Lanxess to reconsider pay cuts after protest march

11 January 2005 16:56  [Source: ICIS news]

FRANKFURT (CNI)--Management and employee representatives of Lanxess, the new Bayer chemicals and polymers spin-off, are preparing to re-open talks on a plan to cut personnel expenditure after a protest action late Monday at its Leverkusen, Germany site.

 

An estimated 2500 employees participated in a protest march organised by the works council and the local branch of the chemical union IG BCE. It coincided with an information session on the savings plan led by Lanxess chief executive Axel Heitmann.

 

Workers carried signs reading “It’s enough, Dr Heitmann” and handed out “red cards” quantifying the size of proposed individual pay cuts.  

 

The works council has also threatened to ask the courts to decide if the proposed cuts are compatible with German labour laws. It said some of the benefits are to be trimmed from merit incentives previously negotiated with Bayer, from which Lanxess is taking over the contracts.

 

 A “global economy package” was announced by Lanxess management in late December 2004, with the goal of reducing personnel expenditure by at least Euro20m ($27m) annually.

 

Under the plans, 3900 of Lanxess’ around 10 000 German staff covered by the chemical industry collective agreement – mostly shift workers – will no longer be paid above union scale, starting in 2006. Salaries of German managerial employees are to be frozen this year and “significantly smaller” increases budgeted for foreign managers. 

 

A  Lanxess spokesman told CNI last week that the pay reductions for workers would average Euro200 a month. According to the Leverkusen works council, those in the lowest pay groups with base monthly salaries of around Euro2000 would be most severely affected, with cuts amounting to at least Euro300 a month. In some individual cases the pay reduction could be as much as Euro520 a month.

 

Lanxess is to be listed on the Frankfurt stock exchange on 31 January, in a 1:10 stock split to current Bayer shareholders.

 

The new company has arranged a Euro1.5 bn ($1.1bn) credit with an international banking consortium to repay a loan from Bayer and to use as a liquidity reserve.

 

In November 2004, Heitmann said the spin-off would need to undergo extensive restructuring and would beef up or sell underperforming businesses. He said management had identified the need for “immediate action” to save at least Euro25m in costs annually, starting this year. 

By: Dede Williams
+44 20 8652 3214

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