INA/FAG Compromises on Eltmann Bearing Factory Shutdown

FAG Kugelfischer Georg Schaeffler AG (with INA, a division of INA Holding, Germany) announced it has reached an agreement with union workers which avoids closing the doors of its Eltmann bearing factory in 2006 as originally planned. INA/FAG had announced early in October that it would be closing the Eltmann bearing plant, with the loss of 671 hourly and salary jobs, by 2006 because it is no longer competitive. At the same time, the company revealed it would be laying off 356 employees from its home office in Schweinfurt. • article: INA/FAG Eltmann plant closing, other cutbacks set for Germany The German workers' primary union, IG Metall, immediately expressed its opposition to the proposed cutbacks, organizing demonstrations as it has done recently for several other German companies attempting to alter their workweek hours and overhead structures. FAG, in particular, said its German manufacturing facilities are simply not cost-competitive with its plants in nearby Eastern Europe, and its bearings made in Germany are too expensive on the world market. IG Metall countered that since INA had an "outstanding result" in 2003, the company's efforts to cut workers and close plants are "arbitrary" and an effort to artificially boost profits. The union rejected management's claim the moves are in response to market conditions, claiming management misrepresents the situation and that there is no real threat to INA/FAG on the horizon. Under the new agreement with the unions and work council, FAG management has agreed not to lay off any workers until January 1, 2006. However, the company will not have to replace any workers leaving before then. In addition, FAG will be able to shift some workers from full-time to part-time and offer early retirement to others. FAG has agreed to continue operating the Eltmann plant at least through 2008. What FAG did not win at Eltmann was one of its biggest issues it has been seeking: extending the hourly workweek from Germany's standard 35 hours, up to 40 hours, with no corresponding increase in pay. Workers and the union overwhelmingly rejected the proposal, even as it is becoming a major issue at many German manufacturing companies. Several INA/FAG plants in Germany have already agreed to step up from their 35 hour week, first to 37, and finally to 40. Unions in Germany have strongly resisted changing work hours up from 35, especially for different operations of the same company, by claiming it is unfair for one plant to work 32 hours, while another might work 40 hours at the same pay scale. But INA said it can live with different plants working different hours, since they all produce different products with different costs and differing competitive market conditions. The Eltmann compromise also allows FAG to move some roller bearing production from there to plants in Eastern Europe, and some layoffs will occur as a result. But in place of the lost bearing production, FAG promised Eltmann will be in line to win the opportunity to manufacture other, new, bearings. Some observers found fault with the powerful union's position, saying the company should not have to wait until it is, "on the brink of collapse," before taking action to remain competitive. While the victories may be good for local plants, they point out, the long-term effect on the company as a whole is negative. And while a short-term focus may provide jobs, in the longer term it costs jobs and opportunities if the company is not profitable enough to reinvest in new products and technologies. In the past, before the FAG acquisition and especially before CEO Juergen Geissenger took the helm, INA worked hard to avoid conflict or confrontation with its unions and workers. But as Germany's manufacturing operations have become less competitive in world markets and its products priced out of reach, the company is pursuing a culture change. The goal, it says, is not only to be competitive, but stay in Germany and keep its German operations competitive in today's world markets.