Industrial relations in shipbuilding in Italy
Shipbuilding in Italy presents a fragmented picture in terms of both industrial relations and sectoral structure, with a polarisation between a handful of medium to large companies (with Fincantieri being by far the largest) and many smaller enterprises. At the beginning of 2000, an important issue for the sector as a whole is that of the increasing weigh of contracting-out, which is posing important challenges for trade union action. For the companies involved in the construction of larger cargo vessels and cruise liners, the decisions that the European Union and the Italian government, respectively, will take on protecting the industry from Far East competition and on the privatisation of Fincantieri will be particularly significant.
The shipbuilding industry in Italy is a diverse sector which includes the production of large cargo vessels and cruise liners, essentially by the largest companies in the sector, the construction of sports and leisure boats, which is experiencing significant developments, and all the firms which subcontract work for the large ones, and those which carry out repairs.
Some 30,000 workers are employed in the sector and are mainly concentrated in the larger companies. Fincantieri, for instance, a state-owned enterprise belonging to the Iri group, whose privatisation is now being discussed, accounts on its own for around one-third of total employment in the sector, with a workforce of about 9,400 people. However, owing to the large number of small firms, the average size of shipbuilding firms was only 11.57 employees in 1996, while in 1981 it was 29.68. The past 20 years have seen employment in the sector progressively decline (with the decrease accelerating in the 1990s), while the number of firms has increased, to the advantage of smaller production units (see the table below). The building of sports and leisure boats is concentrated in smaller companies (more than 75% of firms have under 15 employees), with employment totalling about 4,000 people in 1998 (according to La Nautica in cifre, Edizione 1999, Ucina).
An important aspect of the organisation of production in the sector is the widespread use of outsourcing and contracting-out. As regards shipbuilding proper, according to the trade unions, between 9,000 and 10,000 employees from external firms work within Fincantieri, added to which are employees engaged in the installation of internal equipment and fittings. This feature exerts a considerable influence on industrial relations, and it is an important issue for company-level collective bargaining.
As regards business trends in the industry, for a number of years the sports and leisure boat sector has displayed a tendency towards growth, driven by exports and its conquest of niche markets like that of the so-called "super yachts". In the large cargo and cruise ships sector, Fincantieri has received an increasing number of orders in recent years, and the state-owned enterprise is now among world leaders in the construction of large cruise liners. However, the economic results are less positive: in 1998 and 1999, Fincantieri's profit and loss account has progressively deteriorated, and its losses in the first nine months of 1999 amounted to ITL 458 billion. This situation has induced the company to draw up a restructuring plan which it presented to the trade unions in the autumn of 1999. The plan envisages a 15%-20% reduction in costs over three years without affecting employment levels. At the same time, the company expects that it can undertake a recapitalisation project supported by Iri and with the significant involvement of private investors.
The sector, according to EU Council Regulation (EC) No. 1540/98 of 29 June 1998 establishing new rules on aid to shipbuilding, can partly benefit from state aid until 31 December 2000 for each shipbuilding contract up to an amount equal to 9% of "contract value before aid".
|Number of employees in firm||% employees||% firms|
|Total (absolute values)||48,838||41,109||31,683||1,645||2,139||2,738|
|1,000 and more||53.91||48.09||36.18||0.43||0.05||0.07|
Source: Censimento intermedio dell'industria e dei servizi, Istat (1999).
As far as industrial relations and collective bargaining are concerned, employer representation in the sector is provided by Federmeccanica. In shipbuilding, however, there are other sectoral employers' associations which provide political representation for their members and protect their interests. Assonave is the employers' association which represents the largest firms in Italian shipbuilding, and the publicly-owned enterprises, including Fincantieri, belong to it. The National Association of Private Shipyards (Associazione Nazionale Cantieri Navali Privati, Ancanap) and the National Association of Enterprises for Ship Repairs (Associazione Nazionale degli Industriali Riparatori Navali, Rinavi) are also associated with Assonave. A third association in the sector is Ucina (Unione Nazionale dei Cantieri e delle Industrie Nautiche ed Affini), which represents firms constructing sports and leisure boats as well as those producing accessories and providing services for this branch. Both Assonave and Ucina are affiliated to Confindustria.
Owing to the size of the company, events at Fincantieri dominate sectoral industrial relations at the national level. In effect, also because of the fragmentation of the sector, the national metalworkers' trade unions concern themselves almost exclusively with Fincantieri, while the supervision of second-level industrial relations and bargaining within smaller companies is the responsibility of the union's territorial structures. In general, Italian shipbuilding has a significant diffusion of representation and collective bargaining, both within Fincantieri, where around 70% of the workforce is unionised, and in small-sized firms, though for the latter it is of great importance whether they are located in areas of traditional unionisation and/or integrated into so-called "district systems", as it is the case of the port of Genoa, where union presence is significant.
