Labour Court Database __________________________________________________________________________________ File Number: CD94121 Case Number: LCR14373 Section / Act: S26(1) Parties: BEAMISH AND CRAWFORD (B. & C.) - and - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION |
Company rationalisation proposals.
Recommendation:
The issue before the Court is the urgent need to restructure the
Company as a consequence of financial and competitive problems.
If the future of the Company is to be assured then the necessary
organisational changes need to be achieved. Success will only
result if the changes are achieved with the co-operation of the
workforce.
In the light of the views expressed by the parties in their oral
and written submissions, the Court finds that to date the approach
adopted by the representatives of the Company has been purely
finance driven and has not taken account of the implications and
impact of the proposals on the employees. This approach has not
been conducive to maintaining the climate of good industrial
relations which has existed over the years.
The Court clearly recognises the need of the Company to make the
changes necessary to achieve their objectives. The Court
considers however, that given the level of the changes, and the
redundancies being proposed and the effect of the proposals on the
workforce, there is an onus on the Company to fully consult with
the workers and their representatives and to discuss in a positive
way the extent to which redundancies can be avoided or lessened.
It appears to the Court that no meaningful discussions on these
lines have taken place.
As a consequence of the absence of such discussions and the lack
of evaluation as to the extent of the problem arising from
implementation of the Company proposals, the Court is not in a
position to make a definitive Recommendation on the issue.
In the circumstances the Court recommends the following procedure
as a basis for quantifying the extent of the problem existing and
resolving the matter.
Both Management and Union should immediately enter into
discussions with a view to achieving the objectives of the
Company. These discussions to include voluntary redundancy,
redeployment, early retirement and such other arrangements as will
serve to achieve the objectives of the Company whilst at the same
time maximising the employment prospects of the employees.
These negotiations will require to be completed in a period of
four weeks from the date of acceptance of this Recommendation.
The Court considers that with a view to reaching a successful
conclusion and to expedite matters the discussions should be
chaired by an Industrial Relations Officer of the Labour Relations
Commission.
In the event that any residual issues remain unresolved at the end
of this period these should be referred to an agreed third party
for a resolution.
The Court so recommends.
Division: MrMcGrath Mr Keogh Mr Rorke
Text of Document__________________________________________________________________
CD94121 RECOMMENDATION NO. LCR14373
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990
SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990
PARTIES:
BEAMISH AND CRAWFORD (B. & C.)
(REPRESENTED BY THE IRISH BUSINESS AND EMPLOYERS' CONFEDERATION)
AND
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
SUBJECT:
1. 1. Company rationalisation proposals.
BACKGROUND:
2. Beamish and Crawford was taken over by the Foster's Brewing
Group (F.B.G.) in 1987. As a result of this take-over
B. & C. lost the Carlsberg portfolio, with the loss of 45% of
sales volumes. F.B.G. directly and through Courage U.K.,
invested significantly to support Beamish Stout over the
following period of years until the sales loss could be
reversed.
B. & C. employs approximately 300 workers in Ireland in the
brewing and distribution of beer and stout (Beamish, Carling
and Foster's mainly) for the export and home markets.
The dispute before the Court concerns the Company's
rationalisation proposals which involves 105 redundancies (to
be implemented by 31st March, 1994). The proposed
redundancies would be on a voluntary basis initially but if
necessary they would be implemented on a compulsory basis. A
feature of the proposals involves the replacement of
distribution services and technical services with
contractors.
The Company indicated that a review of its operations in 1993
confirmed that B. & C. is not a viable operation without
significant restructuring of its cost structure.
The redundancies sought are as follows:
16 production workers
47 distribution workers
32 technical services workers
10 administrative workers
The terms of the redundancy package are, statutory
entitlements plus 5 weeks pay per year of service, plus
#3,000. The Union has rejected any rationalisation plans
involving the contracting - out of services.
The dispute was referred to the Labour Relations Commission.
Conciliation conferences took place on 24th January, 1994 and
16th February, 1994, but no agreement was reached and the
dispute was referred to the Labour Court on 18th February,
1994. A Labour Court hearing took place on 4th March, 1994.
UNION'S ARGUMENTS:
3. 1. The Company's rationalisation proposals were published
in the National Press and broadcast on radio before the
workers were officially informed. This "leak" of the
Company's proposals had a traumatic affect on the workers and
their families.
2. B. & C. is not a Company with declining sales. In 1993,
it stated that exports were up 18% on the previous year and
that sales of Beamish Stout in Ireland had increased by 24%
over the same period.
