CNH Industrial qualifies as a Community-scale group of undertakings, and is therefore subject to regulations designed to improve employees’ rights to information and consultation through the establishment of a European Works Council (EWC). As reported in previous CNH Industrial Sustainability Reports, FIOM-CGIL filed a lawsuit against the Company, asserting that its representative was unlawfully excluded from the EWC Special Negotiating Body, and that this action constituted anti-union behavior.
In February 2013, the judge rejected the union’s claim and, in early August of the same year, FIOM appealed against the ruling. At the hearing of May 7, 2014, the Court of Appeal of Turin accepted FIOM’s appeal, ruling that the Company’s conduct during the meeting of December 16, 2011 was anti-union and an undue interference in the appointment of members of the Italian delegation. This ruling, however, only partly changed the 2013 ruling (recognizing the full legitimacy of the Company’s behavior), in that it accepted only one of the various claims set forth by FIOM; it acknowledged, moreover, that the matter of the litigation had ceased to exist due to the evolving circumstances.
In March 2014, according to the applicable regulations, the deadline for negotiating the establishment of the EWC expired without having reached an agreement. Therefore, the EWC must be set up pursuant to the subsidiary provisions set forth by the law of The Netherlands, transposing the Directive 2009/38/EC. As at December 31, 2014, the EWC had yet to be formally established, as the representatives of CNH Industrial’s Italian employees and the representative of its UK employees (whom are allocated 25% of the EWC seats, as per applicable legislation) were still to be appointed. As a result, CNH Industrial has been unable to call a EWC meeting as per applicable procedures.
Representatives of the FIM, UILM, FISMIC, UGL, and AQCF unions, signatories of the Collective Labor Agreement (CLA) applied to all Company employees in Italy (approximately 17,800), were present at the Investor Day held on May 8, 2014 in Auburn Hills (USA) where the Company’s 2014-2018 Business Plan was presented to financial analysts and institutional investors.
A similar meeting was held in Turin (Italy) in July 2014 with FIOM (a union that is not a signatory of the CLA), along with some of its own national/local representatives and works council members employed at CNH Industrial’s Italian factories. Further meetings were held at CNH Industrial legal enitities in various countries, where the Plan was presented to employees and/or their representatives and/or unions.
Collective bargaining agreements cover almost 98% of the Company’s workforce in EMEA. In Italy, all Company employees are covered by such agreements. On July 30, 2014, CNH Industrial and Fiat Chrysler Automobiles signed an agreement with Federmanager for the renewal of the managers’ CLA that expired on December 31, 2013. The contract, which applies to approximately four hundred CNH Industrial managers, is effective for the 2014-2015 period.
The specific sections of the Collective Labor Agreement of December 13, 2011 regarding economic and regulatory matters, applicable as of January 1, 2012 to all CNH Industrial employees (except managers), were renewed on July 11 and November 12, 2014, respectively.
The economic terms agreed on July 11 provide for the payment to all employees of a lump-sum rather than a wage increase, due in part to the low inflation recorded in the period since the last salary increase. The terms agreed on November 12, on the other hand, amended some aspects of the regulatory section of the CLA.
The main new regulations involve:
- the use of individual paid annual leave, including in minimum clusters of two consecutive hours
- a new flexible time slot for arriving at work, changed from 8-9 a.m. to 8-9:30 a.m.
- the reduction of the notice period, to 1/2 hour after the beginning of the shift, in case of illness of children below 12 years; this relates to annual paid leave, for which 15 days’ notice is normally required
- the introduction of an all-embracing bonus payable in the event of full work shifts sustained to ensure production recovery after loss of production
- the facilitation of study permits in the event of university exams, post-graduate courses, and to employees attending the last three years of secondary school or certified professional courses.
Worldwide, excluding EMEA, about 46.6% of employees are covered by collective bargaining agreements. This is an average figure based on local practices and regulations that vary from country to country.
In the USA, collective bargaining agreements cover approximately 1,850 employees (i.e., almost 18%) out of approximately 10,300 at sites and/or plants with trade union representation. However, formal policies relating to certain collective aspects of the employment relationship (e.g., working hours, internal policies and procedures, benefits, etc.) apply to almost all employees of CNH Industrial, irrespective of trade union representation. Collective bargaining takes place at different levels through procedures that vary according to local laws and practices. The collective bargaining agreements at each union-represented location contain equal opportunity language prohibiting discrimination against employees within a variety of protected classes. The collective bargaining agreement with the UAW labor union, which represents approximately 1,250 of the hourly and maintenance employees, is effective until April 2016. The CLA with the International Association of Machinists, which represents approximately 600 of CNH Industrial employees in Fargo (USA), expires in April 2018.
