FULL RECOMMENDATION
INDUSTRIAL RELATIONS ACTS, 1946 TO 1990 SECTION 26(1), INDUSTRIAL RELATIONS ACT, 1990 PARTIES : GLANBIA (INCH) - AND - SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION DIVISION : Chairman: Mr Duffy Employer Member: Mr Grier Worker Member: Ms Ni Mhurchu |
1. Various Issues
BACKGROUND:
2. The Company manufactures yogurt products at its plant in Inch, Co Wexford. In 2005, due to competitive pressures the Company reduced its workforce, from 124 to 65, by way of a voluntary redundancy programme. The redundancy terms, as recommended by the Labour Court in LCR18194, were 6 weeks' pay per year of service subject to a cap of €120,000.
- Due to increased competition from competitor plants abroad, the Company now proposes to invest in new production machinery and cut its annual operating costs by €3,000,000, inclusive of €1,300,000 in labour costs; necessitating,inter alia, c.25 redundancies, the elimination of Saturday shifts and a reduction of pay for some workers.
This dispute could not be resolved at local level and was the subject of a conciliation conference under the auspices of the Labour Relations Commission. As agreement was not reached, the dispute was referred to the Labour Court on 27th February 2008 in accordance with Section 26(1) of the Industrial Relations Act, 1990. A Labour Court hearing took place on 6th March 2008, the earliest date suitable to the parties.
UNION'S ARGUMENTS:
3. 1. Any financial problems the Company may be experiencing are due to the Company's poor investment and maintenance practices.
2. The Workers have always embraced change but will not accept any reduction in their conditions of employment.
3. The Company has never disclosed how much of the €1,750,000 non-labour costs have actually been achieved.
4. There should be no reduction in manning until the new machinery is operational.
COMPANY'S ARGUMENTS:
4. 1. The Company's market share has been eroded from 74% in 1997 to a current 23%, due to competition from larger foreign companies with lower production costs and higher advertising spends.
2. The Company wants to continue production at the Inch plant and is prepared to invest money in the plant, but it is imperative that the reduction in annual operating costs be implemented immediately.
RECOMMENDATION:
This dispute came before the Court against the background of a recent restructuring and cost savings initiative agreed in respect of the plant in 2005. That restructuring was implemented on terms recommended by the Court in Recommendation LCR18194.
It appears that due to further competitive pressure additional savings are now required. The negotiations on the achievement of these additional savings is not helped by the proximity of the earlier agreement and the understandable belief on the part of the workforce that the terms agreed in 2005 would secure the viability of the plant without further retrenchment. Nevertheless, the Court is satisfied that because of new and unanticipated factors, cost savings of the magnitude proposed by the Company are now necessary in order to secure investment upon which the future of the plant, and the employment which it supports, may depend.
Having considered the proposals put forward and the submissions of the parties on those proposals the Court recommends as follows: -
1. The correct manning levels for the plant must be established as a priority and as a first step in the process of trying to reach agreement on other related issues. This exercise should be undertaken jointly between the Company and the Union with each side appointing suitable Industrial Engineers to make recommendations in respect of each area of operation.
2. This exercise should be undertaken as soon as practicable following the acceptance of this recommendation.
3. The Company should not pursue its claim for a reduction in the Serac rate.
4. Intensive negotiations on all other aspects of the Company’s proposals should then take place.
5. The negotiations should continue for not longer than four weeks. If final agreement is not reached outstanding matters should be referred back to the Court and the Court will facilitate the parties with the earliest possible hearing.
6. The Court notes the commitment of the Company to make a significant investment in new plant and equipment if the cost savings are achieved. The Court further notes the assurance of the Company that this new plant and equipment will make it possible to achieve the anticipated efficiencies with reduced staffing levels. These recommendations are made in the context of these assurances.
Signed on behalf of the Labour Court
Kevin Duffy
25th March 2008______________________
JMcCChairman
NOTE
Enquiries concerning this Recommendation should be addressed to Jonathan McCabe, Court Secretary.