In December 2004, the German-based steelmaking group ThyssenKrupp apparently went back on a 2004 agreement with the Italian government and trade unions by announcing the imminent closure of some of its operations in Terni, Italy. Its restructuring plan will lead to the immediate exit from the company of 155 employees (through early retirements and redundancies), the use of the Wages Guarantee Fund for a still unspecified number of workers, and the possible non-renewal of the contracts of 630 fixed-term workers. In protest, trade unions called a one-day strike on 25 January in all departments of the Terni steelworks, as well as a demonstration in Rome. The government convened negotiations involving the company, unions and local institutions in an attempt to resolve the dispute.
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In December 2004, the German-based steelmaking group ThyssenKrupp apparently went back on a 2004 agreement with the Italian government and trade unions by announcing the imminent closure of some of its operations in Terni, Italy. Its restructuring plan will lead to the immediate exit from the company of 155 employees (through early retirements and redundancies), the use of the Wages Guarantee Fund for a still unspecified number of workers, and the possible non-renewal of the contracts of 630 fixed-term workers. In protest, trade unions called a one-day strike on 25 January in all departments of the Terni steelworks, as well as a demonstration in Rome. The government convened negotiations involving the company, unions and local institutions in an attempt to resolve the dispute.
Following the privatisation of the Italian steel sector, which was previously almost entirely publicly-owned, in 1994 the German multinational ThyssenKrupp purchased l’Acciai Speciali Terni (Ast). Today, ThyssenKrupp Acciai Speciali Terni is the fourth-largest Italian steel producer in terms of turnover. It employs 5,000 people and produces special steels (stainless and electrical). The production of electrical steel in particular, which is indispensable for the construction of motors for electrical machinery, is a distinctive feature of the Terni steelworks, which patented its invention.
In February 2004, ThyssenKrupp management announced its intention to end production of electrical steel at Terni (with the dismissal of 500 employees) in order to concentrate exclusively on stainless steel (IT0402203F). However, opposition and the mobilisation of protests by trade unions, local institutions and the local community induced the company to revise its restructuring plan, and in June it signed an agreement to relaunch the Terni steelworks. The understanding envisaged investments of around EUR 60 million in all production activities, including the electrical steel department, about whose closure the company reversed its decision. In exchange, the government and the local authorities undertook to solve problems of electricity supply and to improve local infrastructures, thereby fostering the competitive growth of the area.
Steelworks again at risk of closure
At the beginning of December 2004, ThyssenKrupp management once again announced its attention to close - this time by August 2005 - the electrical steel department at the Terni plant, thus going back on the agreement reached in June 2004 with the government and the unions. Following the company’s decision, the chief executive of ThyssenKrupp Italia, Giovanni Bertoni, who had signed the 2004 agreement on behalf of the company, was replaced by the Peter Henning (head of ThyssenKrupp human resources), a German.
ThyssenKrupp justified its decision on the grounds that it is part of an industrial plan that in future will lead to increased investment in stainless steel at the Terni plants. Production of stainless steel at Terni, the company pointed out, has increased by an annual average of 9% compared with a European average of 4% and a worldwide one of 6%. By contrast, production of non-stainless steel at Terni has fallen by 10% annually, and it is now the company’s intention to produce it solely at its plants in Germany and France.
Following the announcement of the imminent start of the restructuring plan, trade unions and local authorities asked for talks to be held, in the presence of the government, on respecting the pledges made by ThyssenKrupp in June. The talks took place at government offices in Rome on 25 and 26 January 2005 and involved Gianni Letta, the under-secretary at the Prime Minister’s office, the company and trade union representatives. The union organisations involved were the General Confederation of Italian Workers (Confederazione Generale Italiana del Lavoro, Cgil), the Italian Confederation of Workers’ Unions (Confederazione Italiana Sindacati Lavoratori, Cisl), the Union of Italian Workers (Unione Italiana del Lavoro, Uil), the Italian Federation of Blue-Collar Metalworkers (Federazione Italiana Operai Metalmeccanici, Fiom-Cgil), the Italian Federation of Metalworkers (Federazione Italiana Metalmeccanici, Fim-Cisl), the Italian Metalworkers’ Union (Unione Italiana Lavoratori Metalmeccanici, Uilm-Uil), the General Union of Italian Workers (Unione Generale del Lavoro, Ugl) and the Italian Confederation of Autonomous Workers’ Unions (Confederazione Italiana Sindacati Autonomi Lavoratori, Cisal).