Employees working in locations where there is no trade union representation enjoy similar protection under a variety of federal and state laws. The collective bargaining agreements at each union-represented location call for the creation of joint health and/or safety committees, which generally comprise both management and hourly employee representatives. Base wage increases in union-represented locations are collectively bargained and delivered through a variety of methods, including annual base wage increases, lump sum payments, and/or cost-of-living adjustments. Union-represented employees at the Racine and Burlington plants (USA) are eligible to participate in the local Variable Pay Plan, which provides an opportunity to earn a quarterly lump sum bonus payment based on specifically defined plant performance metrics.
In Latin America, more than 96% of CNH Industrial employees are covered by collective bargaining agreements.
In Brazil, a process of continuous negotiation between the Company and trade unions has been established to cover various operating issues, such as temporary contracts, overtime, flexible work, work shifts, health and safety at work, and banked hours. This continuous dialogue has contributed to the significant improvement in working conditions over the years.
Collective bargaining between the Company and worker representatives is also ongoing in Argentina and Venezuela.
More than 97% of the employees surveyed1 worldwide are covered either by collective bargaining or unilateral policies relating to certain collective aspects of the employment relationship (e.g., working hours, internal procedures, benefits, etc.).
In 2014, CNH Industrial signed a total of 1922 agreements at either Company or plant level, 15 of which include agreed provisions on health and safety matters.
The main wage and regulatory agreements signed in 2014 at legal entities level include:
- collective bargaining on wage and labor regulations, concluded at CNH Industrial’s Basildon plant (UK), providing for a structural pay increase for salaried and hourly employees backdated to November 2013 (i.e., the expiry date of the previous agreement), and for the modification of the collective negotiation cycle from biennial to annual, effective as of January 1, 2015. New provisions agreed upon for hourly employees include: a lower bonus payment and the introduction of a premium linked to individual hours of presence; the possibility to use two days off per year fractioned in four half days; and new traineeship rules, also in relation to entry salary level.
Changes to long-term illness coverage were agreed upon for both salaried and hourly employees. Additionally, flexible benefits were introduced in 2014 for salaried employees
- the agreements reached through the annual negotiations in France, which resulted in salary increases ranging from slightly below to above inflation levels, depending on business results. Lump sums were awarded in some cases, also linked to the achievement of production results
- the agreement signed in March at Iveco Czech Republic, providing for a wage increase above inflation as of April 1, 2014, in light of business results and of the flexibility instruments agreed upon for 2014 the agreement reached in Germany in late October by Iveco Magirus AG, Magirus Gmbh, and the Works Council, aimed at discontinuing the ATZ agreement (Alterteilzeit - a pre-retirement agreement) implemented as one of the measures of the 2012 social plan in Ulm. The agreement reached in 2014 allows employees to voluntarily replace their pre-retirement contract with a severance payment and leave the Company, effective January 2015. The new option was accepted by 70% of the approximately 280 employees covered by a preretirement contract (ATZ)
- the stipulation of three one-year company collective agreements in Romania, following the election of the first workers’ councils within three different subsidiaries.
For completeness, it is worth reporting that in Germany an agreement was reached in 2013 for the renewal of the metal workers’ contract, applied by most CNH Industrial subsidiaries in the country, setting salary increases at 2.2% as of May 1, 2014. At the end of October, the pay-related CLA provisions for the metal and automotive industries were agreed upon in Austria and applied to most CNH Industrial employees, resulting in 2.1% pay increases effective as of November 2014.
MAIN ISSUES COVERED UNDER THE AGREEMENTSa
CNH INDUSTRIAL WORLDWIDE
(a) There is no correlation between the number of agreements and the number of issues covered, as each agreement may deal with several issues.
