Strikes at Vacuumschmelze trigger change in relations with employer organisation

In the summer of 2008, news spread that the company Vacuumschmelze (VAC) had changed its membership status with the regional employer organisation, Hessenmetall, in the state of Hesse. As a result, VAC was no longer bound by future collective agreements signed by Hessenmetall. After several rounds of negotiations with the German Metalworkers’ Union and strike action at VAC sanctioned by the Labour Court, the company decided to renew its full membership of Hessenmetall.

The German company Vacuumschmelze (VAC), headquartered in Hanau in the federal state of Hesse in central Germany, is a leading manufacturer of advanced magnetic materials. VAC employs around 1,500 staff. In a press release (in German, 22Kb PDF) on 8 August 2008, the Chair of the company’s management, Hartmut Eiseler, stated that, due to volatile exchange rates and exploding energy and raw material prices, the company would not be able to generate the revenues anticipated for 2008.

Impact of company cost-saving programme

Since the economic situation could not be expected to improve at a faster pace over the next two years, VAC had to introduce a substantial cost-saving programme, involving primarily a reduction in personnel costs. The 2009–2010 pay rises called for by the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) could not be shouldered by VAC. Therefore, VAC had decided to change its status with the regional employer organisation for the metal and electrical industry in Hesse (Hessenmetall) from a full member to a so-called ‘Ohne Tarifvertrag’ or ‘OT-member’ (OT-Verband). This special membership status provides companies with the full range of services of the association but it relieves them from the duty to comply with the standards set by the sectoral collective agreement.

Companies with such membership status are not formally bound by the sectoral agreements negotiated by their employer organisation (DE0212202F, DE0503101N). This means that VAC still had to fulfil obligations arising from collective agreements that Hessenmetall had already signed, but would not have to do so for future collective agreements negotiated by the employer organisation. Instead, VAC wished to negotiate its own terms with IG Metall at company level.

Trade union calls for strike action

In August 2008, the works council at VAC and IG Metall challenged the management decision. In a statement to the press (in German, 15Kb PDF), IG Metall called for recognition of its existing collective agreements or a return by VAC to its old membership status at Hessenmetall. When negotiations between VAC and IG Metall failed, the trade union called for strike action. In the strike ballot, according to IG Metall estimates in a press statement (in German, 19Kb PDF), 92.2% of all IG Metall members at VAC voted for an open-ended strike. The strike began on 11 September 2008.

VAC responded by applying to the local Labour Court for an injunction declaring the strike unlawful. However, according to an IG Metall press announcement (in German, 16Kb PDF), this application was turned down. Meanwhile, about 1,000 employees continued to strike at VAC.

IG Metall proposal to company management

On 16 September 2008, IG Metall made the following proposal to VAC’s management:

  • to begin negotiations about the refinancing of VAC’s loans to minimise interest costs;
  • to set up a committee consisting of equal numbers of employer and employee representatives to decide on steps to safeguard the company’s future;
  • in return, IG Metall would accept deviations from collectively-agreed standards in 2009 and 2010, on the condition that these deviations would be compensated for by VAC in 2011 and 2012.

IG Metall also proposed that VAC should recognise the trade union’s collective agreements or return to full membership of Hessenmetall. On 17 September 2008, VAC decided to renew its full membership of Hessenmetall, thereby also accepting the standards laid down in collective agreements between IG Metall and Hessenmetall. Thus, IG Metall called off the strike.

Reaction of the social partners

On 18 September 2008, in a statement to the daily newspaper Frankfurter Rundschau, Mr Eiseler criticised IG Metall for having organised irresponsible strike action at VAC. He told the newspaper that, due to the strike, the company had no more room to manoeuvre in its economic decisions. Severe cost-cutting measures were being considered in order to safeguard the company’s future. VAC’s original proposal, which included an employment guarantee until 2011, a pay rise of 6% from 2011 onwards and a lump-sum payment for employees, was no longer valid.

Representing IG Metall, Armin Schild welcomed VAC’s decision to return to the collective agreement. He also pointed out in a press article (in German, 18Kb PDF) that the Labour Court’s decision had confirmed the legality of the strike. However, Mr Schild also called on VAC to reimburse its employees for the pay losses suffered over the last few months and made clear that by reverting to full membership of Hessenmetall, the company had only fulfilled one of the many conditions outlined by IG Metall.

Sandra Vogel, Cologne Institute for Economic Research (IW Köln)

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