IUF
Uniting Food, Farm and Hotel Workers World-Wide
Danone Information and Consultation meeting
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December 3-5, 2003 - Report
Preparatory meeting � December 3, 2003
The IUF secretariat presents the Group�s developments and trends as well as the questions forwarded by organisations active in the Group.
Trade union delegates agree to divide the questions asked of corporate management in two parts:
1) definition of social indicators that management will commit to provide each year;
2) employment issues in the Group, in particular:
Follow up on the restructuring of the biscuit business in Europe
Reorganisation currently under way in Poland
Industrial bakery and bread making operations
Programs implemented to improve profitability: CUTE, Puissance 2, etc.
The Group has provided some numbered social data in preparation of this meeting but some people question the numbers regarding the change in consolidated employment (positive percentages while actual numbers are decreasing). [Note from the secretariat: The Group has since explained that percentages measure the year over year change in regional employment as a function of total employment, which explains how diminishing employment at the regional level my still represent a higher percentage of much lower total employment.]
In addition to the questions proposed by trade unions, participants agree to raise the following issues:
1. issues of professional equality (salaries, promotions, access to training, etc.);
2. the issue of vocational training and recognition of diplomas;
3. the issue of subcontracting and of its extension to activities with a direct link to production;
4. the future of Bl�dina within the Group.
Participants agree that a joint statement against the use of subcontracting will be made by CGT on behalf of the trade union group.
Plenary meeting � December 4, 2003
The secretariat excuses Bruno Vannoni, prevented form chairing the meeting at the last minute by family circumstances, and Ron Oswald, travelling out of the country.
As agreed to in preparatory meeting, the meeting was opened by the secretariat, asking the Group�s President for what reasons, in his opinion, should trade unionists confronted with persistent rumours of a takeover of Danone by another company wish that Danone remains Danone.
Franck Riboud presented the Group�s developments. He remains convinced that the best way to preserve the Group�s independence is to be worthy of the shareholders� trust by achieving expected growth and profitability objectives.
He then reviewed the operations of the various business lines. Fresh dairy products have again this year shown a 7-10% growth in sales, with growth potential, as measured by the high difference in the consumption of fresh dairy products per person between various densely populated countries of the world (India, China, Indonesia) and some Western Europe countries. Russia also represents a significant growth relay, hence the discussions with Wimm Bill Dann, which were terminated when it became apparent that the cost of acquiring the company was too high in comparison with its performance. Development in Russia will be fuelled through internal growth.
The President affirmed its conviction that the Group�s development lies in Waters. This market, however, is the stage of severe competitive struggles on numerous mature markets, such as the U.S. or Western Europe, resulting in the alliances with Suntory in the U.S. He expressed doubts over the quality of the water sold by some competitors for filling stations.
On the biscuits market, Danone has shown satisfactory results in some countries (Indonesia, China), strong market share but a growth problem due in part to the cannibalisation of older products by newer ones (Eastern and central Europe, France, BENELUX), and difficulties calling for innovative strategies (alliances, linkings) in Latin American countries, including Brazil. Biscuit is a global market based on local specificities (i.e., Bimbo in Mexico, Bahlsen in Germany, Barilla in Italy). This explains the change in business line management.
About the specificity of the Danone Group, Franck Riboud considers that local organisations would share an interest with corporate management in intervening at all appropriate levels, including at the European level, to defend the principle of fresh dairy products made from fresh milk. Eventually allowing dairy companies to produce yoghurts from UHT milk would signal the eventual disappearance of a portion of agricultural activity in yoghurt-producing countries.
Another particularity of Danone pointed out by the President was the decision he had made to maintain operations in countries experiencing economic difficulties (Argentina, Russia). This decision, while having social aspects (maintenance of employment) also brought economic dividends in terns of brand recognition and consumer loyalty development.
Franck Riboud has great expectations in the development of operations in North Africa and Middle East. He offered to arrange a specific presentation on activities and perspectives in this zone.