MANAGEMENT OF PRODUCTION LEVELS
In 2014, several plants in EMEA again had to resort to mechanisms to address fluctuations in production volumes, such as overtime and temporary contracts to support growth in demand, and/or plant stoppages to cope with drops in market volumes. In Italy, the Powertrain segment, the Iveco brand, and New Holland Construction Equipment resorted less to temporary layoffs compared to 2013. In July, at the Iveco plant in Brescia, an agreement was reached with the signatory unions of the Italian CLA providing for the extension of the solidarity contract (effective from August 2011) until August 21, 2015, and for a further reduction in hours worked per week for all plant workers. During the first part of the year, almost every plant in the Agricultural Equipment segment in EMEA made use of overtime and of temporary workers to cover production volumes. On the other hand, the market slowdown that particularly affected the second semester of the year caused production stoppages at the Agricultural Equipment plants in Italy, UK, and Belgium. At the Iveco Bus plants in Annonay (France) and Vysoke Myto (Czech Republic), the intense production flow required overtime and agency contracts. In Spain, at the Commercial Vehicles plant in Valladolid, the utilization of temporary layoff was almost unchanged compared to 2013. In France and Germany, production stoppages through temporary layoff benefit schemes decreased significantly compared to the previous year. Meanwhile, flexible working time agreements were applied to meet fluctuations in production at the Agricultural Equipment plants in Belgium and Poland, and at the Commercial Vehicles plants in Annonay (France) and Madrid (Spain).
In North America, overtime fell in the second half of the year, and employment levels followed a moderately negative trend versus 2013 due to a slightly weaker performance in the Agricultural Equipment segment, while the Construction Equipment segment remained relatively stable. Several Agricultural Equipment plants in NAFTA implemented workforce rebalancing initiatives and additional down days to manage costs in light of the weaker business performance.
The US plants in Grand Island, Racine, and Fargo rebalanced the workforce in the second half of the year, resulting in the layoff of a number of full-time employees.
Employee layoffs also started at the Saskatoon plant (Canada), which received approval to participate in a government-sponsored work sharing program enabling the plant to temporarily reduce the length of the work week while providing incremental employment insurance benefits to the affected employees. Several plants in NAFTA also reduced the number of salaried agency and regular white collar employees in response to a decrease in production volumes.
In LATAM, several CNH Industrial businesses recorded varying levels of decline compared to the previous year. In the Agricultural Equipment segment, during the first part of the year, volume drops were mainly managed by reducing the number of temporary workers at the Curitiba and Sorocaba plants (both in Brazil). Initiatives to rebalance the workforce based on the lower production needs were put into effect at the Construction Equipment plant in Contagem (Brazil) in the third quarter of the year.
The Commercial Vehicles segment initially coped with the sharp market decline causing a downturn in production volumes by means of time banks and the extensive use of collective vacations (mainly in Brazil), and by enforcing temporary layoffs (in Argentina and Venezuela); but a restructuring program eventually became necessary.
In APAC the production volumes were quite flat compared to the previous year even if the Agricultural Equipment plants of Noida (India) and Harbin (China) experienced production volume increases, the latter due to a new product launch, managed through the use of overtime. Other plants like Chelny (Russia), belonging to Agricultural Equipment, and Dandenong (Australia), part of the Commercial Vehicles production network, experienced decreased volumes compared to 2013, and implemented down days.
Minimum Notice Period for Operational Changes
In the European Union (EU), the Council Directive 01/23/EC stipulates that in the event of a transfer of businesses, plants, or parts of businesses or plants, following a contractual sale or merger, an information and consultation procedure must be conducted with employee representatives. The procedure must be initiated in a reasonable period of time prior to the transfer. Moreover, the Council Directive 98/59/EC on the approximation of the laws of the EU member states relating to collective redundancies requires to hold consultations with workers’ representatives whenever an employer is contemplating collective redundancies.
These “shall begin in good time with a view to reaching an agreement, and should, as a minimum requirement, cover ways and means of avoiding collective redundancies or reducing the number of workers affected, and of mitigating the consequences by recourse to accompanying social measures aimed, inter alia, at aid for redeploying or retraining workers made redundant.” Accordingly, CNH Industrial subsidiaries comply with the regulatory provisions resulting from the adoption of the above directive in each individual EU member state. Outside the European Union, local laws and practices apply.
In the USA, the federal Worker Adjustment and Retraining Notification Act (WARN), which applies to both unionized and non-unionized sites, requires an employer to give a minimum of 60-days’ notice for any action that will cause at least fifty employees or 33% of the workforce to lose their jobs. At unionized sites and/or plants, the level of union involvement, if any, is normally defined by the collective bargaining agreement applicable at site level signed between the Company and the union, which usually also sets forth the information and consultation procedures to be activated in such circumstances. The collective bargaining agreements between CNH Industrial America LLC and International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America, which cover the plants located in Racine and Burlington, contain a letter of understanding stating that the Company will refrain from permanently shutting down either plant during the stated agreement term, which expires on April 30, 2016. A separate letter of understanding under the same collective bargaining agreement requires the Company to provide six (6) months’ advance notice to the local union in the event of a full plant closure. Should this six (6) months’ notice period impair the Company’s need for speed, flexibility, and confidentiality, the Company may provide such notice no less than sixty (60) days prior to full plant closure.
