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FM AMEMBASSY TEGUCIGALPA
TO RUEHC/SECSTATE WASHDC PRIORITY 1183
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE PRIORITY
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RUEHC/DEPT OF LABOR WASHDC PRIORITY
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UNCLAS SECTION 01 OF 03 TEGUCIGALPA 001211 
 
SENSITIVE 
SIPDIS 
 
DEPARTMENT OF STATE FOR: SMORGAN 
DEPARTMENT OF LABOR FOR: PAULA CHURCH 
 
E.O. 12958: N/A 
TAGS: EAID ELAB ETRD ECON BBSR EIND KDEM KTEX HO
SUBJECT: AGREEMENT REACHED IN FRUIT OF THE LOOM LABOR 
DISPUTE 
 
REF: TEGUCIGALPA 158 
 
¶1. (SBU) Summary.  An agreement was signed on November 14 
between Fruit of the Loom's Russell Corporation (FOTL/RC) and 
the SITRAJERZEESH union (SU) over the January closure of the 
Jerzees de Honduras (JDH) factory in Choloma, Department of 
Cortes.  The agreement includes the rehiring of displaced 
workers and reopening of the factory in January 2010.  Both 
sides of the negotiation expressed confidence that the 
landmark agreement will be implemented fully and expressed 
appreciation for the Embassy's support and assistance.  The 
union expressed concern over the issue of its registration 
with the Ministry of Labor, however it appears that FOTL/RC 
has agreed to work with the union despite delays in its 
registration with authorities.  End Summary. 
 
The Negotiations 
---------------- 
 
¶2. (SBU) Gladys Cisneros of the Solidarity Center in 
Washington, DC told Poloff that a settlement agreement was 
signed on November 14 to resolve the dispute between workers 
FOTL/RC over the closure of JDH factory in Choloma, 
Department of Cortes in January (ref A).  Cisneros was at the 
negotiating table with FOTL/RC representatives and union 
representatives of SITRAJERZEESH Union (SU) and their parent 
organization, General Workers Confederation (CGT).  Cisneros 
told Poloff that the agreement will lead to the reopening of 
the factory under the name, Jerzees Nuevo Dia, and that 
FOTL/RC agreed to rehire the workers that lost their job due 
to the factory closure. 
 
¶3. (SBU) Cisneros described the agreement as historic because 
it recognized that JDH workers had lost their livelihood for 
standing up for the right to organize guaranteed under local 
and international laws.  Cisneros congratulated both sides in 
the negotiation for their willingness to take a step back and 
see the needs of the other.  Cisneros told Poloff specific 
credit is due to FOTL/RC Vice President for Marketing Rick 
Medlin and Evangelina Argueta of the CGT.  Cisneros described 
the successful agreement as a combination of good will on the 
part of negotiators, but also consumer demands that products 
be made in factories that respect the rights of workers to 
organize.  From the point of view of Cisneros, she believed 
Medlin was "absolutely committed to the image of the 
company," and for that reason took to heart what workers were 
saying at the negotiating table. 
 
¶4. (SBU) Poloff talked to Evangelina Argueta of the CGT on 
November 18 regarding the negotiation of the agreement. 
Argueta said that the CGT was very pleased with the outcome 
and that she believed there was good faith on both sides 
about the implementation of the agreement.  Argueta expressed 
appreciation to the Embassy for its assistance and support 
since the JDH factory was closed. 
 
The Details of the Agreement 
---------------------------- 
 
¶5. (U) Cisneros told Poloff on November 23 that the text of 
the agreement will not be released to the public, but that 
one item she felt indicated the good will of FOTL/RC was the 
condition that the immediate clean-up and work to reopen the 
factory would be completed by fifty of the displaced workers. 
 Cisneros felt this indicated the willingness on both sides 
to "pitch in together" in order to make the new factory 
successful. 
 
¶6. (U) The sides released a public document that outlines in 
general terms the agreement.  The points include the 
 
TEGUCIGALP 00001211  002 OF 003 
 
 
following: 
 
--FOTL/RC agreed to establish a unionized apparel factory of 
substantial size in Choloma, Honduras called "Jerzees Nuevo 
Dia," which will employ former Jerzees de Honduras employees. 
 The SITRAJERZEESH Union (SU) will be the exclusive 
representative of the workers at the new factory.  The 
company and union have also agreed to a process of good faith 
collective bargaining. 
 