The meeting broke up with nothing being decided. While, as regards investment, the company’s industrial plan envisages EUR 30 million per year for five years (a total of EUR 150 million), of which EUR 120 million would be allocated to strengthening ThyssenKrupp’s European leadership in the production of stainless steel, from the point of view of employment the company reiterated its decision to close down its electrical steel department (which employed 350 workers) by August 2005. This will lead to the exit from the company of 155 employees, who will either take early retirement or be placed on availability lists, while an unspecified number of workers will be put on the Wages Guarantee Fund (Cig) (IT0311306T). There are 630 workers with fixed-term contracts on whose futures the company gave no guarantees. The restructuring plan therefore now seems due to produce a significant cut in jobs in both the electrical and stainless steel departments.
Trade union reactions
From the beginning of the dispute the unions declared their opposition to the closure of the electrical steel department at Terni, claiming that it was unacceptable for ThyssenKrupp to invest solely in stainless steel production in Italy while concentrating the manufacture of non-stainless steel at its plants in France and Germany. Besides protecting employment, the unions’ intention is to safeguard productive continuity and diversification in the steel industry, which is of strategic importance for Italy’s entire industrial system. Moreover, abandonment of 'multisectorality' would entail increased imports for Italian companies in the future.
For these reasons, even before the government had convened a meeting between the parties in Rome, Fiom-Cgil, Cisl-Fim, Uilm-Uil and Ugl called an eight-hour strike for 25 January and announced a demonstration in Rome in support of the trade union representatives engaged in the negotiations. Some 3,000 people took part in the demonstration, together with workers from Acciai Speciali at Terni and the ThyssenKrupp plant in Turin. The Terni steelworks were closed for the entire day as the whole blue-collar and white-collar workforce walked out in protest.
As regards the ongoing negotiations, the trade unions have described the conditions imposed by ThyssenKrupp as 'unacceptable' because the industrial plan would put 1,200 jobs at risk over the next five years, which is many more than would be lost if the electrical steel department of Ast were closed. For this reason, the union representatives have announced themselves ready to mount even 'sensational' forms of protest to be decided with the Terni’s workers at assemblies of the unitary workplace union structures (Rsus).
The situation at present is one of open conflict and deadlocked negotiations, with the unions accusing the government of 'having backed the company’s plan', while the Uil confederal secretary, Palo Pirani has declared that 'a European country would never have allowed an Italian company to do what ThyssenKrupp is doing: close the factory full stop'.
Commentary
The dispute at Ast in Terni shows that the industrial decisions of a multinational like ThyssenKrupp are not determined by the principles that typified the state-controlled enterprises before privatisation of the steel sector (ie an industrial policy geared to productive diversification, continuity of production in sectors deemed crucial, and job protection even at the expense of productivity ). Rather, they are driven by purely market criteria and the logic of economic compatibility (ie international competition, especially from North America, Russia and China intensified by the weakness of the dollar and its exchange rate with the euro).
In a situation such as this, where the role of the central institutions is simply to regulate, and not actively promote, industrial policies, the trade unions regard themselves as vested with a leading role in recommending specific industrial policy measures, but with no power to co-manage production options jointly with companies.
The Ast-ThyssenKrupp affair also demonstrates that the local institutions should be given a central role, and that the dispute should be settled by the signing of an assisted area agreement between local bodies and the social partners, where the former undertake to improve infrastructures and curb energy costs for companies, also with the support of national-level measures. (Livio Muratore, Ires Lombardia)
Eurofound recommends citing this publication in the following way.
Eurofound (2005), Dispute over restructuring of Terni steelworks, article.
