Coca-Cola Hellenic: Workers Pay, Shareholders Profit From Crisis

WMembers of the Services, Industrial, Professional and Technical Union (SIPTU), which organizes workers at Coca-Cola HBC Ireland, have been on strike against the outsourcing of 130 jobs at five distribution plants since the end of August. In June, workers were given a "choice" by management to either accept a reduction in terms and conditions amounting up to 40 percent, or be transferred to a third party provider on similarly reduced terms. A first "welcome message" from the employer-to-be already announced upcoming redundancies.

Faced with the denial of good faith negotiations and the obviously inferior conditions at the third-party provider's, SIPTU served a strike notice on Aug. 20. Despite having filed legal notice an industrial conflict, the workers were sacked while on the picket lines on Sept. 8, but the struggle continues.

The Labour Court ruled on Sept. 18 that the company should follow the previous pattern of negotiated redundancy packages with SIPTU as well as undertake jointly with the union a feasibility study on retaining jobs. Coca-Cola Hellenic (CCH) rejected the recommendations because they were too "costly," claiming that its offer was already "extraordinarily generous." According to SIPTU National Industrial Secretary Gerry McCormack, the company went from being a good quality employer where there had never been a strike to "aligning itself with the worst practices in industrial relations in Ireland."

This most recent outsourcing initiative is part of a ruthless HBC assault on its workforce. The attack on jobs comes against a background of high growth in many CCH markets in recent years, including a successful crisis year, 2008, when profits still reached euro425 million and dividends were increased by 12 percent. When the share price slumped in 2008, CCH management determined to restore it through severe restructuring. In Poland, 150 jobs were slashed, 550 jobs were eliminated in Romania through cuts and closures, and the plant in Bari, Italy, will soon be closed down. In Austria, full outsourcing of distribution was only stopped by strong union opposition.

The workforce has dropped from 47,777 employees in the first half of 2008 to 44,865 employees in the first half of 2009. CEO Doros Constantinou announced a euro310 million operating profit and euro200 million net profit for the first half of 2009. "We were delighted to see the benefit of our cost saving initiatives, together with lower commodity costs, contribute to a solid operating profit performance," Constantinou said.

The second pillar of CCH's strategy to continue delivering "shareholder value" during the crisis consists of returning cash to investors. In April 2009, the company announced an ambitious share buyback program. For several months HBC published almost daily press releases announcing share purchases of up to several hundred thousand euros.

On Sept. 18- the same day as the Labour Court hearing in Dublin- CCH announced a "capital return" which would directly funnel euro548 million in cash to shareholders- more than euro4 million for each of the 130 outsourced Irish workers. The recapitalization, according to the company press release, "will be financed through a combination of accumulated cash and new debt."

In the quest for ever greater returns to investors, the company is taking on new debt to pay out cash. Debt-to-equity ratio now stands at close to 65 percent, and workers pay the cost.

Investors certainly approve, as the share price has climbed from euro10 to euro26 in less than six months. Irish workers, however, are not the only ones outraged by the actions of a company that dishes out loads of cash to shareholders while slashing jobs. CCH workers throughout Europe and Africa have expressed their solidarity by protesting to CCH management, as has the Coca-Cola Workers Alliance Steering Group, which unites major unions of Coca-Cola workers from around the world. All of these groups have condemned the company's actions and called on CCH to negotiate a settlement with SIPTU.