VZCZCXRO9085
PP RUEHAG RUEHDF RUEHIK RUEHLZ RUEHROV RUEHSL RUEHSR
DE RUEHFR #1216/01 2471543
ZNR UUUUU ZZH
P 041543Z SEP 09
FM AMEMBASSY PARIS
TO RUEHC/SECSTATE WASHDC PRIORITY 7098
RUCPDOC/USDOC WASHDC PRIORITY
INFO RUCNMEM/EU MEMBER STATES COLLECTIVE

UNCLAS SECTION 01 OF 02 PARIS 001216 
 
SENSITIVE 
 
NOT FOR INTERNET DISTRIBUTION 
 
SIPDIS 
 
STATE FOR EB and EUR/WE 
 
E.O. 12958: N/A 
TAGS: ELAB ECON EIND EINV ETRD PREL FR
SUBJECT: LABOR DISPUTE AT MOLEX AUTOMOTIVE SARL 
 
SUMMARY 
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¶1.  (SBU): Negotiations over the closure and loss of 280 jobs at 
Molex Automotive SARL, a US-owned automotive supplier near Toulouse, 
have taken a sharp turn for the worse.  Discussions on a buyout 
between Molex and an investment fund brought in by the GOF ended in 
a stalemate.  Minister of Industry Christian Estrosi accused the 
U.S. firm of bad faith and threatened to call on French auto firms 
to boycott Molex. President Sarkozy weighed in publicly against 
Molex, arguing that the company's rejection of the proposed buyout 
is part of Molex's efforts to prevent competitors from entering the 
market after its departure. Renault announced it would reevaluate 
its relations with Molex.  Talks conducted by a GOF-appointed 
mediator with unions on the "social plan" of layoff benefits 
appeared to be making some progress, but broke down after the GOF 
interventions.  Molex is fast reaching its own deadline for closing 
in France and threatens to allow its subsidiary to go bankrupt if a 
negotiated outcome is not in the offing.  End Summary. 
 
 
¶2.  (SBU) Molex Incorporated is a global electronic components 
company based in Lisle, Illinois.  In October 2008, the company 
announced it was closing Molex Automotive SARL, a plant near 
Toulouse producing connectors for the automotive industry.  A local 
judge approved the closure as justified by difficult economic 
factors within the automotive sector and Molex initiated 
negotiations on severance and retraining benefits as required by 
French labor law, and also began looking for a buyer for the 
facility. 
 
¶3. (SBU) The leftist Confederation Generale du Travail (CGT) leads a 
group of unions that represent Molex workers and the local has a 
radical tendency.  The union has consistently rejected the firm's 
decision to close the plant as illegitimate and has refused to 
negotiate a severance and retraining package.  The union claims that 
since the plant turned a profit last year, the decision cannot be 
based on economic factors. 
 
¶4.  (SBU) In April 2009, angry workers at Molex "boss-napped" two 
managers for nearly 48 hours.  (Note: This was one of a series of 
instances during the first half of the year in which managers were 
detained as a high pressure negotiating and media grabbing tactic. 
French officials subsequently denounced the practice, but none of 
these cases have been treated as hostage-takings. One of the Molex 
managers subsequently told EMIN that while the boss-nappers clearly 
did not intend physical harm, they were mostly inebriated, a 
situation that could easily have become dangerous. End Note.) The 
workers told the press that management failed to provide documents 
to a consultancy firm hired by the union to prepare an expert report 
challenging the economic justification for closing.  Workers 
expressed frustration in media reports when the company reportedly 
dismissed the consultancy's findings and launched legal action 
against the works council representing employees for detaining the 
two managers. In response, employee representatives voted to stage 
an unlimited strike.  On July 7, Molex workers went on strike and 
solicited national and local authorities to prevent the plant's 
closure. 
 
¶5.  (SBU) On August 5, Molex' U.S.-based Director of Business 
Development Eric Doesburg was assaulted by Molex employees and 
pelted with eggs.  He had had recent knee surgery and stated that he 
sustained some injuries in the assault leading him to file a 
criminal complaint.  Two French security guards were also jostled by 
Molex personnel and property was damaged.  French police did not 
intervene, though versions differ on whether and when they were 
called, and on what actually happened outside the plant. 
 