Repeating his conviction that the Group�s independence lies in satisfying shareholders, the President stressed that the Group�s culture is different from other companies� in that the Group accepts countervailing powers and is aware of its responsibilities toward all stakeholders. Hence, he knows that the preservation of the Bio marking on some Danone yoghurts is liable to mislead some consumers as these products are not manufactured from raw materials meeting organic agriculture standards. According to the President, if they were, this production alone would consume the entire French organic milk production capacity, which is why Danone is currently looking to change the name of the product.
Finally, Franck Riboud balanced media optimism regarding an economic recovery that he had not witnessed, far from it, in the Group. In France, in particular, it rather seems that individual purchases are coming crashing down.
The following brothers and sisters intervened in the general discussion:
J�rg Lindner on the Group�s capacity for internal growth � the Group has potential for growth even in stagnating countries (example: Actimel in Belgium). New product development requires limited risk-taking, which partly explain the use of subcontracting in certain circumstances. Some competitors are entering the fresh dairy products market solely through subcontractors, in particular the French Senoble. The Group cannot guarantee lifetime employment, but training and career development both within and outside the Group. The President suggested setting up a working group on career management, in particular to facilitate the transition from manufacturing into sales. The President insisted on the need to protect products through binding legislation (fresh dairy products from fresh milk, mineral waters under stricter rules than spring water, etc.)
Patrick Dachicourt on trade union opposition to subcontracting � the President recognized the risks associated with the use of outside personnel or the outsourcing of production, especially with regard to product quality, but reaffirmed that this was now unavoidable. He agreed to check that subcontractors adhere to the Danone Way. He repeated that Danone is not destined to become a brand organisation, without production operations. He supported the development of a book of specifications for subcontractors.
Ren�e Wargnies on the future of Bledina in the Group and of Danone plants in Normandy (Western France) � the President has no wish to sell Bledina, which however does not have to potential to become a worldwide brand, hence the search for partners. In the case of the Normandy plants, efficiency would require that the Group strive to make the plants more competitive through strength concentration and volume repatriation. No decision has been made yet, and none will be made without prior negotiation and agreement with the organisations present on the sites.
Sebastian Serena, Jean-Jacques Cazaumayou on subcontracting and the application of the IUF/Danone agreements (especially on occupational equality) � Franck Riboud deems necessary the establishment of a subcontracting charter to be negotiated at the IUF level. A working group should be established on this issue. Another group should be tasked with analysing the implementation of the agreements.
Abdel Bachkata on the future of industrial bakery and bread making operations, issues in warehouses and the presence of Danone in Morocco � Franck Riboud recognized that it had been a mistake to try to establish one strategy for the whole of the biscuit business line occupations. This is why Business Units have recently been set up for industrial bakery, bread making, salted biscuits and sugar biscuits. It was also the reason for the departure of the Business Line General Manager. As for warehouses, the President will examine the specific case of Verdun. In Morocco, Danone has a substantial interest but not management due to its partnership with ONA.
Tony Hogan on biscuit operations in Ireland � there is a need to improve the efficiency of the industrial operations in Ireland. Lower production volumes require an adjustment in personnel, but the Group does not intend to close down the Tallaght plant.
Marianna Zebrowska on the restructuring of biscuit operations in Poland � President Riboud recalled the process that has led to envision the closing of Jaroslaw. The Group is exploring possibilities to elicit sustainable activity on the site to maintain some employment. Solutions are being discussed for salvaging the industrial tool.
Piroska Dombovari on the situation of the Gy�r plant � the President confirmed its wish to maintain the plan on the current site while reducing to the lowest possible the nuisances to neighbours.
Kris Clymans on the comparison between expected tonnage at the time the biscuit restructuring was announced and actual tonnage � the President confirmed that tonnage is lower than forecast (350,000 tonnes forecast for 2003, 275,000 actual).
Michel Coudougnes and Christian Ghislain on issues of quality and food safety � the President confirmed that quality control jobs have been suppressed and replaced by a process seeking to make operators better trained and accountable for manufacturing quality.
Patrick Dalban Moreynas thanked Franck Riboud for his attendance and responses to trade unionists� concerns. He noted with satisfaction the Group�s commitment toward rapid implementation of mechanisms allowing for joint work on issues regarding the application of the IUF\Danone agreements, training and career management, occupational equality, definition of social indicators, and use of subcontracting.
