Abstract
We argue that, notwithstanding the importance of national industrial relations systems in shaping employment outcomes in situations of company restructuring, differences within countries also exist that cannot be explained by the influence of national institutions. Local union activity can affect corporate restructuring and influence how companies manage restructuring within the EU. The capacity of local unions to use company-based resources and the unions’ internal and external social relationships shape the variations in local union responses. In addition, our research suggests that the interplay of these factors in the socio-economic context of restructuring is crucial in explaining variations within countries. The article argues for the need to focus on these company-level developments as a crucial step in undertaking comparative industrial relations research.
Introduction
Examining trends in globalization and regional economic integration (Sklair, 2001), a growing body of international literature concerning employment and industrial relations has addressed the continued distinctiveness of ‘national business systems’ (Whitley, 1999) and trade union responses to restructuring. Rules and norms characterizing national labour and business systems are the basis of enduring national differences in the restructuring processes of international businesses across national contexts (Ferner et al., 2006). While national differences are clearly important, our starting point is that we need to bring into the equation the differing activities of local actors in the workplace and understand the factors accounting for intra-country variation.
Examining the importance of differing union responses within specific national settings means going beyond the agenda of the Varieties of Capitalism paradigm (Hall and Soskice, 2001). As Peck and Theodore (2007) highlight, that approach poses serious questions about the appropriate way to comprehend ‘economic variegation’. Moreover, Kelly and Frege argue ‘explaining actors’ strategies by their institutional context alone is too simplistic and deterministic’ (2003: 12) because it downplays the mutual dependency between actors and institutions.
Our research sheds light on the distinctiveness of local union responses to the management of change in French and Irish plants. It sheds light on company-level factors and internal and external trade union social relationships shaping intra-national variation in union responses to restructuring. The capacity of local unions to access these factors can increase their power to influence the processes and outcomes of change. Company-level factors refer not only to a company’s structural aspects, such as financial circumstances (including investor interest), workforce composition and unionization. They also include the corporate management strategy as well as the attitude of local unions towards restructuring. Our research finds that in companies with a strong economic position and a relatively elderly workforce, unions are potentially able to work more effectively for their members by negotiating good exit bonuses and jobs safeguards. Social relationships refer to external links with the local community and local (regional) government, as well as internal linkages between unions and different levels of employee representative structures. For example, it was observed that the extent of local unions’ positive influence for workers was higher where unions could benefit from a better articulation with company-level representation structures at national- and/or European level, and where a closer link existed between the locations of action, the local community and local authorities. This provided scope for enhancing local union bargaining power vis-à-vis the company’s restructuring agenda. Findings also reveal that the variation in union responses depends mainly on the combination of these factors and their interplay with the socio-economic context of restructuring; the degree of plant autonomy (of management) in the company; the industrial relations (IR) climate at the workplace; and the political context. This affects the capacity of local unions autonomously to frame negotiation that has the potential for achieving positive outcomes.
Four case studies of companies that have undertaken processes of change in different European contexts (i.e. ‘state’ and ‘market’ regimes) 1 are used to illustrate the fact that, despite national institutional variations shaping industrial relations outcomes at the workplace, sub-national differences exist that cannot be explained solely by the influence of national institutions. We show that restructuring does not always take companies (in different countries) in the same direction, even in the context of the same regulatory regime. Significant diversity within countries (and similarities between countries) is seen in the different responses of local unions to company change. Two types of responses are identified. In the first, local unions cooperate with restructuring by not initially opposing redundancy negotiations. They bargain on the implementation of re-employment (mobility) programmes by using internal (retraining and requalification) and external (severance payments and early retirement) flexibility measures. In the second type, local unions use a confrontational approach to oppose restructuring by refusing at an early stage to become involved in negotiations on compulsory redundancies.
The first section of the article evaluates current debates on the patterns of corporate restructuring and national systems of industrial relations. Then, we outline the research design and present findings illustrating intra-national diversity in union responses while highlighting factors explaining diversity. Finally, in order to provide a more advanced understanding of the degree of union influence over the management of change, we emphasize why these factors need to be seen in the socio-economic context of restructuring.
Company restructuring and union responses
Drawing on institutionalist analysis, we know that different industrial relations frameworks shape the ability of local unions and employee representatives during restructuring, and that this produces different effects on economic and industrial change (Edwards, 2004). Specifically, studies account for significant commonalities and convergence within different national contexts as the result of the belief that diverse national institutions shape different union responses to organizational change (e.g. Streeck, 1987; Kochan et al., 1997). Accordingly, the diverse way in which country-based institutions operate should lead to institutional variation in, for example, systems of workforce adjustment and flexibility, training policies and skills formation. These processes are captured in Hall and Soskice’s (2001) analytical framework of ‘liberal’ and ‘coordinated’ market economies, which seeks to provide a foundation for examining institutional sources of companies’ comparative advantage. Drawing on this analysis, national institutional contexts appear to be of particular importance in explaining the diversity in local union responses to corporate restructuring. This may reflect a more general distinction between what Schmidt (2003) specifically labelled ‘state’ capitalism (France) and ‘managed’ capitalism (Germany) on the one hand, and ‘market’ capitalism (United Kingdom) on the other hand. State and managed capitalism usually correspond with ‘coordinated’ economies, in the Varieties of Capitalism variant, where trade unions are an established part of often institutionalized social dialogue and recognized as important social actors in the decision-making process. Following a purely institutional view, trade unions in this typology of capitalistic regimes should be able to use the institutional resources provided by each national regime to generate convergent or divergent responses within or across countries in a situation of company restructuring. This may imply, for example, improving employees’ skills and empowerment in state and managed national regimes, rather than relying on sanctions and benefit reduction as in the market variant typified by the Anglo-American regime (the ‘liberal’ economies).
