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In February 2004, crises erupted at the ThyssenKrupp plant at Terni and the Ilva plant at Cornigliano (part of the Riva group) which may have significant repercussions for the entire Italian steel sector. ThyssenKrupp, the German-based steel multinational, announced its intention to close some of its operations located in Terni and make 500 employees redundant. The Riva group, the largest Italian steel producer, decided to close down its blast furnace at Cornigliano because of cut-backs in supplies of coke from China and placed 600 of the plant’s 2,700 workers on the wages guarantee fund (if the coke supply problem persists, Riva's Taranto steel works will be affected as well). In both cases there have large-scale protests which, in the case of Terni, involved the entire community.
Italy is the second-largest producer of steel in the European Union, with 26.7 million tonnes produced in 2003 (figure from Federazione Imprese Siderurgiche Italiane, Federacciai) and an annual growth in output of 1.7% (much more than France and Germany, which reduced their output by 2.2% and 0.4% respectively). These figures highlight the strategic importance of a sector which started to develop in the 1950s, following the Italian state’s strategy of creating a steel industry able to meet strongly expanding demand for mechanical products (mainly cars and domestic appliances). Owing to a series of adverse factors, the success of the Italian public steel producer, Finsider, dwindled in the 1980s, which led relatively rapidly (between 1992 and 1996) to privatisation of the Finsider plants. The Riva group purchased Ilva, with its plants at Taranto and Cornigliano; the German-based multinational ThyssenKrupp took over Acciai Speciali Terni (Ast-Tk); Dalmine passed to the Technit group; and other plants were ceded to the Lucchini group. In recent years, these private companies have maintained steel production at high levels, raising productivity from 260 tonnes per worker in 1980 to 670 tonnes per worker in 2002 and reducing their total workforce from 100,000 in 1980 to 38,000 at present (figures from Federacciai, 2003).
In early 2004, recent price increases for raw materials (scrap iron and steel, the prices of which have doubled to USD 200 a tonne) and sea freight, together with the growing competitiveness of North and South American and Asian (especially Chinese) companies, are two of the main factors responsible for a crisis which is developing in the Italian steel sector.
Acciai Speciali Terni
In early February 2004, ThyssenKrupp, the owner of the Acciai Speciali steel factory at Terni (Ast-Tk), announced its intention to close the works producing 'electrical steel' (used to conduct electricity), putting 900 jobs at risk (500 workers employed in the establishment and 400 employees of subcontractors working in the same factory). Among the workers at risk of losing their jobs are 150 young people on fixed-term contracts (work/training contract s, or contratti di formazione-lavoro) which expired at the end of February. The decision was taken after the company had made verbal pledges to increase investments in the area so Terni would become a 'pole of excellence' in the production of high-quality steel. On changing this strategy, the company management justified its decision to close the electrical steel works at Terni on the grounds that it was part of a broader industrial plan. Its intention is to concentrate this type of production in the group’s plants located in Germany and France, while simultaneously undertaking massive investments in Asia, using South Korea as the production platform for the Eastern markets.
The decision provoked immediate protest by the Ast-Tk workforce in Terni and the mobilisation of the entire local community. There was mass participation in a general strike and demonstrations called by the trade unions in Terni on 6 February. Workers, pensioners, students, shopkeepers and entire families came to Terni from every part of the region of Umbria to express their solidarity with the Ast-Tk workers. The entire city came to a halt for around three hours: factories were closed; shops put up posters announcing 'We’re closed today so that the city doesn’t close tomorrow'; and a procession of 30,000 people - led by the mayor of Terni, the senior officials in the provincial and regional administrations, and numerous representatives of the political parties - occupied the city centre to stage the largest trade union demonstration recorded in Terni in the past 50 years. Strikes were also held at Narni and Amelia, towns in the same district as Terni, where all the shops closed.
By showing solidarity with the steel workers, an entire region thus expressed its fears about its future, given that for 50 years the Umbria region has tied large part of its existence and economic and social growth to steel production: around half of Terni’s municipal budget is spent on connecting Umbria with the port of Civitavecchia; 10 of the 13 courses run at the city’s university deal with industrial development; the region’s energy plan has already taken account of ThyssenKrupp’s need for competitively-priced energy supplies; and the 'Legge Obiettivo' (a law setting goals to fulfil in the next few years as regards the construction of infrastructures) envisages expansion of road and rail networks and of the logistical hub, for which purpose the regional government has already allocated its share of the funding.
