Siemens Vdo Automotive, Italy: Towards a balanced flexibility
On 27 January 2005, Siemens Vdo Automotive (part of the German electronics multinational) and its workplace trade unions signed an agreement concerning continuous-cycle production across three-eight hour shifts. The agreement was accompanied by a reduction in the total weekly working time, the recruitment of 16 employees on open-ended contracts, and a gross monthly pay rise.
Siemens VDO Automotive, a leading international supplier of automotive electronics, has a workforce of about 43,900 employees. In Italy, Siemens VDO Automotive SpA. in Italy has its head office and two working plants in Pisa and a trading office at Turin. The two plants, which manufacture fuel injectors, are regarded as one productive unit; they employ 798 employees (of whom 225 are women). On average, the workers are 35 years old and almost 50% are graduates. The workplace employee representation body (Rappresentanza Sindale Unitaria, RSU), is made up of nine representatives, of whom three are women. Eight representatives belong to the Italian Federation of Blue-Collar Metalworkers (Federazione Italiana Operai Metalmeccanici (Fiom-Cgil), and one to the Italian Federation of Metalworkers (Federazione Italiana Metalmeccanici, Fim-Cisl). Each plant has its own union coordinator who interacts with the management. Union density is about 50%. Siemens VDO Automotive SpA is a member of the Employers’Association of Pisa (Unione Industriale Pisana), associated to Confindustria (the main employers’organisation).
The automotive sector and its suppliers have recently overcome a crisis resulting from international competition. Other firms belonging to the Siemens group and located in Italy (such as Osram of Treviso), have responded to the crisis their own way: faced with the threat of production relocating to Slovakia, and having a promise made to them that employment would be maintained, the workers settled for a wage cut.
Description of the initiative
On 27 January 2005, a company agreement was signed between, on one side, Siemens Vdo Automotive SpA and the Employers’ Association of Pisa, and on the other, the RSU and the three metalworkers’ trade union federations – FIOM-Cgil, FIM-Cisl and and the Italian Metalworkers' Union (Unione Italiana Lavoratori Metalmeccanici, Uilm-Uil). The agreement establishes a continuous production cycle across three eight-hour shifts, with a 30-minute canteen break. In return, it establishes a reduction in the total weekly working hours, the recruitment of employees on open-ended contracts, and a consistent gross rise in monthly pay. The shift schedule is structured around five alternating teams, and the working week decreases from 35 hours to 32 hours. The fifth team is made up of volunteers from other assembly lines. In addition, the agreement offers three additional training days for the employees.
Prior to the agreement being settled, talks took place between the company, the trade unions and the employees. The proposal to work on a continuous cycle came from the company, which saw it as a way to use production capacity more efficiently: the interruption in the production for the weekly rest day led to inefficiency in restarting the machines. At first, the trade unions and the employees, especially those employees with families, were strongly opposed to the idea of working at weekends. However, they came to feel that in times of sectoral economic difficulties, the agreement proposed by the management prevented the relocation of the company to other countries where labour is cheaper. Nevertheless, the company did not use the option of moving production out of Italy as a threat to force an agreement. To discuss the company proposal, three assemblies were held between all the employees and the RSU (from October 2004 until January 2005), and five meetings between the RSU and the management. At the final assembly between the employees and the RSU, the majority of the workers (73%) voted in favour of the agreement.
The concessions were made in exchange for a number of advantages for the employees: considerable wage increases, reduced weekly working hours and the assurance of new recruitment with an increase in the number of alternating (from four to five). The shift schedule is linked to a gross monthly pay rise of EUR 250 (to be reviewed every two years). This means that employees working a continuous cycle work fewer hours but earn more than those not working a continuous cycle. In order to cope with the production increases, the agreement provides for the hiring of 16 new workers.
Three different proposals were made to settle the type of work-shift rotation: one from the management, one from the RSU and one from the employees; the employee proposal was voted in by secret ballot. The shifts rotate on a 10-day cycle.
The rotation of the shifts is as following (a cycle of 10 days):
- Day 1: morning (06:00–14:00)
- Day 2: afternoon (14:00–22:00)
- Day 3: day off
- Day 4: morning
- Day 5: afternoon
- Day 6: night (22:00–06:00)
- Day 7: night
- Day 8: day off
- Day 9: day off
- Day 10: day off
On the 11th day, the cycle repeats. The fact that the workers always have 3 days off in a row (days eight, nine and 10) is a great advantage. The assessment, or monitoring, of the agreement takes place on two levels: in the workplace, there is daily contact between the employees and the RSU at the workplace; between the RSU and management, the assessment takes place after three months. After the first three months, it was deemed a well-functioning system: three assembly lines work on a continuous cycle (under the initial agreement, just one plant would be working on a continuous cycle), the employees work in the shifts that they proposed, and – as agreed – 16 new employees have been hired.
The agreement concerning the production in a continuous cycle across three eight-hour shifts is accompanied by a reduction of total weekly working time, the recruitment of 16 employees on open-ended contracts, a substantial gross rise in monthly pay, and additional training days. The agreement represents a win–win situation and an innovative approach in the context of industrial relations in Italy, because it runs counter to the increasing tendency to relocate production in countries where labour is cheaper. Indeed, the now continuous productivity boosts the company’s competitiveness, enabling it to remain in Italy. Moreover, employees are also very satisfied, especially with the rotation of the work shifts that allow them to have more time off.
Currently, 170 employees are working on continuous cycle assembly lines (of whom 50 women). The company started with just one continuous cycle assembly line. Currently, three assembly lines are producing on continuous cycle, depending on product demand. Prior to the implementation of the continuous cycle system, the scheme had attracted a lot of criticism; however, once the system was instituted, employees were satisfied with the results. In one case, where a worker had major difficulties, the company moved the worker to another assembly line.
The agreement is the result of a number of negotiations between the employees, the trade unions and the management. Together, they have managed to reach a solution that benefits both employers and employees.
Exemplary and contextual factors
The continuous-cycle production has been established by means of a negotiated company-level agreement. The benefits for the company (gains in productivity) and the benefits for the employees (a reduction in the weekly working time, with an increase in wages) have reconciled the needs of both parties, representing an exemplary case of balanced flexibility.
Maite Tapia, Volker Telljohan, Fondazione Istituto per il Lavoro, Bologna