In Canada, the collective bargaining agreement between CNH Industrial Canada LTD and United Steelworkers Local Union No. 5917, which covers the Parts Depot located in Regina, provides for the Company’s written notice to the union no later than ninety (90) days prior to the scheduled depot closing date. At non-unionized sites and unionized locations with no specific requirements in the collective bargaining agreement, it is common practice to inform all employees of organizational changes related to outsourcing through a company-wide announcement, with appropriate notice prior to the operation.
In Brazil, bargaining is not mandatory in the event of the transfer of businesses, plants, or parts of businesses or plants, following a contractual sale or merger, but it is customary for CNH Industrial to implement a direct and formal communication process with both employees and unions. Talks generally occur to the extent of minimizing social impacts, if any.
Operational changes within the Region, such as the deployment of new technologies to increase work efficiency, quality, competitiveness, or the employees’ health and safety, are preceded by formal negotiations with labor unions, according to the specific terms and conditions provided for under the collective bargaining agreement.
The procedure must be initiated a reasonable period of time prior to the process. When necessary, changes are made gradually in order to prepare employees for the new scenarios.
In Australia, as per the collective bargaining agreement applicable at Iveco Trucks Australia Ltd., unions, delegates, and officials must be notified within 28 days in the event of changes that may significantly affect employees.
In China, the Chinese Labor Union stipulates that all operational changes such as reorganizations, restructurings, or actions causing twenty or more employees, or 10% of company employees, to lose their jobs must be notified to the Labor Union. Such operational changes must be filed and approved by the Labor Bureau thirty days prior to any further notifications or actions, or the changes are deemed illegal.
In India, companies are required to comply with regulatory provisions defined by Indian law according to the changes to be put in place.
Uzbekistan’s labor legislation stipulates that operational changes must be notified at least two months in advance.
RESTRUCTURING AND REORGANIZATION
In Italy, further meetings were held in 2014 with investors interested in the reindustrialization of the Valle Ufita plant, where production ceased on December 31, 2011. Meetings between Government representatives, the Company, and trade unions were also held at the Ministry of Economic Development as part of the working group established in 2011.
Examining the projects took longer than expected, requiring further recourse to extraordinary temporary layoff benefits, recognized as an exception to the law for the entirety of 2014.
On May 28, 2014, at the Ministry of Economic Development and with the Minister present, the CEO of King Long Italia presented his company’s plan to set up a new Italian company for the production of buses, called Industria Italiana Autobus; the plan was presented to CNH Industrial representatives, national and local trade unions, the workers’ council, and to Members of Parliament from the Avellino area (where Valle Ufita is located).
This plan would assure the reindustrialization of the Valle Ufita site and absorb all of its workers. Among the many projects examined, the Ministry of Economic Development judged it as fulfilling the purpose and objectives of the working group set up in 2011. At a subsequent meeting held on October 13, 2014 at the Ministry of Economic Development, King Long Italia confirmed the establishment of Industria Italiana Autobus a few weeks later (with the participation of Finmeccanica), with the aim of creating an Italian center of excellence for the production of buses, and the acquisition of the undertaking, consisting of the Valle Ufita plant and all its employees, before year end. The plant and the 298 workers3 that were employed at the end of December 2014 were transferred to Industria Italiana Autobus S.p.A., effective January 1, 2015. On the date production ceased at the end of December 2011, 658 employees were working at the Valle Ufita plant; at the end of December 2014, their number was 288 (43.8% of the initial workforce). During this timeframe, 39.8% of employees voluntarily opted for the mobilità scheme (a Government benefit scheme providing for an unemployment allowance to employees affected by collective redundancies, with a duration of up to three years in Northern Italy and four years in Southern Italy, where the Valle Ufita plant is located); these employees will retire before the scheme’s expiry date. Approximately 9.8% of employees have benefited from the mobilità scheme to pursue self-employment initiatives. All employees who opted for mobilità scheme received a severance payment from the Company, as set out in agreements with trade unions. Approximately 6.6% of employees were reassigned to other CNH Industrial sites/plants. Overall, the Company’s 2011 decision to close the Valle Ufita plant was implemented minimizing the social impact across the region.