In the days following the public mobilisation, the Minister of Production Activities convened a meeting with the social partners. During the talks - which began on 10 February - ThyssenKrupp made three commitments: to postpone the meeting of its supervisory board (scheduled for 27 February) to decide the fate of electrical steel production at Terni; to renew the 150 fixed-term contracts at the Terni steelworks; and to undertake the investments foreseen for the area, with a view to further investment in the future.
Despite the positive result of this meeting, the climate of conflict at the steelworks shows no signs of subsiding. Given a continuing blockade of goods by workers at the factory gates, the company decided to place 56 employees on the 'mobility lists' (IT0311306T), and also threatened to go to court. This decision has been reversed after a further meeting with the Minister of Production Activities. Negotiations are still ongoing in late February, therefore, but only the meetings to be held in the near future will clarify what the final outcome of the dispute will be.
Ilva at Cornigliano
There has also been tension in Genoa, where, after a stalemate which has dragged on for two years, the crisis of the steel industry has moved to centre stage. On 10 February 2004, workers at the Ilva steelworks in Cornigliano (with 2,700 employees) protested in Genoa city centre because they were not invited to a meeting - scheduled for 12 February in Rome - with the cabinet under-secretary, Gianni Letta, to decide the future of the Ilva works at Cornigliano. This is one of the largest plants, together with the Taranto steelworks (13,000 workers plus 5,000 employed in subcontracted and outsourced activities), of the Riva group. Riva is one of the largest steel manufacturers in Europe and the supplier of raw materials to almost 50% of Italian industry (mainly producers of electrical appliances, energy generation equipment, car components, and food containers). The workforce demonstration highlighted two issues in particular: the imminent use of the wages guarantee fund (IT0311306T) for at least 600 workers at the Cornigliano plant following shutdown of its blast furnace due to difficulties with fuel supplies (coke); and the future of the blast furnace itself, which is part of a 'reclamation plan' for the entire site occupied by Ilva.
Violent incidents broke out during the demonstration. A number of workers attempted to enter the Genoa prefecture building and clashed with the police. At the same time other demonstrators blockaded one of the main squares in Genoa city centre with bulldozers and lorry trailers, while the main procession marched to the Genova Brignole station, where a sit-down protest on the railway lines blocked trains to Rome and France.
The problem of the production and importing of coke for the Cornigliano blast furnace has a long history. The Riva Group was ordered by magistrates to close its coke producing plant at Cornigliano, and part of the equivalent plant at Taranto, because of emissions of pollutants in excess of the maximum legal levels. As a result of the court order, the Riva Group was forced to rely on imported coke (almost all of it from China) in order to produce steel. However, since the beginning of 2004, China - the largest producer of coke in the world - has drastically reduced its sales, because it is increasing its own steel production and uses almost all the coke produced in the country for its own purposes. Hence, due to the lack of fuel, the Cornigliano and Taranto steelworks are threatened with a total halt of production and the consequent utilisation of the wages guarantee fund (at Cornigliano more than 600 workers would be affected, while in Taranto this is estimated at 6,000 plus another 3,000 workers in subcontracted and outsourced activities).
The meeting held on 12 February was attended by the cabinet under-secretary, Mr Letta, the Minister of Production Activities, Antonio Marzano, representatives of Ilva, representatives of the local authorities, and - following the demonstration on 10 February - representatives of the trade unions. No agreement was reached on implementation of a plan drawn up two years previously by Mr Letta himself for conversion of the Genoa steelworks. The so-called 'Letta plan' provides for: the division of the site into two almost equal areas; the increased cold working of steel; the closure and decontamination of the blast furnace area; and the start-up of new production activities and harbour services able to absorb the redundancies caused by the shutdown of the blast furnace. However, the plan has been blocked for two years by disputes between the Riva Group and the local authorities. The company wants to purchase the site and continue with the cold working of steel, while the local authorities are opposed to any sale of the site to the company and are only willing to grant it a 90-year leasehold. The issue of ownership of the site is connected with problems concerning the resources available for the decontamination operations and employment problems to do with the redeployment of the workers made redundant by closure of the blast furnace. This latter issue in particular should be clarified in detail at the next meeting of the parties involved - for months if has been believed that around 600 workers would have to leave the company, half of them being eligible for a particular mobility scheme (accompagnamento alla pensione) which provides income support for workers close to pension age until they retire.
