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Danone ICC meeting discusses job security

Posted to the IUF website 27-Jan-2005

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Report of the ICC meeting - November 2004

Danone Information and Consultation Committee Meeting


Geneva, November 2-4, 2004

Minutes of the meeting


Preparatory meeting



The Secretariat informed the trade union members of the ICC of the follow-up on the commitments made at the 2003 meeting:

 Implementation of a working group on career management and employability: was not done, but this issue is the central theme of the 2004 ICC meeting.

 Working group on sub-contracting: did not meet, but management has provided the IUF with a draft statement of basic standards to be met by the Groupís subcontractors.

 Follow-up on IUF/Danone agreements: discussions are underway on the scope of the agreementsí application and follow-up on such application.

 Biscuit business line: a meeting of IUF affiliates was held on October 25 on the future of the biscuit business in the Group.

Bruno Vannoni, Jean-Jacques Cazaumayou, Walter Kopp, Vincenzo Sgalla, Bruno Fournet, Abdel Bachkata, Paul Loridant, Kris Clymans, Leszek Kopczynski took part in the discussion. The issue of sub-contracting (internal and external) emerged as an issue to be further discussed with corporate management in order to define more clearly its conditions of application.

Claude Faure (AXIA Consultants) presented the participants with an analysis of the Groupís operations from an economic and social perspective. He stressed that the work was done quickly as he was only approached a short time before the meeting. Although he had to work from 2003 data, he was able to identify strong tendencies.

He did not refute the fears of some trade unionists who think that the biscuit sector will experience more reorganisations and therefore more employment losses.

He stated that industrial sub-contracting accounted for 5% of the Groupís total production.

Participants also discussed the consequences of the changes in the European Union Common Agricultural Policy, resulting in greater access to European markets for imported raw materials, the reduction in logistics expenses, and the influence of consumer distribution modes on agrifood production.

The delegates then explained the questions to be asked of management.

Abdel Bachkata, Kris Clymans, Robert Szewczyk, Vincenzo Sgalla, Denis Enfert, Bruno Fournet, Giuseppe De Leo, Cipriano Mesa, Walter Kopp, Jean-Jacques Cazaumayou, Daphnť Lecointre and Claude Faure took part in this discussion.

Plenary meeting


Franck Riboud made a presentation on the Groupís results. From an economic and financial perspectives, the results are good, notwithstanding the difficulties arising from the development of hard discounting (in Europe, 15,000 stores in 1993, 32,000 in 2004), weak consumption in some countries (France), price pressures (some forced price reductions in France). The Group need to stand out from the traditional agrifood industry and insist on the health/pleasure dimension.

Discussions with ICC members covered the following:

 Logistical issues: road versus rail transportation. The Group is willing to absorb the cost differential of environmental protection (for Evian, for example, rail costs about 10% more than transportation by truck), provided it is flexible enough.

In logistics, choices will be made without prior assumptions. If required, logistics will be outsourced.

Paul Loridant (CFE-CGC France, Evian) regretted the absence of prior communication and consultation by appropriate management with local trade unions on the issue of transportation, especially following a public fuss at Evian. The President agreed and asked HR Management to reflect on ways to improve communications.

 Distribution: consumer purchasing patterns are evolving. Hypermarkets have lost their price advantage. Private brands account for about 4% of the Groupís production. Danone is not present in the hard discounting segment, which has no national brands. The company, however, is already active in the soft discounting market in Spain (Dia) and France (Ed). The Group will not, however, add targeted production capacity to serve this market.

 Internal competition between plants: the President reminded participants of the need to maintain external plant competitiveness but also to strive for improves profitability internally. He confirmed that production in Normandy (Western France) fresh dairy products plants will only move forward with the unanimous agreement of the trade unions concerned. He was willing to make clear commitments on the preservation of employment.

 In the case of the Rosenheim plant, where 40 jobs could be suppressed following a reduction in shipments toward France (now supplied through FerriŤres), the President generally favours production close to markets, and the need in this specific case to open discussions with the unions of the plants concerned.

 Employability: the President stressed this strong focus for Group policy, which calls for providing professional development opportunities internal or external to the group through training.

 Waters in Italy: Franck Riboud described the beverage environment in Italy, where Italaquae is unable to play a central role. The Groupís brands are not well known enough and are facing strong competition (San Benedetto, San Pellegrino). He stated his preference for an association rather than divestiture .