¶6.  (SBU) The following day Doesburg turned to the American Presence 
Post in Toulouse for assistance and APP Toulouse contacted Embassy. 
 The APP had been in touch with Molex regularly over last the year 
but had become involved in any business decisions.  Embassy followed 
up at once through RSO law enforcement liaison channels.  In 
addition to the police channel, EMIN spoke with Economy Minister 
Lagarde's chief of staff and with the Invest in France Agency and 
met with Industry Minister Estrosi's chief of staff. French 
officials condemned any use of violence or force by union members 
and assured us that measures would be taken to ensure safety and 
security. 
 
¶7.  (SBU) On August 13, President Sarkozy instructed Minister 
Estrosi to appoint a mediator, which he did at once.  In a press 
release, Sarkozy reiterated the legal obligations of companies that 
are restructuring (i.e. closing): to search for industrial solutions 
and provide professional retraining.  Dialogue is absolutely 
crucial, he stressed, while condemning the use of violence. 
 
PARIS 00001216  002 OF 002 
 
 
Minister of Economy Lagarde echoed Sarkozy's key messages in a media 
interview: the social dialogue must never be interrupted and every 
effort must be made to save jobs and find an acquirer.  However, 
there will be situations when jobs can't be saved, after all Lagarde 
stated: "Foreign investment in France is determined by investors". 
 
¶8.  (SBU)   Molex's Doesburg returned to France the following week 
and met with both Elysee staff and with EMIN before heading to 
Toulouse for his first meeting with the mediator.  He then met with 
Minister Estrosi in Paris August 25.  The Industry Ministry insisted 
that Molex offer to sell not only its plant, but some part of its 
product line and customer base, which the firm refused to consider. 
¶9.  (SBU) Despite some progress in the mediated negotiations 
regarding the social plan, Minister Estrosi issued an accusatory 
press release on September 2 and called for a boycott of Molex 
products by French auto producers unless the company agreed to an 
acquisition This followed the failure of Molex to cut a deal with an 
investment firm brought in by the GOF.  On September 3, President 
Sarkozy told the press that if there is a buyer for Molex, it will 
benefit from GOF backing and restated his priority for an industrial 
solution.  He claims that it is not "fair play" for Molex to leave 
and try to thwart a buyout and thus prevent a competitor from 
entering the market.  Sarkozy denounced the way the U.S. company was 
handling the shut-down, in particular, its treatment of the workers 
"who are not merchandise" and noted that in the U.S. as in France, 
there "are values to respect." According to Molex (maintain strict 
business confidentiality) the investment firm wanted Molex to 
guarantee future operating losses at the company while leaving 
behind a part of its production and order book, in addition to 
paying in advance, or putting in escrow, the possible future closing 
costs. 
 
¶10.  (SBU) On September 4, Molex appeared in labor court over one 
aspect of the dispute.  Ninety-six out of 283 Molex employees are 
claiming salary payments for the month of August when they were on 
strike.  The court will render its decision on September 18. 
 
¶11.  (SBU) The USG is not a party to this negotiation.  We 
intervened strongly to protest lack of adequate police protection 
during the standoff.  Since that incident, we have remained in 
close, ongoing contact with Molex and have provided our assessment 
of political and economic factors when requested.  We have also 
emphasized to the GOF that the continuation of this dispute could 
only harm the perception of France's investment climate in the 
United States. =On September 3, Ambassador Rivkin raised in a low 
key manner our concern regarding the dispute and the GOF 
intervention with the president of France's employer federation 
(MEDEF)and with Minister of Economy Lagarde  EMIN also raised with 
Invest in France agency head. 
 
Comment and Action Request 
-------------------------- 
 
¶12.  (SBU):  The GOF appears willing to draw out the labor mediation 
process to be able to claim having tried to save jobs and for 
setting a moral standard for economic layoffs.  Extending the 
conflict serves the unions interest.  The GOF does not seem to 
appreciate the damage being done to France's investment climate 
reputation.  Officials are hesitant to get involved given to the 
increasing level of politicization by Estrosi and President Sarkozy. 
   It should be clear to all parties at this point that Molex will 
close this plant shortly, either in an orderly fashion, with a 
substantial severance and retraining package, or when the subsidiary 
goes bankrupt.  Post has made clear to Molex that we are prepared to 
highlight our assessment to the GOF at an appropriate moment. 
Embassy also requests any appropriate Washington trade policy 
guidance to respond forcefully to the GOF's planned boycott of Molex 
products. 
RIVKIN