In contrast to approaches treating national systems as the basic unit of analysis, other literature has highlighted the importance of micro-level (sub-national) structural features (Locke, 1992; Frost, 2000; Lévesque and Murray, 2005) and societal features (Maurice et al., 1986) in assessing the differences and similarities in comparative industrial and employment relations research. We focus on research into local unions’ capabilities and power resources to influence change in the face of common international market pressures in different institutional contexts. There is a wide range of evidence of the impact of different local power resources (internal solidarity, network embeddedness, narrative and infrastructural resources) on the capacity of local unions to bargain more effectively for members’ interests in situations of change, irrespective of institutional settings. For example, Lévesque and Murray’s (2005) study of union members in Canada highlights both the complexity of internal solidarity as a union power resource and the importance of ‘deliberative vitality’ as methods to build bridges between contending parties. Moreover, various studies illustrate the importance of network ties for union negotiations with management over workplace change (Eaton, 1990; Locke, 1992; Frost, 2000), as well as providing critical examples of values, projects and ‘fortifying myths’ (Voss, 1996). The result is a wide intra-country variation in workplace outcomes, as well as local practices and the resources unions mobilize in exerting influence on patterns of labour-management relations.
As Sisson (2001) argues, the negotiation of Pacts for Employment and Competitiveness (PECs) in Europe at the end of the 1990s, to link employment to competitiveness, potentially increased expectations of a growth in sub-national (micro-level) variation. This is the result of the wider scope under PECs for local actors to influence company-level employment negotiations (in particular flexibility and job security) in situations of uncertainty. This echoes comparative analyses of union revitalization strategies exemplified notably by Turner (2004: 3) who argues that, ‘union proactive strategies matter a great deal especially when unions seek to pursue renewed influence both at work and in the broader society’ (see too, Frege and Kelly, 2003, 2004; Turner and Cornfield, 2007). It implies developing a wider, in-depth, micro-level, understanding of how local unions can best influence contemporary developments, including corporate restructuring. What are the causal factors accounting for local unions’ engagement in negotiations on restructuring? What are local actors negotiating? In order to answer these questions we need to explain the nature of the factors shaping variations within countries in local union responses to corporate restructuring. This means identifying the resources local unions use to bargain more effectively and assessing their degree of interrelation with the socio-economic context of restructuring. More specifically, it implies understanding the strategies of both employers and employees, which is at the core of the analysis in the following sections.
Research design
Data are drawn from an EU-funded, three-year study (2006–2008) into firms’ restructuring processes in different national contexts. 2 The study was based on four multinational subsidiaries that had undertaken significant restructuring in two countries: France and Ireland. These countries were selected because they present a consistent degree of cross-national institutional divergence. France is usually seen as a ‘state’ capitalist regime, within the group of coordinated (or mixed) economies, whereas Ireland is typically described as an example of a liberal economy, and thereby a ‘market’ regime. By searching for a distinctive pattern for France while emphasizing the nature of national capitalisms as evolving over time, some scholars have stressed the continuing, albeit much changed, role for the state in France. Accordingly, France transformed from ‘state-led’ to ‘state-enhanced’ capitalism, with a reduction in state intervention and a radical turn to market-reliance in industrial relations with increased firm autonomy (Schmidt, 2003). By contrast, Ireland, despite its recent – albeit problematic – experience with social partnership, has become more market driven and decentralized in industrial relations. Because the focus is primarily on explaining intra-national variation in local union responses to company change (the dependent variable), we have increased company-level variation (2-by-2 company-level comparison) by controlling for as many factors as possible when making comparisons. One of the factors we have controlled for is the industry dimension. Despite their structural differences the manufacturing and transport sectors were selected for comparison because of their high level of internationalization and growing significance for restructuring in Europe during the period under consideration (EMCC, 2008).
