Smart Car Standoff Pits Social Progress Against Global Competition
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Version 0 of 1. HAMBACH, France — On a drizzly afternoon in October, Mathis Cédric buzzed around the kitchen of his small Alsatian restaurant in Hambach, France, a bucolic town near the German border. It was lunchtime, and workers from a nearby Smart car factory would soon be filtering in to grab the daily special of sauerkraut and sausages before heading to their afternoon shift. Typically, when the workers gathered around the small tables, the atmosphere was chatty. But lately, a pall has hung over the conversation. To lift competitiveness, the bosses at Smart, owned by the German auto giant Daimler, had asked the plant’s 800 employees to vote on whether they would be willing take a pay cut and temporarily abandon the cherished 35-hour workweek, which had long prevailed at Smart and every other business in France. In return, Smart, Hambach’s biggest employer, would guarantee their jobs for five years. To Mr. Cédric, the answer seemed clear: For the sake of the factory, if not the town, the workers should agree to the deal. But Smart’s proposal had opened a rift inside the plant and with the factory’s powerful unions. Rumors flew that Smart might be closed if an accord was not reached. “This is on everyone’s minds — it’s the No. 1 fear,” Mr. Cédric said. “Frankly, I don’t understand why some of them don’t want to do a little more to save jobs. I work 40 hours just on the weekend,” he added. “But I guess people want to hold on to what they’ve got.” This week, after a three-month fight led by the unions, the workers will have one last chance to agree to change their contracts to allow a longer workweek, which would start in January. The unions that oppose the change are still resisting. But Philippe Steyer, Smart’s director of human resources, said he expected at least three-quarters of Smart’s employees to accept the change. More than 15 years after France’s 35-hour workweek became law, the showdown at Smart, which has captured headlines nationwide, is a vivid reminder that the measure is still a social and political lightning rod. At Smart and many other companies, employers say the rule and other rigid labor laws make France one of the most expensive places in Europe to do business. To the outside world, France appears to be one of the most laid-back places anywhere to work — an impression that even made its way to one of the Republican presidential debates. “I mean, literally, the Senate, what is it, like a French workweek?” Jeb Bush asked Senator Marco Rubio recently, accusing him of a slack work ethic. “You get like three days where you have to show up?” In reality, the 35-hour workweek has become mostly symbolic, because a multitude of loopholes allow companies to work around the law. French employees work an average of 40.5 hours a week — more than the 40-hour average in the European Union — and have high productivity. Many workers at the Smart factory already pull longer hours and are compensated in overtime. As France now grapples with five years of sluggish economic growth and high unemployment, President François Hollande has been exploring options that could hollow out what’s left of “les trente-cinq heures.” The government has proposed legislation that next year would give companies and workers more leeway in setting their own work rules, and would permit collective negotiation over salaries, employment conditions — and the length of the workweek. The mere hint that Mr. Hollande might relax the 35-hour rule put him at odds with the left wing of his Socialist party, which ushered in the law in 2000 and considers it a totem of social progress. French labor unions have also vowed to block the changes. The unions wield strong negotiating power even though less than 8 percent of the French work force now holds membership. At the Smart factory, the national debate was crystallized this fall around a nonbinding vote in September that wound up dividing the factory between blue-collar workers, who generally opposed the change, and white-collar workers, who supported it. Smart’s managers framed the referendum as a test of willingness to adapt to globalization. But some employees feared the mandate to “lift competitiveness” amounted to little more than squeezing workers to increase profitability. “What they’re asking is for people to work more and earn less,” said Didier Getrey, a local leader at France’s C.F.D.T. union, which is leading the deal opposition. “We cannot live in a world where we’re always scraping savings off the backs of the little guy to enrich the 1 percent,” Mr. Getrey said. “Those are Chinese labor standards. We are not going let it happen in France.” The standoff frayed nerves in Hambach, a former iron ore mining town that brims with red geraniums and rows of tidy Alsatian-style houses. Many of Smart’s employees have lived in the hamlet for years and work side by side at the factory making the Smart Fortwo, the lollipop-colored minicars that can squeeze into half a parking space in New York, Paris and other crowded cities. Nearly 2,000 other people in the area live off the Smart factory, including employees at cafes, hotels and other small businesses. Many of the town’s older people remember the hard times before Smart arrived. The Lorraine region, which was annexed briefly by Germany during World War II, depended on the mining industry for most of the last century. When cheaper competition arose in the 1960s from Eastern Europe and elsewhere, the mines began closing, prompting thousands of layoffs over the next three decades. Fortunes revived after local politicians and President Jacques Chirac persuaded Daimler to open the ultramodern Smart facility in 1997, praising low costs and high French productivity. New roads were paved into the rolling green hills, with names like