Agreement reached at Fiat Melfi after major industrial action

Download article in original language : IT0405205FIT.DOC

During April-May 2004, industrial action by workers at the Fiat plant in Melfi, southern Italy, which also involved local suppliers, paralysed all of the car company's plants in Italy by preventing delivery of components from the Melfi factory complex. The protest was the first of significance since construction of the Melfi plant, which is considered a leading example of productivity and corporate efficiency. The industrial action divided the trade unions at Melfi, and was backed by only some of them, notably Fiom-Cgil. It led to the blockading of the factory gates by strikers to prevent the entry of workers and vehicles, and saw tension both between strikers and the police and among the workers themselves. Only after direct intervention by top management and by the general secretaries of the three main union confederations was the blockade lifted and negotiations opened. A deal was finally reached and approved by the workforce.

At the beginning of the 1990s, Fiat Auto launched its 'Melfi project'- the construction of a plant that the company has regarded since its opening as an example of excellence, in terms of work flexibility and employee participation. Innovative from the industrial point of view, and to some extent from that of industrial relations too, and closely watched by Fiat’s competitors, the production methods introduced at Melfi, in the Lucania region of southern Italy, have a number of distinctive features, such as:

  • the presence of suppliers in the immediate vicinity of the assembly line (IT9806171N);
  • 'just-in-time' production, with the consequent almost complete disappearance of stocks of parts;
  • the organisation of work on the basis of homogeneous teams of workers and technicians, called 'basic technological units' (unità tecnologica elementare, Ute);
  • the recruitment only of workers with secondary-school certificates; and
  • major investments in specific vocational training.

Moreover, the location of the plant in an economically depressed area of the country enabled Fiat management to negotiate pay levels considerably lower than those at the group’s other plants, and shift schedules permitting the use of equipment around the clock on six days a week.

These were radical innovations, initially accepted by all the parties concerned, which by exchanging job and pay flexibility for greater workforce participation enabled Fiat to achieve considerably higher levels of labour productivity. Since 1994, each of the indices of productivity and efficiency used at the factory (named Fiat Sata) has reached record levels in European terms, such as: 1,200 cars produced per day; and 8,200 high-quality jobs in the factory itself and its 22 subcontractors and outsourced firms. Today the Melfi plant has 5,000 employees and produces two models (the Punto and Lancia Ypsilon) as part of the product range on which Fiat has staked its industrial and commercial recovery (IT0212211F). Recently, however, relations between company and workers have broken down, and the Melfi plant has seen unprecedented conflict.

Beginning of the dispute

Protests by workers at the Fiat Sata plant in Melfi began on 19 April 2004, when the plant management decided to send workers on leave because strike action at the factory’s subcontractor firms had blocked supplies of the materials needed on the assembly lines. The Melfi unitary workplace union structure (rappresentanza sindacale unitaria, Rsu) (IT0309304T) regarded the management’s action as illegitimate, because sending the workers on leave meant they would probably not qualify for payment from the ordinary Wages Guarantee Fund (Cassa integrazione guadagni, Cig) (IT0311306T). At an assembly called by the Rsu, the workers unanimously approved a document censuring the company and decided to go out on strike for an indefinite period, and to blockade the factory complex. This marked the beginning of three weeks of severe conflict.

There were three main issues at dispute:

  • the organisation of night work. The shift system is organised so that six consecutive days are worked for two weeks, and then three days in the third week. The Rsu asked for abolition of the so-called 'two-stroke' (doppia battuta) element of this system, consisting of night shifts for two consecutive weeks;
  • revision of pay scales. The Melfi workers contested the wage differential between the Melfi plant and Fiat’s other plants in Italy. The last supplementary company-level agreement dates back to 1996 and the employees at Fiat Sata have never benefited from internal agreements reached prior to construction of the Melfi plant. The consequence is that at Melfi Saturday work is not considered to be overtime and the wage increment for night shifts is as fixed by the national-level agreement for metalworking - ie 45%, compared with the 60.5% increment received by workers at the Fiat plants in Turin and Termini Imerese. According to the trade unions, a 'third-level' worker at Melfi thus earns around EUR 1,500 less per year than any other equivalent worker in the Fiat group; and
  • the intensity of work. The organisation of work at Melfi is based on a system measuring the time required to execute job tasks (so-called 'Tmc2', or 'connected movement times'), which by accelerating work times has increased the workload per person by around 20%. Over time, it is claimed, this system has caused working conditions and in-house industrial relations to deteriorate - as evidenced by the large number of disciplinary measures applied to workers in recent years (around 9,000 in the past three years, with an average of around 10 a day).

