Companies and their employees are in intense competition with one another over orders and output levels, often competing with sites in the new EU member states. For representatives at European level this is a tough test. The experience of the European Works Council at ZF Friedrichshafen shows one way of dealing with the challenge.
By Marion Houben and Rudolf Reitter
M. Houben is a researcher at the INFO Institute in Saarbrücken; R. Reitter is assistant to the European and Group Works Council at ZF Friedrichshafen AG.
mhouben@info-institut.de
rudolf.reitter@zf.com
Autumn 2001: the truck market in Turkey collapses almost totally. The worst affected part of the ZF Group is the plant in Bouthéon (France) making gearboxes for light and medium-weight trucks. Until now most of the plant's output has gone to the Turkish market, and the crisis threatens its very existence. The company's immediate response, to scale down the number of temporary workers, is not sufficient to ensure the survival of the French plant. Only the Group can help - by transferring production on a temporary basis.
A different approach to transferring production
The French works council therefore entered into negotiations with the local company management, and André Bonnier, the EWC member from ZF Bouthéon, immediately informed EWC chairman Hans Kirchgässner, who also chairs the ZF works council in Friedrichshafen, about the difficult situation. Those involved in co-determination in Germany soon realised that gearbox production needed to be partly transferred to Bouthéon so as to preserve jobs at the French plant. The works council in Friedrichshafen immediately declared its readiness to provide the necessary support.
Background: when the Bouthéon plant was purchased by the ZF Group in 1999, some production lines were transferred to Friedrichshafen. In return, however, contractual guarantees were given that Bouthéon would be offered support if capacity under-utilisation were to become a problem in France.
The EWC for its part now organised an information process for local workforce representatives. This enabled Bouthéon to plan ahead with some certainty, as Hans Kirchgässner makes clear: "The European Works Council ensured that there was a high degree of transparency at both sites and made certain that all the information also reached the works council in Bouthéon." The workforce was informed, and some gearbox production capacity was indeed transferred within the Group. Ultimately this led to a reduction in overtime at the Friedrichshafen site, which was tolerable in view of the excessive workload.
Everyone concerned realises with hindsight that this specific context Ð a contractual obligation and the overload in Friedrichshafen - was the main reason why the transfer could take place so smoothly. It was nonetheless crucial that the EWC was able to take on the role of coordinating this process: "Since the EWC was set up, the company managers in Bouthéon have also been more cooperative in their dealings with the works council," states André Bonnier.
No alternative?
Autumn 2003: the production of special driveline technology (SDT) in Friedrichshafen runs into financial trouble. Management indicates that it has already decided on relocation to Hungary.
The works council duly informed the workforce, insisting at the same time that the EWC should become involved. For Istvan Ambrus from the ZF plant in Eger, Hungary (at that time still attending the EWC as a guest) the meeting of the EWC which followed was the first he had heard about the intention to transfer production: "The management in Hungary provided no information whatsoever." Moreover, it emerged in consultation with him that "these parts simply cannot be manufactured at our plant in Eger," so the transfer made no sense even in production terms. The lack of information from management, including at the EWC meeting, meant that the two sides left without finding a solution. But the works councils in Eger and Friedrichshafen stayed in touch and kept each other informed about management's moves.
Meanwhile, a working group of the works council at the Friedrichshafen site used the time to draw up proposals on how to optimise SDT production and retain assembly on site: they were unwilling simply to sit back and watch the transfer take place. The alternative plan made plain that the financial advantages of the Hungarian solution were minimal. Once these findings were presented to management, a "pause for thought" set in at Friedrichshafen and lasted until March 2004. It was finally announced without any explanation that 80 per cent of SDT production would be integrated into the general assembly operations and 20 per cent would go to Hungary or to external suppliers Ð a solution that is feasible for both sites.
The involvement of the EWC and the exchange of information between Friedrichshafen and Eger prevented the two sites from being "played off" against one another and avoided premature concessions being made by employee representatives. This episode too demonstrates the special function of the EWC in coordinating the process and acting as an information hub: by adopting this approach, the European-level workforce representatives in the ZF Group withstood another challenge.