Reactions
The crisis in the steel industry has alarmed both the government and trade unions, which have proposed the opening of talks on the entire Italian steel sector. In the words of Cosmano Spagnolo, national secretary of the Italian Metal-Mechanical Federation (Federazione italiana metalmeccanici, Fim) affiliated to the Italian Confederation of Workers' Unions (Confederazione italiana sindacati lavoratori, Cisl), the unions intend to ask the government for 'an overall package of interventions to protect both blast furnace production and electrical steel production against further situations of crisis'. The companies represented by the Federation of Italian Steel Companies (Federazione Imprese Siderurgiche Italiane, Federacciai) affiliated to Confindustria, have requested the government to devise measures which extend beyond the emergency logic dictated by the Ilva and ThyssenKrupp cases. According to the president of Federacciai, Giuseppe Pasini: 'Italy must transform the steel industry’s difficulties into a battle by the European Union. The large American steel manufacturing groups have asked the US administration to stop granting licences for the export of ferrous material [essential for electric steel factories]. If the request is granted, the EU should respond immediately. We will demand that the scrap iron exported by the EU to the USA and Asia is blocked.'
The administrators of the Umbria region and the city of Terni, too, have appealed to the European Commission: '60% of the electrical steel produced in Europe is consumed in Italy. If the Terni plant is closed, Italy will no longer be an exporter but an importer in contravention of Community rules.' According to the representatives of the trade unions and the local authorities, the decision by ThyssenKrupp 'is a blatant abuse of its dominant position to create the conditions for the transfer out of Italy and the European Union of market shares, industrial skills, and research and development expertise which are part of the national and European heritage'.
In response to these appeals, member of the European Parliament have expressed their full solidarity with the Terni workers. The European Parliament has asked the European Commission and national governments to intervene to protect the sector and safeguard jobs. Again at the European level, the European Confederation of Iron and Steel Industries (Eurofer), after waiting for some months, has reacted to the 'coke problem' by requesting the European Commission to begin consultations with China and attempt to persuade it to change its strategy. If no agreement is reached, an appeal to the World Trade Organisation (WTO) is not ruled out.
At the national level, one of the proposals by the Italian Minister of Production Activities, Mr Marzano, is 'to accelerate the introduction of advanced technologies which would enable coke to be manufactured in Italy without impacting on the environment'. He maintains that 'this is indispensable for resuming the coke production halted by the magistrates because of pollution problems.' Intervention of this kind, however, would require at least two years to accomplish. As regards the crisis at the Ast steelworks in Terni, the government - not least because of the decision by the company to take part in talks and to prolong the work/training contracts of 150 workers at the steel plant - has declared itself moderately optimistic that the dialogue now begun between the government and the social partners may lead to reconsideration by the German multinational of its industrial plan as regards the Terni steelworks.
Commentary
After the large-scale privatisation, restructuring and concentration processes of the 1980s and 1990s, numerous Italian and European steel companies are now more competitive than they used to be in the past. Despite this renewed competitiveness, however, Europe’s contribution to worldwide steel production and consumption has recently suffered from the aggressive entry into the market by the Asiatic countries and those of the former Soviet Union. The resulting change in global market shares is the cause of the crises that have recently hit Ast-Tk at Terni and the Ilva steelworks at Cornigliano and Taranto.
The cases of Terni and Cornigliano illustrate two distinct aspects of the growing world economic integration. Ast-Tk shows that, in certain cases, a good industrial performance, a favourable climate for manufacturing activities and a set of specific supportive local policies might not be decisive for the location and investment choices of multinational companies, as they are influenced by global equilibria and financial strategies. Ilva represents a case of a significant impact of environmental regulation on economic activity, which exposes the different interests of the various stakeholders and often requires the intervention of public authorities and specific measures. At Cornigliano (and Taranto), this situation has worsened since the closure of the coke producing plant has further increased the dependence of the steelworks on foreign purchases and on international markets for raw materials, which are characterised by relative volatility. The difficulties in finding a shared solution and the involvement of national and local public authorities for the continuing importance of steel production for the Italian manufacturing sector, created the conditions for the present conflict.
Finally, it is interesting to note that the forms of industrial conflict are changing even in the manufacturing sector and assume some typical features of conflict in services, such as the involvement of third parties (through highway and railway station blockades, for instance), in order to provide 'social visibility' to the protest - a visibility which was formerly perhaps granted by a more marked centrality of the manufacturing sector in economic and social life. (Diego Coletto, Fondazione Regionale Pietro Seveso).