Financial crisis at Tonsil Polska
For several months, Tonsil, the largest manufacturer of loudspeakers in Poland, has paid employees only a portion of their wages. To maintain the company’s production process over the coming months, a restructuring programme is required in conjunction with securing permission for a state-owned financial company to become a strategic investor.
In March 2006, negotiations were initiated with the Ministry of State Treasury (Ministerstwo Skarbu Panstwa, MSP) with a view to securing permission to allow the state-owned Silesia Financial Company (Towarzystwo Finansowe Silesia, TF Silesia) to become a strategic investor, thus enabling the future survival of Tonsil Polska in Wrzesnia, in western Poland. This move is in response to the significant financial problems being faced by the company, recently reflected in its payment of only part of employees’ wages.
Tonsil’s first forays into the production of loudspeakers date back to the 1970s, when the state-owned company acquired a licence from Pioneer, the Japanese electronics group. The early 1990s saw Tonsil becoming listed on the newly established Warsaw Stock Exchange, but it also experienced the challenges of having to adapt quickly to competition in the free market. Exposure to increased competition was compounded by the fact that most of Tonsil’s Polish customers went bankrupt, which caused the company’s own debts to escalate rapidly. In 1996, the State Treasury responded to the company’s difficulties by paying all of its liabilities. Subsequently, the newly revived Tonsil attracted the interest of Tohoku Pioneer, which took a 10% share of its licensee, increasing it to 40% in 1998. Despite the commitment of this strong shareholder, Tonsil was unable to secure a stable position in the marketplace, and its financial situation continued to deteriorate steadily. In September 2003, the Regional Social Dialogue Commission (Wojewódzka Komisja Dialogu Spolecznego, WKDS) in nearby Poznan stepped in and helped to secure a public aid package for Tonsil Polska, in 2004, enabling it to settle its debts but not, however, to launch a restructuring programme.
New measures proposed
Currently, Tonsil Polska employs just 600 people, which is substantially lower than the 3,600 workers it employed in the early 1990s. The issue of the wage payment backlog represents a serious problem for the company. In 2005, the backlog in payments amounted to the equivalent of three monthly salaries; however, by December of that year, the company did manage to repay the equivalent of two salaries to its employees. At present, Tonsil Polska is two months in arrears of payments due to its workers, many of whom are facing considerable personal financial difficulties. The representative of the Independent and Self-Governing Trade Union Solidarity (Niezalezny Samorzadny Zwiazek Zawodowy ‘Solidarnosc’, NSZZ Solidarnosc) at Tonsil Polska explains that, with an average salary of around PLN 900 (approximately €228) per month, the workers are unable to save any money and, as a result, have no financial resources to fall back on. These problems have since come to the attention of the head of NSZZ Solidarnosc for the Wielkopolska province, who is also the vice-chair of the WKDS in Poznan. On 13 February 2006, he called for an extraordinary session of the WKDS to be devoted to the situation of the Tonsil employees; however, the national government’s representative for the region (wojewoda) set the date of this meeting for the following month.
On 15 March, the WKDS duly convened a session dealing exclusively with the situation at Tonsil Polska. In his capacity as chair of the WKDS, the wojewoda took it upon himself to pursue negotiations with the MSP, geared at securing permission for TF Silesia to become a strategic investor in Tonsil. TF Silesia is presently drawing up a ‘crash programme’ aimed at maintaining the company’s production process over the coming months. The WKDS also discussed the need to accelerate the bankruptcy procedures for Tonsil Polska; once this process is completed, it is hoped that restructuring will be easier.
The NSZZ Solidarnosc representatives are well aware that, in order for any restructuring programme at Tonsil Polska to succeed, it must involve redundancies. Nonetheless, the union has emphasised the need for benefit packages for any redundant employees; it is also disputing the scale of the lay-offs as proposed in the restructuring programme, which provides for the retention of only 150 employees, a quarter of the current workforce. Whether Tonsil will be able to survive yet another financial crisis remains to be seen; undoubtedly, much will depend on the State Treasury, which holds a 100% share in TF Silesia.
Piotr Sula, Institute of Public Affairs