Disputes at Electrolux and Candy over relocation plans

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In late December 2005 and early January 2006, disputes came to a head at two of the largest groups manufacturing domestic appliances in Italy - Electrolux and Candy. In both cases, the cause of the grievance among workers and trade unions was the management’s decision to relocate production of some plants abroad, with consequent job losses. The plants affected by the decision were those at Donara in the province of Bergamo for the Candy Group, while for Electrolux the plants were those at Porcia (Pordenone) in Friuli Venezia Giulia and Scandicci, close to Florence. However, the outcomes of the disputes were entirely different. In the case of the Donara plant, the protest by the workforce against Candy’s decision did not prevent the plant’s closure; in the case of the Electrolux plants, joint action by the unions and the local authorities led to agreements with Electrolux on relaunching the Porcia plant and avoiding the closure of the one at Scandicci.

The disputes at Electrolux and Candy are only the most recent in a long line involving Italian and foreign firms operating in the manufacturing sector - in particular, those producing domestic appliances (IT0501206F). The latter is a sub-sector especially vulnerable to international competition, in response to which numerous Italian companies have decided to relocate production to countries that have lower labour costs and that represent new markets for their products.

In Italy, the Candy and Electrolux groups dominate the domestic appliance market. Candy is a long-established group of appliance manufacturers, established in 1945 just outside Milan and with deep roots in Lombardy. Today, it is a multinational with more than 5,000 employees: 2,000 in Italy, and 3,000 at plants in the Czech Republic, the United Kingdom, France, Russia and Spain. Besides investing in the refrigerator sector, the group has extended its production range by opening plants in eastern Europe for the manufacture of washing machines and cookers. Swedish multinational Electrolux is one of the world’s largest manufacturers of domestic appliances. The group, which had taken over Zanussi in 1984, further expanded in 2003 by acquiring Italy’s other traditional brand, Rex. Electrolux has just over 74,000 workers worldwide, with 9,000 employed at its plants in central and northern Italy (in Lombardy, Veneto, Friuli Venezia Giulia, and Tuscany).

Candy’s planned closure of the Donara plant

On 22 November 2005 the management of the Candy group announced the closure of its plant at Donora di Cortenuova, in the province of Bergamo, with the consequent laying-off of the entire workforce of 380 employees. Candy’s justification for its decision was the difficult situation of the refrigerator market and the lower operating costs at the company’s twin plant of Podborany, in the Czech Republic. All production will be transferred to Podborany, which will be upgraded to a productive capacity of around 700,000 items a year and will become the group’s only plant in the refrigeration sector. According to Candy, the decision will be implemented by summer 2006, when the plant’s 380 employees will be placed on mobility lists (the procedure has not yet been defined in detail).

The trade unions obviously reacted with hostility to the decision, insisting that a solution must be found to retain refrigerator production in Italy. To strengthen their hand, the Italian Federation of Blue-Collar Metalworkers (Federazione Italiana Operai Metalmeccanici, FIOM-CGIL), the Italian Federation of Metalworkers (Federazione Italiana Metalmeccanici, FIM-CISL) and the Italian Metalworkers’ Union (Unione Italiana Lavoratori Metalmeccanici, UILM-UIL) organised a campaign of industrial action. The campaign began with the picketing of the plant to prevent the shipment of finished products; it concluded on 21 December 2005 with a demonstration outside the headquarters of the Lombardy Regional Government, which was asked to moderate negotiations with the company.

The dispute now seems to be worsening. The company has taken legal action against the workers and trade union representatives blockading the plant, and it has ruled out any form of negotiation until the pickets at the factory gates have been removed.

Electrolux plants avoid closure and relaunch production

The dispute at Electrolux has more distant origins and it concerns several European countries. In the early months of 2005, the company management announced its decision to undertake large-scale restructuring, thereby provoking joint strike action (in July 2005) by workers in Italy and Germany. In fact, Electrolux’s restructuring plan envisages the downsizing or even closure of plants in Germany and Italy (IT0508103N).