 Other activities in Italy: the Fresh dairy products situation is satisfactory. In Biscuit, the closure of Locate should improve the situation. The group will invest in FDP in Italy and may consider a partnership with Barilla in the biscuit business.

 Activities in Poland: faced with the growth of distributor brands in Eastern and Central Europe, the Groupís activities in Poland must show increased profitability. The Group is looking for a partner for joint operation or outright purchase of Jaroslaw.

 Bread-making/bakery: the president announced a will to re-establish bread-making and to improve the quality of bakery products. The priority nevertheless remains on the production of biscuits, where revitalisation plans are in the books.

 Sauces in UK: the President will check into the reasons for the dismissal of 25 workers at the Birmingham HP plant with 6% growth and results exceeding expectations. HR General Manager Franck Mougin ensures that the Group will abide by all of its commitments regarding the maintenance of pension levels.

 Subcontracting: the group uses subcontracting in some instances, in particular when launching new products. In some instances (biscuit production in India), there is no way around subcontracting. The president stated that he is favourable to the discussion and eventual approval of a charter of subcontracting.

EEB update

Franck Mougin provides an update on the restructuring of the biscuit business line (EEB). Solutions have been found for 1,987 out of 2,200 employees affected, or 94%, as follows: 24% through internal transfers, 38% through outside placement, 20% through age-related measures and 13% through support for personal endeavours. The resolution rate is 100% in Belgium and the Netherlands, 99% in Italy, 94% in Hungary and 85% in France.

Lessons learned from the implementation of the EEB plan show how difficult it is to manage such a large plan in numerous countries with vastly differing legislation as well as economic and social conditions, that it is preferable not to globalise the project, that the Group underestimated the media impact, that those units/countries that quickly entered into negotiations got better results that the resolution rate is higher in Danone than in other corporations and that the absence or weakness of the social dialogue in this specific sector did allow for proper forecasting of upcoming developments.

Franck Mougin confirmed the sale of UK operations to UB. In his view, this decision is more likely to ensure the future of the operations and employment in those plants.

He defended the reductions in personnel in Russia by linking them to the switch from direct distribution to an external system. He confirmed the groupís intention to revitalise innovation and to better position the health profile of biscuits by stressing the main ingredient, cereals.

Evolution

Andrť Mathieu introduced the Groupís Evolution project. The project seeks to develop internal and external employability by stressing four handles: training, professional development, organisations and partnership.

Trade union participants insisted on:

 The need to consult with the trade union prior to the implementation of a project along these lines;

 The recognition of training benefits and the validation of oneís competences;

 The non-mandatory status of professional and geographic mobility.

Trade union assessment meeting


Contribution of the Axia expert consultant: it is hoped that Axia will be present at the assessment meeting convened to analyse and comment the statements made in the plenary session for management representatives. It is also suggested for the future that the expertsí presentation should cover both the past year and the first half of the current year (to the extent that the ICC meeting is usually held in the second half of the year. It is suggested that the experts provides comparison points with other organisations in the agrifood industry. It also appears important to consider the decisions on investments and reorganisation in relation with the decisions on the outsourcing of production. The trade union group wished for more information on production sites and markets, as well as a comparative study on volume and workforce by CBUs. It recommended identification of the volume and siting of outsourcing production.

Evolution project: the trade union group regretted that trade unions were not associated with the initial testing of this project and that management had not provided a hard copy. Those brothers and sisters who have gone through the process before (Germany, Czech Republic) are invited to provide a copy to the IUF Secretariat.

Situation comparisons: it is proposed that the Secretariat conduct a comparison study with the affiliates on work contract basics (working hours, health plan, training, gender equality, absenteeism, etc.) in the various CBUs.

Russia: Henri Lindholm (SEL Finland) and Artur Lisowski (Solidarnosc Poland) express surprise that Danone workers in Russia are not represented at the meeting. It is explained that the Moscow Bolshevik plant representative is ill and should resign his responsibilities .

Web page: The IUF Secretariat was asked to develop an interactive Website for ICC members. The Secretariat outlined the issues in the development of an interactive Web page that would be accessible to a limited number of people and include a translation tool (essential to allow for constructive exchanges). The Secretariat nevertheless committed to looking into the issue.