Up to a third of jobs at the NedCar car manufacturing plant in Born, in the southeast of the Netherlands, may soon be cut. In April 2006, owners Mitsubishi and DaimlerCrysler announced their intention to reduce production output to 70,000 cars, threatening the jobs of at least 1,000 employees. The employees and trade unions are demanding that the company provides alternative employment by pursuing new models for manufacture, and are calling on the government to provide the company with financial support. However, the Dutch prime minister rejected this demand. Following strike action by employees, the Mitsubishi management has accepted the unions’ proposal to seek other production possibilities. In the coming four months, no dismissals will take place.
Reasons for job cuts
The jobs of 1,000 employees among the 3,000-strong workforce at the NedCar car assembly plant in Born are at stake. Over the past two years, some 1,700 employees have already been dismissed by the company. Now that DaimlerCrysler has announced its intention to stop production of the Smart Forfour model due to disappointing sales figures, the Mitsubishi Colt is the only model that remains in operation at NedCar.
The problem of overcapacity is once again looming for this one-of-a-kind Dutch car manufacturer, where two models can be assembled in a single production line. While around 300,000 cars were produced in peak years, these figures have fallen to just over a third of this output, at 115,000 cars. Mitsubishi would like to see this figure further reduced to a mere 70,000 cars in the future as part of a cost-cutting plan. In doing so, the company hopes to discontinue the double-shift system and revert to single-line production.
In early April 2006, an unofficial strike took place at the NedCar plant, when Mitsubishi were in the process of removing all the cars ready for sale from the plant. As a result, negotiations began between the employer and the trade unions in a tense atmosphere. Moreover, employees and unions fear that the company will be split up into viable and non-viable parts.
Trade union claims
On 5 April, negotiations aimed at providing greater clarity took place between Mitsubishi, the unions and the works council; however, consensus was not reached among the parties and a period of uncertainty remained in the week that followed. The unions expected Mitsubishi to put forward a bridging plan extending to 2010, in order to compensate for the loss of the Smart Forfour; however, this failed to transpire even though it was considered necessary by the unions. Instead, Mitsubishi issued a single message that the company planned to reduce capacity. In response, the unions have demanded a mandate in order to draft a bridging plan of their own.
Mitsubishi is currently one of the less successful Japanese car manufacturers, but the unions point out that the NedCar plant in Born is the Japanese parent company’s only production plant in Europe. Nevertheless, critics question whether this alone will provide sufficient reason to encourage the Japanese manufacturer to remain in Born. Most of the Colt models are sold in Russia, which could also become a cheaper production location, despite the fact that this would require several years of investment.
Moreover, the trade unions emphasise that Asian car groups, such as Hyundai, Nissan and Toyota, are on the lookout for production capacity. In support of their claims, the unions also pointed out that cars are still being manufactured at a profit in Belgium and France.
Demand for government support
NedCar is the only car manufacturer in the Netherlands to have been established in the 1960s with government support. This aid was provided as a form of compensation on the part of the government to alleviate job losses in the mining industry. The production method at the assembly plant in Born was renewed and automated, and a single production line was installed for two models. The company achieved impressive results for a number of years, but government support remained indispensable. In 1985, the state reduced its stake to a majority holding in the run-up to its intended complete withdrawal from the company in 1999.
In total, the Dutch state has given €1 billion in support funding to the company. As NedCar was once a vital source of employment – and continues to be a significant employer in the region – employees at NedCar, along with the trade unions, have turned to the government for help after the disappointing outcome of the negotiations. Mitsubishi is demanding financial support in a bid for recovery.
Government response
The unions and employees have reminded the government that the region within which NedCar is based continues to suffer an above-average unemployment rate. Moreover, NedCar’s innovative capacity cannot be overlooked, considering the Dutch government’s policy on innovation. Minister of Economic Affairs, Laurens Jan Brinkhorst, confirmed that the government would consider providing support if the employees could present a solid business case.
Over the Easter weekend, the Dutch Prime Minister, Peter Jan Balkenende, conducted emergency talks with the company’s chief executives, but failed to offer any support. This decision once again leaves Mitsubishi in conflict with its workforce.
After employees initiated strike action, the Mitsubishi management decided to accept the trade unions’ proposal to join efforts in the search for other production possibilities. They have also agreed that there will be no dismissals in the coming four months.
Marianne Grünell, Hugo Sinzheimer Institute (HSI)