Table 1 provides a comparative overview of the four cases. Companies are indicated by acronym (France Metal 1, France Metal 2, Ireland Food and Ireland Transport). The first two cases – France Metal 1 and France Metal 2 – have a number of important similarities, involving plants of medium size (which are part of a multi-location company) which were involved in restructuring operations during 2005–2007. Although ownership is not identical, both companies have a rather centralized management structure, being subsidiaries of French and US multinational corporations respectively. Both cases are characterized by the same industrial conditions, being in the manufacturing sector, pursuing a similar market strategy and with similar levels of technological sophistication. In both cases, restructuring was needed in order to reduce costs. The cases of Ireland Food and Ireland Transport include many of the same factors as the first pair, with two important additions. First, the ownership is domestic. Secondly, while commercial conditions differ in food and transport, similarities include high internationalization with relatively high levels of vertical disintegration.
Profile case studies
As Frege and Kelly (2003) argue, a union’s strategic capacity depends on its resources and organizational ability. We identify and assess the nature of the resources or factors (independent variables) that explain variations. In particular, we highlight the decisive factors for the strategic choices of local unions to use a ‘cooperative’ or ‘confrontational’ approach to company-level restructuring. These factors comprise a combination of structural (i.e. financial circumstances, workforce composition, unionization rate) and strategic (i.e. management, sensitivity to the economic dynamism in the territory and union attitudes to restructuring) company-level features. Furthermore, the framing process (procedural variable) shaping union strategic responses includes the interaction between independent variables and the socio-economic context of restructuring, in particular the degree of local autonomy of management vis-à-vis the parent company, the industrial relations corporate culture and the political context as well as the role of the company and the trade unions within it. The research is based on in-depth case studies, relying on interviews with national and European-level employers, trade unions, local managers, local employee representatives and focus groups.
Cases
Restructuring: France Metal 1
France Metal 1 was established in the early 1980s as a manufacturing subsidiary of a French-owned multinational (26 000 employees in total), located in the Bagneaux sur Loing region. The company produced cathode-ray tubes (CRTs), manufacturing approximately six million in 2004. By early 2005, demand had decreased to three million due to increased market competition and the fact that the product was approaching the end of its life. In spring 2005, management approached employee representatives (comité d’entrepriseor works councils) to advise that CRT production was to cease, as televisions would in future only use flat screens. The employees’ characteristics were typical of those of traditional industries undergoing change: a majority of blue-collar, predominantly male, older workers with long service. Six months before the restructuring announcement, 2 500 employees were working at the plant and they were mostly male (96 percent). Seventy-five percent of this workforce were blue-collar and white-collar workers (25 percent were administrative managers and technicians). Almost all employees were on permanent contracts. The average length of service was 18 years, with significant variations according to the employee status. Twenty-eight percent of the workforce had worked for more than 26 years (35 percent fewer than 10 years). As a consequence of restructuring all on-site employees faced redundancy. Three unions were present and the unionization rate was traditionally high (85–90 percent): CGT (Confédération Générale du Travail), CGC (Confederation Générale des Cadres) and CFDT (Confédération Française Démocratique du Travail). No union had an absolute majority in the works council where seats were held as follows: three for the CGT, two for the CFDT, one for CGC. Prior to restructuring a conflictual situation existed between unions and management and between the unions themselves. Inter-union cooperation was unusual but the threat of restructuring left them little choice. Frustrated by management’s unexpected announcement of plant closure and concerned about the massive compulsory redundancy programme, the local union branches of the CFDT, CGT and CGC adopted a confrontational strategy by refusing to negotiate on the closure plan. The unions mobilized the local workforce against the company restructuring plan. A number of demonstrations in the local area were organized and were strongly supported by other workers in the region. In line with French law obliging employers in companies with at least 300 employees to provide reinsertion of the employees laid off due to restructuring, the aim of the three unions was to request negotiation on a plan requiring regional re-investment. Retraining of the workforce and the creation of new products, installations and infrastructures would be key to this. Local management rejected this on the basis that its headquarters considered the French site to be no longer sustainable and were seeking profitable investment elsewhere. Interviews with local management showed that they did not have the power resources to argue the case for conversion (and consequently retention) of the manufacturing unit in France (nor did they appear enthusiastic), since the economic performance of the subsidiary was poor in comparison with other European subsidiaries. This motivated the local union branches, with the support of their regional organizational structures, to request an estimate of the social costs of closure. An independent consultant identified the high social costs of closure since employment of almost 10 000 people in the region depended indirectly on the company. This information was made public via the media. An asset sale was opened before summer 2005 and the regional authorities publically committed to provide financial support for conversion. In July 2005 a Spanish multinational in the manufacturing sector took over the Bagneaux factory. In September 2005, an agreement was reached between the new company and the three local union branches on the implementation of a conversion plan (for producing automotive glass). The employment contracts of almost one-third of the workers were transferred, 300 accepted early retirement packages with around 150 eligible for voluntary severance. While the site underwent complete refurbishment, employees undertook a comprehensive retraining programme. On 21 October 2005, another agreement was concluded between the new company and the regional authorities. This resulted in the new owner taking responsibility for retraining and requalification of employees and the construction of new production buildings with the financial support of the local government. France Metal 1 financially contributed to the reconversion project. Workers not retained by the new company, mostly skilled and experienced, voluntarily left the company. Previous working conditions had to be renegotiated. This entailed a salary reduction of 15 percent, due to the different occupations and the introduction of new, temporary contracts and flexible working time schemes. The company restructuring project was followed in 2006 by a new regional initiative designed to support local industry.
