The case under review is typical of the course followed by industrial restructuring operations as carried out in major groups, and at the same time provides an illustration of the various choices open to those involved in the course of this type of process.
The decision to shut down the site formed part of a chain of economic causes and effects, and a context, resulting from those delocation/relocation movements that are typical of the present period. For reasons of cost and choice of organization, both industrial and logistical, the global players regularly have to make decisions to open and close production units owned by them in various countries. Thus, the restructuring operation considered here took place within the context of the continuous reorganization of one of a group’s areas of activity of in Europe. The history of this restructuring can be summarized as follows. In 1991, the group opened a works in the former East Germany, in competition with the French site which was undergoing its first restructuring at that time (relocation of some of the workload). In 1996, a site was opened in the Czech Republic, supported by the closure of the Spanish site, and the French site was restructured for the second time. This operation was followed two years later by another, which provides the context for the subject of our study: the closure of the French site (the restructuring operation examined here) and of the German site in order to concentrate and reassign production operations to the Czech site. The operation considered here thus involves a long timeframe (nearly ten years) and a broad geographical extent (Europe including the candidate States).
The site analysed here employed 720 people in the early 1990s and 280 by the end of the decade when the shutdown was announced. It is highly probable that the decision to close the French site had been taken somewhere between those two dates, very probably in 1996, during preparation of the plan that finalized the shutdown of the Spanish works and the second transfer of production from the French to the Czech works.
When Continental purchased ITT’s subassemblies and systems division, the plan to shut down the French works therefore did not envisage an immediate announcement of what was already a long-standing decision. It should be noted here that situations of this type are common, especially when restructuring leads to the closure of a site – and above all an industrial one. The decision to close therefore predates the announcement of closure, often by several years. The present case is an example of that. In a small but steady number of cases, restructuring is implemented in the form of a bankruptcy filing. Finally, in the third category of cases, the announcement is made after the decision has been taken, and a process of retraining is embarked upon. In the first two cases, the choice of procedure is based on the assumption that economic and industrial advantages may be derived from delaying the announcement: the hope is that production can continue under acceptable quality, productivity and cost conditions. This procedure, which is very socially irresponsible, sterilizes the period during which the announcement is deferred, so that the other stakeholders cannot take advantage of it to anticipate future restructuring operations. It also involves substantial social risks, of which Vilvoorde provides an example.
In the third case, two difficulties arise. First, business activity has to continue under difficult conditions, the announcement of the closure being likely to create an atmosphere which all those we met agreed was a trying one. Secondly, it is necessary to embark upon a process of planning alternatives, in the absence of which no cooperation is possible between participants whose futures and interests are violently opposed.
When Continental purchased ITT’s brake systems division, the management of the French affiliate took three socially responsible decisions:
to announce the future closure as quickly as possible, thus putting an end to a falsehood that had already been in existence for over two years,
to look for new economic activities,
and to prepare a redundancy programme aimed at retraining the 280 people employed at the works.
We identified three factors that led to this decision, among which the first was critical:
A joint decision by the site management and the management of the French holding company not to embark upon a restructuring process that would not take place under satisfactory social conditions.
A risk to the group’s image and international reputation, which was regarded by its management as a stimulus to embark upon redeployment measures.
The existence of the Vilvoorde case, which both provided evidence of the risk in question and established a cost reference for operations of this type.
It was these decisions – and that taken by the local management to organize a transparent process – that would make it possible to prepare a redundancy programme whose results may be regarded as very good in view of the redeployment statistics.
Once the decision to announce the closure had been made, it was immediately followed by another decision to look for new activities to compensate for the closure of the works. A working group was set up, christened OPTH4 and comprising the site manager, the French Human Resources Department, two industrialization consultants, a lawyer and the group Human Resources Department. Finally, sufficient time (two years, ending on 31 December 2000) was allowed for the operation to be conducted satisfactorily. This quest would result in the establishment – with financial support from Continental – of two activities, binding and logistics, which would offer a total of 170 sustainable jobs to those employed at the Continental Teves works.
Measures designed to establish new economic activities in the area which the Continental Group was leaving were accompanied by the establishment of a retraining mechanism for employees, the key measures of which resulted in the following organization:
a steering committee on retraining, involving the social partners,
the use of professionals to organize a job-seeking system whose task was to produce a balance-sheet and skills assessment for the employees, help them to plan new careers, and help them to find job offers,
arranging sufficient time (in this case in the form of redeployment leave) for employees to arrange their retraining,
finalization of a valid offer of employment under open-ended contracts, which established the objective of finding long-term solutions for the employees concerned.
The complex comprising the steering device for the retraining operations (industrial and social), the creation of economic activities in the region concerned and the introduction of a retraining mechanism for the employees are the tools used by the undertaking to exercise its social responsibility in the event of retraining.
B.3.3 Discussion of the case
There is no doubt about the socially responsible behaviour of the management of the French companies concerned here. Indeed, in the case under consideration, one may wonder how the undertaking would have exercised its social responsibility without their commitment. But it should be noted that, under French law, the measures adopted do not really go beyond what is legally required, since Article L 321-4-1 of the Code du Travail lays down that a redundancy programme must include ‘a plan for the redeployment of employees’ and that this plan must provide measures such as the ‘creation of new activities, training and retraining schemes and schemes for redeployment inside or outside the undertaking’. This fact has become even clearer since the vote on the Loi de modernisation sociale, which provides that ‘schemes to promote redeployment outside the undertaking, particularly in the form of support for the reactivation of the labour pool’ (new wording of Article L 321 4 1) must be initiated by undertakings that are required to prepare a job protection plan.
The staff representatives voted in favour of the retraining plan; today, they still take a positive view of what was done in this area. Certainly, the results in terms of employment are clearly superior to those disclosed by the studies and statistics published by the Division des études statistiques (Statistical Studies Division – ‘DARES’) of the Ministry of Labour. But the procedure as a whole has been the subject of heated debate, involving a complaint to an employment tribunal by about a hundred employees. They challenged the reality of the economic ground for the restructuring operation, and the fragility of an isolated and localized process for exercising social responsibility should be noted. Thus, although the establishment of a redeployment plan did produce results, it did not legitimize the decision to close the works, which is still the subject of widespread incomprehension and opposition among the employees and their representatives. This poses the problem of the sustained consistency of the company’s exercise of its social responsibility, and also the problem of the consequences of the action taken: the management, which had committed itself to the creation of this socially responsible process, now has to justify an increase in the costs of the operation that would result from an unfavourable decision by the tribunal.
This situation emphasizes the central role of information in the process of exercising social responsibility, and the case considered here makes its importance doubly apparent. The announcement of the decision to close the works, when it was confirmed by the acquiring group, and then the information and consultation of the workforce throughout the process made it possible for the retraining operation to exist. Conversely, the organizing of the process of information on the economic decision and the timing of the announcement of that decision are still unresolved issues in this case.
Finally, it should be noted that, although the employees had the use of the works council as a forum for debate and appropriate exchanges of opinion, and their union organizations to represent their interests at local level, no such forum was available to the other stakeholders. The labour authority was informed (as required by French law in the latter case) of the decisions taken, and the redundancy programme was submitted to it for an opinion in the course of an iterative process. The local authority concerned and the Conseil Général of the department were also notified of the action which the company intended to take. In this latter case, however, the exchange of information did not result in a more advanced process of consultation.