Creativity Street and Mobility Boulevard. Helmut Kohl, then the German chancellor, joined Mr. Chirac in a ribbon-cutting ceremony to inaugurate Smartville, whose factory and supplier buildings swept over 168 acres. But competition from other countries is once again clouding the town’s future. While the Hambach plant is still profitable, Daimler recently opened a lower-cost Smart car facility in Slovenia, producing four-seater Smart cars. Many people at the plant and in town worried that Smart might move operations there if the two sides could not reach a deal. “If Smart were to leave, this place would become an economic desert,” said Gaston Meyer, Hambach’s mayor. Local unemployment isn’t as bad as when the mines closed, but it is stuck around 10 percent, on par with the national average. Nearby, a massive plot is supposed to be transformed into a new industrial park. The mayor is working to lure companies. But if there is even a hint that Smart might move, he wonders what business would even want to come. “We haven’t returned to the times of Zola,” he said, referring to the French author Émile Zola, who chronicled the grim struggle of workers in 19th-century France. “But we live off of industry, so we need to do everything we can to entice industries to stay and develop.” Philippe Steyer first set foot in the Smart factory 16 years ago as a floor manager overseeing the assembly line. A bright, youthful man with a firm demeanor, he walked the floor frequently, talking with employees who transformed bare Smart car frames into glossy, finished vehicles by snapping in steering wheels, dashboards and doors. Five years later, Mr. Steyer moved into an airy administrative office to work in the human resources department. The move made him one of “them” — an executive — in the eyes of some colleagues. After he was recently promoted again, this time to human resources director, Daimler officials called. Daimler was beginning to enact a companywide plan to improve competitiveness across all production sites to ensure their future viability. Would the French operation get on board? Mr. Steyer knew that would mean a fight. Across the country, French unions had been guarding against the unraveling of the 35-hour week. In Paris, they recently sought to override a vote taken by the mostly nonunionized employees of the Sephora cosmetics store on the Champs Élysées to be able to work until midnight for more pay. The Sephora workers prevailed after a protracted fight. At Smart, Daimler was trying to push the limits even further. “We’re in a good situation,” Mr. Steyer acknowledged. “But we need to prepare in case hard times come. Economic cycles move fast. We believe it’s better to do this before a crisis hits and our backs are against the wall.” Besides, he observed, Smart was the last factory in Western Europe still making small cars. The French carmaker Renault moved production of the Twingo to Slovenia over a decade ago. Fiat was making the Fiat 500 in Poland, where labor costs were nearly a third of Western Europe’s. Mr. Steyer authorized the nonbinding September vote, in which Smart employees would decide whether to work 39 hours, but get paid only for 37. White-collar workers would give up half of the 10 rest days they get annually on top of five weeks’ vacation. In exchange, Daimler would authorize Smart to guarantee jobs through 2020, and return the plant afterward to a 35-hour workweek. Even if workers rejected the measures, Mr. Steyer promised that Daimler would not close the French plant. On the day of the September vote, Mr. Getrey, the staunch opponent of Smart’s plan, stood in the parking lot handing out leaflets with members of the C.G.T., another powerful union that opposed it. Because Smart was still profitable, Mr. Getrey told workers that management had no legal right to ask them to decide. “This is a test of what could become a bigger national fight over the 35-hour workweek,” Mr. Getrey said. Not everyone was persuaded by the union’s argument. Raymond Wasbauer, a maintenance administrator, had worked at Smart since 1998 and was promoted several times. With his earnings, he was able to afford a modest home, evenings out with his family and vacations away several times a year. “I voted yes — I’m ready to do what I need to keep the operation going,” Mr. Wasbauer, 50, said afterward. “The world today is different than it was back when I got hired,” he said. “We need to make sure we survive.” When the vote was tallied, 56 percent of the overall employees had backed the change. Yet the referendum revealed a deep divide: 61 percent of the factory workers voted against, while among white-collar employees, 74 percent approved. The two unions vowed to stop Smart from going any further. “If they want us to work 39 hours, paid 39 hours, fine,” Mr. Getrey said. “Otherwise, this is basically blackmail,” he said. “We won’t move one single iota.” But last week, as the opposing unions stood firm, Smart raised the specter of moving production from France to Slovenia. On Wednesday, managers handed employees amendments to their contracts to cede the 35-hour workweek, at least for the next five years, and gave them a Dec. 18 deadline to sign. If 75 percent agreed, Smart would move to a longer workweek as of January. If not, Mr. Steyer said, “we would clearly need to study the possibility of making this car elsewhere.” The workers took their slips of paper and went home to mull things over. As Mr. Getrey again warned them not to sign, another union that had reluctantly come around to Smart’s point of view urged employees to seize their last chance save the factory. “In France today, can we really afford to insist on keeping perks at the risk of losing jobs?” said Mario Mutzette, the head of that union. “If Smart closes,” he added, “we will have a social disaster.” Mr. Steyer said, however, “We are confident that enough people will sign.” |