Restructuring: France Metal 2
France Metal 2 is located in Chalon-sur-Saone in south-eastern France. It is a subsidiary of a large US multinational operating in the imaging technology sector. In the second half of 2005, plant management was faced with a financial crisis triggered by rapid developments in digital imaging technology and consequently a sharp decline in demand for traditional photographic film. The stock price of the company plummeted. For companies in the sector, survival meant lowering costs, while moving up-market and looking to invest in new locations to develop more sophisticated (and diverse) technologies. This led the company to launch a global restructuring programme which would have entailed 12 000 to 15 000 job losses worldwide. This would have included further relocation of some production to emerging markets. In late 2005, the restructuring process started and plant management approached local trade unions with a restructuring plan for the Chalon site. The initial plan was for closure of the plant, with the lay-off of 2 000 employees, which the local unions opposed from the start. At Chalon-sur-Saone the majority of the workforce were blue-collar (75 percent), male (95 percent) and with long tenure (almost 25 years on average). Twenty-five percent were in administration and management. At the time of restructuring almost 30 percent of the workforce had fewer than 10 years’ service. The plant was traditionally unionized (99 percent) with a majority of seats on the works councils (comité d’entreprise) held by CGT (Confédération Générale du Travail) and CFDT (Confédération Française Démocratique du Travail). FO (Force Ouvriére) held a minority of seats. Instead of simply closing the site, the company decided to mitigate the negative effects (social conflict) that restructuring would have caused.
Essential for the successful outcome of the plan was a shared commitment by the plant-level management and the three local trade unions to seek sustainable solutions for all employees. While ‘unitarism’ was a key traditional feature of management in the global headquarters of France Metal 2 in the US, the presence of a European headquarters contributed towards the presence of a more European style of social dialogue. The company decided on a restructuring strategy that would reorient its activities towards research and market support. When negotiations began, the company highlighted to the three local unions its strategy of expanding its market share by investing in new locations. This did not exclude the option of reorienting activities in Chalon, with the creation of an industrial park for new businesses. Due to the solid economic performance of the French subsidiary vis-à-vis other locations, the global headquarters was not against the idea of reinvesting in Chalon. Therefore local managers were able to negotiate restructuring policies maintaining high-level manufacturing and competencies. At this point it was clear to the CGT and CFDT in particular that it was vital to ensure effective and meaningful interaction with the local management and thus important to encourage people to take the initiative. Although FO initially opposed this idea, refusing to negotiate on restructuring, being a minority union made opposition difficult. Thus, engagement between the three unions, employees and the local community was critical in ensuring that the employer correctly followed their legal obligations. Specifically, in France, in the case of economic lay-offs, employers are obliged to seek employment for those made redundant. Accordingly, a multi-level communication process was established, including information and exchange with members of the works council and the group works council (comité de groupe). Furthermore, a committee consisting of the three local union branches, local management, local authorities (and employees) was established to ensure daily follow-up and monitoring of the establishment of the industrial park. Local management worked closely in this respect especially with two of the three local unions (CGT and CFDT) and the public employment service and Chamber of Commerce. Possibilities for starting business activities were actively explored with potential enterprises and, by 2007, 18 new businesses were operating there. This was the result of the Plan de Sauvegarde de l'Emploiwhich was negotiated between management and unions. This offered to each employee the choice of relocation within the wider corporate group, or the opportunity for outplacement with the new businesses in the industrial park or elsewhere. Moreover, the plan included voluntary early retirement for employees who would have left voluntarily. Thus, the creation of the industrial park led local unions to support management’s restructuring agenda. The company opted for a model based on reorientation of activities and tried to retain former staff, although the loss of 20 percent of the workforce was seen as inevitable. Appropriate measures for job mobility and retraining were further negotiated between the unions and the new companies in the industrial park. One of the main issues in negotiations was reconciling the plant-based staff competencies with requirements of the new enterprises by undertaking training for specific employment rather than generic employability programmes. This required working with the new employers and with the France Metal 2 employees, to acquire an understanding of the skill requirements and the new job opportunities. All the workers transferring to other enterprises in the industrial park retained their previous working conditions including seniority.
