Unions mobilise against planned closure of Siemens plant

Siemens Kolejová vozidla, the leading manufacturer of rail vehicles in the Czech Republic and a subsidiary of the German-owned Siemens Transportation Systems, has announced the planned closure of its site in Prague with over 1,000 jobs threatened. Siemens plans to sell the plant by September 2009. The company’s decision is due to low Czech customer demand, global economic changes and the company’s global strategy, which envisages 17,000 redundancies.

The German company Siemens AG is to end its involvement in the Siemens Kolejová vozidla plant in Zličín in Prague by the end of September 2009. The Siemens group – which previously received tens of millions of Czech koruna (CZK) in investment incentives in the Czech Republic and employs around 12,500 people in the country – announced at the beginning of July 2008 its plan to reduce its global workforce by 17,000 workers due to the current economic downturn. This figure includes 2,500 employees from its Mobility Division, which includes a plant in Zličín. According to the CEO of the Mobility Division, Hans-Jörg Grundmann: ‘This reorganisation is necessary for eliminating surplus capacities and thereby increasing long-term competitiveness.’

Trade unions issue strike alert

The planned layoffs have understandably met with a negative reaction from employees. For example, in protest against the company’s decision, an impromptu demonstration was held by employees outside the gates of the Zlíčin plant. Trade unions have also mobilised and issued a strike alert. The unions have initiated negotiations with the employer and have demanded guarantees from company management that work will continue at the Zlíčin plant after the company’s intended departure. They insist that production should be maintained at the facility, even if it is under a different owner. In the event that the enterprise is shut down, the trade unions have demanded an appropriate settlement to be reached with employees.

The Czech Metalworkers’ Federation KOVO (Odborový svaz KOVO, OS KOVO), which is the largest trade union in the Czech Republic and has a branch in the Zličín facility, has warned that Siemens had breached applicable European regulations by not inviting trade unions to take part in negotiations on reaching a final decision regarding the Zličín plant. The General Secretary of the European Metalworkers’ Federation (EMF), Peter Scherrer, has also supported his Czech colleagues in this matter. He commented that ‘this type of notification is not acceptable’, adding that the federation was surprised by developments at the Czech factory.

Unions receive additional support

In support of their demands, trade union representatives have met with the German Ambassador to the Czech Republic, Helmut Elfenkämper. At the beginning of August 2008, they subsequently met with representatives of other trade union organisations at a Siemens European Works Council (EWC) gathering in Munich. When the next stage of talks between trade unions and the employer began on 5 August, the unions organised a protest demonstration in support of their demands. According to the unions, because no significant result was achieved during the subsequent negotiations, a two-hour warning strike was held at the factory two weeks later. Some of the protesting employees’ colleagues from the Škoda Auto automobile manufacturing plant in Mladá Boleslav, northeast of Prague, came to support them, as did almost 20 trade unionists from Siemens in Germany.

Agreement favourable to employees

The trade unions’ forceful approach to negotiations with the employer paid off. At the end of August 2008, they agreed a package of benefits worth €32.7 million with the group’s representatives. If the company lets employees go after September 2009, they will receive a severance payment corresponding to 16 wage packets. Alternatively, if the factory finds a buyer, employees will receive a bonus of three months’ wages – at present, the average gross monthly wage in the company is about CZK 31,400 (about €1,241 as at 17 November 2008). Moreover, the employer – who has an interest in completing current job orders – will begin to pay a bonus worth 35% of an employee’s salary, which will be increased every month by a further 5% up to June 2009. The company will also pay out a once-off bonus of CZK 15,000 (€593) for the month of August. Furthermore, Siemens undertook to regularly inform the trade unions in a prompt manner with regard to how the sale of the enterprise is proceeding and to consult with them on the issue.

According to the Chair of OS KOVO, Josef Středula, the outcome of the negotiations demonstrates the significant strength of the solidarity among employees, who opposed the company’s planned intentions. He stated: ‘For us, the above-standard level of severance pay is not the most important thing.’ Moreover, he continued: ‘First and foremost, selling the enterprise to a new owner was and still is the most crucial thing for us.’

This restructuring case has also been reported by Eurofound’s European Restructuring Monitor (ERM) – see relevant factsheet.

Jaroslav Hála and Soňa Veverková, Research Institute for Labour and Social Affairs (RILSA)