In May, Iveco started a collective dismissal procedure affecting 65 employees in its Central, Commercial, and Technical departments in Turin (Italy).
In November, New Holland Construction Machinery started a collective layoff procedure involving up to 36 employees at its San Mauro Torinese plant (Italy). In both procedures, agreements were signed with the regional signatory trade unions of the Italian CLA and with the workers’ councils (RSA). According to the selection criteria agreed upon by all involved parties, the only employees to be dismissed are those who will meet retirement requirements during the period covered by mobilità.
In December 2014, after a consultation with the trade union, the Agricultural Equipment plant in Basildon (UK) announced that in 2015, due to the market downturn and the resulting drop in production, up to 40 employees would be made redundant.
In Italy, information and consultation procedures with the works councils/local trade unions started at the end of May, with regard to the transfer from Fiat Group Purchasing to CNH Industrial Italia of the business unit called CNH Industrial Purchasing, employing more than 400 workers.
This transfer was implemented to improve and increase the effectiveness of CNH Industrial’s decision-making by enabling it to oversee and control all activities directly related to processes of strategic importance to the Company; as a result, CNH Industrial Italia now provides for purchasing in the name and on behalf of CNH Industrial.
In light of the production stoppages that would have been required due to low volumes, an agreement was signed on October 15, 2014 at the Iveco Plant in Valladolid (Spain) providing for recourse, during the November 2014-March 2015 period, to the temporary layoff benefit scheme, and for the adaptation of the existing production facilities needed in the same time frame for the launch of the new Daily model (planned in 2015).
In June 2014, it was announced that the Calhoun plant (USA), manufacturer of excavators and dozers for the Construction Equipment segment, would be shut down in the third quarter of 2015. The production of excavators at the plant ceased in the last quarter of 2014, and dozer production will be transferred to the Burlington plant (USA) in 2015. The closure of the Calhoun plant affects approximately 100 employees. The plant complies and will continue to comply with all federal and state notification laws, and severance payments, benefit continuation, and other assistance consistent with Company policies applicable to non-unionized employees will continue to be provided.
On November 26, 2014, CNH Industrial acquired Miller-St. Nazianz, Inc. and its subsidiary, located in St. Nazianz (USA). The company, whose workforce comprises approximately 240 non-unionized employees, is engaged in the manufacture and wholesale trade (throughout North America and internationally) of self-propelled sprayers, other agricultural equipment, and parts and accessories for its products.
In LATAM, due to the sharp decline experienced in the Commercial Vehicles segment, temporary measures were initially applied to cope with the reduction in production volumes; a restructuring program subsequently became necessary, however, also aimed at reducing the permanent workforce at plants in Brazil, Argentina, and Venezuela.
In Venezuela, this objective was mainly pursued through voluntary dismissals. Although not mandatory, trade unions were engaged in the workforce reduction process.
In China, due to the closure of Shanghai New Holland Agricultural Machinery Corporation Ltd., a 60% Company-owned joint venture, an agreement was reached with trade unions and employee representatives on a Placement Plan, devised as per applicable labor laws and regulations, with the purpose of minimizing the social impact of this closure. The plan provides for the placement, within the company of the former joint venture partner, of employees meeting specific criteria, and for severance payment in all the other cases.
In 2014, labor unrest in Italy was low: despite a 2.5-fold increase in hours lost versus the previous year, the overall level was lower than in 2012. The hours lost due to strikes against labor reform or against other extra-Company issues represented more than 90% of the total hours lost during the year. The overall levels of labor unrest in 2014 in countries outside Italy were negligible. As in past years, the CNH Industrial plants in Belgium and France were affected by the national strikes called against government changes to social policies; strikes in France were also related to annual wage negotiations. Some strikes took place in LATAM during collective negotiations, while no strikes were recorded in NAFTA or APAC.
(1) Data based on a survey of 99.2% of CNH Industrial’s workforce worldwide.
(2) Includes six collective bargaining agreements with trade union organizations in Italy at Company level, which qualify as Company agreements but are signed by CNH Industrial in the name, and on behalf, of several CNH Industrial legal entities.
(3) The workforce transferred includes 10 employees acquired in December 2014 by insourcing the resources and activities of a former provider, which managed, transformed, and distributed electrical energy, produced and distributed hot and cold water for compressed air and other technological uses, and managed the waste water of the Valle Ufita plant.