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Cablegate: Argentina: Embassy Assists U.S. Chemical Firms And

VZCZCXYZ0001
RR RUEHWEB

DE RUEHBU #1761/01 2491339
ZNR UUUUU ZZH
R 061339Z SEP 07
FM AMEMBASSY BUENOS AIRES
TO RUCPDOC/USDOC WASHDC
INFO RUEHC/SECSTATE WASHDC 9145

UNCLAS BUENOS AIRES 001761

SIPDIS

SIPDIS

STATE FOR WHA/BSC
PASS TO DEPUTY UNDER SECRETARY FOR FNS - KATE HOUSTON
USDOC FOR 4322/ITA/MAC/OCAC/PEACHER
USDOC FOR 3134/USFCS/OIO/WH/KESHISHIAN
FAS/OA/OSTA/OCRA/ONA/OGA/OTP/OCBD/OAO/OFSO

E.O. 12958: N/A
TAGS: EINV EAGR ECON BEXP ELAB AR
SUBJECT: ARGENTINA: EMBASSY ASSISTS U.S. CHEMICAL FIRMS AND
SHERATON HOTEL IN LABOR DISPUTES


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SUMMARY
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1. (U) In July 2007, the Embassy learned that Argentine chemical and
petrochemical unions had called strikes in Zarate/Campana region,
paralyzing production in that sector, which features four U.S.
companies. One of those firms, Monsanto, initially requested no
Embassy involvement, as they hoped that the strikes could be
resolved peacefully with the assistance of the Ministry of Labor
(MOL). After those talks failed, Monsanto sought our help, and we
mobilized. FCS and FAS contacted the three remaining U.S. firms in
the region, Eastman Chemical, Rohm & Hass, and Merisant, who all
reported that their plants had been similarly crippled by the
strikes. DCM called the Labor Minister to signal our interest in a
solution. After a prolonged period of stalled talks, and with
strong continuous Embassy support, industry recently reached an
agreement with union leaders. Mission assistance was also involved
in the lifting of a taxi blockade of a local Sheraton hotel and
providing security to the hotel while the disagreement was in play.
Ambassador talked to the Interior Minister, Labor Minister, the
Secretary of Tourism and the Mayor of Buenos Aires in support of a

SIPDIS
solution. Both Sheraton and Monsanto subsequently expressed
appreciation for Embassy efforts. These episodes and others not
directly involving US companies suggest that Argentina's unions are
becoming increasingly militant, beyond the traditionally active. End
Summary.

------------------------------------------
The Establishment of Collective Bargaining
------------------------------------------

2. (SBU) Last year, chemical and petrochemical companies in the
Zarate/Campana region established a local chapter of the National
Chamber of the Chemical/Petrochemical Industry and obtained MOL
approval for the chamber to negotiate with the unions directly.
This allowed the companies to negotiate with the unions collectively
as opposed to independently. Nelson Palacios, leader of the Union
of Workers in the Chemical And Petrochemical Industries of
Zrate/Campana, responded by calling strikes that began in May
demanding higher wages and a return to negotiations by individual
companies. The companies managed to get government intervention in
the strikes transferred from Buenos Aires Province's MOL to the
national MOL. Companies believed that this shift in purview would
lead to a more effective response from national authorities.

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Let the Strikes Begin
---------------------

3. (SBU) The unions began with one-two hour strikes. On June 10,
Palacios organized a general strike that directly affected 15
chemical companies, including four from the U.S. The unions then
expanded the strike to ten calendar days, citing an unsafe work
environment as the cause. The companies appealed to the MOL, asking
the MOL to require the unions to come to the negotiating table. The
companies invited the MOL to tour plants to verify whether or not
safety standards were being violated.

