Furore over major restructuring plan for Electrolux

Multinational white goods company Electrolux announced a radical restructuring of its Italian plants in January 2014. The plan introduces pay cuts, shorter shifts and a reduction in staff numbers, with an income support scheme to cushion the effects on individual salaries while the restructuring is underway. Although the plan would save the plant in Porcìa from closure, where Electrolux makes washing machines, metalworkers’ unions have described it as a form of social dumping.

Background

In October 2013 the Swedish multinational company Electrolux, which employs about 5,700 people in Italy, announced that it would close its plant in Porcìa (Pordenone) with the loss of 1,200 jobs, and move production of its washing machines to Poland. The company has three other plants in northern Italy; Solaro (Milan) for dishwashers, Forlì, for ovens and gas hobs, and Susegana (Treviso) for fridges and freezers.

The company said it needed to respond to the effects of the economic crisis and of a lack of competitive product innovation that had led to market share losses. Electrolux management said the company had either to bring the Italian plants’ competitiveness in line with its Polish plants, or move production out of Italy.

First restructuring plan

On 27 January 2014, Electrolux announced an alternative to the Porcìa plant closure.

It demanded significant salary cuts at all four Italian plants, halving current monthly wages from €1400 to €700/800 to bring wage levels more in line with its plants in Poland and Hungary. Hourly labour costs in Italy were around €24 on average (compared to €7 in Poland and Hungary) and would be reduced by €3 in Forlì, €3.20 in Solaro, €5.20 in Susegana and €7.50 in Porcìa.

The company also proposed reducing working time to six hours per day, cutting time allowed for breaks and halving leave time for trade union duties. Company-level bonuses and seniority advancements were to be abolished, and production bonuses cut by 80%.

Finally, 650 workers would be permanently dismissed, although the number of job losses would be reduced to 250 if working time was cut to six hours a day.

First reactions

Immediately after the restructuring plan was presented, workers went on strike and organised several demonstrations, blocking the streets leading to the factories.

Gianluca Ficco, an official of the household electric appliances section of metalworkers’ union Uilm-Uil, said it was impossible to accept the ambiguity of the company’s plans for working time reduction, and it was not clear whether social ‘shock absorbers’ would be used. He also argued that the plan offered no guarantees that the Porcìa plant would survive in the long term, even after workers had made the sacrifices demanded by the restructuring, and he demanded government intervention.

Anna Trovò, National Secretary of metalworkers’ union Fim-Cisl, also said the company’s proposals were not clear and criticised the expected budget growth after reorganisation, saying that it was not realistic.

A number of local political and social actors took part in the public debate.

The President of Friuli Venezia Giulia regional government, Debora Serracchiani (Democratic Party), said that all four Italian plants should be protected, and the regional administration allocated €98 billion to keep production and employment in the region.

The employers’ association of the province of Pordenone (Unione industriali), with a group of experts, prepared a report that contrasts moving production to other countries to the advantages offered by the region. The aim of the report is to attract new investment by creating new industrial development, through three initiatives:

  • an experimental laboratory to stimulate local industrial competitiveness and to attract investment for employment growth and development;
  • new industrial relations, orientated to competitiveness, employment, participation and social cohesion;
  • engagement of local stakeholders in launching local manufacturing as a genuine engine for improvements in employment, development and wellbeing.

Following these developments, the then Minister of Economic development, Flavio Zanonato, began a consultation and mediation process with Electrolux Italia CEO Ernesto Ferrari, the presidents of the four regions where the Electrolux factories are based, representatives of sectorial trade unions.

Second restructuring plan

Electrolux presented a second 2014–2017 restructuring plan on 17 February 2014. The new plan promised investment of €32 billion. To avoid salary cuts, the plan sought 316 job losses – 298 of the Portia plant’s 1,000 blue-collar workers and 18 of its 64 white-collar workers.

Production in Portia would remain in the high quality market segment, to be fostered by product innovation and strengthening of the brand. The plant in Susegana would keep production of 94,000 fridges a year that, in the original plan, was to be moved to Hungary. There would be some working time reduction and proportional reduction in wages, although this would be partially offset by a special income support scheme using job security agreements (contralti di solidarity).

Social partner and regional government response

Uilm-Uil official Gianluca Ficco has said he still believes the plan for Porcìa is not clear about numbers, since:

…it expects 450 redundancies from 1,050 employees, but also a reduction in daily produced units, from 1.15 billion today, to 750 in 2017. The goal is that Electrolux does not shut down any plant.

Uilm-Uil General Secretary Rocco Palombella said that the protests of workers had helped reshape the company’s initial proposals, but that all matters would now be discussed at the Ministry of Economic Development.

Fim-Cisl National Secretary Anna Trovò said that the negotiations between Electrolux and the unions had brought some important developments, including the promise of genuine investment in the Italian plants.

Regional President Debora Serracchiani said:

The negotiation process should not focus only on the number of job cuts, but on the strategic investment for the development of the Porcìa plant. This would be a proper industrial plan, rather than focusing on redundancies and reduction of productivity potential.

Recent developments

A new Italian government took power at the beginning of March led by the new Prime Minister, Matteo Renzi. The Electrolux case has been recognised by this administration as a priority for the country.

On 5 March, the new Minister of Economic Development, Federica Guidi, and the Minister of Labour and Social Policies, Giuliano Poletti, organised a meeting with Electrolux’s Italian management. They explained that any support measures that the government might offer would be

…subject to the presentation of an industrial plan, of guaranteed employment prospects and to an agreement between the social partners to best support the company’s productivity and competitiveness.

The government planned to organise a meeting with the social partners and local authorities, with promises from the ministers involved all necessary support would be given to preserve production and employment in Electrolux Italia. This may lead to measures to sustain innovation strategies and labour cost reductions.

One pending issue concerned the financing of government-subsidised solidarity contracts. If the company was allowed to use such contracts, it would invest about €150 billion in its Italian operations between 2014 and 2017 and all four Italian plants would remain open. However, 500 jobs would be lost by the end of 2017.

On 19 March, Regional President Debora Serracchiani said: ‘We obtained the attention of the government. We now have to deal with the issue of solidarity contracts, which are an important tool required by the company.”

Lisa Rustico, Università degli Studi di Milano

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