French laws force failing tire factory to stay open; lack of competitiveness, investment oddly not improving
posted at 7:01 pm on July 5, 2013 by Erika Johnsen
For years now, the tire giant Goodyear has been trying to stop the financial bleeding from one of its ailing factories in France, continually attempting to negotiate new terms with the unionized workers and getting continually rebuffed until, finally, the plant’s closure became the most economical option. The French workers, however, apparently feel entitled to the 1,173 jobs that the U.S. company provides at the factory, and the battle is currently tied up in court as the country’s largest trade union sues for imagined injustices; in June, a French court finally ruled in Goodyear’s favor, but the Confederation Generale du Travail has every intention of appealing the ruling, via the BBC:
Employees have also filed a complaint in the state court in Akron, Ohio where Goodyear is based. Seeking $4m in damages and class-action status for their case, they claim the company has violated laws on both sides of the Atlantic. …
“Goodyear is the biggest tyre maker in the world,” he says. “It makes $1.5bn profit a year, employs 80,000 people globally and there is only one village which is holding out against them – it is the village of Amiens.”
From the company’s point of view the struggle looks very different. The factory is losing $80m a year, it says, and producing goods there is no market for.
Goodyear’s attempt to save the plant and its profitability began way back in 2007, with plans for restructuring that would have included some layoffs and putting the unionized workers’ 35-hour work week on a more effective rotating six- and four-day cycle that would include nights and weekends. They didn’t like that at all:
Unions refused. The next year they went to court to prevent the company laying off 400 staff, and won. Last year they helped scuttle Goodyear’s plan to sell the factory to Titan, an agricultural tyre producer, in a deal that would have seen many more job losses (including voluntary redundancies).
It was in January that Goodyear finally announced its decision to close the factory, describing this as “the only possible option after five years of fruitless discussion”.
“French law says if you want to put all these workers on the dole, you have to have a good reason,” says Fiodor Rilov, the CGT union’s lawyer. “This may be an American company, with a headquarters in the US but they are operating on French soil and they have to respect our social rules.”
Oh, Goodyear has gained a newfound respect for France’s social rules, I’m sure — now perhaps France could return the favor and try to learn some respect for Goodyear’s right to not do business there?
This is just one of a string of examples of the ways in which France’s egregiously restrictive labor laws are directly hindering their labor markets and economic growth. Voices are coming in from all sides recommending that France do some serious work on creating labor flexibility as one of the prime problems dragging down their economy, because the meager reforms French President Hollande has introduced so far aren’t cutting it.
How it is that the French people at once demanded a path for economic growth and employment, and believed electing a regime comprised of Socialists-with-a-capital-S was going to accomplish that, is still unclear.