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. 
 
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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