The main initiatives taken recently in the sector have been the national shipbuilding conference, organised by Fim-Cisl, Fiom-Cgil and Uilm-Uil and held in Genoa on 29 October 1999, and the European shipbuilding unions' European day of action. The national conference focused on the present situation and future prospects of the industry, asking for more attention to the sector's needs and potential by the government, and stressing specific issues such as health and safety in shipbuilding firms and the privatisation of Fincantieri. As far as this latter point is concerned, the trade unions believe that the future of shipbuilding in Italy will largely depend on developments at Fincantieri. For the European day of action, on 5 November 1999, Italy's confederal unions organised a series of initiatives simultaneously with 11 other European countries to draw attention to policies for the development and support of the sector (EU9911208N) and to emphasise what is regarded as "unfair" competition by the countries of the Far East, and South Korea in particular. If specific action is not taken by the European Union, the unions believe that the very survival of the shipbuilding sector in Europe may be threatened.
Collective bargaining at Fincantieri
The two issues which have recently attracted trade union attention at Fincantieri have been company reorganisation and privatisation. The former issue has already been addressed by collective bargaining with an agreement signed on 25 January 1999 on the "company productive system". Reorganisation is also an important item on the agenda for talks on the "restructuring plan" announced by the company to the unions at the beginning of October 1999, and is part of the platform of demands now being discussed by workers and unions for the renewal of the company-level agreement, which expired at the end of 1999. As regards privatisation, the unions have presented their views in various documents and intend to start discussions on the matter at governmental level as well.
A major factor which draws the attention of the parties in terms of organisational issues has been the abovementioned negative economic record of the company, despite its positive performance in acquiring orders.
The agreement of 25 January 1999 signed by the company and representatives of Fim, Fiom and Uil, addressed the question of the "company productive system", "defined as an integrated system of internal resources, contracting-out and supply". The agreement stipulates:
- the target of a design and production cycle which should use internal resources for 75% of total requirements and contracting-out for the remaining 25%, while the supply of components, equipment and services would be outsourced;
- the hiring of around 1,300 workers in order to ensure that the company has the necessary skills;
- the analysis of the factors hindering improvements in productivity;
- an overhaul of the contracting-out and supply system in order to guarantee that access is limited to firms possessing the requisite professional and organisational capacities, and to reduce second-level subcontracting to the minimum. To this end, the Fincantieri Rsu unitary union representative bodies have been granted rights to information, and a system for monitoring contracting-out has also been introduced, in particular as regards compliance with the laws on social security contributions, job placement, and health and safety. Close involvement of the workers' health and safety representatives (Rappresentante dei lavoratori per la sicurezza, Rls) is envisaged, as far as health and safety are concerned. Moreover, Fincantieri has undertaken to create the conditions so that the trade union rights of workers from subcontracting firms can be fully implemented (notice boards, areas set aside for assemblies etc);
- the development of a union information system based on individual shipbuilding contracts; and
- the creation of a six-member joint committee to monitor application of the agreement and achievement of its objectives on a three-monthly basis.
In the course of 1999, Fincantieri's economic performance showed no signs of improving, and in the autumn the company presented a restructuring plan which envisages a 15%-20% reduction in costs over three years, the aim being to restore the company's profits to satisfactory levels. The unions have welcomed the fact that the plan does not foresee job cuts or direct intervention in working conditions, and they have asked for joint discussions to be held which should then continue in the form of monitoring of the plan. However, the company seems to prefer to maintain its full autonomy in implementing the plan.
The next important stage in bargaining at Fincantieri is due to begin in January 2000, when negotiations on renewal of the company-level agreement will get under way. In this regard, on 17 November 1999, at the end of the meeting at which the restructuring plan was presented, Fincantieri made a formal request for the renewal of the company-level agreement to be postponed. The unions, Fim, Fiom and Uil, refused the request, declaring instead that negotiations should begin forthwith. To this end, the union platform was being discussed by the workers at time of writing (December 1999). The main demands advanced by the unions in many respects repropose and reinforce the contents of the agreement signed on 25 January 1999. First, the unions are asking for a company-level bargaining structure based on individual shipbuilding contracts to be introduced, since this will make it possible for all aspects of the production cycle, especially delivery times, to be kept under control. Contract-based bargaining should provide the principal reference point for defining performance-related pay. The platform of demands also envisages action on safety aspects and intensified effort to rationalise the contracting-out system
As regards the privatisation of Fincantieri, the unions argue first that the company must not be broken up through the selling off of the various shipyards (of which there are eight in the group), and second that the public ownership of Fincantieri should continue, but with the involvement of financial investors and private investors. According to the trade unions, it would not be feasible or expedient to break up the company, because the individual shipyards on their own could not withstand the competition of foreign companies, which are generally large-sized, and indeed are not autonomous production units but depend on a highly centralised planning and decision-making structure. The unions advocate the maintenance of public ownership because of the strategic importance of the shipbuilding industry for transport and defence, and because they believe that the ecologically compatible nature of maritime transport (more so than other kinds of transport) can thus be better guaranteed, and also to protect employment in areas in the south of Italy (Mezzogiorno) or areas which have been already hit by deindustrialisation.
