The closure of Renault-Vilvoorde
The closure of the Renault assembly plant in Vilvoorde in Belgium came unexpectedly and has sparked reactions from all segments of Belgian life, as well as numerous international responses. The consensus is that the decision was announced inappropriately and demonstrates what has been called "the unacceptable face of capitalism".
An unusual closure procedure
On Thursday 27 February 1997 Renault announced - completely unexpectedly - the closure of its Belgian production plant in Vilvoorde by July of this year. As a result, more than 3,000 Renault employees and an estimated 1,500 employees in direct supply companies will lose their jobs. There is a general consensus that the decision ignored all legal rules and procedures concerning factory closures. This includes ILO and OECD procedures as well as national codes of conduct, and European Union and national legislation on collective redundancies and works council rights. These regulations lay down that employees have to be notified before a decision about a factory closure is made and informed about the ways in which the company plans to deal with the consequences for the employees.
General disapproval of the decision is based largely on the manner in which Louis Schweitzer, the French chief executive officer, made the news public: the closure was announced at the same time both to the works council of Renault Vilvoorde and at a press conference in a hotel in Brussels. It seems that announcing the closure in such an abrupt way sent a clear message that it was irrevocable, a fact that Mr Schweitzer has repeatedly confirmed. Its irreversibility was apparently further confirmed in contacts between the Belgian Government and Renault's top French management. The press conference also sent a signal to the stock markets. The Paris stock market reacted almost euphorically: Renault shares gained 13% in one day.
Immediately after the announcement, the 3,100 Renault-Vilvoorde employees launched a series of campaigns. They occupied the production plant and took control over the stock of finished cars as a sort of collateral. Their key aim was to reverse the plant closure; there was, for the time being, no willingness to negotiate accompanying measures to alleviate its social consequences.
A wave of reactions
The closure of Renault-Vilvoorde caused a wave of reactions from all segments of Belgian society.
Reactions from the political world
The Belgian and Flemish governments strongly condemned the closure and the style - or lack - of communication. There have been emergency talks with Mr Schweitzer in protest against the way in which it was announced, and also to propose alternative solutions. Belgian Prime Minister Jean-Luc Dehaene even visited Paris to talk to the French Government, which is the largest shareholder in Renault (47%). Moreover, the Flemish and Belgian Governments have decided to take legal action against Renault. The Belgian Minister of Economic Affairs, Elio di Rupo, has filed a complaint with the OECD for breach of the organisation's code of conduct on multinational corporations, while it is believed that the closure also violates the EC Directives on collective redundancies and on European Works Councils. A heated debate in the Flemish Parliament ensued. After a rather ideological debate, a joint resolution, condemning the closure, was passed.
Reactions from the employers
Belgian employers and their organisations VBO (Federation of Belgian Enterprises) and VEV (Flemish Federation of Enterprises) also reacted with dismay against the closure. Their reactions focused on the manner in which it was announced. According to the employers it completely lacked social responsibility, infringed all codes of conduct and constituted a decision made without any corporate ethic. At the same time, however, the employers understand the inevitability of economic logic in management decisions.
Pressure for (international) union solidarity
A rarely-witnessed international solidarity has emerged following the factory closure. Work stoppages were organised not only in other Belgian car assembly plants, but also Renault plants in France and Spain. A combined demonstration of French and Belgian unions took place in France and several rallies involving Belgian and French employees took place. This type of international solidarity is not common nowadays. Companies such as Renault use comparisons between their different production centres to exert pressure on those plants in the group that do not meet required standards. Judging from reactions, however, it seems that employees across the various plants well understand that they themselves might be the next victims of restructuring. The Renault European Works Council, one of the first to be set up, sharply condemned the closure. The European Trade Union Confederation (ETUC) and theEuropean Metalworkers' Federation (EMF) called on the EU to take action.
