The Renault-Vilvorde affair: "Euro-strike" against the closure of its Belgian plant

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The announcement by the French auto manufacturer, Renault, of the closure of its plant with a workforce of 3,100 in Vilvorde in the Flanders region of Belgium, has caused a wave of indignation throughout Europe. The closure is part of a European restructuring project which also includes the axing of 2,800 jobs in France. The response by the unions, of an unusually rapid and massive nature, took the form of strikes in all the group's European plants, and a series of joint demonstrations.

On 27 February 1997, the chair and managing director of Renault, Louis Schweitzer, issued a press release outlining the planned closure, by July 1997, of the group's sole factory in Belgium, located in Vilvorde/Vilvoorde (north of Brussels). This decision, presented as irrevocable, is justified by a continuing decline in the profitability of the group and also by the need for the redistribution of production among the remaining plants, which will lead to the cutting of 2,764 jobs in France. This announcement caused the immediate soaring of the price of Renault stock on the Paris stock exchange. The news of the closure of the Belgian subsidiary follows the French Government's refusal to grant early retirement at 51 to 40,000 employees, a measure requested jointly by Renault and Peugeot-Citroën in exchange for the taking on of 15,000 young people.

Renault has been "downsizing" on a continuous basis for around 15 years and has thereby cut its workforce by half. Renault currently employs 140,000 people throughout the world, for the most part concentrated in Europe, and in particular in France, which accounts for more than three-quarters of them. Renault currently manufactures cars in around 30 factories in five European countries: France, Spain, Portugal, Belgium and Slovenia. The Belgian plant, which was set up in 1925 and recently modernised, accounts for only 2% of the group's workforce. It manufactures the Clio and the Mégane, both of which are also assembled in other plants. The management wishes to restructure production in such a way that each factory is the sole producer of a given model, except in the case of the Clio and the Mégane. This project entails the closing of two Spanish assembly lines and the axing of 2,800 jobs in France. However, it is the projected closure of the factory in Belgium that has caught the attention of the public.

The singling out of the Belgian factory has been motivated by pay costs 30% higher than for French plants, which have not been offset, despite attempts to modernise, by an increase in productivity. The closure of the factory in Slovenia, which was for a time an option, was rejected on the grounds that it affords access to the Italian and East European markets.

Reaction in France

The reaction of indignation in Belgium seems to have surprised both the French Government and the Renault chiefs, although the management had in fact informed the French Government, the Belgian Prime Minister and the President of the Flemish Government. According to a statement made by Louis Schweitzer before a French government committee, it was the attitude of the latter which was behind the hasty announcement of the closure.

The French Government's reaction was slow and embarrassed. Since the beginning of the year the Government's stake in Renault has dipped below the 50% mark and the Government has refused to involve itself directly in the running of a private company, which, as far as it is concerned, is entirely the responsibility of the management. The French Prime Minister even reiterated his confidence in Louis Schweitzer. Only rather late in the day, did French President Jacques Chirac voice his condemnation of the way the closure had been announced, but at the same time he stated that he understood the rationale behind the closure. In his opinion "the closure of factories is, alas, part and parcel of life."

The reaction of the opposition parties in France has been varied. The Communist Party immediately condemned the closure, placing it within the logic of privatisation and of "the Europe of Maastricht". The Socialist Party centred its criticisms around the French Government, thus sparing European institutions and the role played by Louis Schweitzer, who was Cabinet Secretary to the Socialist Minister Laurent Fabius when he was Industry Minister and later Prime Minister. Louis Schweitzer was in turn criticised by several wings of the Parliamentary majority. The president of the centrist UDF (Union pour la Démocratie Française), Gilles de Robien, castigated Renault for not having implemented the powers of the law he recently sponsored, which allows the combination of a reduction in working hours and of job creation thanks to government subsidy of social security contributions. Then, on the initiative of the Speaker of the National Assembly, a Parliamentary select committee on the future of Renault and the automotive industry was set up. Only after its findings have been published can a debate take place.

The most violent reaction has obviously come from the unions. Belgian unions immediately decided to stage a sit-in at the factory at Vilvorde and to blockade the transporting of new cars. The Belgian, Spanish and French unions, except the CFE-CGC (Confédération Française de l'Encadrement-Confédération Générale des Cadres), called for a one-hour strike on the 7 March in all the group's European factories. This was obeyed to a large extent. This strike had great symbolic significance since it was presented as the first "Euro-strike" in a European multinational company. It was followed by a joint demonstration by Belgian, Spanish and French workers outside Renault headquarters in Billancourt and later by a large national march for jobs, organised on the 16 March in Brussels by the Belgian unions, in which French union delegations and politicians took part.

Commentary

It might be thought regrettable that public debate was primarily centred on the conditions under which the closure of Vilvorde was announced and on the matter of whether Renault had respected EU Directives. Two specific items of Community legislation have been cited, the Directives on collective redundancies and on European Works Councils. The first requires the prior consultation of workforce representatives when mass redundancies are planned. As far as the closure of the Vilvorde factory is concerned, it seems that Renault acted in accordance with this Directive - formally and at the last minute - by informing the Vilvorde works council 10 minutes prior to the announcement of the closure in the press.

What is more delicate is the matter of information and consultation of all the representatives of the workforce in the event of major restructuring, as required under the Directive of September 1994, which was incorporated into French law in November 1996. This legislation provides for the setting up through negotiation of a European Works Council or an equivalent body. This Directive exempts those companies which set up such councils through voluntary agreement before September 1996 from the obligation to renegotiate them. Renault is one such French company which created a "European group committee" at a relatively early date. This agreement was signed in 1993 during preparations for its merger with Volvo and two years after the loss by the CGT (Confédération Générale du Travail) union of its majority on the central works council to a coalition of four unions: CFDT (Confédération Française Démocratique du Travail), CGT-FO (Confédération générale du Travail - Force Ouvrière), CFTC (Confédération Française des Travailleurs Chrétiens), and CFE-CGC. Following the failure of the merger with Volvo, a new agreement was signed on 5 May 1995 by five French and two Spanish unions, the CC.OO and the UGT, and also by the Belgian CSC.

The agreement provided that the European group committee meet "at least once a year by order of the chair", who is also the president of Renault. According to the text of this agreement, Louis Schweitzer was under no obligation whatsoever to order an extraordinary meeting of this committee to consult its members on the closure of Vilvorde, as the CFDT-affiliated committee secretary had requested. He decided, however, following a meeting with the Prime Minister, to call a meeting of the committee normally scheduled for the spring, for 11 March. During this meeting, which took place against the backdrop of a union demonstration, Louis Schweitzer once again justified the closure of Vilvorde and the irreversible nature of the decision.

The Vilvorde affair has revealed the loopholes in European social regulations, which are in themselves insufficient to force reluctant management to negotiate economic and social options with workforce representatives. It has demonstrated the need for a balancing of power through union representation within European companies. Paradoxically, Renault management's controversial decision is thus going to bring to the fore the importance of the social aspect of European construction.(Udo Rehfeldt, IRES)

For further details of Belgian reactions to the Vilvoorde closure, see Record BE9703102F, and for further information on the overall EU implications, see Record EU9703108F.

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