The afternoon session was taken up in most by a presentation by Quality Manager Yves Rey on the Danone Quality Policy. Yves Rey has been with the Group six months, having previously worked at McCain and Coca-Cola, among others.
According to Yves Rey, quality teams must be consumer ambassadors to the Group, which has an objective to attract and satisfy consumers in ever growing numbers. The Danone logo must be a guarantee of quality.
The quality system must satisfy consumers� expectations about health protection and risk control (through the implementation of AIB prevention/control, HACCP, traceability, and risk management systems), provide real health addition and make good on marketing promises (through quality and operational procedure management), and finally, satisfy and enhance consumer fidelity (through listening and continuous improvement). The Group has implemented systems for auditing the level of implementation and satisfaction in each business line.
On food safety, Mr. Rey highlighted the gap between confirmed scientific risks and the consumer�s perception of food safety risks. He described the crisis and consumer complaint management procedure.
He also mentioned the role played by R&D, which must take into account quality imperatives, especially in the areas of health (health beneficial products), nutrition (good nutritional practices), preferences (surpassing competitors in product attractiveness) and technological efficiency (development of industrial technology to guarantee safety and quality).
The following delegates participated in the discussion of this theme: Abdel Bachkata, Artur Lisowski, Sebastian Serena, Michel Coudougnes, Patrick Dachicourt, Tony Hogan, Zeff Qurreschi, Patrick Longin, Marianna Zebrowska, Christian Ghislain.
Yves Rey provided the following information:
Quality must apply throughout the supply chain, including through the application of the Danone Way by suppliers. At their level, operators must ensure the quality of the products. A quality charter must be applied to suppliers, and product traceability must be ensured. An efficient quality process is one that is applied at the lowest cost. Quality controls must be applied throughout a product�s life cycle.
Franck Mougin added that employee involvement in quality control needs to lead to job enrichment, and that the organisation of work needs to be rearranged as required. Quality and safety should not be sacrificed to productivity. The Puissance 2 program is not intended to reduce employment. The use of interim employees in supplier relations is abnormal.
Franck Mougin presented an update on the restructuring of the biscuit business line in Europe. Site reindustrialisation is ensured or under way in Dordrecht, Locate, Chateau-Thierry, Calais, and Ris-Orangis, but the proposed solution for Beveren did not go through. The percentage of employees for whom a solution was found is 100% in Belgium, 100% in the Netherlands, 94% in Italy, 92% in Hungary, 85% in Ireland, 68% in France and 66% in the UK.
In response to questions from Kris Clymans and Abdel Bachkata, Franck Mougin recognized that expected tonnages have not been met in the remaining plants but indicated that there have been encouraging signs, in particular with the recovery of market shares in France. The situation remains difficult in the remaining plants on account of the delays due to the procedures implemented. Inasmuch as possible, the regularisation of interim employees has been assured, although it must be agreed that their status still differ from that of permanent employees.
Franck Mougin then presented the implementation of the Th�mis project. Some 3,254 people have received training so far under the project, for a total investment of 4 million euros. For those who have already implemented the program, 29 jobs have been created while 33 have been lost. The quantitative impact on employment is therefore low (net loss of 4 jobs) while the qualitative impact is positive (increase in qualifying training).
Assessment meeting � December 5, 2003
Almost all participants considered that the portion of the meeting covering Group operations (Franck Riboud) was more successful than many preceding such meetings. Questions were well defined, the trade union group�s discipline allowed touching on all current concerns and the answers provided were both clear and factual enough. ON the other hand, Yves Rey�s presentation was somewhat long and less factual.
Some trade unionists regretted that representatives from local Danone management in various countries are not more closely associated with ICC meetings. This might narrow the gap between what corporate management says at the ICC meeting and the attitude and decisions by site management.
Participants expressed the wish for the secretariat to conduct, in as much detail as possible, a study on casual on job insecurity in the group.
Patrick Dalban Moreynas closed the meeting with a recap of the issues raised during the meeting and which the IUF will strive to advance through working groups. He thanked all participants as well as the interpreters.