Restructuring: Ireland Food
Ireland Food is the local subsidiary of one of the world’s largest Irish-based confectionery companies with a strong regional presence in the beverage sector in the Americas and Australia. The company employs around 60 000 people globally. In February 2006 the company sold its European beverage operations, arguing that it intended to focus on its global confectionary and US beverage businesses, and announcing a split into two divisions: confectionary and US beverages. It would appear that this resulted from stock market pressures for an improvement in the company’s financial performance. The Irish confectionary operation has a 38 percent share of the market in Ireland, where it is one of the best-known consumer brands. It employs 1 500 workers in Coolock (in Dublin), and 500 are employed at a small factory in Tallaght and a facility in Rathmore, in Kerry. The Dublin plant has always been regarded as a workplace characterized by stable, long-term and well-paid employment, reflecting the plant’s good economic performance. The company’s production workers were represented by Amicus (now Unite) and the TEEU (Technical Engineering and Electrical Union). The largest union is Amicus (80 percent) and the plant is highly unionized (90 percent). Eighty percent of the workforce at the time of restructuring were blue-collar workers (80 percent) almost half of whom were female. In October 2006, the company announced that economic difficulties due to rising costs – and profits at this plant falling by 50 percent – would necessitate a major restructuring plan involving reducing the workforce by a third, with more than 400 redundancies. However, this would be combined with a €100m investment programme to enable production levels to be maintained despite the reduced headcount. During this period, factory running costs had increased by 26 percent, to a projected €97m in 2007. In the period 2002–2006, the company argued that average wages had increased by 24 percent, energy costs by 55 percent and pension costs by almost 25 percent. The company advised both local unions that changes were necessary to restore competitiveness. Downsizing would have implied the outsourcing of all non-core functions, such as the staff canteen and maintenance, as part of a global offshoring plan, which included transferring back-office functions to India and Romania.
Following the restructuring announcement, negotiations were opened with the trade unions. Hitherto, at Ireland Food union and management followed a partnership strategy aiming at increasing labour productivity while improving pay and working conditions. Interviews with several local shop stewards illustrate this by emphasizing that the plant was always regarded as a good performer both by management and workers, due to its high productivity and pay rates (approximately €750 on average per week). Due to the offshoring initiative, local unions were convinced that restructuring at Coolock was part of a wider transnational restructuring agenda. Accordingly, the Irish delegate asked EWC (European Works Council) members for a special meeting to obtain more information on the global plan so as to glean more detail on the future of the plant. The Irish EWC member explained the good socio-economic climate in the factory, which in the past had generated increases in the productivity rate while producing good workplace conditions for all the employees. Both local unions made clear to management that, in the event of compulsory redundancies, equality of treatment, taking account of the age range in the plant, was key. In Ireland, in the absence of an agreement, redundancy is determined by seniority (LIFO-‘last-in-first-out’). Reassured by the EWC that the company did not intend to leave Ireland in the medium term, the unions negotiated with local management on compulsory redundancies. Assured of a corporate strategy to keep production in Dublin, albeit at reduced cost, unions reached agreement with local management on the provision of high-value severance packages for older workers in exchange for job security for young workers. It was reported that redundancy negotiations resulting from downsizing did not constitute a difficult exercise for the unions, specifically due to the strong economic performance of the plant and the relatively good industrial relations climate.
Restructuring: Ireland Transport
Ireland Transport is an Irish-based company operating in the aviation sector, originally state-owned and privatized in 2006. Shortly after privatization, an Irish low-cost airline holding around 25 percent of the company’s shares launched a hostile takeover bid. During the bid, Ireland Transport pilots bought company stock so that, in total, Ireland Transport employees controlled around 16 percent of the airline. In defending itself against the low-cost airline, and in a climate of serious financial difficulty, Ireland Transport’s management announced survival plans involving ‘efficiencies’ and a ‘sustainable’ return for shareholders under prevailing ownership. This would have entailed significant restructuring and job losses leading to, it was claimed, a return to profitability. Specifically, the company sought to drive through a new change programme called PCI-07 (Programme for Continuous Improvement). As part of this, the company unilaterally commissioned a consultant to undertake a benchmarking exercise on its terms and conditions of employment and to establish whether they were out-of-line with aviation industry norms and practices. In the light of the findings the company proposed a programme for rationalization and ‘continuous improvement’. They demanded changed terms of employment for existing staff and lower salaries for new employees. In particular, changes to pay and grading structures, overtime working, shift allowances and annual leave were advanced as part of the reorganization. Moreover, management considered cutting almost one-third of the workforce.
When the restructuring occurred, SIPTU (Services, Industrial, Professional and Technical Union), the local union representing all employees except pilots, who were represented by the trade union IMPACT, was the majority union (60 percent) whereas IMPACT (public sector trade union) represented only a minority of employees. Both unions rejected the restructuring plan due to its quantitative (redundancies) and qualitative (changes in practices and work culture for existing employees) repercussions. Moreover, it can also be argued that since privatization the labour-management relationship had deteriorated due to the aggressive management attitude towards the unions. Consequently, the unions refused to negotiate with the company on proposed restructuring. In these circumstances, the company announced its intention unilaterally to implement the changes proposed in the PCI-07. It proceeded to employ some new staff under the new terms and introduced revised conditions for existing workers. In response, SIPTU balloted on industrial action. In turn, the management informed the Irish Labour Court, arguing that it had sought to engage with the unions on its proposals but that they had failed to respond in any meaningful way. On the other side, the union claimed that the company had failed to provide them with sufficient information on the PCI-07 proposal. Specifically, the union complained that the company had not provided sufficient data relating to the benchmarking study. Due to the seriously deteriorating industrial relations situation, the Labour Court decided to investigate the dispute under Section 26(5) of the Industrial Relations Act 1990 which allows the Court to undertake an investigation on its own initiative. Having met both parties, the Labour Court concluded that it was clear that the company had entered into a collective agreement with the unions, in which it committed to achieve continuous improvement in efficiency and cost-effectiveness through negotiation and agreement. However, the agreement repeated a commitment that existing agreements would be honoured until they were renegotiated. The Court came to the conclusion that ‘the clear and inescapable import of that agreement was that neither party would act unilaterally in seeking to impose change’. The Court made recommendations which stressed the need for both management and the union to managing ongoing change rather than imposing ‘set piece’ headcount reductions. It is clear that both parties were continuing to have difficulties agreeing on a common direction and, principally, implementation of change desired by management.
