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Friday, April 3, 2009

Labor Relations - French Style
Or, Viva La Revolucion!
Story Originally Posted to the Wall Street Journal

PARIS -- Of the 22,000 workers Caterpillar Inc. plans to lay off this year, the French ones have perhaps the most radical tactic for negotiating their severance deals.

In an aggressive, and peculiarly French, negotiating strategy, they held their managers hostage. The workers detained the director of their plant and four other managers for about 24 hours this week. Workers released them only after the company agreed to resume talks with unions and a government mediator on how to improve compensation for workers who are being laid off.

Protest is "inscribed in the genes of French culture," said Maurice Lévy, chairman and CEO of advertising company Publicis Groupe. "In the past peasants protested against their lords. Today the difference is that the lords are chief executives."

Caterpillar declined repeated requests to comment.

The Caterpillar executive-hostage taking is the third in two weeks in France. The incidents, which were all peacefully resolved, revived fears that the economic downturn may fuel violent forms of protest in France by workers who feel they have nothing to lose.

German tire maker Continental AG, which is planning to close a factory in eastern France, this week moved the site of a meeting with unions to a hotel 500 miles away to avoid a repeat of tense protests last month when executives were pelted with eggs. Continental confirmed the move grew out of security concerns, but said it wanted to "stay in dialogue with employees."

The detention of the Caterpillar boss followed incidents at the French plants of Sony Corp. and 3M Co., where managers were held captive by workers angry at being laid off. In those cases, as with Caterpillar, unions and companies resumed talks on severance pay. Sony France's chief executive didn't return calls and emails, and 3M France declined to comment.

Jérôme Pélisse, a sociologist, surveyed 3,000 companies in 2004 and found that 18 of them had experienced an executive detention in the prior three years. "Kidnapping your boss is not legal," says Mr. Pélisse. "But it's a way workers have found to make their voices heard."

French Caterpillar executive Nicolas Polutnik, center,
with workers after his release Wednesday.

Taking the boss hostage is a way to stop the clock and reach out to those who made the decision to cut jobs -- especially when the decision comes from the remote headquarters of a foreign company, Mr. Pélisse said.

In the U.S. and most other countries, abducting a boss wouldn't be tolerated. In France, however, people have sympathy for those who take to the barricades -- as long as no one gets hurt. In the wake of the May 1968 cultural revolution, taking one's boss hostage became a popular form of protest.

One of the longest boss kidnappings in recent years took place at the Paris headquarters of bank Crédit Foncier de France in 1997. Even though he was detained for five days, Chairman Jérôme Meyssonier said there was "perfect respect" between him and employees.

With the recent public outcry over bonuses and stock options, executives are even more unpopular than usual in France. This week the government banned companies that get state funding from issuing stock options to top managers and limited some other forms of compensation.

"In the U.S., people accept getting fired on the spot, without complaining," says Michel Laboisseret, a CGT union delegate who took part in the Caterpillar protest. "We are more willing to pick a fight."

Even President Nicolas Sarkozy -- known for his pro-business views and policies -- said he supported the Caterpillar workers. "I will meet with the unions because they asked for my help, and I won't let them down," he said on the radio Wednesday.

Executive hostage-takings are deemed acceptable as long as some informal rules are obeyed. The workers must refrain from outright violence, and the executive must not be detained for more than a couple of days. Workers don't usually face criminal charges.

"Boss-napping falls into a particular category," says French police spokesman Laurent Bischoff. "Technically, it amounts to kidnapping, but it's not regarded as an offense." Police rarely intervene. "Our role is to stay within distance and let negotiations between unions and executives roll out quietly," Mr. Bischoff said. "Sending in troops would only help fan the flames."

Security firms and public-relations experts that help companies deal with these situations usually advise managers not to call the police. "That's the last thing they should do" said Yves Jambu-Merlin, who specializes in crisis communication at advertising firm Euro RSCG SA, because it could touch off violence or cause workers to trash the plant, he explains.

Mr. Jambu-Merlin advised one of the companies where the boss recently was taken hostage but declined to say which one.

Riot police did turn up in Paris on Tuesday when angry employees of luxury-goods company PPR SA besieged a taxi carrying CEO François-Henri Pinault. Police dispersed the workers, but Mr. Bischoff says that was "because they blocked traffic."

Caterpillar in January said it would shed 733 jobs out of 2,800 employees at its two factories in Grenoble in the French Alps. Legally, it must negotiate a "social plan" with the unions, which could include lump-sum payments, training or help finding new jobs.

After talks with unions, Caterpillar increased its package to €47 million ($62 million) from €37 million. But workers felt it still wasn't enough. On Monday they went on strike, and on Tuesday they began holding the executives. "We let them call their families," says Mr. Laboisseret, the union delegate. "We are not beasts."

Nicolas Polutnik, the plant director who was held hostage, didn't return calls seeking comment, but his wife confirmed she got a call from him while he was detained aimed at comforting her and his boys.

Albert Dupuy, the highest government official in Grenoble, said he spent Tuesday juggling phone calls from the Caterpillar union representatives and managers, including those at its European headquarters in Geneva. On Tuesday night, he persuaded the workers to release the human-resources director, who suffers from a heart condition. The other managers spent the night in the offices, sleeping on the floor, according to workers present.

Early Wednesday morning, Mr. Dupuy said both sides agreed to a 10-day schedule of negotiations on severance packages, and Caterpillar also agreed to pay the workers' wages for the three days they had been on strike. Midmorning, the workers let their bosses go.