--The company and union have agreed to cooperate on the 
hiring of the former Jerzees de Honduras employees at the new 
factory and at the company's other Honduran facilities.  All 
former JDH employees will be extended an offer and it is the 
company's intent to complete this process within one year. 
 
--The company and union have established a framework for 
ensuring respect of the worker's freedom of association 
rights in all company factories, including provisions 
addressing training of workers through a join union-company 
training program and union access to facilities. 
 
--An oversight process has been developed to ensure the 
success of the new relationship that includes an ombudsman to 
monitor day to day issues and mediation where needed. 
 
--The company has agreed to establish a workers welfare fund 
to provide assistance to displaced workers and will 
contribute a substantial amount to this fund.  The money will 
be distributed to workers by the Worker Rights Consortium, 
the General Confederation of Workers, and the American Center 
for International Labor Solidarity. 
 
Challenges 
---------- 
 
¶7. (SBU) Cisneros told Poloff on November 23 that she 
believed the biggest challenge for the implementation of the 
agreement is the name change of the factory and that this 
could impact the labor union's registration with the Ministry 
of Labor.  She said that FOTL/RC had agreed to recognize and 
continue to negotiate with SU even if they were not formally 
registered with the Ministry of Labor.  She requested Embassy 
assistance for the expeditious registration of the labor 
union under the new factory name.  Poloff explained the 
Embassy's no contact policy due to the coup d'etat but said 
that we would be willing to help as much as possible within 
those guidelines. 
 
Reaction by Fruit of the Loom/Russell Corporation 
--------------------------------------------- ---- 
 
¶8. (SBU) Tony Belaski, Senior Vice President of Human 
Resources for FOTL, Edward Vardales, Director of Human 
Resources for Central America and Mexico, and Werner 
Oberholzer, local plant manager in Choloma, discussed FOTL's 
stance on the agreement with EconOff in a November 25 
telephone call.  Belaski, who was part of the negotiating 
team, said that Fruit of the Loom was very pleased with the 
outcome and sees it as a landmark agreement for 
labor-management relations.  Oberholzer added that other 
firms operating in Honduras view this as a new model for 
labor relations and may implement some of the measures if 
they see them as providing long-term positive benefits for 
Fruit of the Loom. 
 
¶9. (SBU) Oberholzer stated that the factory is slated to 
begin operating on January 4, 2010 and hopefully to be at 
optimal production within six months.  Preparations are 
already underway, including moving machinery to the new 
 
TEGUCIGALP 00001211  003 OF 003 
 
 
facility.  The plant was previously located in a leased 
building one block away from the new building owned by FOTL. 
Belaski added that they have already begun hiring back 
members of the previous workforce and that sixteen members 
are already on the payroll and handling the move-in 
preparations. 
 
¶10. (SBU) According to Belaski, FOTL plans to rehire 750 
workers out of the 1400 displaced.  Verdales noted that 400 
workers already found other jobs through their workers 
displacement center.  Belaski said that they were not 
rehiring the full 1400 workers because the general demand for 
their products is lower now than when the previous factory 
closed.  In addition to reduced demand, Belaski cited 
retailers maintaining lower inventory levels and the loss of 
some university licensing agreements as other reasons why 
they would not initially need the same size workforce as 
previously.  He did note that since the agreement was signed, 
Arizona State University began the due diligence process to 
sign a new licensing agreement with Fruit of the Loom and 
that they are in talks with some of the other universities 
with whom they had licensing agreements. 
 
¶11. (SBU) Fruit of the Loom is planning on sending a 
delegation from its corporate headquarters, including 
Belaski, to Honduras in the first quarter of 2010.  At that 
time, they intend to meet with the newly installed Minister 
of Labor and have also requested to meet with Embassy 
officers.  Furthermore, Belaski extended an invitation for 
Embassy officers to accompany the delegation when it inspects 
and tours its new facility in Choloma. 
 
Comment 
------- 
 
¶12. (U) This landmark agreement is an important step forward 
for workers rights in Honduras; we will support the 
agreement's implementation in any way we can.  The agreement 
is not only the first of its kind, but also received a high 
level of media attention in the United States following very 
public pressure by anti-sweatshop student groups.  The mutual 
respect and confidence expressed by both sides shows that the 
probability of success for this agreement is high. 
 
LLORENS