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Cablegate: Wal-Mart's Union Woes in Quebec

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 QUEBEC 000031

SIPDIS

E.O. 12958: N/A
TAGS: ELAB ETRD PGOV CA
SUBJECT: WAL-MART'S UNION WOES IN QUEBEC

SENSITIVE BUT UNCLASSIFIED

1. (SBU) Summary: Wal-Mart's decision to close down its store
in Jonquiere (250 km north of Quebec City), following that
store's successful unionization drive is provoking public
outrage in Quebec. The idea that Wal-Mart, the world's largest
and perhaps wealthiest corporation, is playing hardball offends
Quebecers. A public call to boycott Wal-Mart fell short and
many Quebecers still want a Wal-Mart in their town for the jobs
and low-cost goods and services. They just wish they could have
both Every Day Low Prices and a Wal-Mart that complies with
Quebec's generous employee labor laws. That said, while Quebec
has traditionally looked favorably upon the union movement, what
is driving negative public opinion in this case is not so much
solidarity with the unions as anxiety over globalization. We
detect no up tick in anti-Americanism in the current debate over
Wal-Mart. If anything, local communities here are identifying
with the Wal-Mart-related struggles of their neighbors in small
New England towns and across America. End summary.

2. (SBU) As of fall 2004, Wal-Mart had 235 in Canada,
forty-five of which are in Quebec Province. The Jonquiere
Wal-Mart, one of three in the Saguenay region of Quebec, opened
three years ago. Soon after, the United Food and Commercial
Workers Union (UFCW) sought to organize a majority of the
Jonquiere Wal-Mart employees in a secret ballot. This initial
effort failed but in July 2004 the UFCW was able to present
signed union membership cards from a majority of employees.
Consistent with provincial labor laws, the Quebec Labor
Relations Board accredited the union as the employees'
bargaining agent, making the Jonquiere Wal-Mart the first to
unionize in North America. Management immediately responded by
threatening to close the store for poor economic performance.

3. (SBU) Beginning in October 2004, the union entered into
unsuccessful contract negotiations with Wal-Mart management. On
February 2, the union applied to the Ministry of Labor for an
arbitrator who under Quebec law can impose a first contract on
newly organized workplaces. Shortly after the Ministry granted
the request, a Wal-Mart spokesman announced that the store would
be closing in May 2005 because "we've been unable to reach an
agreement with the union that in our view will allow the store
to operate efficiently and profitably." The UFCW plans to file
charges of bad-faith bargaining and unfair labor practices. If
the union can prove this to the Quebec Labor Relations
Commission, it could force a reversal of the shutdown or result
in significant fines.

4. (SBU) Trade unions have played a major role in Quebec's
modern history. Quebec trade unions were prominent in the
success of the Quiet Revolution of the 1960s that laid the
political foundations of contemporary Quebec. The Saguenay
region itself has a recent union tradition, resulting from the
organization in the 1940s of its (now mostly closed) aluminum
mills. Quebec today is the most unionized region in North
America, with over forty percent of the province's workforce
represented by a union. That said, the public reaction --
judging from media coverage and from our conversations with a
wide variety of Quebecers -- has been less a matter of defending
the unions and more of anger at what is viewed as the
heavy-handed tactics of the world's largest corporation.
Articles appear almost daily in the local press of reported
Wal-Mart bullying of employees, suppliers and communities here
and elsewhere. Many Quebec City residents recall that when
Wal-Mart Canada began with the purchase of Woolco stores in
1994, it chose not to purchase those local Woolcos with union
contracts.

5. (SBU) Wal-Mart presents Quebec, particularly the heartland,
with the same challenges and opportunities as it does in rural
and small town America. On the one hand, consumers are
attracted to its convenience and wide array of products and
services; on the other hand, they fear Wal-Mart will put
existing shops out of business. In 2003, Consul visited
Shawinigan, like Jonquiere a former industrial area, and was
told by a Chamber of Commerce official that his biggest
challenge was what to do about a Wal-Mart proposal to locate in
town. If they allowed Wal-Mart to set up shop, existing
merchants would go under. But if they turned Wal-Mart down, it
was clear Wal-Mart would build in nearby Trois Riveres, and
Shawinigan's economy would be hurt anyways.

6.(SBU) Others believe they can benefit from Wal-Mart's
presence. In the CG's recent visit to St. George de Beauce, a
town about one and a half hours south of Quebec City by car, the
town mayor pointed with enthusiasm to a plot of land purchased
by Wal-Mart two years earlier. "We are eager for Wal-Mart to
begin building on the site," he said. He is confident that once
Wal-Mart comes to St. George, the town will be able to entice
Wal-Mart into buying local products for sale in Wal-Mart stores
in North America. Last week, newly appointed Labor Minister
Laurent Lessard was condemned by the PQ Opposition for speaking
favorably about Wal-Mart and free market entreprise.

7. (SBU) While in many places in the world a battle with as
prominent a U.S. firm as Wal-Mart would produce an up tick in
anti-American sentiment, such is not the case in Quebec. If
anything, we detect the reverse - a sense of solidarity with
workers and small towns in America struggling with similar
challenges. A local Radio-Canada report on Wal-Mart Feb. 27
consisted of interviews with citizens of St. Albans, Vermont,
over how they feel about Wal-Mart's presence in their town. A
Feb. 26 article on Wal-Mart headlined "Wal-Mart blamed for
harassment in Ste. Foy (a suburb of Quebec City)" jumps to a
subheading, "Employees in Colorado say no to unionization."
Even the bitterest opponents in Quebec will cite that Wal-Mart
is acting no differently in Canada than in the U.S., and use
American examples to bolster their anti-Wal-Mart case.

8. (SBU) Comment: The Jonquiere Wal-Mart saga is part of a
larger battle between Wal-Mart and unions being played out
elsewhere in Canada and the U.S. (Wal-Mart is facing
certification applications at about a dozen other locations in
Quebec, Saskatchewan and British Columbia.) It is also bringing
to the fore what one business analyst (a Quebecer) here
describes as Quebec's "tortured relationship with money."
Quebec, according to this view, practices a "distinct
capitalism," a capitalism of the left where successful business
people are admired even as people feel malaise before iniquities
in wealth. It is a sign of health in our bilateral relationship
that Quebecers -- however they feel about Wal-Mart -- are
looking south across the border for kindred spirits rather than
using the situation as fodder for anti-Americanism.

FRIEDMAN

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