Strikes and bankruptcy hit Factory Wagon SA

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In early August 2003, the workforce of Factory Wagon SA, a privatised Polish railway rolling-stock producer and repairer, launched strikes and other protest action, with the immediate cause being several months' arrears in wage payments. The strike ended in late August when the debt-ridden firm was declared bankrupt, opening the way for the sale of its assets and possible survival of its operations and jobs.

Factory Wagon SA (Fabryka Wagon SA) in Ostrów Wielkopolski was established in the wake of the restructuring of a railway rolling-stock repair facility. Only recently, the company had a 40% share in the domestic market for the production and repair of railway carriages for Polish State Railways (Polskie Koleje Państwowe, PKP) and a workforce of approximately 8,000. The company held a large portfolio of orders, some of them from foreign buyers, and its future seemed quite secure. Accordingly, Wagon was seen as a prime candidate for privatisation (PL0209103F).

In 2001, the Minister of the State Treasury put up for sale a 25% stake in Factory Wagon, which was bought by Partner Marketing AG, a Swiss-based company largely owned by Slovakian investors. Some time before, the same company had bought 24% of Wagon from one of Poland's National Investment Funds. The Swiss enterprise soon exercised complete control over Wagon - while the State Treasury retained a stake of 25%, it soon became clear that the Polish government had lost all real influence over the running of the company.

In spite of the continuing high value of its orders, the debt of Wagon began to increase rapidly. In 2001, a group of Wagon’s creditors, finding themselves unable to enforce settlement of debts owed by the company, applied for it to be declared bankrupt. By 2002, the situation had deteriorated to a point where the management of Wagon, seeking to block enforcement proceedings being pursued by almost 700 individual creditors for repayment out of the company’s assets of aggregate debts approaching PLN 80 million, itself applied to the courts for the commencement of debt rescheduling and arrangements.

The situation at Factory Wagon SA began to deteriorate seriously when, in early 2003, the Internal Security Agency (Agencja Bezpieczeństwa Wewnętrznego, ABW) and the public prosecution service entered the scene, alleging that the firm's former directors had been acting to the detriment of the company by siphoning off several million złoties. It was at this time that the workforce, faced with delays in the payment of their wages, first mounted a widespread strike. It became clear to many parties that far-reaching restructuring was called for. The company applied for public aid from the Industrial Development Agency (Agencja Rozwoju Przemysłu, ARP), but the restructuring plan formulated by the board of directors was rejected by the shareholders. The debts of the company were estimated at PLN 200 million.

Given the unwillingness of the company’s owners to countenance proposed restructuring measures and the delay in payment of their wages for the month of June, most of the 2,200 workers employed at Wagon decided, on 6 August 2003, to go on strike. Initially, a rotating strike was organised and on 7 August the workers took their protests to the streets of the city of Ostrów Wielkopolski, through which they led a 'hunger march'. The main road between Poznań and Katowice, one of the more important transit routes in this part of Poland, was blocked in Ostrów Wielkopolski for several hours. The protests attracted the attention of the general public throughout Poland, but no commitments that the workers’ demands would be met were forthcoming. Accordingly, on 11 August the workers progressed to a full strike and occupation of the factory.

National trade union leaders, members of parliament and officials from the Ministry of the State Treasury (Ministerstwo Skarbu Państwa, MST) and ARP all joined in the negotiations at the company. Some hope was provided by declarations from the banks that they would be willing to lend to Wagon if these loans were underwritten by the State Treasury. At the same time, ARP demanded that the board present a complete restructuring plan by the end of August. The striking workers, however, decided to continue their protest until such a time as a final decision was reached. Two weeks later, a group of employees went on hunger strike. These developments led the Deputy Prime Minister and Minister of the Economy, Jerzy Hausner, to involve himself personally in talks on the future of Factory Wagon SA.

A breakthrough was achieved on 28 August, when the general meeting of shareholders appointed a new board of directors and supervisory board for the company, diluting the influence wielded by its majority shareholders. ARP, however, did not move from its previous position – a restructuring plan should be ready by 1 September 2003, or bankruptcy would follow. As this deadline was not kept by the company’s directors, the restructuring was discontinued and the bankruptcy of the company was announced, thus paving the way for sale to a new investor of such assets as are not attached to the benefit of creditors. In this way, the hope that the plant – and the jobs associated with it – can somehow survive was kept up. The next day, the workforce returned to work, announcing that their strike had been suspended.

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