Unfortunately, from a union perspective, these
incentives did not seem to be taken into consideration when
demanding the same increase from all Couriers, as well as the 184
local firms under this agreement, as they simply applied the same,
across-the-board percentage increase.

--------------------------------------------
Options to Move Forward with Greater Clarity
--------------------------------------------

6. (SBU) FedEx and UPS officials explained that as illegal and
unacceptable as the Truckers Union's action might appear, under
Argentine law (and custom), they will not face any penalties. FedEx
and UPS expressed their frustration with the situation. FedEx and
UPS also expressed their desire to grow their business in Argentina,
while also creating a work plan with the Government and union that
could serve as a basis to avoid such situations in the future. They
expressed their concern about the current lack of stability and
predictability in Argentina.

7. (SBU) FedEx and UPS also said that they would like to brief GOA
Labor Minister Carlos Tomada about this situation, and establish a
closer working relationship with him. They are also concerned that
this latest Trucker's Union demand will not be the last. They would
like to inform the Minister of their desire for a long term and
stable presence here. They would also like to inform him that they
offer much higher salaries, benefits and compensation packages than
the local companies do. They asked for advice on how to proceed
with a potential meeting with the Minister and whether it would be
beneficial or detrimental to their long-term ability to operate.
They said that he has a close relationship with Trucker's Union who
might not appreciate such an approach. (The Union leader is under
great pressure to increase the salaries of his members due to
upcoming elections in July.)

8. (SBU) Embassy officials recommended that as FedEx and UPS are
also considered to be airlines, they could also consider approaching
the Secretary of Transportation Ricardo Jaime and/or his boss,
Planning Minister Julio De Vido, to explain their situation.

9. (SBU) Post has remained in touch with both companies and will
continue to provide appropriate support and counsel.

WAYNE

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