Wolf Richter: Taking Bosses Hostage – A Labor Negotiating Tactic In France

By Wolf Richter, San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Cross posted from Testosterone Pit.

At 2 p.m on Thursday, the final day of the annually required wage negotiations that were going nowhere, Bruno Ferrec, the man in charge of the nine Fnac stores in Paris, and his HR Director were “retained” by 120 of his employees at a conference room at the Hotel Ibis in the rue des Plantes in Paris.

“Mr. Ferrec is in the middle of the room,” said Christian Lecanu, representative of the CGT, one of the unions involved in the negotiations. “He listens and keeps repeating, ‘the negotiations are over.’ For now, we do not know when we will let him go.” And the police did nothing.

Fnac is France’s largest retail chain in the cultural and entertainment sector (books, DVDs, video games, software, consumer electronics, tickets, etc.). It even has its own literary award for fiction. It operates stores in other European countries, Brazil, Morocco, and Taiwan. But times are tough: e-commerce competition, pirated products, falling flat-screen-TV prices…. Sales for 2011 were down 3.2%.

To reinvent itself, it is launching an expansion program. Certain stores would offer higher-end consumer products, such as designer vacuum cleaners and coffee makers. Decoration and life style, as it’s called in modern French, would be added soon. The idea: position the company above discount retailers. Good luck.

Somehow in parallel to, or despite, these expansion plans, PPR, the publicly traded company that owns Fnac, is trying to implement a belt-tightening program that would save Fnac €80 million. It would include 500 job cuts (310 in France) and “salary moderation,” that is, a wage freeze for the lucky ones.

Oh-là-là!  Layoffs aren’t easy in France and become highly politicized. Wage freezes don’t sit well either, with gas prices shooting through the headliner. Read…. $10-Per-Gallon Gas Has Arrived In Paris.

“Isn’t it risky to announce job cuts 100 days before the presidential election?” the daily paper, le Figaro, asked Fnac CEO Alexandre Bompard during an interview.

The answer was a non-answer. “My responsibility is to ensure the survival of the Fnac,” he said. “Faced with a very poor economic situation, nothing would be more dangerous for the future than not implementing measures when they should be implemented.” And they would try to accomplish much of it through voluntary departures and internal reclassification.

Then there are legal issues. The Labor Inspectorate rejected the job preservation measures that the company had presented as part of the job-cuts plan and demanded more support for employees that would be transferred internally or externally. Today, two labor councils initiated court proceedings to suspend the layoffs, citing a lack of information on the economic and strategic underpinnings of the plan.

So, to apply additional leverage, 120 unionized employees have “retained” Bruno Ferrec, the hapless guy that has to implement the cost cutting measures imposed by PPR.

“We will hold the siege of the conference room for as long as management remains prostrate in silence,” said Philippe Graulière, from the Union Sud, the other union participating in the negotiations. What really galled him: “They imposed a wage freeze on us while PPR announced the distribution of dividends.”

Ferrec had made a counter offer, but employees weren’t enamored with his proposal and put the negotiations into overdrive. “The only thing they offered is a 15 euro increase for those that earn less than 1,500 euros,” lamented Sud member Catherine Gaigne.

Ferrec “accuses us of not working enough and putting the company into the red,” said Lecanu. He blamed top management for their disastrous strategy. “They all come from the world of supermarkets. They don’t know our business.”

“A difficult dialogue,” is what a Fnac spokesperson called it politely when le Figaro contacted the company, but wouldn’t comment otherwise.

Alas, at 9 p.m., police intervened politely, possibly at the request of the hotel which needed the conference room for other groups—this being central Paris after all. Ferrec and his HR Director were released. No arrests were made. Nothing was resolved.

In France, the labor negotiation tactic of locking up bosses is not unusual after a company threatens with layoffs or plant closings. Law enforcement rarely intervenes. What appears to be hostage taking and extortion in much of the world is viewed with a mix of amusement and support by the French media and the public, so long as it remains non-violent. Property damage, especially when plants are occupied, occurs on occasion. But only when it gets seriously out of hand does law enforcement try to calm things down. Labor groups have achieved some short-term compromises, but the long-term benefits remain dubious.