The industrial action brought production to an immediate halt, with sit-ins at the factory gates that blocked all incoming and outgoing traffic. However, the protest was not promoted by all the trade unions. It was led and organised by a coordination committee made of Rsu representatives from: the Italian Federation of Metalworkers (Federazione impiegati operai metallurgici, Fiom) affiliated to the General Confederation of Italian Workers (Confederazione generale italiana del lavoro, Cgil); the Intersectoral Union of Self-Organised Workers (Sindacato lavoratori autorganizzati intercategoriale, Slai-Cobas); and the metalworking union federations affiliated to the Italian Confederation of Autonomous Workers’ Unions (Confederazione italiana sindacati autonomi lavoratori, Cisal) and the General Workers’ Union (Unione generale del lavoro, Ugl). On the other hand, the Italian Metal-Mechanical Federation (Federazione italiana metalmeccanici, Fim) affiliated to Italian Confederation of Workers' Unions (Confederazione italiana sindacati lavoratori, Cisl), the Union of Italian Metal-Mechanical Workers (Unione italiana lavoratori metalmeccanici, Uilm) affiliated to the Union of Italian Workers (Unione italiana del lavoro, Uil), and the Italian Federation of Metalworking and Connected Sectors’ Unions (Federazione italiana sindacati metalmeccanici e industrie collegate, Fismic), although they endorsed the reasons for the protest, did not agree with the methods used. There thus again arose at company level the division in the union ranks that in the past year has characterised industrial relations in the Italian metalworking sector (IT0305204F).

Tension and negotiations

After a week of protests, Fim-Cisl, Uilm-Uil and Fismic attempted to unblock the situation by signing a preliminary agreement with Fiat Auto which established a schedule of meetings to resolve the dispute, on condition that the blockades at the factory gates be removed. However, this condition was rejected by Fiom-Cgil, Cobas, Failms-Cisal and Ugl, with the consequence that the preliminary agreement was annulled and conflict ensued among the trade union representatives and among the workers themselves. The climate of tension culminated during the eighth day of protest, when the police, on the orders of the Ministry of the Interior, charged the strikers' blockades, in order 'to restore access to the plant and remove the blockades, reinstating the rule of law and guaranteeing the right to work of employees who have not joined the protest'- in the words of the vice-police chief of Rieti, Manalia Di Ruocco, who was responsible for coordinating the police operation. The use of force led to around 20 injuries among strikers and police offices, but the blockades remained in place.

As the days passed, the blockade of the Fiat Sata plant also had serious repercussions for the Fiat group’s plants elsewhere in Italy. Owing to the lack of components from Melfi, after 10 days of protest production halted at the Fiat plants in Mirafiori (Turin), Termini Imerese (Palermo), Cassino (Rome), Pomigliano d’Arco (Rome) and Pratola Serra (Avellino), with a resulting loss of output for the company which amounted to circa 40,000 cars (the figure up to the 11th and final day of the blockade), and the 'forced leave' of almost all employees. This caused major economic damage to Fiat Auto, not least in view of the fact that it is currently going through a difficult phase of industrial and commercial recovery (IT0212211F).

National-level mediation and the agreement

The major tensions among the trade union organisations and pressure - applied mainly by Fiom-Cgil - for the government to intervene in the dispute, transformed the Melfi protest into an issue of national importance and prompted Fiat senior management and the general secretaries of the three most representative trade union confederations to intervene.

This intervention proved decisive in getting concrete negotiations started. After talks among Giuseppe Morchio, the chief executive officer of Fiat Auto, and Gugliemo Epifani, Savino Pezzotta and Luigi Angeletti, respectively the general secretaries of Cgil, Cisl and Uil, the company undertook to make major investments in the Melfi plant over the next three years and announced its willingness to start negotiations with both the leading representatives of the sectoral unions affiliated to the three main union confederations and the plant-level Rsu representatives.

Following this proposal, Fiom-Cgil persuaded the Melfi strikers to lift the factory-gate blockades - so that personnel and vehicles could enter the plant - but at the same time it announced a strike of unlimited duration which significantly slowed down the resumption of production. There then occurred an episode which aborted this first attempt to start negotiations: on the first day following removal of the blockades, the news spread that a Fim-Cisl union delegate had been assaulted on his way to work. This episode halted the resumption of talks and triggered other forms of protest. In the days that followed, Fiom-Cisl held a protest demonstration in Rome - attended by the leaders of the Melfi strike action and by numerous workers who had travelled to Rome from other Fiat plants in order to express their solidarity with the Melfi workers - while Fim-Cisl organised a demonstration in the centre of Melfi.

