VZCZCXYZ0001
RR RUEHWEB

DE RUEHBU #0849/01 1751001
ZNR UUUUU ZZH
R 231001Z JUN 08
FM AMEMBASSY BUENOS AIRES
TO RUCPDOC/USDOC WASHDC
RUEHC/SECSTATE WASHDC 1391
RUCNMER/MERCOSUR COLLECTIVE

UNCLAS BUENOS AIRES 000849 
 
SENSITIVE 
SIPDIS 
 
USDOC FOR 4332/ITA/MAC/OLAC/APEACHER 
USDOC FOR 3134/USFCS/OIO/WH/JLEBLANC 
 
E.O. 12958: N/A 
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