Networking around the EWC
Basically, an EWC requires a good deal of sensibility when coordinating the employee response to transfers of production. On the one hand, local works council members see it as their task to uphold the interests of the workforce at 'their' site. On the other, they are fully entitled to seek international solutions which reconcile varying interests. For this reason, the EWC should not be the highest level in a hierarchy of works council decision-making but, rather, the centre of a network where information is gathered, distributed and discussed, and where actions are harmonised and coordinated. The EWC of the ZF Group took on this role, helped considerably by the fact that at the beginning of 2003 it had already agreed on a work programme making explicit provision for joint action in the case of restructuring and site difficulties.
Other examples of ZF Group employee representatives acting in solidarity with one another at European level include:
- an agreement on codes of conduct and key labour standards, currently being negotiated with management;
- workforce representatives in Spain, Italy and France meeting for their first exchange of experiences at national level. In these countries there was no institution within ZF comparable with the Group works council in Germany, so there was a corresponding lack of information exchange and co-determination at this intermediate level. The EWC now hopes that these meetings will become established practice and take place once a year.
All this shows that employee representatives at ZF are beginning to develop a common policy at European level. The EWC is supported in this by an adviser who is responsible for preparing meetings and for the public relations side of EWC work and works for the EWC chair. The EWC's systematic efforts to build up internal structures for its work and communications include the development of its own information system to provide details about the actual economic situation of the various sites. This reporting system was devised in conjunction with the INFO Institute of Saarbrücken and focuses on core data such as turnover, existing and incoming orders, operating results, value added, investments, materials costs, employee numbers and personnel costs. This is the only way the EWC can have a strategic approach: the information system makes it possible to analyse either specific issues or individual sites and forms the basis for a long-term evaluation of developments site by site. The information supplied through this mechanism is of particular value for employees outside Germany, as they do not have the information sources provided by the various structures in the German co-determination system.
Negotiated agreements in the future?
The EWC at ZF has only been in existence for a short time but has rapidly begun working professionally. However, it would be further strengthened in representing employees if it had a negotiating mandate at European level. This emerged strongly from the most recent meeting of the EWC, held in mid-June 2004 in Überlingen on Lake Constance. The aim is to conclude "European company agreements" (ECAs) as a way of setting Europe-wide standards within the Group and, at the same time, making the work of the EWC more transparent and visible for all employees.
'Health and safety' is a topic that lends itself to a European initiative for various reasons:
- First, there is a extensive amount of legislation on health and safety issues at European level. In addition, the importance of health and safety issues has increased with EU enlargement, through the extension of acquis social (the existing body of EU law) to the new member states.
- Second, regulating basic working conditions is one of the fundamental tasks of works councils. It is a proof of their local presence and competence. It is often only possible to find solutions which are appropriate to a job or plant because works council members mediate between the local workforce and the bodies responsible for planning and management.
- Third, workforce representatives generally have similar interests in all countries as far as health and safety issues are concerned.
This means that joint work on these issues is especially well suited to building up cooperation, developing shared ideas and finding creative solutions at both European and plant level. A final benefit is that the adoption of uniform health and safety standards for employees in all EU Member States also reduces the factors on which plants can compete.
The ZF Group and its European Works Council
The Zahnradfabrik (ZF), which is steeped in tradition, was founded in Friedrichshafen on Lake Constance in 1915. Its purpose, as stated in the entry in the commercial register, was "to produce gearboxes and transmissions for aircraft, motor vehicles and motor boats". According to the annual report, in 2003 the ZF Group employed some 53,500 workers at 110 production sites in 25 countries, and is therefore one of the world's largest suppliers to the automotive industry. Incidentally, as well as gearboxes, axles and steering systems, it is still possible to order a Zeppelin in Friedrichshafen. The ZF Group's EWC is still relatively new, having been founded only in September 2000. The 22 members of the EWC come from Germany, Italy, Spain, France, Great Britain, Belgium, Austria, Slovakia and Hungary. The chair is Hans Kirchgässner, who also chairs the works council at the company head office in Friedrichshafen.
