Productivity agreement reached at Nissan

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In May 2004, a new company collective agreement was signed at the Spanish operations of Nissan, the Japanese motor manufacturer. Management had initially proposed an agreement to boost productivity though measures such as a pay freeze, and during the ensuing difficult bargaining it threatened numerous redundancies. A four-year deal was finally reached, with Nissan dropping the threatened redundancies and the proposed pay freeze, but the trade unions accepting longer and more flexible working time and lower pay rates for new recruits.

Nissan, the Japanese-based motor manufacturer, currently has 6,000 workers in Spain, with over 3,000 workers at its two plants in Barcelona. Together with its factory in Sunderland (UK) with 5,000 workers, the Spanish plants represent Nissan's European presence. The firm recently proposed to increase productivity in its Spanish factories (which the company claims is lower than in Japan and the USA) through a new four-year collective agreement parallel to the company's 'TOP 07 plan'. Nissan has committed itself to an investment of EUR 400 million over the four-year period and the director general of its Spanish operations, Teruo Takebe, recently stated that 'Nissan is a company that is committed to its operations in Spain because it considers them to be essential to its industrial strategy in Europe.'

To achieve its aims, in 2006 Nissan plans to transfer production from its engine factory in Madrid to the plants in Barcelona. It wishes to introduce a new strategy, which consists of increasing production from the 100,000 vehicles manufactured in 2003 to 150,000 in 2007, with a 31% reduction in production costs. The formula devised to carry out this strategy consisted of the proposed four-year agreement freezing pay and employment levels. Consequently, the real pay of the workforce would fall and the hours of work and rhythm of production would increase. Otherwise, according to management, there would be a surplus workforce of 600 in 2006 and 900 in 2007. To justify its proposals, Nissan argued that the pay of its workers is 15%-20% higher than in the rest of the Spanish motor manufacturing sector (which appeared to imply that a large part of the reduction in costs would fall on pay) and that they work shorter hours.

Workers' committee response

Nissan experienced a major dispute over the conclusion of its collective agreement for 2002-3 (ES0304204F). This agreement provided for a 'dual wage scale' (doble escala salarial), whereby newly recruited workers received less pay than those workers already employed in the same category, indefinitely and without any compensatory measures in terms of the creation of new jobs or the conversion of temporary contracts into open-ended ones. The agreement was signed by the General Workers’ Union (Unión General de Trabajadores, UGT) and the Independent Trade Union of the Nissan Group of Companies (Sindicato Independiente del Grupo de Empresas Nissan), which had a majority on the Nissan workers' committee. It was not signed by the Trade Union Confederation of Workers’ Commissions (Comisiones Obreras, CC.OO) and the General Confederation of Labour (Confederación General del Trabajo, CGT). CC.OO brought a court case over the agreement and in February 2003, the High Court of Catalonia (Tribunal Superior de Justicia de Catalunya) declared the double pay scale invalid. It therefore did not come into force, though the Supreme Court (Tribunal Supremo) annulled the High Court ruling to a technicality in February 2004.

The workers’ committee has since refound its unity, and responded negatively to the management's radical proposal for a new agreement in spring 2004. It stated that the company's argument that pay is high at Nissan was incorrect, because average pay is seriously distorted by a pay structure with many managers, technicians and executives, and the picture would change totally if the blue-collar workers at Nissan were compared with similar workers in the sector. The committee also stated that, though working time at Nissan is shorter, the rhythm of work is far higher than the sector average.

The workers' committee instead made a 'traditional' proposal for a new collective agreement that bore no relation to the plans of the company. It proposed a two-year agreement, with pay rises in line with increases in the retail prices index- with provision for a 2% revision to account for differences between the predicted and actual RPI - and a working time reduction of eight hours per year. The committee's initial response to the plans of Nissan was therefore arguably defensive. It questioned the claim that productivity is low and the way that productivity is calculated by the company, and demanded figures to allow a comparison with other companies and other countries. The tension rose and the negotiations broke down.

In April 2004, the dispute escalated. Nissan presented a redundancy procedure involving 160 job losses, to which the workforce responded with a 24-hour strike on 20 April and a demonstration on 24 April. The company presented another procedure involving the 688 redundancies, which led to a major controversy. Trade unions and left-wing political parties saw the redundancy plans as blackmail aimed at making the workers accept the agreement.

There is currently a great deal of industrial conflict in a number of regions of Spain, above all in Catalonia, due to the relocation strategies of many multinationals (ES0402205F). The Nissan case was arguably an example of this, with the management's proposal seen almost as an 'internal relocation'- ie instead of taking its investment abroad in search of lower labour costs (which is difficult given the type of vehicles that it produces in Spain, mainly off-road), it was attempting to achieve lower costs within its current factories.

The workers' committee subsequently stated that it was willing to accept more flexible working time and increases in the rhythm of production that would effectively increase productivity. The parties resumed negotiations.

New agreement for 2004-7

A new company collective agreement was reached on 27 May 2004. Nissan withdrew the two redundancy procedures and the proposal for a pay freeze, and accepted wage increases in line with to the RPI, with provisions for revision. In exchange, the workers’ committee accepted a dual wage scale, but a temporary one whereby new workers will initially receive 75% of the normal pay rate, rising gradually to 100% over five years. This is a formula that the trade unions have accepted in other cases, because it involves new recruitment and the new workers receive less pay for only a limited period. The committee also accepted an increase in working time of 27 minutes per day, which will be achieved by a reduction in the snack break and rest time.

In terms of working time flexibility, it has been agreed that 10 Saturdays may be worked per year, which will be paid as overtime or compensated by days off. In addition to the dual wage scale, costs will be reduced by 'rejuvenation' of the workforce through pre-retirement, which also means new recruitment. Finally, the workers' committee agreed that the agreement will have a duration of four years.

Commentary

Nissan is one of the largest companies in Spain, so the first proposals from management, its threats of redundancies and the tension of the first few months of bargaining were viewed with concern by trade unions, the government and public opinion. The signing of the agreement in May 2004 was therefore a cause for satisfaction. However, as Nissan is such a large company, it is important to make a careful assessment of what has happened because it may serve as an example for other companies.

The threats of job losses had a highly dissuasive effect on the workers' committee and on the workforce. In recent years the public authorities have been unable to prevent redundancies in companies in which they have not been economically justified. Also, the possibility of obtaining the solidarity of the sector and of the general public in response to unfair redundancies is more remote than in the past, so the workers of Nissan felt that they were facing the threat alone. In these circumstances, it was arguably difficult for them to resist.

The new dual wage scale at Nissan, which is applicable only to blue-collar workers, is a complex factor. The workforce have avoided a pay freeze, but in exchange for accepting lower initial wages for newly recruited workers. This may be justified by a long period of apprenticeship. The company has already started to take advantage of the dual scale. Only a few days after signing the agreement it announced the recruitment of 500 temporary workers in the next few years, apparently having 'forgotten' its earlier arguments that there was a surplus workforce. However, as pre-retirement will be used to 'rejuvenate the workforce', part of the cost will be borne by social security, ie by public money. The previous conservative government stated on several occasions that pre-retirement should be avoided unless it is paid for entirely by the company (ES0204206F). The new Socialist Party (Partido Socialista Obrero Español, PSOE) government that came to office in April 2004 has informally expressed its agreement with this view, but has so far taken no steps in this area.

To summarise, the Nissan agreement has been signed and the workers have avoided the worst, but in exchange for a considerable intensification of working time. When agreements are achieved through threats they do not tend to be lasting, because the mutual confidence of the parties has been broken. (Fausto Miguélez, QUIT)