Certain other French companies, particularly the automakers, are also in deep trouble and want to restructure—more plant closings and layoffs. But when PSA Peugeot Citroën, whose sales are plunging, announced layoffs, it attracted the ire of President Nicolas Sarkozy himself. Layoffs will be even tougher to implement if socialist François Hollande wins the election. But something has to give. And even GM, whose European operations have been bleeding red ink for years, won’t save PSA. For that whole debacle, read…. The Nightmare of the European Auto Industry.

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  1. Maju

    So… what’s the problem? Workers are weak in the legal frame of Capitalism, they need to play differently: you would not expect workers to negotiate one by one with the all powerful corporations, would you? We accept (except a couple of irreducible Thatcherites) that they need to join forces and attempt to play monopolistically, so to say, impeding individualized contracts and imposing sectoral or company-wide comprehensive deals.

    In other words: workers are not expected to behave like companies, for which this oligopolism would be considered socio-economically unhealthy.

    Similarly workers should not abide by the bourgeois legality, because it is generally designed to harm them and protect their exploiters.

    The problem is that the French, so to say, are being forced to compete with companies and states where social chaos reigns and capitalists can impose their conditions on workers or the environment. I’m all for eco-social protectionism: taxing lack of worker guarantees, lack of environmental respect, etc. It might destroy the global market… or heal it… but I could not care less about the global markets anyhow, what I care is about social health.

  2. reason

    That’s just the peculiar way the French go about things. Like America they are stuck with a disfunctional presidential political system. So everything is about outrage and symbolism.

  3. polistra

    France is sane. For a long time France’s government has focused on improving the lot of the French PEOPLE, as opposed to increasing “economic efficiency.”

    Americans mocking France are like drunks mocking the only sober guy at the party.

    1. proximity1

      RE: “Americans mocking France are like drunks mocking the only sober guy at the party.”


      And, about certains points in Mr. Richter’s edition of events, notably, this,

      “Law enforcement rarely intervenes. What appears to be hostage taking and extortion in much of the world is viewed with a mix of amusement and support by the French media and the public, so long as it remains non-violent. Property damage, especially when plants are occupied, occurs on occasion. But only when it gets seriously out of hand does law enforcement try to calm things down.”

      — I have never heard of a single case in which one or the other didn’t happen: either the so-called hostage(s) were released unharmed or b) the police did intervene.

      In fact, it’s much closer to the truth to say that the police almost always intervene and they have been known to do so even when the “hostages” have been released;

      So, after telling us above that “law enforcement rarely intervenes,” we learn from Mr. Richter that in this case (as in the near-totality of them,) law enforcement did in fact intervene: …” at 9 p.m., police intervened politely, possibly at the request of the hotel which needed the conference room for other groups—this being central Paris after all. Ferrec and his HR Director were released. No arrests were made.”

      Now, by the way, the hotel is not in central Paris by any reasonable definition of that concept. Would you call the Wall Street financial district “central Manhattan”? Maybe you would if the Ibis hotel here qualifies as “central Paris.” Here, the hotel is hardly 2 km from the inner ring road, called the “boulevard périphérique.”

      Notice, readers, if you care to

      (http://upload.wikimedia.org/wikipedia/commons/d/d7/Boulevard_p%C3%A9riph%C3%A9rique_de_Paris.png )

      that at the southern edge of the peripherique, just to the left of the “A6a” autoroute, one finds the Porte d’Orléans–not far from this “central Paris” spot is the hotel Ibis at 49, Rue des Plantes.

      Secondly, while it just may be that “no arrests were made” this doesn’t mean what it clearly implies–that is, that no one faced or shall face any legal repercussions, whether civil or criminal, from the “hostage”-taking. In the past, people involved in similar actions have found themselves subject to criminal sanction in the form of fines for the most part. This doesn’t necessarily require that they be arrested on the scene. The identities of the people taking part in the so-called negotiations are typically known, aren’t they? –or does Management negotiate with total strangers?

      A little disclaimer: please don’t confuse my critical comments here as an indication on my part of any, even the slightest, good regard for the French legal system. It’s a horror–like so many of the world’s legal sysyems–even in so-called democracies. If you find yourself in the clutches of the french legal system, I hope that you or someone on your side is wealthy because justice happens in France with what should be viewed as a scnadalously slap-dash and haphazard fashion. Every now and then, seemingly by sheer accident, the French courts actually do something which can arguably resemble justice–if you overlook that it can take a decade to get there.