Industrial relations in small and medium-sized enterprises
Industrial relations are fragmented within small and medium-sized enterprises (SME s) operating in the shipbuilding sector. There are some cases in which the unions and collective bargaining are forcefully present, and others in which there are virtually no forms of collective representation. Apparently, these variations among areas stem primarily from differences in the extent to which the trade union tradition has been consolidated at the local level.
As regards trade union presence, the experience of Genoa is of interest, with a territorial agreement signed in 1996 involving all the firms in the sector which operate in the port district. These are firms which both work on contracts for larger ones and undertake repairs or construct small leisure boats. The trade unions are extremely active in these firms and unionisation may be as high as 80%. The territorial agreement is now about to expire and should be renewed in 2000. Its main aim has been to establish a common reference framework for industrial relations and for performance-related pay, and also to eliminate forms of competition based on normative and economic differences caused by fragmented collective bargaining.
It should be stressed that SMEs also engage in contracting-out and the fragmentation of production, so that large numbers of specialised small firms are involved in individual phases of shipbuilding. These firms are often of small or extremely small size; they may belong to the artisan sector and work in the shipyard for a limited period of time. According to the unions, this obstructs the spread of trade union representation, and it also gives rise to a marked differentiation in working conditions, in pay levels, and in the protection of the workers employed by these firms, compared with the contractor firm. This is the situation, in the opinion of union representatives, that applies in the area of Viareggio, where there is a particularly large amount of light shipbuilding. While the larger shipbuilding companies have high levels of unionisation (up to 60%) and of coverage by second-level bargaining, workers in the subcontracting firms are practically devoid of any collective protection. This is not a minor issue, given that, on average and according to the unions, at least half the workers in any shipyard belong to contracting firms.
Analysis of industrial relations in the shipbuilding sector is greatly complicated by its strong differentiation and polarisation: Fincantieri and a handful of other private constructors of medium-to-large size are flanked by a multitude of SMEs engaged in the construction of leisure boats or in particular phases of production outsourced by the shipbuilders.
A possible common denominator for the sector as a whole is the question of contracting-out, which, under the pressure of demands for flexibilisation and cost-cutting by firms, has developed considerably in recent years. In this context, the unions are trying, with great difficulty, to extend their influence in this area as well. The strategies pursued to date are of two kinds. First, there has been an attempt to restrict the use of contracting-out by the main firms, guaranteeing at the same time minimal protection for the workers employed by the contracting firms. This is what was attempted at Fincantieri with the agreement of 25 January 1999. Second, there is an endeavour to introduce a unitary reference framework which comprises all the firms involved in the overall production cycle. This is the option of the territorial or "district" agreements introduced, for example, in the Genoa area.
Both strategies are interesting, and their combined use might in certain cases help to overcome specific difficulties that may hamper their effectiveness. Probably of great importance for territorial agreements, for example, is the presence of an already well-established tradition of unionisation, and obviously essential is the presence of a local system of firms engaged in the various phases of the production cycle on a stable basis. When a trade union tradition is lacking and/or the contracting firms are from other areas, local-level bargaining is difficult to achieve and its efficacy is undoubtedly compromised. In these cases, it might be better to concentrate on managing contracting-out within the contractor firm. On the other hand, the worker protection afforded by the latter instruments is limited because they tend to impede access to the contracting-out system by firms which do not offer sufficient guarantees to their workers, without helping to improve, except only indirectly, working conditions in those firms. Moreover, this will not necessarily extend the representation and the protections provided by collective bargaining to the contracting firms.
As appears evident from this brief discussion, the issue of contracting-out is difficult to address, and it is one on which the unions will probably have to concentrate in the future. Nevertheless, it is an area where there may be interesting accords with employers, given that the efficacious and efficient management of the contracting-out system seems crucial for profitability, as Fincantieri's recent negative experience demonstrates. From this point of view, forms of project planning and management which involve the workers and the unions on individual shipbuilding contracts may help significantly to increase productivity, also through the definition of specific elements of performance-related pay.
A further two crucial aspects for the sector are solving the problems created by the increasing competitive pressure applied by South Korea and defining the privatisation of Fincantieri. These issues, however, depend essentially on the decisions taken respectively by the European Union and the Italian government - decisions which may be influenced by the positions taken up on various occasions by the social partners (Roberto Pedersini, Fondazione Regionale Pietro Seveso).