Production ends at Hewlett Packard Barcelona

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In late 2000, the management of the Hewlett Packard plant at Sant Cugat in Spain announced the end of production activities, with the redundancy of 200 workers, as the US-based computer hardware and services multinational had decided to outsource production. Workers took industrial action to oppose the job losses, but were eventually forced to negotiate an improved redundancy package in February 2001.

Hewlett Packard (HP) is a US-based multinational with facilities in 159 countries devoted to computer hardware and services to companies. In Spain it began to market its products in 1971. In 1985 it began to manufacture on a small scale, and in 1988 it began to carry out marketing and research and development (R&D). An important leap in the presence of the company in Spain came in 1992 when production, R&D and marketing of large-format printers for the world market and production of personal printers for the European market were moved to Sant Cugat del Vallés (Barcelona). From 1985 to 1999 the workforce rose from 35 workers to 1,500, and turnover rose from ESP 540 million to approximately ESP 115 billion.

The Sant Cugat workforce is very young, with an average age of 30, little previous employment experience and no trade union tradition. Some 35% are women and 70% men. The level of education is high: most of the marketing and R&D staff are graduates and the production staff have secondary school education or vocational training.

Personnel management strategies

The company's personnel management strategies and industrial relations model are seen as "typically" North American. Competition between the workers and differentiated employment conditions are encouraged, without - according to critics - an objective scale of categories (individual workers must produce more and better than their colleague). In production, temporary recruitment is widely used, which some observers see as a means of cutting costs and subordinating and dividing the workforce. More than half the workforce are on temporary contracts; for five years no workers have been recruited on permanent contracts and there is a high labour turnover. In the past year, direct temporary recruitment has been replaced by the use of temporary employment agency workers and the production staff has been cut from 500 to 245. Production line capacity does not correspond to the market volume served by the Sant Cugat site. A part of production is subcontracted to suppliers in foreign countries and another part to companies in the Barcelona area. Low-value services are also outsourced. The outsourcing strategy allows for cost cuts and it is part of HP's distribution policy.

These strategies are combined with a personnel policy that seeks: enriched functional mobility (giving the company greater flexibility); the integration of the workers through measures described by critics as "paternalism"; and "dehierarchisation" through measures such as the absence of differentiated work areas between management and workers (though there is no participative workplace democracy), the fact that none of the workers clock in (though unpaid overtime is very common), and the locating of production on the same floor as engineering, administration and marketing (though there are reportedly practically no relations between technicians and direct production workers).

Industrial relations

The first trade union elections of workplace employee representatives did not take place at Sant Cugat until 1996 and the workers' committee, which is entirely composed of members of the Trade Union Confederation of Workers' Commissions (Comisiones Obreras, CC.OO), represents only the factory workers. In the trade union elections, a very long list of candidates was presented that received great support from the workforce. However, this support is seen by observers as formal, and there is reported to be no trade union culture in the company, even in production, with very few people willing to participate. The management of the company, it is claimed, completely disapproves of the workers' committee and attempts to minimise its influence, making bargaining individual and atomising industrial relations for a workforce that is already highly segmented by temporary employment and by the different employment and working conditions of technicians and direct production workers. The company has no collective agreement of its own, but the sectoral agreement for the metalworking industry is respected with regard to wages.

Redundancies announced

In early December 2000, HP management communicated to the workers' committee and the production workers (with a gap of 30 minutes between the two) its decision to make the latter redundant. The reason given was that the central management had decided to outsource all production (assembly) and to concentrate HP's resources in activities that contribute added value to the business. The firm has decided to contract out production, thus allowing it to choose the best supplier and order according to its needs. The management in Barcelona claims that it needs to improve profit margins in a context of increasing competition in the sector. In 1999, turnover was 25% higher than the previous year but profits were 50% lower (this was the first time that profits had fallen since HP set up its facility in Spain). The management offered the dismissed workers compensation of 48 days' pay per year of seniority (three days more than is required by law), and was prepared to contract a placement company to seek employment for them.

Conflict breaks out

The workers' committee was flatly opposed to the decision to outsource and make the production workers redundant. It considered that a company like HP Barcelona that is making ESP 15 billion in profits - ie that has suffered a fall in profits but is still in an excellent financial situation - should not be able to dismiss 198 workers. It considers that this decision is due to the multinational's ambition to obtain greater profits by transferring production to geographical areas with lower labour costs based on low or non-existent workers' rights, and which also offer tax "advantages".

Contrary to the perceived expectations of the management, at a mass meeting the production workers decided to fight for their jobs, although they represent only 25% of the Sant Cugat workforce and could not count on the solidarity of technicians and clerical staff. They agreed to call two 24-hour strikes and demonstrations in Barcelona and Sant Cugat del Vallès, and to seek the involvement of the public, the political parties and the public administration to save their jobs.

