Further workforce cuts in car industry

In late 2008, Spain’s largest car manufacturers announced workforce adjustment plans in response to declining market demand. Workforce adjustments such as redundancies or temporary layoffs are applied when the internal flexibility measures agreed in many companies are no longer effective. The trade unions question the motives of employers and claim that workforce adjustments are being used to obtain concessions in the bargaining on new flexibility measures.

Companies in the Spanish motor manufacturing sector have presented redundancy procedures, a flexible form of workforce adjustment that they can apply in a series of economic, technical and organisational situations. The job cuts affect in particular the northeastern province of Barcelona in the autonomous community of Catalonia, where most of the car manufacturing companies are located. In this region, a total of 7,500 workers employed in car manufacturing plants and among the network of suppliers have been affected by dismissals and temporary layoffs. The cases presented below illustrate the role of redundancy procedures in workforce management strategies in two of the main companies of the sector.

Temporary layoffs at SEAT

In the autumn of 2008, the car manufacturer SEAT (part of the German-based Volkswagen group) presented a temporary redundancy procedure that would affect 750 workers by the end of December 2008. A series of temporary plant closures is expected to affect a further 3,900 workers between January and July 2009.

The announcement of the redundancy procedure at SEAT came after the trade unions refused to negotiate production cuts involving rotating closures of manufacturing plants affecting 6,000 workers. The company’s initial plan was to add up to 15 days to the ‘hours pool’ (or working time account) established in the collective agreement as a flexibility system for adapting working time to variations in production (ES0406206F). The trade unions rejected the proposal due to the lack of guarantees that workers could complete the number of hours they owed, in view of the falling production forecasts for 2009.

SEAT’s redundancy procedure was finally approved by a resolution of the regional government, although no agreement had been reached between the parties involved within the bargaining period laid down by law. The resolution accepted most of the company’s demands, but introduced some changes requested by the employee representatives.

The resolution forces the company to apply temporary layoffs after each worker has used up the pool of hours. However, workers over the age of 53 years and those with less than 12 months’ seniority cannot be laid off; in these cases, the temporary layoff would affect the calculation of their present and future benefits. The workers affected will receive 80% of their wages for the duration of the period that they are laid off.

The trade unions criticise the fact that the company has not taken responsibility for failing to meet the conditions of the agreement signed in December 2005 (ES0601102N). This is the third redundancy procedure presented by the company in the past three years and the levels of production and staffing laid down in the agreement have not been reached.

Planned restructuring at Nissan

On 10 November 2008, the car manufacturer Nissan presented a redundancy procedure to lay off some 1,680 workers, 40% of the workforce at the company’s factory in Barcelona. The redundancy procedure forms part of an adjustment plan aiming to obtain production of new models as of 2010. As part of the company’s proposal, the workers who are laid off can sign up for a re-employment pool and receive 50% of the redundancy payment. In return, the company agrees to re-employ these workers within a period of two years, or to pay them the remaining 50% of the redundancy payment. This is a similar formula to that agreed at SEAT in 2005 in a redundancy procedure affecting over 600 workers (ES0601106F).

Production at Nissan’s manufacturing plant in Barcelona has been affected in recent years as a result of relocation to other Nissan plants in Morocco and Thailand. In fact, the company presented a redundancy procedure in January 2008 due to decreasing sales, but it was withdrawn on account of an agreement on new flexibility measures regarding working time. However, the agreed measures for reducing production are no longer effective. Therefore, the company management presented a proposal to the trade unions for extending the hours pool and notified them of a series of plant shutdowns of 26 days up to the end of 2008 as a complementary measure to adapt production to declining sales.

The trade unions consider the redundancy procedure as an excessive measure and have asked the company to apply temporary layoffs instead. Due to the positions taken by the two parties, an agreement does not seem feasible. The uncertainty over the final resolution of the redundancy procedure has led many workers to accept the voluntary redundancy and pre-retirement option proposed by the company (ES0802039I).

Commentary

The cases of Nissan and SEAT show that redundancy procedures are no longer an exceptional measure for companies in times of crisis. They have become a normal part of workforce organisation and optimisation, particularly in cases where trade unions refuse to negotiate new measures for increasing productivity and flexibility (ES0406207F). However, the unions claim that workforce adjustments are being used as a lever to obtain concessions in the bargaining on new flexibility measures.

Juan Arasanz Díaz, QUIT, University Autònoma of Barcelona (UAB)