Variety in local union responses
The case studies illustrate a high level of intra-national variation (as well as cross-country similarity) with regard to the processes and outcomes of corporate restructuring. Two patterns of local union responses to company restructuring are identified. In the first, the union responds by promptly engaging in local negotiation with management. Rather than opposing (ex-ante) restructuring including compulsory redundancies, trade unions instead cooperatively negotiate with management on potential social consequences of job loss so as to promote long-term solutions to manage change in a socially responsible way. This means, for example, negotiating with local management on measures enabling labour market ‘job-to-job’ transitions, conversion programmes and company involvement in financial support for retraining and requalification programmes for those moved to new jobs. In the alternative pattern, local unions resist change by not engaging at an early stage in negotiations with local management on restructuring. This is typical of local unions following a confrontational approach to corporate change. This is usually seen as a strategy aimed at resisting restructuring by rejecting negotiation on compulsory redundancies while protecting in the short term those employees at risk.
The cooperative response is exemplified by the actions of the local unions in France Metal 2 and Ireland Food, where negotiation with the company was entered into at an early stage and with a clear view on how to manage the social effects of restructuring by influencing the management of change. Previous empirical evidence illustrates that unions’ timely involvement in the process of restructuring often leads to superior outcomes (Bacon et al., 1996; Cooke, 1990; Eaton and Voss, 1992; Frost, 2000). Findings presented in this article seem to confirm this by showing that when this happens it often implies that both management and labour share a long-term vision on employment protection practices. This can involve negotiating on compulsory redundancies by guaranteeing job mobility or fostering reconversion programmes and labour market transitions, or boosting early retirement for those employees at risk. In both cases here, local negotiation led to iterative refinements of the proposal until the parties were able to reach consensus. The trade unions possessed considerable leverage, and therefore could ensure that their arguments were resolved satisfactorily. Moreover, as highlighted elsewhere (Frost, 2001), France Metal 2 illustrates how various points of union access to management had a profound impact on how seriously they took the unions’ agenda. In practice this was ensured by setting up a committee for regular tracking of the conversion plan involving all social partners: the local and company-level structures for employees’ representation, as well as the formation of different working groups comprising local unions, management and local authorities.
By contrast, the confrontational approach is indicative of those local unions, such as in France Metal 1 and Ireland Transport, where local unions rejected restructuring at a very early stage rather than negotiating throughout the entire restructuring phase (and therefore maintaining a strong involvement in the entire process of bargaining on compulsory redundancies). Findings illustrate that local unions following this approach were those sharing a short-term view of the social consequences of restructuring. They saw restructuring as affecting their members’ interests due to the contingent situation (the decision to dismiss staff) and therefore responded by attempting to keep employment in place as much as possible by refusing negotiation. However, workers’ interests may or may not be maximized by this short-term approach.
Unions taking a confrontational approach either respond to management-initiated company change by failing to negotiate an agreement (Ireland Transport), or follow some form of negotiation through a highly contested bargaining phase (France Metal 1). The example of France Metal 1 shows that the local unions’ use of industrial action when closure is announced was not intended to signify a definitive rejection of negotiated restructuring. Contrary to research highlighting the impasse characterizing situations where little or no negotiation on workplace change occurs (e.g. Walton et al., 1994), our findings reveal that a confrontational response can put pressure on management. However, the results can be contradictory where agreements lead to a trade-off of job security and working conditions.
We have described two broadly distinctive local union responses to management-initiated corporate restructuring. How can we explain this empirical divergence? It is commonly asserted in comparative research that the power relationships between workers and employers under threat of globalization are dependent on those local power factors unions use (Lévesque and Murray, 2005). We also found evidence of this. In the next section we will offer further insights into the nature of these factors as well as pointing out their combined effects. In addition, factors allowing unions to promote their agenda very much depend on how these interact with the specific socio-economic context of plant restructuring.
