Increase in industrial holiday shutdowns due to recession

The Danish-based multinational wind turbine blade manufacturer, Vestas, closed for three weeks during the summer of 2009. A survey by the Danish Federation of Small and Medium-sized Enterprises shows that many of the federation’s member companies have closed for holidays in 2009. The industrial holiday was thought to be a relic from a distant past, but has been resurrected by companies as a means to deal with the current economic recession.

The industrial holiday, where a company closes for three to four weeks during the summer months and all employees take annual leave, was in general thought to have been eliminated a long time ago. This is due to the fact that industrial change and various collective bargaining rounds provided for greater flexibility in companies regarding working time and leave arrangements. Companies needed operations to continue all year round and thus granted employees more flexibility in organising their summer holiday.

Vestas reinstates holiday shutdown

The current economic recession, which began with the financial crisis in the autumn of 2008, has changed employers’ attitudes to the idea of a holiday shutdown. This was the case at the well-known Danish manufacturer of wind turbine blades Vestas, where management and trade union representatives had agreed to close the company for three weeks during the summer of 2009 before the waves of individual summer holidays began. By the same agreement, management and trade unions also decided to abolish Sunday shifts. ‘The agreement is in force until a new economic situation arises’, according to the shop steward at Vestas Blades in Lem, Lisbeth Jensen from the United Federation of Danish Workers (Fagligt Fælles Forbund, 3F). The agreement covers the company’s factories in Lem in northern Denmark and Nakskov in southeast Denmark. The requirement for such an agreement is due to a decline in orders, which has resulted in machinery being unused, thereby threatening the company’s sustainability in the longer term – as is the case of the Vestas Newport plant on the Isle of Wight (UK0909029I).

The industrial holiday, as in the case of Vestas, should be seen as an alternative to restructurings resulting in dismissals and/or long periods of work-sharing (DK0903021I) as a means to deal with the recession in the manufacturing sector. Many companies in this sector have reduced their staff to the core competences, and it will be difficult to replace any further staff made redundant when the economic situation improves again. Work-sharing has also been an effective means for manufacturing companies to keep their core workforce.

Many SMEs close for summer holidays

Whereas holiday shutdown has been reinstated in a large company like Vestas, and perhaps in other companies of similar size, small and medium-sized enterprises (SMEs) have used this mechanism to control production for the past two years. An analysis by the Danish Federation of Small and Medium-sized Enterprises (Håndværksrådet, DFSME) among its over 20,000 members showed that half of the SMEs were closed for holidays for a period of one to three weeks in July 2007. Regarding the question of whether a company makes use of the possibility in the Holiday Act to close the company during the summer holiday, 45% of companies in industry answered ‘yes’, in addition to 28% of companies in services, 26% in construction and 22% in retail trade. According to DFSME, this means that every second SME in Denmark closes for a period in July due to a mandatory holiday.

However, there are differences in when companies close and for how long. In retail trade, most shops close for one week, for instance because their customer base is on holiday elsewhere. The lengthiest closures occur in industry where most of the SMEs are closed for a three-week period. This is much closer to the idea of a real ‘holiday shutdown’, as implemented by Vestas, and not similar to a sign in a hairdresser’s window saying ‘closed for holidays in week 27’. Looking at different working time measures to respond to the crisis situation, the 45% of SMEs closing for three weeks in the manufacturing sector constitute a significant sample in this regard. Thus, holiday shutdown can be seen as a third measure to mitigate the employment effect of the recession, along with redundancies among mainly production workers and those involved in work-sharing schemes among a broader spectrum of employees.

Carsten Jørgensen, FAOS

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