In Belgium, the closure also fed the flames of the debate enveloping the Government's employment policy, regarded by critics as ineffective and fading. This became very clear during the large national demonstration for employment organised by the ACV/CSC (Confederation of Christian Trade Unions) and the ABVV/FGTB (Belgian General Federation of Labour), the two largest union confederations, on 15 March. This march had been originally planned for the end of May. The Renault closure moved the march to the top of the agenda and mobilised an estimated 50,000 people. The different organising groups stressed issues such as reduction of working hours, redistribution of employment, reducing the fiscal pressure on labour, and economic growth.
Other acts of solidarity
Further acts of solidarity also were expressed by Renault car dealers and sales people. In addition, Government agencies and a number of cities and companies cancelled fleet orders. Vande Lanotte, Minister of the Interior, cancelled an order of 150 Renault Meganes for the National Guard, whilst Brasschaat, Bruges, Liege and Namur announced that they would not include Renault in future tenders for fleet orders. Companies like Electrabel, Egemin and the Flemish Automobile Association (VAB) have decided not to replace older vehicles with Renaults. Even individual citizens are driving their cars decorated with signs stating "This is my last Renault". This type of action may have little financial effect given that Belgium is a small market, but they are an indicator of the unexpectedly strong reaction of citizens. Finally, even the Belgian and French Conference of Bishops has officially stated that it is a sign of elementary respect for humans to inform and involve employees in decisions which have such an impact on their lives.
Assembly, a Belgian speciality
Belgium has a long-standing tradition in car assembly. Besides Renault, other companies have important assembly lines in Belgium including Ford, Volvo, General Motors, Volkswagen and in earlier days Citroën andBritish Leyland as well. Their corporate headquarters and decision-making centres, however, are not located in Belgium. Indeed, although recent developments in the car assembly sector have promoted specialisation and more decentralised decision making, key strategic decisions remain the prerogative of central, and hence foreign, centres.
A serious problem in the automobile sector is the current overcapacity in Europe. According to estimates, only 80% of productive capacity is currently being used. The closure could therefore herald far-reaching rationalisation and restructuring in the sector as a whole. Observers expect this in the near future, but definitively in 2000 when the European market will abolish its import quotas for non-European cars, which can only sharpen competition. The problem of overcapacity also jeopardises the chances that the plant may be taken over, as suggested by Renault. Although there was talk of such a move by Korean car manufacturers in need of extra production capacity, no such candidates have actually come forward.
Sharp condemnation by Belgian and Flemish officials has only limited scope in bringing legal pressure to bear on Renault policy. They have to admit that there is a lack of legal instruments to reverse the closure. One possibility is to prosecute Renault top management for non-compliance with legal procedures and codes of conduct. This could possibly result in a BEF 20 million fine, a rather small sum compared with the BEF 17 billion budgeted by Renault to deal with the financial and social consequences of the closure. According to the unions, closing a factory in Belgium is fairly easy from a legal point of view. This could have been a reason to choose the Renault plant for closure instead of a plant elsewhere. Procedures are more complicated and fines much higher in France.
The European character of the reactions to the closure could have further far-reaching consequences. Social unrest in other parts of the Renault concern and even in other companies is one such. Employees in other European car assembly plants now realise more keenly what their own fate might be. Collective agreements on productivity and flexibility do not guarantee employment security. The unions had accepted extensive compromises on those issues at the Renault Vilvoorde plant, which have, however, apparently proved to be useless. This could have consequences for similar labour negotiations in other companies.
More citizens now realise that a United Europe also needs a strong social dimension. Public debate on this issue has been more than ever given an edge by the Renault case. This might present a major challenge to the EU, which has largely ignored the social consequences of a single economic market. And finally, there are the numerous public condemnations of the Renault decision which cast a slur on Renault's public image even though a positive commercial image is crucial for a company. It remains to be seen whether those who decided on the closure have taken all of these consequences into account. (Hans Bruyninckx, Steunpunt WAV)
For further details of French reactions to the Vilvoorde closure, see Record FR9703122F, and for further information on the overall EU implications, see Record EU9703108F.
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