Explaining variation: contextualizing local union responses
To provide a full account of intra- and inter-country variation in union responses and the degree of union involvement observed in company-level restructuring, we argue that we need to shift from paradigms providing a useful understanding of national strategic choices to a focus on local union capacities to shape the contexts in which they act. Our argument is that unions can shape company change, the nature of the factors they use to exert their influence on negotiations at the company level, and more importantly, why they engage in distinctive ways in the process of change. This implies understanding the nature of the factors shaping union responses, but also an understanding of the dynamics of the interactions among (and between) these factors within the broader socio-economic context in which restructuring occurs. When we talk about socio-economic context we are specifically referring here to the various structural and cultural company-specific conditions and social relationships (i.e. external links with local government and local community as well as internal links with other levels of employee representation) explaining the ‘cooperative’ and/or ‘confrontational’ union approach to restructuring.
The study identifies broadly a combination of factors used by local unions which enhanced their influence over the process of change. These company-level specific factors have a structural (i.e. financial position of the company, workforce composition and unionization rate) and strategic connotation (i.e. management and union attitudes). In this respect, external (local government authorities and community) and internal (other union members at different levels) social relationships can be instrumental to the unions’ interests in defending and promoting members’ interests. Notably, we observed that cooperative responses were associated with workplaces where company-level representation structures comprising representatives from different national production sites – such as in France the comité de groupe – together with European-level structures representing employees from different European locations (the EWC as in one of the two Irish cases) offered a strong social network of employee representatives. Local unions were thus able to manage negotiations through the exchange of information in addition to providing financial and infrastructural support. Similarly, the strength of local unions’ assistance from their regional-territorial structures provided support for socially valuable alternatives for employees affected by restructuring. This was illustrated very well in the case of France Metal 2 where external linkage with the local community and local public employment services and the Chamber of Commerce provided leverage for the local unions during the negotiation process. Similarly, support from their regional organizational structures allowed the local unions in France Metal 1 to make a valuable counter proposal to management’s closure agenda.
Management’s attitude is important as can be seen in both French cases. Specifically, whereas from the outset local management in France Metal 1 argued that job cuts provided the only solution to restructuring, in France Metal 2, local management was more open to pursuing alternative solutions. Under such circumstances, it is understandable that in companies with similar unionization rates, the same unions (CGT and CFDT) which in France Metal 2 used a cooperative response to restructuring, in France Metal 1 pursued at first a confrontational strategy to bring management to the table of negotiation. On the other hand, in contrast to France Metal 1, France Metal 2 appeared to be in better financial shape and with a comparatively higher percentage of older workers than in France Metal 1. Whereas the latter’s good economic performance could be used by local management as a strong argument in retaining local decision-making power vis-à-vis its global headquarters in the US (Pulignano, 2006), the presence of a high percentage of older workers within a company context was used by the local unions strategically to influence restructuring. The unions achieved this by trading employment security for younger employees with voluntary redundancies and generous severance payments for those older employees seeking exit. The same pattern is observed in the Ireland Food case. Likewise, the presence of a relatively older workforce in a company context characterized by good financial conditions contributed to reaching a (cooperative) consensus between management and unions on the management of restructuring. In particular, the company agreed to reduced salary and pension costs by encouraging voluntary redundancies and early retirement while the local unions obtained safeguards for the young (internal) workforce. Conversely, in France Metal 1 and Ireland Transport the fact that the company’s economic performance was not that strong did not leave much space to leverage by the local management vis-à-vis the central headquarters. On the other hand, it can also be argued that under bad financial and economic company contingencies it was difficult for the local unions in France Metal 1 to safeguard employment for the majority of the employees with an average job tenure lower than 10 years. This contributed to aggravate the already confrontational attitudes of management and unions at both workplaces.
Hence, to advance our understanding of union responses to corporate restructuring we need to examine the socio-economic context in which it occurs. As mentioned above, at France Metal 2, company-based structural factors affected the extent of plant autonomy which enabled local management to be open with unions in negotiating restructuring. This was facilitated (but not determined) by the more cooperative industrial relations climate in the company. In particular, for France Metal 2, being both a ‘better economic performer’ and the subsidiary of a US multinational but with European headquarters and European managers, facilitated mediation of the original anti-union corporate culture. It also provided local management and union actors with a stronger strategic position in negotiating wider responsibilities which included the plant investment plan. Conversely, at France Metal 1, the decision to close the subsidiary in order to reduce economic losses was understood by local managers as the only possible strategy to meet head office demands. This process included laying off all manufacturing staff and the closure of the subsidiary. On the other hand, the traditionally adversarial French corporate culture as likely as not left the unions little choice other than to pursue industrial action. Moreover, as local management in France Metal 1 stressed in interviews, the restructuring measures adopted were seen as the only rational answer to the need to reduce the manufacturing base and expand into other areas, where different competencies and infrastructures were required. By contrast, as demonstrated above in France Metal 2, the more economically viable position of the local subsidiary offered the possibility to negotiate ex-ante restructuring and relocalization policies with the US parent. This offered the local unions more scope to use external social networks to influence the process of restructuring. Likewise, the corporate rationale for restructuring was to create greater scope for product expansion and differentiation rather than simply improving economic performance per se by transferring production to cheaper sites. This contributed to the creation of an integrated socio-economic framework within which local actors had greater opportunities for strategic influence.
