Managing large-scale restructuring: The cases of Danone-Saiwa and Moulinex

Under pressure from economic and financial globalisation, French-based food group, Danone, and electrical household appliance manufacturer, Moulinex, announced large-scale restructuring in 2001. Danone decided to rationalise its European biscuit production facilities which led to the closure of the Saiwa factory in Locate Triulzi, Italy, while Moulinex filed for bankruptcy following an unsuccessful company recovery plan. The two case studies explore the decision-making process accompanying the restructuring, outline the positive aspects and highlight the initiatives underway for economic redevelopment of the regions concerned.

Restructuring is a striking feature of today’s European economy, often with negative effects on both employment and working conditions. And yet, it is a crucial means for enterprises to reshape their way of production and work organisation in order to stay competitive in the global market.

2001 was a particularly notable year in this regard for France following Danone’s European restructuring which resulted in the closure of two plants in France, one in Belgium and one in Italy as well as Moulinex’s bankruptcy which led to mass redundancies. However, the corporate context is different in the two cases: the multinational food group Danone embarked on restructuring its biscuit production facilities in the light of its diminishing competitiveness while Moulinex filed for bankruptcy having reached a crisis point following several unsuccessful restructuring plans aimed at maintaining its competitiveness.

Case study topics

The two case studies cover the period from 2001 until early 2004, focusing on the following areas:

• the decision-making process in each company with regard to the restructuring;

• national context of restructuring, including mass redundancies, and the impact on the restructuring process;

• analysis of the positive aspects of each restructuring case, i.e. the close cooperation of and ongoing dialogue between the competent public authorities at various levels, trade unions and company management;

• initiatives undertaken for the economic revitalisation of the area and region concerned;

• outcome of each restructuring and lessons learned.

The case studies are downloadable free of charge as pdf files by clicking on the company’s name below. Both case studies are aslo available in Spanish

Danone-Saiwa

Danone (English version) (

330 kb; Danone (Spanish version)

210 kb), in particular, places a strong emphasis on social and territorial responsibility, seeking to work alongside key local players and to take environmental concerns into account, during both good and bad times. Thus, Danone’s restructuring strategy focused on its commitment to redeploying laid-off workers and to the reindustrialisation of the areas where the company decided to close down manufacturing sites. The group’s global objectives included:

• minimum redeployment of 80% of redundant staff;

• offsetting job losses by contributing to greater job creation in the same areas where sites were closed down.

Moulinex

In the case of Moulinex (English version) (

183 kb; Moulinex (Spanish verion)

195 kb) , the French government appointed a representative to oversee the economic and social redevelopment of the lower Normandy region following the company’s bankruptcy. The redeployment of employees as well as the implementation of the various social measures (e.g. early retirement, retirement based on exposure to asbestos, etc) amounted to €100 million in costs which were entirely paid for by the public authorities. The regional development plan, including site reassignment and the creation of 2,300 new jobs, was funded with €103 million by the State and the lower Normandy region, which financed 40% and 60% respectively. These positive results are attributed to the effective coordination of the various players. However, two criticisms remain:

• as with many restructuring cases, redundancy marked the beginning of significant social exclusion for a number of former employees (about 20%);

• former Moulinex employees felt they were the victims of poor company management.

Assessment

Both case studies illustrate ways of managing large-scale restructuring with positive outcomes, despite some criticism in the case of Moulinex. The identification of specific objectives in each case, with strong cooperation from company management, trade unions and public authorities (at various levels) to carry them out, resulted in a united effort to successfully implement social as well as economic measures. In this sense, the cases highlight that ongoing dialogue aimed at finding points of agreement between all players involved can help to successfully overcome some of the difficult aspects of restructuring.