Michelin Italy S.p.a., Italy: Retirement policy, redeployment
The Michelin factory in Trento is a local subsidiary of the leading French and multinational tyre manufacturer. It operates in the areas of steel threading, wire drawing and textile twisting, making semi-manufactured goods for producing tyres, on contract to the parent company. Since its foundation in 1927, Michelin Italy has always had a sizeable workforce, often more than 500 employees.
Since the 1990s, the company suffered a series of setbacks because the parent company relocated production to economically more favourable areas. The first, in 1991, involved the closure of an entire production line and the redundancy of around 50% (247 employees) of the workforce. The second, in the second half of the 1990s, involved the complete closure of the steel wire drawing sector and the transfer of the remaining steel thread production to a more modern factory. The third and final setback, at the end of 2004, was the parent company’s decision to terminate the factory’s productive activity on 1 July 2005 and to leave the industrial site altogether by 31 December 2005.
Currently, the company has 85 employees, 45 women and 40 men. Of these 68 are aged over 40 years and 33 are aged over 55 years. The social dialogue appears to be favourable, thanks to a human resource policy that is attuned to employees’ needs.
The original initiative
In 1991, the company introduced an initiative to redeploy its older employees, offering them opportunities for alternative employment. The aim was to reduce its workforce without disrupting the working environment or negatively affecting its corporate image.
The initiative was based on a social plan designed to redeploy, at company expense, redundant workers. The plan paid special attention to older workers, who would face difficulties in finding new jobs. The plan developed from supporting workers by means of training, information, orientation and counselling, to giving local companies economic incentives to hire redundant Michelin workers indefinitely or until they had fulfilled the work requirements for receiving their pension plan benefits.
The plan, periodically updated, has continued since then because of the repeated closures and redundancies. The initiative has allowed:
- many workers (385) to find other jobs;
- many workers aged over 55 years (120) to meet their pension plan requirements;
- the company to continue its activities in an internally favourable environment, while safeguarding its external image. This complies with the company’s own objective: ‘To be a company that is harmoniously integrated in society, fully accepting our responsibilities in the exercise of our values.’
Good practice today
The company’s human resource policies have always been based on its support of, and loyalty to, its employees. One of the company’s declared values is, ‘Seek growth and the satisfaction of men and women in the exercise of their responsibilities. Favour the development of diversity and the wealth of the company’s human resources.’ The initiative reflects this principle and it was introduced to safeguard occupational conditions and to protect redundant workers’ incomes, without age- or sex-related discrimination.
The initiative was revived in November 2004, when the parent company decided to shut down production and buy its components in lower-cost foreign markets. On 29 November 2004, the company and the works council representatives signed an agreement in the presence of the local labour unions and industrial associations, which adopted a new social plan to redeploy the remaining 85 workers.
The new social plan was designed to:
- ease the social consequences of ending the working relationship with Michelin;
- facilitate the employees’ transition to new duties or to other branches of the Michelin group if there was a match between need and skills;
- facilitate employees’ entry into other companies, by training in new skills, if needed;
- facilitate the satisfying of pension plan requirements in the case of older workers;
- encourage and facilitate freelance work initiatives.
In addition to the normal welfare programmes, the social plan included:
- facilitated transfer to other Michelin companies with paid transfer and moving costs and support in finding new accommodation;
- specialised support, counselling and technical assistance in finding work either as an employee or freelance worker;
- options chosen, for example, company employee or freelance;
- time of leaving the company – larger amounts for those leaving early;
- missing pension plan requirements – greater financial support for those near retirement because reintegration into other activities is more difficult;
- loans (for three years at zero interest, requiring no financial guarantee or security and no processing fees) of €7,000 for every new job created and €4,000 for every ex-Michelin employee hired as a replacement worker;
- transformation of the loans into outright grants (up to 75% of the disbursed sum) if the employment becomes full time for an indefinite period or until pension plan requirements are met.
Despite the understandable and widespread displeasure at Michelin’s decision to close the Trento factory, the social plan, which is supported financially and logistically solely by the company, enables it to:
- communicate the conviction to the workforce that the closure is tied to market and business factors, and does not result from the company’s lack of will or effort;
- ease the social impact of terminating business in the region, in effect ending a century of historical, economic and social ties, without compromising the positive image created in that time;
- comply with the five fundamental values of its mission, especially point 3, ‘Seek growth and satisfy the men and women in the exercise of their responsibilities’, and point 5, ‘Be a company harmoniously integrated with society.’
At the beginning of August 2005, the social plan was still in effect, having redeployed as many as 71 of the 85 workers. Most found jobs as specialised workers in the region’s small manufacturing companies and some went into the service industry. Some 14 women remained unemployed.
These results show that planning can, even in difficult circumstances, result in concrete strategies to employ older workers.
References: Lorenzo Paruzza, plant manager (email@example.com) and Flavio Postal, HR manager.
Representing the workers: Five workers selected among those still present at the factory, Milena Demozzi of trade union Fiom Cgil and Ann Damiano of trade union, Fim Cisl.