Finally, it may be also questioned whether the particular political context may have had a role to play as well. In particular, we refer here to the French cases where it can be argued that the political context indeed encouraged both French unions to politicize the restructuring problems at national level. The outcomes were: the organization of a local mobilization in France Metal 1, leading to another firm being interested in acquiring the old site, and the strong involvement of the internal and external social network in France Metal 2, which led to the creation of an industrial park where almost all jobs at risk would be retained. These two outcomes illustrate that the national political context may have contributed to the shaping of differences in restructuring outcomes. Nonetheless, we also argue that these results need to be seen in the context of the role played by the industrial relations background in helping unions in the shaping of their responses. In contrast to the Irish situation, when it comes to lay-offs French employers are obliged to find workers other employment. In line with other studies (Zagelmeyer, 2011), we argue that in both French cases the national institutional framework contributed to shaping union attitudes to reconversion plans which were concretized in the search for another firm in France Metal 1 on the one hand, and the creation of an industrial park at France Metal 2 on the other. However, it is clear that the diversity in the union responses in both French cases can be explained only by adapting the same institutional national context to company-specific circumstances.
Similarly, in Ireland Food the highly-integrated context of plant restructuring, where the Irish subsidiary could count on its strong economic performance and the corporate strategic interest in keeping production at the site, created the conditions for a more integrated socio-economic environment. The local unions could successfully use the information from the EWC members as the main strategic resource enhancing their influence over the restructuring agenda. By contrast, in Ireland Transport the fact that the subsidiary operates in a weakly-integrated context, where restructuring was seen as the only way to reduce costs and meet corporate headquarters’ demands, weakened the scope for local unions to influence the management of change. On the other hand, one also needs to recall that the aggressive management approach at Ireland Transport following privatization meant that the unions had to struggle to achieve recognition. This contrasts with the long tradition of workplace partnership in Ireland Food where hostility towards union recognition was not in evidence. Thus, despite similar membership rates at both companies, variant local union positions vis-à-vis the companies in the context of restructuring were discernible. This was somewhat more confrontational at Ireland Transport, in contrast to a greater propensity to negotiate at Ireland Food.
Conclusion
This article has argued that there are undoubtedly limitations and challenges to the use of an institutionalist approach alone when assessing the variation in local union responses to company-level restructuring. One of these is an underestimation of the role of local actors. In particular one needs to be concerned with trade unions’ use of embedded structural (company-based) and social (relationships or networks) resources, in influencing company-initiated restructuring agenda. In line with recent key literature, this implies considering local trade unions as being capable of formulating autonomous strategies. They can define a cooperative or confrontational agenda, rather than simply following policies handed down from above (Lévesque and Murray, 2010). Findings illustrate that local unions, irrespective of the institutional configuration of the national context (‘state’ or ‘market’ regime), appear to have chosen from a range of possible strategic options which cannot be read off from particular national institutional arrangements. Case studies illustrate that state regimes, such as the case of France, offer local unions greater scope to access information, options and possibilities, which are more difficult to access in market regimes, such as in Ireland. Nevertheless, diversity within countries is not insignificant. While some local unions rejected change (Ireland Transport and France Metal 1), refusing early engagement in negotiating dismissals, others (France Metal 2 and Ireland Food) were involved in bargaining at a very early stage in pursuit of a long-term solution.
The article also argues that whereas the capacity of unions to influence the management of change through cooperative as opposed to confrontational responses depends on the combined use of company-related (structural and strategic) factors and social networks as power resources, these factors alone cannot provide an explanation for the nature of union engagement or non-engagement in redundancy negotiations. If we want to advance our understanding of the why and how of union engagement with the management of change we need to examine the interplay between internal factors and the socio-economic context of restructuring itself. Union power resources depend upon the interplay of these factors. Our argument is that local subsidiaries which operate in a highly-integrated context of plant restructuring, where the local subsidiary has a high level of autonomy vis-à-vis the corporate head office, and where the industrial relations climate is not hostile to unions, can exercise more leverage in negotiating local restructuring. In this regard, we found that the political context may also have an influence on local union approaches to change.
To sum up, we have argued that different or similar union responses are produced within and across the same or different institutional contexts due to contrasting local-level contexts. Union responses to corporate restructuring are affected by their contingent resources and the way in which unions frame the issue within the local context. Thus, the terms of the power relationship between unions and management during restructuring, within Europe, are redefined precisely as a result of local union action which can in turn make a difference to the manner in which corporate restructuring agenda are managed.
Footnotes
Funding
This study was developed as part of a larger study on Restructuring and Social Dialogue supported by the European Social Partners (ETUC, BusinessEurope, CEEP and UEAPME) and funded by the European Commission as part of the Joint Work Programme 2006–2009.