Workers at Danish-owned pharmaceutical plant agree to restructuring plan

Members of two trade unions at the long-established Leo Pharma plant in Dublin have voted to back a restructuring plan by the company. This decision ended a long-running dispute that had threatened the future of the pharmaceutical plant. The management at Leo Pharma decided to take immediate action to reduce its cost base in order to secure the plant’s future rather than wait for the company’s Danish headquarters to decide on whether to relocate production.

Restructuring necessary for plant survival

Following the acceptance of a restructuring agreement in April 2009, which includes higher pay for workers in return for changes in work practices, the future of the Danish-owned Leo Pharma pharmaceutical plant in Dublin looks more secure. The trade unions at Leo Pharma, which began operating in Ireland in 1959, had been warned by the Labour Court (An Chúirt Oibreachais) to urgently conclude an agreement with the company.

A spokesperson for Leo, which employs about 300 workers in Dublin, had warned that the Irish plant urgently needed to ‘get its’ cost structures right’; otherwise, the company might have to relocate production.

Leo management told the Labour Court in the course of separate hearings with the two representative trade unions – Unite and the Services, Industrial, Professional and Technical Union (SIPTU) – that they had participated in lengthy discussions over a long period of time, and that the acceptance of the restructuring plan was essential for the company’s future viability, as well as the protection of employment.

The company’s Danish headquarters had been reviewing the Irish cost base and the cost of manufacturing in Ireland. Thus, the management of the Irish plant responded in an effort to secure the future of the plant by submitting a restructuring and productivity plan to the Labour Court.

The original deadline of 31 December 2008 for a final agreement on the changes was set by the company’s Danish headquarters, but this date had to be extended as the case was being processed by the Labour Court.

Conclusion of company agreement deemed urgent

In March 2009, the Labour Court told Unite that ‘recognising the state of the industry and the safeguards being offered by the company, the union should proceed as a matter of urgency to conclude an agreement with the company’, and later issued a similar warning to SIPTU.

The work practice changes at the centre of the Unite dispute included the transfer of some low-level activities from fitters to SIPTU operatives, as well as a reduction in the workforce – affecting eight fitters. In the case of SIPTU, which has about 120 members at the Leo plant, the main issues of concern included pay rates, bonus payments, assimilation to a new single pay scale and the award of an additional competency-based payment to 37 female operatives in return for a product changeover, and an ability to carry out craft-related duties.

Outcome of trade union Labour Court hearings

During the Unite hearing at the Labour Court, the company told the court that it wanted to implement changes to work practices and reduce staffing levels in order to secure the future of manufacturing at the Leo Pharma Dublin plant. It was the company’s intention to reduce the number of fitters at the plant and transfer some tasks currently being carried out by fitters to general operatives. The Labour Court recommended that,

recognising the state of the industry and the safeguards being offered by the company, the union (Unite) should proceed as a matter of urgency to conclude an agreement with the company within one week of the issue of this recommendation on the basis of the plan already put forward.

In the case involving SIPTU, the Labour Court heard from the company management that

the future viability of the company depends greatly on a return to competitiveness and securing new product lines from its parent company in Copenhagen. If the company fails in its initiatives going forward, this will inevitably lead to job losses.

The court recommended that the company’s plan should be implemented with minor amendments ‘with immediate effect’. It supported company proposals in relation to basic pay, pay scales, additional payments, shift rates and voluntary severance payments.

Reviewing Irish cost base

During the dispute, a spokesperson for Leo Pharma told the specialist weekly publication Industrial Relations News (IRN) that the company’s Danish headquarters had analysed the cost of manufacturing in Ireland. It concluded that Ireland was an expensive place to do business. As a new line of products was due to come on stream, the parent company was reviewing the Irish cost base and comparing it with manufacturing elsewhere.

The spokesperson for the company stated that the Irish management team had chosen to tackle the cost issue, deciding not to wait until after a potential decision to relocate had been made. The decision had been taken in order to make an early response in an effort to secure the future of the plant.

Brian Sheehan, IRN Publishing

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