New agreement on job security at Schaeffler Group

On 26 May 2009, a new agreement on job security was signed at the German car component manufacturer Schaeffler Group. The agreement negotiated with the German Metalworkers’ Union precludes redundancies until 2010. In return for this job guarantee, personnel costs at Schaeffler are to be reduced by €250 million. The agreement has to be considered in light of the global financial crisis as well as Schaeffler’s takeover of the automotive supplier Continental in August 2008.

The family-owned Schaeffler Group is an industrial conglomerate and one of the world’s leading car component manufacturers, which is based in Germany. The company’s bid for the much larger automotive industry supplier, Continental, was leveraged and Schaeffler is currently hard-pressed to service its debt due to the tense situation on the financial markets.

In a press release (in German) on 1 February 2009, the company was looking for potential investors for interim financing. The economic crisis, which has led to a steep slump in orders, especially in the automotive industry, has aggravated the situation at Schaeffler. The company’s representatives therefore entered into negotiations with the German Metalworkers’ Union (Industriegewerkschaft Metall, IG Metall) to discuss possible solutions to the crisis. The company management stated that about 220,000 jobs at Schaeffler and Continental, as well as many more at their suppliers, were at stake.

Development of negotiations at Schaeffler

In February 2009, Schaeffler and IG Metall signed a memorandum on the future of Continental and Schaeffler (in German, 88Kb PDF). It reaffirmed the Schaeffler family’s position as the main partner in the Continental-Schaeffler Group. In addition, the company’s partners offered to sell some of their shares to cover part of the company’s debt. Employees will also be able to acquire shares in the group. Further details of a workers’ participation programme have yet to be released. Finally, IG Metall and Schaeffler agreed that job losses as a result of the merger between Continental and Schaeffler were to be avoided. An agreement on job security to implement this point was finally concluded at the end of May 2009.

Provisions of agreement on job security

The new agreement rules out redundancies until 30 June 2010, provided that personnel costs can be reduced by €250 million. To reach this target, a catalogue of measures was negotiated. The social partners at each of the group’s establishments can use any of the suggested measures to contribute to the overall goal of reducing costs. The list of measures include:

  • reducing working hours, including a corresponding adjustment of wages and salaries;
  • expanding the use of short-time work;
  • voluntary redundancies;
  • offering partial retirement programmes;
  • realising cuts in one-off payments;
  • establishing transfer companies.

In February 2009, the Schaeffler family had already agreed to introduce co-determination rights regardless of the group’s future legal entity. A new supervisory board is to have seats equally divided between employee and employer representatives.

Position of social partners

On 26 May 2009, both the Schaeffler Group and IG Metall warmly welcomed the new agreement in a joint press statement (in German). IG Metall Chair Berthold Huber declared that a critical factor had been overcome for the Schaeffler Group: the time needed to cope with the drastic slump in orders in the metalworking industry. The Chair of the Schaeffler Works Council, Norbert Lenhard, emphasised that the job security agreement represented ‘a vital guarantee for the workforces in the future alliance with Continental’. The Schaeffler Group’s President, Jürgen Geißinger, underlined that the new agreement was ‘the concrete result of intensive and constructive negotiations between all parties involved’. The agreement facilitates the required cost reductions in order to avoid dismissals in the near future.

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

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