In Italy, restructuring has involved the plant at Scandicci (close to Florence) and, to a lesser extent, the plant at Porcia (Pordenone, in Friuli Venezia Giulia). In the latter case, given the company’s announcement of 50 redundancies (for 2006), the union representatives of FIOM-CGIL, FIM-CISL and UILM-UIL have declared their willingness to discuss productive reorganisation in order to make the Porcia plant more competitive, with the introduction of a new generation of washing machines. In part due also to intervention by the local authorities, an agreement was signed in early December 2005 to boost the plant’s competitiveness through the investment of 25 million euro, to raise productivity and increase work rates. The positive outcome of the Porcia dispute in part results from the Electrolux management’s decision to close their plant in Nuremberg: one of the main beneficiaries of the decision is the Porcia factory, to which a large part of the production of washing machines, spin dryers and dishwashers will be transferred. More problematic, however, is the reorganisation of the Scandicci plant, which manufactures only refrigerators and will not benefit from any transfer of production; moreover, the dispute between the company and unions here has been much more complex. At Scandicci, the management announced 200 lay-offs and at the end of September 2005 sent out 192 redundancy letters (availability list), triggering a highly complex dispute, with the unions resisting the mobility procedure (the prelude to dismissal) and the company determined to make drastic cutbacks in personnel. The central issue was how the redundant workers should be handled - with incentives for voluntary resignations and early retirement, and the provision of vocational training and outplacement schemes.

In the end, a compromise was found by resorting to the Extraordinary Wages Guarantee Fund (Cassa Integrazione Straordinaria, CIGS). On 2 December 2005, at the headquarters of the Florence provincial administration, an agreement was reached on the Scandicci plant between the company and the representatives of FIOM-CGIL, FIM-CISL and UILM-UIL. These are the main points of the agreement:

• recourse to the CIGS for one year (as an alternative to the mobility procedure already begun by the company) from 1 January 2006 onwards and for a maximum of 170 workers, of whom 162 are blue-collar and eight are white-collar workers;

• the mobility procedure will only be accepted if combined with a pension (early retirement) and only for those workers who volunteer; they will receive an incentive of 16,000 euro. This incentive will diminish month by month to 9,000 euro for workers who go on mobility in June 2006;

• the extension of part-time work on a voluntary basis (already regulated by company-level agreements) to cover the equivalent of 10 full-time jobs;

• a scheme for outplacement to other companies, based on training and retraining courses to begin in January 2006; the local institutions (provincial and regional administrations) and the Florence Industrial Association will also be directly involved;

• product and process investments amounting to 1.65 million euro for 2006, with the start-up of two new products and the consequent redefining of the Scandicci plant’s industrial profile within the group as the producer of built-in refrigerators;

• the creation of a system for reviewing the agreement’s implementation and the plant’s industrial role, to be developed at both local and national level in 2006.

When the CIGS year has ended, negotiations will resume with all workers who have not been dealt with.

The draft agreement was approved by a workforce referendum held at Scandicci. Out of 633 employees entitled to vote and the 495 who cast ballots (equal to 78%), some 452 voted in favour of the agreement (more than 90% of voters).

The plant’s unitary workplace union structure (RSU), the local FIOM-CGIL, FIM-CISL and UILM-UIL unions of Florence, and the national FIOM-CGIL, FIM-CISL and UILM-UIL multi-plant coordinating body for Electrolux expressed 'a positive verdict on the agreement reached' and declared that they were 'committed to its complete and useful management'.

Commentary

The Candy and Electrolux disputes are part of the more general processes of relocation and industrial restructuring that have recently impacted on various plants in Europe. It seems that these processes are not the result of a loss of productivity on the part of the plants themselves, but rather of decisions taken by company management with the aim of increasing price competitiveness (by reducing production costs, especially that of labour) to acquire new markets.

Together with local and national institutions, the social partners have an important role to play in these decisions. However, they should concentrate less on impeding business choices imposed by global competition (choices that are difficult to oppose) and concentrate more on finding socially sustainable solutions for the local-level problems that such choices produce. This does not mean the role of the institutions and the unions should consist merely in proposing a system of social shock absorbers. The Electrolux case shows that it is possible to tackle even difficult situations of productive and occupational reorganisation - due, amongst other things, to corporate decisions to relocate - by gaining a company’s commitment to revitalised production.

The two cases demonstrate the need for a global approach to business strategies at national level (hence the creation of a FIOM-CGIL, FIM-CISL and UILM-UIL multi-plant coordinating body for Electrolux) and at supranational level through the development of joint strategies with unions in other European countries. (Livio Muratore, Ires Lombardia).