3. Sales of Beamish Stout has increased from 1% to 6.5% of
the Irish market in recent years. In the circumstances the
Company's proposals are unacceptable to the workers
concerned.
4. The Company's experience in the area of contracting-out
of distribution services has been unsuccessful:
1. The contracting-out of work in the Longford area
has been a complete failure. Legal proceedings are
now pending in relation to a breach of contract.
2. The contracting-out of the Company's Bantry and
Castleisland depots resulted in increased costs to
the Company of 300%.
3. In the South East area work contracted-out resulted
in increased costs to the Company of 100%.
5. The Company has deliberately inflated delivery costs
over the last couple of years, through bad routing and
duplicate calls to customers.
6. The Union was given access to the Company's accounts to
establish if the Company's announcement of 7th May, 1992
regarding profits of #1.7m for the year ending June, 1992 was
correct. It was never the Union's intention to provide
alternative cost saving proposals. The Union is prepared to
examine any cost saving proposals that do not involve
compulsory redundancies.
COMPANY'S ARGUMENTS:
4. 1. The Company must achieve full implementation of the
restructuring programme by 31st March, 1994. This is vital
as F.B.G. and Courage U.K. have indicated that they are not
prepared to subsidise B. & C. from April, 1994.
2. The Company's cost base is the highest in the Group and
is significantly out of line with industry and international
standards.
3. The Irish market is increasingly competitive and if the
Company is to survive its costs must be reduced.
4. The cost of the Company's distribution and technical
services operation is grossly out of line with industry
norms.
5. Carling sales have declined steadily since 1990. This
decline is accelerating over recent times and is consistent
with the under funding in sustained marketing expenditure
over the years. This represents a major threat to the
Company as Carling generates the largest contribution of all
brands.
6. The Company's rationalisation is the only option
available in order to guarantee its long term viability. It
will bring the Company's cost base into line with Group and
industry standards and will allow greater marketing
investment in the Company's 3 main brands - Beamish, Carling
and Foster's.
7. Implementation of the plan will secure the future of 200
jobs.
8. Failure to meet the Company's deadline will result in
Courage U.K. immediately taking over the brewing of Beamish
Stout in the U.K.. In the circumstances B. & C. would
inevitably face closure.
9. The redundancy package available is substantially ahead
of Group and industry generally. In addition the Company is
offering professional outplacement, pension and taxation
advice.
10. All contractors who have tendered for the contracting
etc. are willing to interview B. & C. staff.
RECOMMENDATION:
The issue before the Court is the urgent need to restructure the
Company as a consequence of financial and competitive problems.
If the future of the Company is to be assured then the necessary
organisational changes need to be achieved. Success will only
result if the changes are achieved with the co-operation of the
workforce.
In the light of the views expressed by the parties in their oral
and written submissions, the Court finds that to date the approach
adopted by the representatives of the Company has been purely
finance driven and has not taken account of the implications and
impact of the proposals on the employees. This approach has not
been conducive to maintaining the climate of good industrial
relations which has existed over the years.
The Court clearly recognises the need of the Company to make the
changes necessary to achieve their objectives. The Court
considers however, that given the level of the changes, and the
redundancies being proposed and the effect of the proposals on the
workforce, there is an onus on the Company to fully consult with
the workers and their representatives and to discuss in a positive
way the extent to which redundancies can be avoided or lessened.
It appears to the Court that no meaningful discussions on these
lines have taken place.
As a consequence of the absence of such discussions and the lack
of evaluation as to the extent of the problem arising from
implementation of the Company proposals, the Court is not in a
position to make a definitive Recommendation on the issue.
In the circumstances the Court recommends the following procedure
as a basis for quantifying the extent of the problem existing and
resolving the matter.
Both Management and Union should immediately enter into
discussions with a view to achieving the objectives of the
Company. These discussions to include voluntary redundancy,
redeployment, early retirement and such other arrangements as will
serve to achieve the objectives of the Company whilst at the same
time maximising the employment prospects of the employees.
These negotiations will require to be completed in a period of
four weeks from the date of acceptance of this Recommendation.
The Court considers that with a view to reaching a successful
conclusion and to expedite matters the discussions should be
chaired by an Industrial Relations Officer of the Labour Relations
Commission.
In the event that any residual issues remain unresolved at the end
of this period these should be referred to an agreed third party
for a resolution.
The Court so recommends.
~
Signed on behalf of the Labour Court
16th March, 1994. Tom McGrath
F.B./A.L. _______________
Deputy Chairman
Note
Enquiries concerning this Recommendation should be addressed to
Mr. Fran Brennan, Court Secretary.