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In late January 2005, Siemens Vdo Automotive (part of the German-based multinational) and trade unions signed a company-level agreement that is highly innovative in the context of Italian industrial relations, because it runs counter to the increasing tendency for firms to relocate production abroad. The agreement introduces Sunday working - a concession made by the unions in exchange for considerable wage increases, reduced weekly working hours and the guarantee of new recruitment. For the time being, the new measures affect a single factory, but the objective is to extend the agreement to cover all Siemens plants in Italy.
In Italy, the German-based Siemens electronics group has factories that manufacture fuel injectors and centres conducting applied research on new injection technology, some of which are world leaders. The plants in the area between Pisa and Livorno were opened at the end of the 1980s, at which time they had around 20 workers. Today, the workforce amounts to 730 people, and Siemens Vdo Automotive, with annual sales of EUR 120 million, supplies car manufacturers in numerous countries (80% of output is sold in Europe and 20% in Asia). Employees are around 35 years old on average, and almost half of them are graduates. Average monthly pay is EUR 1,400-EUR 1,450, and since 1990 investments in research and development have amounted to EUR 150 million. Siemens produces an average of 20 million fuel injectors per year, and the target for 2005 is 1.5 million.
Siemens had been considering relocating these operations from Italy. However, on 27 January 2005 it decided against this move when an 'integrative agreement' (ie a company-level agreement within the framework of the national sectoral agreement) was signed at one of its plants in the Pisa area, which introduces new provisions on working time, pay, employment and investment. The deal was signed: on one hand by Siemens Vdo Automotive Spa and the Employers’ Association of Pisa (Unione Industriali Pisana) - the local employers’ association affiliated to Confindustria; and on the other by the unitary workplace union structure (rappresentanza sindacali unitaria, Rsu) (IT0309304T) and the three metalworkers’ trade union federations - the Italian Federation of Metalworkers (Federazione impiegati operai metallurgici, Fiom) affiliated to the General Confederation of Italian Workers (Confederazione generale italiana del lavoro, Cgil), the Italian Metal-Mechanical Federation (Federazione italiana metalmeccanici, Fim) affiliated to the Italian Confederation of Workers' Unions (Confederazione italiana sindacati lavoratori, Cisl), and the Union of Italian Metal-Mechanical Workers (Unione italiana lavoratori metalmeccanici, Uilm) affiliated to the Union of Italian Workers (Unione italiana del lavoro, Uil). Because of the difficult market situations of its customers, Siemens has decided to change its mix of products, and also to use its plants in a continuous cycle in order to consolidate its market shares, which are increasingly subject to fierce competition by countries where labour is cheap.
Contents of the agreement
The new company-level agreement provides that:
- from 31 January 2005 assembly lines will operate on a continuous cycle across three eight-hour shifts (06.00-14.00, 14.00-22.00 and 22.00-06.00) with a 30-minute cafeteria break in each. The shift schedule is structured around five alternating teams. Employees will therefore also work on Sundays, but total weekly working time will decrease from 35 to 32 hours;
- the shift schedule will be linked to a gross monthly pay rise of EUR 250, which will be reviewed every two years;
- plants will close down for six days a year in coincidence with public holidays;
- 16 new workers will be recruited on open-ended contracts by 30 April 2005;
- Siemens will invest EUR 45 million over 2004-6 - these investments are already under way; and
- the parties will meet in three months’ time to review the results of the new shift system, and they will meet at the end of every year in order to examine production and employment prospects and the progress of the investment plan.
At present, the agreement concerns around 60 employees at the plant in Fauglia (Pisa), but the expectation is that it will be extended to the other Siemens plants in Italy within two years. After the agreement had been signed, a referendum was held among all 730 workers at the Pisa factory, 73% of whom (511 workers) voted in favour of the agreement.
Reactions of the social partners
All those concerned have assessed the agreement positively, and it has also been welcomed by the representatives of the local institutions. Paolo Benesperi, the regional councillor for employment and education, has called the agreement an excellent result and said that the model should be adopted in other branches of manufacturing. Mario Levrini, a representative of the Employers’ Association of Pisa, expressed satisfaction with the deal and acknowledged the contribution made to it by the trade unions, but he added that 'there are no ready-made solutions; every deal must be made to measure'. For the Association, moreover, the trade unions and Siemens have managed to reconcile the company’s need for competitiveness with the personal needs of the workers by designing a model geared to consolidation and development.
The secretary of Fiom-Cgil's Pisa organisation, Domenico Contino, has stressed that 'continuous cycle production requires employees to make a great deal of extra effort, but in this way we have safeguarded their interests, protecting them against risks of relocation in the future and creating new employment'. The regional secretary of Fiom-Cgil declared: 'unfortunately, the overwhelming majority of companies do not have the same far-sightedness. This is a pity, because Siemens has shown itself able to acquire new market shares by concentrating on intelligent flexibility'. For the regional secretary of Cisl the results of the referendum demonstrate that the world of work has not entrenched itself in conservative positions, and that when flexibility is not contrary to workers’ interests, they are willing to accept it.
Commentary
The globalisation of markets - with the consequent 'internationalisation' of firms in all the advanced economies - has provoked much debate among practitioners, experts and academics on the (positive or negative) consequences of relocation of production for both the home and destination countries. The great interest aroused by the debate on relocation, however, has arguably often been accompanied by comparative neglect of the alternatives; a neglect which may in part be due to a lack of concrete examples. One practicable alternative is to rely on product quality by increasing investments in research, and developing personnel management policies intended to build workforce consensus. The agreement reached at Siemens is an outstanding example of this approach, and it consequently stands in contrast to recent cases of relocation by companies in north-eastern Italy (IT0501206F) and the policies pursued by Siemens itself in Germany (DE0407106F).
There are various reasons why the Siemens agreement is innovative in the current context of Italian industrial relations.
The most obvious one is Siemens’ decision to pursue its business goals, not by seeking to reduce costs but by undertaking a radical process of innovation whereby product quality is the means to consolidate and increase the company’s market share. The Siemens agreement therefore runs counter to the increasing tendency for large Italian companies (national and multinational) to relocate production.
The agreement is also important as regards the maintenance of good levels of employment in Tuscany. Also located in the region is one of Italy’s largest companies currently facing difficulties, namely Piaggio, where discussions are taking place on a possible 500 job cuts. The decision by Siemens to keep production in Italy may therefore serve as a valid example for other companies now having to restructure in order to maintain high levels of competitiveness.
Finally, the agreement is innovative also in view of the new 'bargaining culture' displayed by the Italian unions. Until some years ago, it would have been difficult to imagine the unions, especially the most radical of them, signing an agreement of this kind. Whilst this change has induced some commentators to regard the Siemens deal as manifesting a form of 'concession bargaining', it is more important to stress that once again a cooperative approach devoid of ideological posturing on the part of employers and unions has proved crucial in reaching a solution that rewards both the far-sightedness of Siemens and the willingness of the unions to negotiate on acquired rights. (Edoardo Della Torre, Ires Lombardia)