Employment under threat from sofa industry crisis

In June 2005, financial problems facing the Natuzzi group highlighted a crisis affecting the Italian sofa industry. Under the terms of an agreement between the government, local authorities, the company and trade unions, over 1,000 Natuzzi workers have been fully or partially laid off, on a temporary basis, under the wages guarantee fund scheme. The company has guaranteed that it will keep a high level of production in Southern Italy.

The Italian sofa industry is mainly concentrated in the industrial district of Murgia, in Southern Italy, between the Apulia and the Basilicata regions. The district is composed of about 530 small-sized companies, which employ about 14,000 workers. The district developed around a leading company, Natuzzi founded in 1959 by Pasquale Natuzzi. The company has grown significantly and, at present, employs 4,431 workers in Italy, where it has 12 plants, and about 3,000 all over the world (China, Brazil and Romania). The company exports 90% of its production to 135 countries and has a total turnover which exceeds EUR 750 million, with an approximately 15% world market share. The Natuzzi Group is among the few Southern Italian companies listed on the New York Stock Exchange.

The maximum development of the Natuzzi Group was reached in the 1990s. International competition, an increase in raw material costs and falling consumption have jeopardised the company’s philosophy of 'democratic wealth' (ie high quality sofa at low costs), one of the main reasons behind the success of the company’s brands Divani&Divani and Italsofà on the North American markets. In 2004 the company recorded a severe economic loss equal to EUR 9.3 million. Moreover, the results for the first quarter of 2005 confirmed this negative tendency: losses reached EUR 3.5 million, orders decreased by 30%, and sales in the United States diminished from 79 to 59 million while turnover in Europe decreased by 5%.

The Natuzzi Group, further to these negative results, asked for the extension of coverage by the special wage guarantee fund (cassa integrazione guadagni straordinaria, Cigs) - which already concerned 345 employees - to another 1,320 employees and decided to make 3,500 workers, employed in the plans Matera, Ginosa (Taranto) e Altamura (Bari), obligatory go on holidays from 3 to 12 June 2005.

The trade union representing the workers in the sofa industry - the Italian Federation of Wood and Building Workers (Federazione Italiana Lavoratori Legno Edili e Affini, Fillea-Cgil), Italian Federation of Building Workers (Federazione Italiana Lavoratori Costruzioni e Affini, Filca-Cisl) and the National Federation of Building and Wood Workers (Federazione Nazionale Lavoratori Edili Affini e Legno, Feneal-Uil) - expressed their deep concern about the consequences of the company’s strategy on employment. On 30 May 2005, in order to hasten urgent action on behalf of the government and of local institutions, the sectoral trade unions called an eight-hour strike. According to the trade unions, about 90% of the workers took part in the strike.

During the first week of June the 'Task force for employment' set up by the Ministry of Labour met twice to analyse in depth the problems of the company. During the meetings the government, the Natuzzi Group, the presidents of the Apulia and Basilicata regions, and the representatives of the workers of the sofa industry discussed the situation and signed an agreement.

The agreement permits the recourse to the wage guarantee fund (cassa integrazione guadagni, cig) for 1,120 employees of the Natuzzi group, however only some of them (270) will be completed suspended from work, while the rest will work on a rotation basis. Workers will be under the Cig scheme starting from 23 January 2006, but, another scheme of 24 months to cover the two-year period 2006-2008 has been already announced.

The company promised to discuss with the trade union organisations a new industrial plan containing concrete guarantees about the level of production to be kept in the Italian plants. Moreover, the company declared its intention to guarantee a minimum wage level to its employees (up to 70% of the net pay for blue collars and up to 60% for white collars) and to maintain in Italy important production quotas.

The Government and the Local institutions promised to carry on active labour policies in the area object of the crisis. In particular, they intend to strengthen the job placement services for redundant workers as well as training actions.

At the end of the meeting, the undersecretary of the Ministry of Labour, Maurizio Sacconi, underlined the importance of the agreement signed by the social partners because 'it permits the recourse to the wage guarantee fund but also the presentation of a new industrial plan based on the reorganisation and the re-launch of the company which, if necessary, will make possible the extention of the wage-guarantee fund for another period'.

According to the secretary general of Cisl-Basilicata, Nino Falotico, 'the objective of Natuzzi employees was to obtain, through the substantial contribution of the trade unions concrete industrial policy actions able to re-launch the competitiveness of the sofa industry in Italy, starting from Southern regions'

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