These constant conflicts among the trade unions, however, did not impede a second attempt to hold talks to resolve the dispute. After Fiat group management had reiterated its willingness to negotiate on issues such as shiftwork and pay levels, on 9 May, at the Confindustria employers' confederation headquarters in Rome, an agreement was reached between Fiat and the representatives of Fiom-Cgil, Fim-Cisl, Uilm-Uil, Fismic and Ugl, plus the Rsu representatives. The agreement envisages a reorganisation of shift schedules with abolition of the 'two-stroke' system, while its economic part provides for wage increases and competitiveness bonuses amounting to EUR 105 a month - half of which will be paid from July 2004 and the rest divided into two equal parts, the first paid from July 2005 and the second from July 2006. Moreover, every July the Melfi workers will receive a lump-sum payment of EUR 240 representing the variable part of the competitiveness bonus accumulated annually (on the basis of EUR 20 a month).

The final provision of the agreement is the creation of a special conciliation and conflict-prevention committee with the task of re-examining disciplinary measures taken in the past 12 months leading to suspension from work or of pay.

The Fiat Sata workers held assemblies and voted on whether or not to accept the preliminary agreement. The deal was finally approved, with a large majority of workers (77.4%) voting in favour.

Reactions

During the period of intense conflict, contrasting and sometimes changing opinions were expressed on events at Melfi.

The chief executive of Fiat Auto, Giuseppe Morchio - who after the days of greatest tension had sent a letter to all Fiat employees reminding them that 'given the difficult phase that the company is at present going through, a great sense of responsibility is required of everybody'- expressed his satisfaction with the agreement, stating that 'closing the gap between pay levels at Melfi and those at Fiat’s other plants in Italy is a significant cost for the group, but its timetable is compatible with the aim of restoring Fiat Auto to financial health and relaunching the company'.

The same satisfaction was expressed by Confindustria and the Federation of the Italian Metal-Mechanical Industry (Federazione sindacale dell’industria metalmeccanica italiana, Federmeccanica), although Alberto Bombassei, the president of Federmeccanica, said that he was concerned that 'the great efforts made to revitalise the largest Italian car company may be thwarted by protests which verge on illegality, creating only a climate of tension in factories and among workers'.

The general secretaries of Cgil, Cisl and Uil - who worked from the outset to find a unitary solution to the dispute - passed very positive judgment on the outcome of the talks. 'The agreement,' said Guglielmo Epifani of Cgil, 'may signal a change in Fiat’s policy towards the unions. This agreement is also important for the democratic method, and it is perhaps no coincidence that the democratic method has led to unity.' According to Savino Pezzotta of Cisl, the agreement 'resolves a very difficult problem that could have torn the trade union confederations apart'. Gianni Rinaldini, the national secretary of Fiom-Cgil, declared that 'the dispute began with very different positions and has concluded in unitary manner'; for Mr Rinaldini, a decisive factor had been 'the understanding shared by all the trade union organisations that any agreement reached should be scrutinised by the workers'. The only dissenting voices have been those of the Rsu representatives of Alternativa Sindacale (a group within Fiom-Cgil) and Failms-Cisal, who announced a further eight hours of strike action.

Finally, the Minister of Welfare, who was urged to intervene in the dispute on several occasions, has declared that 'it is now necessary that the company receives the unhesitating commitment of all parties to its recovery plan', while the Ministry of the Interior, Antonio Pisanu said, with reference to action by the police, that 'the police intervened when the factories had been blockaded for a week, and only when it was clearly necessary to guarantee the right of dissenting workers to enter the factory. Moreover, the blockades removed on that occasion had been declared illegal by the court of Melfi.'

Commentary

The dispute at the Fiat Sata plant at Melfi has highlighted two interconnected aspects.

If the just-in-time production system is to function properly, it requires great organisational ability and a high level of cooperation by all the internal and external components of the system. In this case, the gradual erosion of workforce participation - which had been one of the key factors in the productive success of the Fiat Sata plant - and of the management’s ability to involve the unions in the 'Melfi project' provoked increasing discontent among the workers at the plant, whose needs had changed after 10 years, with unexpected effects on the entire production activity of the Italian car industry.

This interweaving between a local and a broader dimension was also apparent in the methods used to mount the protest and to conduct the negotiations. In fact, apparent from the beginning of the dispute were the divisions and tensions provoked at national level by renewal of the metalworking sector collective agreement, signed in May 2003 by Fim-Cisl and Uilm-Uil, but not by Fiom-Cgil (IT0305204F). In the current case, however, after some days of protest, the risk that the conflict would spin out of control induced all the actors concerned to seek a shared solution with the aim of maintaining unity among the unions. The final approval of the agreement was left to a referendum among workers, probably also in consideration of the specific features of the origin and developments of this conflict. However, this is a solution which supports to some extent the arguments with regard to representativeness often put forward by Fiom-Cgil, which will probably raise the issue again at national level when negotiations on the pay part of the national-level metalworking agreement begin at the end of 2004. (Diego Coletto, Fondazione Regionale Pietro Seveso)

Useful? Interesting? Tell us what you think. Hide comments

Eurofound welcomes feedback and updates on this regulation

Add new comment