Multidisplay maintains staff levels despite restructuring

Multidisplay began production of electronic valves and tubes for radios and televisions in 2001, with significant investment incentives from the government. The latter company created about 3,000 new jobs in the Moravia region in the eastern part of the Czech Republic where unemployment is traditionally high. Following a change of ownership and planned redundancy measures, the company has decided to maintain its current staff levels.

Multidisplay s.r.o. is a former subsidiary of the Dutch company LG. Philips Displays Holding B.V. The company is located in Hranice in central Moravia in the southeastern part of the Czech Republic and began the production of electronic valves and tubes for radios and traditional vacuum television screens on 25 August 2001. At the time, the then social-democratic government headed by Prime Minister Miloš Zeman considered the establishment of a manufacturing plant in Hranice in central Moravia as a great success. The Czech government therefore granted investment incentives in the form of tax relief amounting to CZK 1.5 billion (about €57 million, as at 5 December 2007) to this company. In exchange, the Multidisplay was to create about 3,000 new jobs in a region that usually suffers from high unemployment levels.

However, the company’s development came to an abrupt halt when, due to worsening market conditions, the parent company, LG. Philips Displays Holding B.V., filed for insolvency protection on 27 January 2006. The holding company also announced that it would be unable to provide further financial support to its loss-making subsidiaries. With a decreasing market demand for traditional television screens, Multidisplay also began to experience financial difficulties, as did its approximately 1,000 employees.

Change of ownership and subsequent restructuring

On 22 February 2007, the manufacturing plant and the grounds were sold to the Dutch-based developer CTP Invest. The latter committed to assume Multidisplay’s debts while maintaining the production of television screens and 1,000 jobs for at least two years. However, within a month, CTP suspended the production process on 20 March until 1 April 2007, and employees received only 70% of their salaries for the duration of the plant’s closure. The company’s management explained that the momentary interruption of production was due to a normal seasonal decline in product demand.

Nonetheless, another plant-wide shutdown began on 23 May 2007 and was scheduled to last until July; in the end, it carried on until September 2007. From July 2007, employees received only 60% of their salary. The company explained that this shutdown was necessary to prepare changes not only in production but also on the grounds of the manufacturing plant, in order to end production of traditional television screens and introduce an LCD screen production line. The company’s management, however, claimed that the new production line would only provide jobs for about 250 people so that the remaining 570 workers would have to be let go. Such an outcome of Multidisplay’s restructuring would represent a great burden for a region with a 10% unemployment rate.

Trade union effort to mitigate consequences of restructuring

Multidisplay’s management and the company’s branch of the Czech Metalworkers’ Federation KOVO (Odborový svaz KOVO, OS KOVO) agreed on a common approach to reduce the negative impact of the mass redundancies. The employer was to present to the trade union representatives a list of vacant positions. On 4 September 2007, the company started organising information meetings for all of its employees. At these meetings, representatives of the human resources (HR) department informed employees about the company’s current situation and its future plans. Moreover, management offered a bonus of two months’ salary to employees who would leave the company of their own volition in September 2007. Each employee was also to have an interview with a recruitment agency, which would offer employees a vacant position in a different company.

Employees criticise company approach

The employees, however, complained about the company’s approach: to them, it seemed as if the company was seeking employees to voluntarily give their notice so that it would not have to disburse severance pay. Under the current law, severance pay would amount to at least three times the monthly salary if the reason for redundancy relates to an excess of employees.

Since 23 July 2007, the company’s management has obliged employees to attend a daily organisational meeting of 15 minutes during their normal shift hours. These meetings are exhausting, in particular for those employees using public transport to come to work. Meanwhile, some employees also found temporary brigade work to bridge the income gap in the period where they only received 60% of their salaries, and the daily commute for these obligatory company meetings makes it difficult for them to fulfil their temporary work contracts.

Furthermore, employees are not happy with the alternative job offers received from the external recruitment agency: in several cases, the proposed jobs are up to 150 km away from the workers’ home. As a result, about 100 workers decided to take up the employer’s offer and resign voluntarily.

Company decides to keep employees

In the end, however, CTP Invest decided not to let their employees go, and those employees for whom there will be no job in the LCD screen production will be employed by the investors located in the grounds of the manufacturing plant. Thus, about 100 people should find employment. Nonetheless, CTP Invest and Multidisplay remain the centre of local media attention.

Sona Veverková, Research Institute for Labour and Social Affairs (RILSA)

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