In early 2002, the US-owned multinational, Lear, unexpectedly announced the closure of its electrical components plant at Cervera in Spain, which has a workforce of 1,200. The move has brought protests and allegations that the correct procedures have not been followed.
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In early 2002, the US-owned multinational, Lear, unexpectedly announced the closure of its electrical components plant at Cervera in Spain, which has a workforce of 1,200. The move has brought protests and allegations that the correct procedures have not been followed.
It was announced in early 2002 that the US-based Lear Corporation is to close its plant in Cervera (Catalonia). The plant, which manufactures electrical components for cars, has a workforce of 1,200, most of whom are women. Lear states that in the past few years it has suffered losses worldwide and that it cannot sustain the high wage costs of its Spanish plant. Apparently, the favoured option for relocation is Poland, where pay rates are far lower. The decision has led to strong protests in the Cervera area, in Barcelona and elsewhere. The Lear workforce and trade unions have stated that they will do their utmost to oppose the closure.
Some commentators believe that the Lear case highlights some important aspects of economic globalisation. First, the Lear workers at Cervera are covered by the agreement for the metalworking sector, but are thought to receive the lowest pay and work the most hours per year of any company in the sector. Their average pay is EUR 640 compared with the sectoral average of EUR 700, and they work 1,793 hours compared with the sectoral average of 1,770. However, Poland and many others countries of central and eastern Europe that will soon join the EU have lower pay than any Spanish region.
Second, Lear obtained very favourable conditions to set up its plant in Cervera: the town council provided a newly developed site, and the company obtained several types of tax allowances. It is quite possible that the new host country will be no less generous, so bearing in mind the income from the sale of the land, observers claim that the transfer of the multinational's operations may be a very simple operation.
Third, shortly before announcing the closure, the company sold its cabling section to another company, Tyco, which is located in a nearby town, in an operation that is now seen by some as one of 'asset-stripping' the facility.
Finally, some critics claim that the Lear Cervera cases shows that employment regulations can be ignored with impunity. The company should have presented to the labour authorities a procedure justifying the closure and the job losses. The workers should have had a month to present their responses, and the government should have had another month to issue a resolution. None of these conditions was fulfilled, it is alleged. The notification of the closure was sudden and categorical, though it is alleged that the company may have been preparing it for months and gradually cutting staff.
After an interview with the company, the Catalan government stated that 'the decision of the company is final and the only thing that can be achieved is to delay it for a few months or phase it over a relatively brief period'.
Eurofound recommends citing this publication in the following way.
Eurofound (2002), Lear to close Spanish plant, article.
