French and German unions respond to Hoechst/Rhône-Poulenc merger

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In December 1998, the German Hoechst and the French Rhône-Poulenc began a merger process which should lead to the creation of the world's second-largest pharmaceuticals group, under the banner of "Aventis". Both French and German trade unions have expressed their concerns about the possibility of job losses in both companies, and unions from the two countries took the innovative step of issuing a joint declaration to all employees concerned.

On 1 December 1998, the German pharmaceuticals and chemicals group Hoechst and the French pharmaceuticals group Rhône-Poulenc began a merger process which should lead to the creation of the world's second largest pharmaceuticals group. The two companies will firstly take an equal stake in the creation of a joint company (headquartered in Strasbourg, France) called "Aventis," which will bring the "life-science" operations of both companies - ie pharmaceuticals, plant and animal health - under one umbrella.

At a joint press conference in Strasbourg on 1 December, the chair of Rhône-Poulenc, Jean-René Fourtou, and the chair of the executive council of Hoechst, Jürgen Dormann, explained that: "We want to build an entirely new company with a European corporate culture and global ambitions, which will be able to take full advantage of the outstanding possibilities in the area of life sciences in the 21st century."

Following a transition period which should end in mid-1999, Hoechst and Rhône-Poulenc will conclude their merger over "the subsequent three or four years," during which time each company will sell off its chemicals operations - Rhodia for the French group and Celanese and Ticona for the German group.

A 1997 turnover of USD 20 billion and a workforce of 95,000 will make Aventis the second-largest pharmaceuticals group in the world after the US company Merck. It will also be number two after the Swiss company Novartis in the area of life sciences. The new company will also have "one of the largest research and development budgets - approximately USD 3 billion - in the pharmaceuticals industry." The two groups hope that over the next three years, the merger will bring savings of USD 1.2 billion - divided 60-40 between the pharmaceuticals and agrochemicals sectors respectively.

During the transition period, the management structures of Aventis and its two parent companies Aventis Rhône-Poulenc and Aventis Hoechst will be harmonised in preparation for the merger. The current managers will retain the top jobs. Mr Dormann and Mr Fourtou will occupy the positions of chair and deputy-chair of the executive council respectively, while the former chair of Société Générale, Marc Viénot will become chair of the supervisory board.

The merger announced on 1 December will be put before the respective Rhône-Poulenc and Hoechst general meetings, to be held in mid-1999 after the legal procedures have been fulfilled and the approval of the various authorities concerned have been obtained.

The reaction of the French unions

Trade unions representing the groups' employees are concerned about the social and employment implications of this Franco-German merger. The lack of official figures for resulting job losses and plant closures has given them cause for concern. The unions fear that in France, between 3,000 and 4,000 of the combined workforce of 35,000 could be axed at both Rhône-Poulenc and Hoechst (which already has a strong presence in France in the form of the former Roussel-Uclaf company).

The French trade union reaction was characterised by a failure to respond jointly, with each individual union giving its own analysis. The largest union at Rhône-Poulenc, CGT- with approximately 35% of the votes in workplace elections - stated that it would "do its utmost" to scuttle the merger. The union says that the merger "is tantamount to an attempt by Hoechst to seize control of Rhône-Poulenc's pharmaceuticals and agrochemicals sectors" and is therefore "a disguised takeover bid". Georges Hervo, general secretary of CGT's National Federation of Chemical Industries (Fédération nationale des industries chimiques) stated that "the takeover of the number-one French pharmaceutical company raises the question of our national independence in the health sector."

A joint Franco-German reaction

The merger gave rise to a first-ever joint declaration between the Chemical and Energy Federation (Fédération Chimie Energie, FCE) affiliated to the French CFDT union confederation - which won 30% of the votes at the last Rhône-Poulenc workplace elections - and the German Mining, Chemical and Energy Workers' Union, (Industriegewerkschaft Bergbau, Chemie, Energie, IG BCE).

In a joint statement on 2 December 1998, both unions "acknowledged" the decision made by the two companies to begin the merger process. However, the unions expressed concern about perceived "research and development and management-quality problems experienced by both companies". They further stated that, in their opinion, "two weaknesses do not make one strength, no more so than trying to achieve economies of scale is enough to determine industrial strategy."

Both unions stated that "both workers and their representatives were excluded from a choice that decides their future. This lack emphasises once again the urgent need for the European Union to define the rights and obligations of European companies in terms of informing employees."

In the opinion of IG BCE and FCE CFDT, "the success of the merger will depend to a large extent on its ability to motivate and involve the men and women employed in the firm." The two unions have set themselves the following goals:

• to reject redundancies and any deterioration of working conditions;

• to upgrade equipment and staff in production, research, development and sales; and

• to maintain the co-determination system for the new company's German workers and to improve the industrial relations arrangements for French workers in this direction.

This declaration was distributed in both French and German (one side of the document in German and the other in French) in all of the two companies' plants on both sides of the Rhine.

Commentary

The heads of Rhône-Poulenc and Hoechst presented their merger as the creation of a " truly European company." For their part, two unions - one French, the other German - decided to react very swiftly (the day after the merger announcement) in issuing a joint declaration (an approach that the five French unions failed to adopt).

However, this cannot be seen as a "European" trade union reaction. It should be noted that theEuropean Mine, Chemical and Energy Workers' Federation (EMCEF) did not instigate this joint stand. Undoubtedly, it would have been too complicated to bring all three French unions which are members of EMCEF (CFDT, CFTC and CGT-FO) together with IG BCE, because of the divisions that exist among French unions. What is more, CGT is still not a member of the European Trade Union Confederation (ETUC). CFDT and IG BCE felt the urgency of the situation and decided to act jointly.

However, the joint declaration has a certain importance, in both its form and its content, in that it:

• demonstrates to workers in the two companies in France and in Germany that both unions - separated by language and union culture - share a common viewpoint and that transnational action, at a level close to the workers, is possible; and

• illustrates the fact that the creation of a "European group" can have an impact on industrial relation systems. With this in mind, it is noteworthy that CFDT, which has always been opposed to co-determination, now wants to "improve" the "industrial relations arrangements for French workers" in this direction.

(Alexandre Bilous, IRES)