Restructuring of automotive industry hits suppliers

The automotive industry in Spain is experiencing a period of upheaval caused by the restructuring of multinational car manufacturers. Job losses affecting 3% of total employment in the automotive supply industry were announced between January and April 2007. Among the companies affected are Delphi Automotive Systems and GDX Automotive, both of which are closing manufacturing plants. The trade unions have secured favourable redundancy terms.

The restructuring of two major car manufacturers – Renault and SEAT – has now been followed by plant closures among car component suppliers. Overall, the adjustment plans announced in the first four months of 2007 represent a loss of 3% of total employment in the automotive supply industry, which is equivalent to the industry job losses in the entire period from 2000 to 2005.

Delphi plant closes despite public subsidies

In February 2007, Delphi Automotive Systems announced the closure of its plant in the province of Cádiz as part of a process of relocation and reorganisation of the group’s activities on a global scale. The overall restructuring plan will affect those factories that are considered non-strategic, representing a third of the total by 2008. The plant in Cádiz, based in the town of Puerto Real and employing 1,650 workers, has experienced difficulties since 2001, with financial losses resulting in three rounds of redundancy measures being taken. Nevertheless, the trade unions are demanding the fulfilment of the industrial feasibility plan, which the company signed together with the regional government and the trade unions in 2005. In signing this plan, the company agreed to maintain its operations and employment until 2010 in exchange for substantial public subsidies.

Impact of SEAT’s cost-reduction policies

In March 2007, an agreement was announced between SEAT and its supplier SAS to terminate the supply contract and award it to another company, involving the loss of 360 jobs. The SAS factory was established over 10 years ago as a result of an outsourcing process by SEAT. The closure represents a significant setback as it affects a workforce that enjoyed better working conditions than those delivered by the provincial sectoral agreement, in terms of both pay and working time. The work has been transferred to a company with considerably poorer working conditions.

Other car component companies affected by the cost reduction policies of SEAT are Copo and GDX Automotive. In May 2007, GDX announced the closure of its plant in Barcelona, with the loss of 740 jobs, only five months after the closure of the company’s other plant in the province of Tarragona. At that time, the company alleged that closing the Tarragona site was the only way to guarantee the group’s presence in Spain. The company claims that the Barcelona closure is due to financial losses and high production costs. Other sources, however, state that the company’s decision may indicate its wish to withdraw from the automotive supply business following its purchase by the same private equity group – Cerberus – which recently bought Chrysler.

Trade union protests

The trade unions have repeatedly disputed the reasons for plant closures at Delphi and GDX. They believe that both companies are highly competitive but are being abandoned due to negligent management and distant interests that often have little to do with the search for industrial viability. The closures formed part of a process of reorientation of the groups’ business activities, and relocation was not considered.

Protest action in response to the closures has led to agreements with relatively favourable redundancy conditions in terms of both compensation and relocation opportunities. However, the strikes and blockading by the workers of SAS and GDX managed to partially paralyse some of SEAT’s production lines, showing the weaknesses of the ‘just-in-time’ production model. In the case of SAS, the action taken by the trade union sections was not always supported by the regional federations of the Trade Union Confederation of Workers’ Commissions (Confederación Sindical de Comisiones Obreras, CC.OO) and the General Workers’ Confederation (Unión General de Trabajadores, UGT); this broke the unity of trade union opposition to the company’s plans. A similar pattern was observed in 2006 during the dispute at SEAT (ES0601106F).

Juan Arasanz Díaz, QUIT - University Autònoma of Barcelona (UAB)