9 September 2019
This is an open letter to IKEA Industry Management
Call to IKEA Industry Management board to assume international responsibilities and engage in a transparent and sustainable global social dialogue.
In July of this year, IKEA-Industry announced the closure of their production facility in Danville, Virginia, with effect at the end of 2019. This sudden move directly affects 300 workers. It also concerns their families as well as other businesses and workers in the city. It will not be easy for laid-off workers to find equivalent work in a community that has few major industrial employers.
In doing so, IKEA-Industry has again chosen to ignore authoritative international standards that it has pledged to respect. The actions that IKEA took in Danville are similar to its decisions in other countries such as the closure of theIvar Stepnica sawmill and selling of the plant in Skoczów in Poland.
Consultation with the affected workers and their trade unions on the reasons for closures
Under the Organization of Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises, in addition to a general responsibilityof corporations to provide information to trade unions related to financial and economic issues relevant to the enterprise, necessary, for example, for collective bargaining purposes, there is a specific provision related to closures. It reads that the enterprise should:
“…co-operate with the worker representatives and appropriate governmental authorities so as to mitigate to the maximum extent practicable adverse effects. In light of the specific circumstances of each case, it would be appropriate if management were able to give such notice prior to the final decision being taken. Other means may also be employed to provide meaningful co-operation to mitigate the effects of such decisions. “
Similarly, under the ILO Tripartite Declaration of Principles on Multinational Enterprises and Social Policy, enterprises are expected to conduct themselves as follows:
“34. In considering changes in operations (including those resulting from mergers, takeovers or transfers of production) which would have major employment effects, multinational enterprises should provide reasonable notice of such changes to the appropriate government authorities and representatives of the workers in their employment and their organizations so that the implications may be examined jointly in order to mitigate adverse effects to the greatest possible extent. This is particularly important in the case of the closure of an entity involving collective lay-offs or dismissals.”
In addition, ILO Convention 158 – Termination of Employment Convention (1982) reads:
1. When the employer contemplates terminations for reasons of an economic, technological, structural or similar nature, the employer shall:
(a) provide the workers' representatives concerned in good time with relevant information including the reasons for the terminations contemplated, the number and categories of workers likely to be affected and the period over which the terminations are intended to be carried out;
(b) give, in accordance with national law and practice, the workers' representatives concerned, as early as possible, an opportunity for consultation on measures to be taken to avert or to minimise the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment.
In other words, meaningful discussions should have taken place with the trade union representing the affected workers before the closure was announced concerning the reason for such actions and to see if any alternatives were possible, particularly if it were possible to avoid or to mitigate that closure.
Instead, the company simply announced the closure and said that it was for cost reasons, citing expensive raw materials. That is not responsible and not in line with the UN Guiding Principles on Business and Human Rights, which call for due diligence concerning negative impacts as well as consultations.
It is also difficult to understand because, in the same month, the parent company of the “other” IKEA branch in wood purchased a substantial amount of woodland in South Carolina. A subsidiary of the Ingka Group has bought approximately 17,000 acres of land in Georgetown, Williamsburg and Clarendon on the northern edge of the Greater Charleston region. That land is used for growing and harvesting trees and expands IKEA forestry holdings in the United States.
Ingka is also the owner of 25,000 acres in Alabama and another 22,000 acres in Texas. According to Krister Mattsson, General Manager of Ingka Investments in a statement, “This new acquisition provides a solid foundation for us to invest in the lower South Carolina Coast, where the woodland offers both high quality wood and good recovery capacity."
With the Danville closure, the company will also increase the IKEA carbon footprint as all IKEA-Industry production will now take place in the European Union and will have to be shipped to the United States for U.S. markets. We note that IKEA has been an active player in the debate to stop the climate crisis. Noting this, the decision to close the Danville plant is in contradiction to its commitment for a sustainable future.
The United States Administration has urged companies to maintain employment in the U.S. In that context, the International Association Machinists and Aerospace Workers (IAMAW), which represents the workers in Danville has sent a letter to President Donald Trump.
Discussions with Building and Wood Workers’ International (BWI) about restructuring of production and its consequences for workers
The industry in which IKEA is a major player, is, by its very nature, global. Materials are sourced globally from internal and external suppliers, manufacturing is global, markets and retail outlets are global. That means that shifts in production will, inevitably, be global and that the issues for workers will need to be dealt with at the global as well as local and, at times, regional levels.
We propose that IKEA-Industry and BWI enter into social dialogue that will enable us to better deal with the social consequences of re-structuring. That means discussing possibilities to ease the social pain inside the company world-wide, but also, in some cases, trying to find other employment opportunities for workers outside the company when closures are unavoidable.
Our sister Global Union Federation, the IUF (food, agricultural, and hotel workers), negotiated, already several years ago, a re-structuring agreement with the French-based company Danone. In addition to providing that restructuring occurs in an environment where workers’ rights and conditions are on the table from the beginning, it agrees to seek other employment where necessary. This has included, selling rather than closing facilities as well as helping to find and easing the transition of workers to other jobs.
As you may know, the BWI is also heavily involved in issues related to global warming in forestry, construction, and building materials. We are committed to examining and resolving economic, social, and environmental issues together along the lines of the three, interdependent pillars agreed at COP21 in Rio de Janeiro, Brazil in 2015.
The BWI has also closely followed the work of the Commission on the Future of Work established by the ILO and is pressing for further global discussions and implementation of its report. This is closely connected to the work on the “Global Deal”, where government support continues to expand, with 100 countries already voicing support and where a major program is being launched by the OECD.
The Global Deal, like this proposal to IKEA-Industry management to begin a process of discussions on restructuring and on global warming, is about the fact that the labour market has become global more than ever before and not only does productivity, but also decent work, require global cooperation. Sound industrial relations and social dialogue is critical to its future.
We urge IKEA-Industry management to open a global social dialogue with the BWI on all of these issues so that global issues are dealt with where they must be, at the global level. The BWI and IKEA has a history of engaging in social dialogue global issues based on the International Framework Agreement BWI signed with IKEA Group in 1998.
Recognizing that the agreement was outdated due to changes within the IKEA Group, the BWI proposed several times to update the current agreement. Unfortunately, IKEA-Industry has not taken this proposal seriously with the belief that issues can be easily resolved nationally without global intervention. From the experience of BWI this is not the case, as we have had to intervene on behalf of BWI affiliates representing IKEA-Industry workers in Russia, Poland, Slovakia, and the United States to the global IKEA-Industry management. Noting this, the BWI strongly believes it is critical that IKEA-Industry recognizes the need to renew previous discussions to negotiate an International Framework Agreement to address the points outlined in this letter. It is only through this institutional mechanism that we can effectively and concretely address issues nationally and globally in a long-term and sustainable manner.
Thank you for your consideration.
BWI General Secretary