This week, the American company Titan International made headlines in France when its CEO, Maurice “Morry” Taylor Jr., sent a sharp letter to Arnaud Montebourg (PS), France’s minister for industrial renewal, concerning union working practices.
Before I get to Taylor’s letter to Montebourg, this story goes back at least three years. I didn’t have time to do a forensic analysis of the situation but promise you I’ve done better than much of the popular American and French media have.
If you’ve not heard of Titan, they have a century-long history of making wheels for off-highway vehicles, notably farm equipment. (This page details the company’s history from 1890 to the present. It is still based in Quincy, Illinois.) Twenty years ago they began supplying complete wheel and tire assemblies for these vehicles. During the 1990s, they began buying up European tire manufacturers in this sector. In 2005, they acquired Goodyear’s farm tire assets in North America. Five years later, they bought Goodyear’s Latin American farm tire business.
With the Latin American acquisition was a clause requiring Titan to draw up a social plan concerning the Goodyear automobile tire plant in Amiens, France, for possible purchase. This Titan press release announces what happened (excerpts below, emphases mine):
Goodyear and Titan had entered into an agreement in 2009 for Titan to acquire Goodyear’s Latin America farm tire business and their European farm tire business. The parties closed on the Latin America transaction on April 1, 2011. The European farm business and related put option contained a clause that Goodyear had to have a social plan for the closing of the passenger car business in Amiens[,] France leaving 537 jobs in the farm business. The factory unions have been successful in the French labor courts holding up such plans for a number of years.
“It shows how screwed up things are in France when a company tries to save jobs,” commented Maurice Taylor, Chairman and CEO of Titan International. ”Titan has other acquisitions that have been on hold while the put option was still active. Now Titan will pursue those options instead of waiting for the French union to start thinking about their members. Titan spent a lot of time and money trying to get Goodyear’s social plan approved but only a non business person would understand the French labor rules. The French workers are very good at what they do when they work but as I told the union personnel, you cannot get paid seven hours for three hours of work.”
That’s quite accurate. Only a community organiser or social activist would understand French labour laws, especially where unions are concerned.
That said, don’t ever think that French factory workers have jobs for life, even when they do belong to unions. Over the past decade, a number of manufacturing sites have been shut down, downsized or offshored in various sectors including automotive, home appliances, steel and lingerie.
Social plans in such cases focus on severance pay and pension settlements. However, to arrive at that point, a company’s management must negotiate at length with union representatives and put up with Socialist politicians sticking their oar in by releasing provocative statements to the press.
The CGT is the union involved at the Titan/Goodyear plant in Amiens.
One can imagine that Goodyear was more than happy when Titan accepted Goodyear’s clause concerning an option to buy the Amiens plant. This article from business daily Les Echos describes Goodyear management’s situation in 2008:
In September 2008, after workers at Amiens-Nord refused to move from a 3 x 8 to 4 x 8 schedule, Goodyear announced a social plan of eliminating 400 jobs, [which they] doubled shortly afterward to 800. That started a very long [period of] guerilla justice. The local lawyer the CGT chose, Fiodor Rilov [!], wasn’t known for promoting the workers’ interests, rather, he was an expert at pointing out the errors in the procedure for drawing up the social plan … The [plan] was simply ‘delayed’.
Then, once Titan showed interest in the Amiens-Nord plant at the end of 2009:
the CGT began by preventing the CEO from touring the premises.
Eventually, Taylor was able to tour the premises ‘several times’ (his words, more below).
The Les Echos article goes on to say that the CGT’s lawyer also objected to Titan’s potential social plan objectives. Titan originally wanted to retain 537 jobs out of 1,200; the employees losing jobs would be able to go to the Amiens-Sud plant, however, with the risk of less-favourable employment and salaries. The CGT wanted a guarantee of future employment. Matters weren’t helped when François Hollande made an appearance at the factory in 2011, the premise being that if he were elected president, these sorts of labour conflicts could be resolved. In 2012, Titan withdrew their offer for the plant. Now it might well close altogether.