After a month, the company decided to put off the presentation of the redundancy procedure until 9 February 2001, to give time for negotiations. The workers' representatives accepted the outsourcing but not the redundancies. They considered that the production staff are young and well-trained, have great potential, and are able to adapt to the new business direction taken by the company. They proposed: either the retraining and relocation of the workers to technical areas that need to be reinforced; or following the model that the company had used in France, which consisted of setting up another company, relocating the workers, giving them equal salaries and guaranteeing their jobs. The management did not change its decision to dismiss the workers, merely offering to relocate first 16 people and then 26, which the committee considered to be inadequate.

The mobilisations were renewed in the form of two-hour stoppages in each production shift for three weeks, and demonstrations inside the company that prevented all intellectual work and buyers' visits, thus paralysing all the activities of the plant. However, the management refused to change its position.

Public authorities' reaction

To the surprise of many, in the week in which HP announced the end of production, the President of the Generalitat of Catalonia (regional government), Jordi Pujol, declared that he regretted the decision but did not consider it important because "HP's strategic activities will remain in Catalonia." One month earlier, a body dependent on the Catalan government authorised a redundancy procedure involving the closure of a plant of another US-based multinational, Delphi Automotive, located in the same town (ES0101231F), despite an unfavourable report by the Labour Inspectorate.

The general secretary of CC.OO's regional organisation in Catalonia (Comisión Obrera Nacional de Cataluña, CONC), Joan Coscubiela, criticised the case of HP as an example of current short-term strategies by multinationals seeking to avoid the risks of business by transferring them to the workers and to subcontracted companies, thus ensuring enormous profits and avoiding the social impact of business decisions. He also criticised the action of the Catalan and Spanish governments which "reinforce the unilateral powers of management", in a clear reference to the alleged tacit support of the public administrations for multinationals (in the cases of Delphi and Sintel- ES0011120N) and the Spanish government's opposition (DE0010288F) to the draft EU Directive on national information and consultation rules (EU9812135F) .

On the other hand, the local government (the Sant Cugat del Vallès town council) decided to support the workers, as did the opposition parties in Catalonia, and the Initiative for Catalonia-Greens (Iniciativa per Catalunya-Verds) party raised the issue in the Catalan parliament.

Workers forced to negotiate redundancy terms

The actions and opinions of the public authorities weakened the position of the HP workers. The redundancy procedure was very likely to be approved and, if the case were taken to court, after a long legal process the compensation would be less than that offered by the management, so it would be no real alternative.

In this context, in early February 2001 the Sant Cugat production workers decided to put an end to the stoppages and to negotiate the conditions of the redundancies. It was considered that the general implications of such an agreement would be negative but that it would solve the problems of the individual workers, attenuate the consequences of the closure for the affected workers and obtain better compensation.

Finally, the workers' representatives were able to reach an agreement with management covering the 26 relocations offered by the company and providing for an improved placement service, offering the dismissed workers jobs of a similar professional level, wages and geographical situation to those in HP. The representatives also achieved a better deal on compensation for the redundant workers. Compensation will not follow the wage differentiation rules laid down in the company's pay policy, but will be made up of a fixed amount per year of seniority (bringing payments far higher in all cases than the compensation offered by the company in all cases and also higher than a possible annuity for each worker). This took the compensation to between ESP 4 million and ESP 10 million per worker.

Commentary

Massive redundancies carried by multinationals making profits are very common in Europe and the rest of the world (FR0104147F), as is outsourcing in order to reduce costs (in terms of labour, tax, trade, facilities etc) (TN0008201S). The decision by HP in Spain is one more case of this tendency.

Some companies act in an authoritarian way in order to maximise their already high profits, regardless of the social effects of short-term rational economic strategies. This approach characterises North American multinationals, whose methods are having an increasing influence on European companies.

In such cases, the public authorities have often taken a passive attitude, or even one of tacit support for the multinationals. For them, the end - job creation in the short, medium or long term — justifies the means, ie approving unjustified redundancy procedures, precarious employment and working conditions, tax exemptions etc.

Globalisation (which can be seen as the lack of regulation of companies' actions at a world level and liberalisation) and outsourcing are leading to a profound change of scenario that seriously weakens trade unions. The atomisation of companies and the dispersion of workers are important obstacles to the unions' capacity for organisation and collective representation, and make it very difficult for them to deal with the liberalisation process in an integrated way. The impact on employment and working conditions of the new production model is largely beyond the scope of trade union intervention. The unions and the workers are left with a very limited capacity for action, given a gap in terms of international organisation and solidarity between workers. The debate on globalisation, outsourcing and trade union action is at a very early stage and will be long because it will be necessary partly to redefine the forms of organisation, representation and collective bargaining. (Clara Llorens, QUIT-UAB)