  4. Bam_Man

    If you’ve ever stayed at an Ibis hotel in France, then you can truly appreciate what cruel and unusual punishment those bosses were subjected to.

  5. Economic Maverick

    Fascinating. Very rarely do progressive forces in the US use tactics that profoundly question the system in such a way that puts bourgeois property into question, the latter requiring heavy use of coercive state force. The cognitive dominance of the bourgeois framework is total and complete, to a point that it isn’t considered a state intervention, but as “natural order”, and those who question their dominant frame are branded as extreme “coercives”. That’s total victory

  6. JamesW

    Any Ameritard who ever dares call the French stupid had better look in the mirror, or learn something other than their fave subject “me” (as in ignorant of anything else but their pathetic and putrid lives).

    The other day some clown (and I emphasize the word “clown”) form a carpenters local (better known as a business union) handed me a leaflet urging me to contact JPMorgan Chase because of their anti-union policies, etc.

    That’s akin to asking one to contact the FBI’s Profiling Department to warn them that serial killers may be dangerous.

    I attempted to explain to him how downright silly such a plea was, given not only the current history of JPMorgan Chase’s billions paid in financial fraud settlements, but how much they loaned to private equity firms to do leveraged buyouts to destroy unions and pensions, and utilizing those very same unions’ pension funds for their perfidy.

    He didn’t get it!

    Next I attempted to give him a brief review of American labor history, such as the Ludlow Massacre, why the McNamara brothers bombed the LA Times in 1910, why JP Morgan was bombed in 1920, the Haymarket Massacre, and some other choice historical events, etc.

    He didn’t get it!

    There’s still hope for France and those regions in China where the workers routinely murder those CEOs who lay them off, etc., but I’ve given up on America.

    Just too many ignorant people, who only know about “me”…

  7. Ed Bradford

    Cultures are different and if the French think this is acceptable, who can disagree. The French can do with themselves what they want.

    If this happens in America, the hostage takers should be jailed, tried and convicted for kidnapping.

    Here, in America we respect the rights of the individual.
    In France, no so much.

  8. balois

    After I got the job to turn around a loss making company of about 2500 people in France (and we achieved it. It took 3 years, with hundreds of layoffs but also new hires, new products and no major strikes – but that’s a separate story, even some DJI companies were interested) the most frequently asked question was what the difference is, running a company in the US vs France. The short answer is: None.

    The time I ve wasted in the US with lawyers (any number of frivolous suits, joint and several, deep pocket, misleading and deception accusations, including getting sued for neglecting my oversight duty preventing sexual harassment of male employees ‘getting on’ to female colleagues, after work, in a public bar, on Friday night), in France, I had to spend about equal time with works councils and union representatives. Although we were not ‘organized’ and actual union membership was minimal, one needs to pass certain reorganization plans by a reps from one of the officially recognized unions.

    So be it a major law suit, with no merit, but where the sheer cost and time of the defense process can destroy the company, before one gets the not-guilty verdict in the US, a similar risk in France is for the labor courts to create havoc by deciding for a company which restructured successfully, to re-instate the status quo ante – even years after a reorganization took place, offices have been let, machinery is no more available, different products are being produced and the people, who were let go, have other jobs, or even moved abroad or run their own businesses…

    Mind you, there are also other ‘similarities’ between the US and France, to be avoided like the plague (we were lucky): companies, plants, ports that are de facto run (eventually into the ground…) by the unions, the management being mere puppets on strings. Think about UAW, Teamsters, Longshoremen, OCAW. In France it is mostly the CGT, FO and some militant minor unions, dockers locals. Threats of bodily harm more a specialty of the waterside unions, both countries.

    BUT: Properly motivated, with a strong all-in-the-same-boat sentiment, real deeds by management, mutual trust, in both, the US and in France, there are world class workers. And with their dedication, they can achieve miraculous results – to the terrible chagrin of the predatory lawyers and some unions who hate nothing more than the boss getting along with the workers. So, no difference there, either.

    1. Matt Macy

      Interesting comment. One thing worth noting though is that the workers do derive some level of benefit from the unions and labor councils. In the US, however, only the rare beneficiaries of windfall settlements benefit from the litigation culture.

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