Montebourg, whose brief in the Hollande administration includes advocating for French manufacturing, announced a few weeks ago his hope that Titan would return to the negotiating table. This provoked a sharp response from Titan’s CEO. Taylor sent a letter to Montebourg, which reads in part:
The French workers are paid high wages but only work three hours. They have one hour for their lunch, they talk for three hours and they work for three hours. I told this to their union leaders directly; they replied, that is the way it is in France …
Sir, your letter suggests you would like to open discussions with Titan. How stupid do you think we are? Titan has money and the know-how to produce tires. What does the crazy union have? It has the French government. The French farmer wants cheap tires. He doesn’t care if those tires come from China or India or if those tires are subsidized.
Titan is going to buy Chinese or Indian tires, pay less than one euro an hour to workers and export all the tires France needs.
Montebourg, some of whose views make Hollande look like a centrist, replied, saying that
the American’s comments were “as extreme as they were insulting” and showed his “perfect ignorance of our country and its solid advantages.”
Montebourg pointed out that 4,200 American companies had operations in France that employed 500,000 people.
He finished by condemning Taylor’s suggestion that he would move operations to countries where labor costs less and flood the French market with cheap tires. But Montebourg managed a final flourish of humor: “Rest assured you can count on me to ensure that your imported tires are inspected by the relevant French authorities with extra zeal.”
France has a lot of attractive qualities for business, I agree, but only without their unions. They are militant and more interested in salary increases than work. That’s the sort of perspective that results in job losses in the private sector — where men and women work for far less money with no guarantee of employment.
As I write this on February 21, 2013, RMC presenters and listeners have been discussing whether Frenchmen are ‘workshy’. More than 60% of Jean-Jacques Bourdin’s morning listeners thought so. Bourdin and Les Grandes Gueules — all leftists — firmly defended France and the nation’s work ethic. The Frenchmen I know — all non-union — put in a lot of hours for multinational companies; the executives do well but those on the lower rungs of the ladder make an unremarkable salary which they more than earn. At the other end of the scale, there are many low-paid women working behind the tills in the major supermarkets who earn peanuts for the amount of aggravation they put up with from management. Yet, they would all rather work than not. Bottom line — today’s unions are greedy activists and fewer French people have empathy for them, especially during these precarious times.
As Britain and the United States have done over the past several decades, France has adopted many laws which protect workers. The work situation is imperfect everywhere, but this is the hell that we must endure in a fallen world.
Unions going Bolshevik on potential corporate buyers results in only one thing: closed factories. The CGT has no regrets about Goodyear’s imminent closure in Amiens.
This is the same type of thinking that closed Hostess in the United States late last year. The bakers’ union didn’t regret that, either.
Strange. I thought these folks took pride in referring to themselves as ‘workers’.
It’s the same type of thinking that caused Britain’s car industry to collapse. It’s the same warped perspective that causes manufacturers to scale back jobs and factories.
Don’t think that I support everything that corporations do, but there must be give and take on both sides — management and employee. On the one hand, with so many people looking for work these days, it’s time that the unions curb their materialism and class struggle. On the other, the markeplace is becoming increasingly global; cheaper labour is always available, often abroad.
Ultimately, a company exists to make a profit. A reader at L’Internaute, Marc Chauvaux, looks at both sides of the picture, however, begins by saying:
This American boss, in a way, isn’t totally wrong … What do bosses (European or global) think?
I invest 1 euro (equipment, salaries, taxes), so that euro must bring in more than one euro (profits) …
Takeaways from this story for me are as follows. 1) People have to decide what sort of work ethic they’re going to adopt (put in an honest day’s work or expect the sack). 2) No one gets a second chance at making a good first impression (CGT preventing Titan from touring the Amiens plant initially). 3) Unions rarely help their members keep their jobs. (No regrets on the part of the CGT if the Amiens plant closes altogether. No regrets on the part of the bakers’ union when Hostess closed.)
For an amusing yet painfully honest movie about unions in late 1950s and early 1960s Britain, see I’m All Right, Jack with Peter Sellers as the Communist union rep Fred Kite. True then, true now. Here’s a three-and-a-half minute scene of Kite confronting the factory’s personnel manager (Terry-Thomas) about a non-union employee (Ian Carmichael, not in this clip):