4. (SBU) In response, Minister of Labor Tomada ordered the unions to
submit to mandatory conciliation, and gave the Chamber and the
unions until July 11 to reach a resolution. On Thursday, July 5, the
companies submitted a proposal to
Tomada's Chief of Staff offering a wage increase of
15 percent, as opposed to the unions' demand of 16.5 percent. The
unions' counteroffer demanded that the
companies pay workers' salaries during the 10-day strike. On Friday,
July 6, the companies stated that they were willing to consider this
offer, on the condition that the unions agree not to organize
additional strikes. Unsatisfied with this latest proposal, Palacios
immediately called for another strike. In response, Minister Tomada
sent the unions a letter demanding that they return to the mandatory
conciliation process or face the loss of their legal status as a
union.

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U.S. Companies at Risk
----------------------

5. (SBU) The affected U.S. companies included Monsanto, Eastman
Chemical, Merisant and Rohm and Haas. The strikes negatively
affected the production of agrochemicals, herbicides, fertilizers,
foot and mouth disease vaccines, chemical inputs for the leather
industry, sweeteners, and
solvents for the paint industry. Monsanto estimated that the strike
resulted in a US$16 million loss.


6. (SBU) In follow-up calls by the Mission to each U.S. company
during the strike, all reported that the strikes had paralyzed their
operations. The worst case was that of Merisant. A Union employee
answered the office phone and explained that the plant had been
"taken" by the workers. This was confirmed by the General Manager
in a separate call. He stated that the situation was critical with
some employees being fired and others having lost salaries due to
days not worked. The General Manager also stated that stock was
being depleted, and soon there would be no products to export.

7. (SBU) Eastman Chemical reported that picketers had blocked entry
to the firm's gate and that a police escort was needed in order to
enter their own facility every twelve hours to maintain their
effluents plant. Without routine entry, the bacteria needed to run
the plant would die and require a major reconstruction effort. Rohm
& Hass reported a similar situation but explained that they had
abstained from trying to cross the picket line, instead transferring
essential personnel to their Buenos Aires location.

------------------------------------------
Embassy Assists U.S. firms with Resolution
------------------------------------------

8. (SBU) From the onset of the strike, the Ambassador, DCM, Labor
Officer, FCS, and FAS advocated on behalf of U.S. companies with the
Ministry of Labor in an attempt to reach a quick resolution.
Embassy Officials received constant updates from company Executives
(often by cell phone, as many were not allowed access to their
plants). The DCM coordinated routine calls with Minister Tomada for
updates on the situation, to brief him on the daily activities of
the U.S. companies involved, and offered constant Embassy assistance
when needed.

9. (SBU) On August 16, FCS learned from Eastman Chemical that the 15
companies affected by the strikes had reached agreement with union
officials late the previous evening. He confirmed that the
agreement resolved several issues that preceded the current
conflict, as well as most issues arising from the conflict itself.
For example, it was agreed to downplay the role of the Chemical
Chamber in the collective bargaining. There were also agreements
reached on issues such as lost salaries, salary increases, and
collective bargaining. It was also stressed that a period of
"social peace" was needed in order to recoup heavy losses, to build
up depleted inventories, and resolve some of the down-stream damages
generated by the strike. Monsanto representative subsequently
expressed to Ambassador his company's profound thanks for the
consistent support through this period.

-----------------------------
Mission Also Assists Sheraton
-----------------------------

10. (SBU) During this dispute, the Embassy was also called to assist
with a dispute involving Sheraton Hotel, which faced a blockade of
its entrances by a taxi firm that wanted an exclusive contract to
serve the hotel. Diplomatic Security and Legatt both helped to
contact Federal Authorities to ensure that Sheraton's hotel and
guests were protected during the taxi protests, and the DCM was in
constant contact with Sheraton executives offering assistance. The
Ambassador raised this issue with the Secretary of Tourism, twice to
the Interior Minister about providing security to the hotel against
egg throwing activities, urged the Labor Minister to help find a
solution and thanked the Mayor of Buenos Aires for offering to help
facilitate a solution. The issue was resolved quickly. The
Sheraton's local owner and manager called on the Ambassador and
country team to express their appreciation for the support.

WAYNE

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