Linde’s German Workforce Wins pre-Merger Concessions

13.12.2016 -

In negotiations with industrial gases and engineering group Linde, the German workforce backed by the chemicals trade union IG BCE and the metalworkers union IG Metall has secured advance concessions from the company in the event of a successful merger with US gases rival Praxair. Among other things, the Munich-based company has agreed not to pursue any forced layoffs before 2021.

As part of the agreement, the number of jobs due to be trimmed from the German workforce as part of a global three-year efficiency program called LIFT –  announced at the end of October after the first round of talks between Linde and Praxair had ended unsuccessfully – will be reduced, and after a merger employees will continue to be paid according to the terms of the collective agreement for Germany. Among other concessions, the Dresden site in eastern Germany will not be closed.

Closure of the East German site opened by the Linde engineering division after the collapse of the communist bloc in eastern Europe led to a flurry of new plant construction projects, had threatened. The company said contract volume has sunk, due to international sanctions imposed on Russia after the invasion of Ukraine and the US-forced sanctions against Iran, as well as falling oil prices.

According to news agency reports not confirmed by Linde, LIFT’s original terms foresaw the elimination of 3,000-4,000 jobs from the global workforce of 65,000. The company’s official announcement in October projected cost savings of €370 million starting from 2019. In announcing the efficiency scheme, then-CEO Wolfgang Büchele pointed to “severe cost pressure” from low-priced competitors.

Initial talks between Linde and Praxair broke down amid fears by the company’s German workforce that major corporate functions would be moved to the US. The collapse of the deal triggered changes in Linde’s leadership, with chief financial officer Georg Denoke – who had sided with employees against the merger – stepping down.

CEO Wolfgang Büchele said at the time he would leave the company when his contract expired in April 2017. With the recent resumption of the merger talks, however, the executive last week announced his resignation with immediate effect. He was replaced by recently retired managing board member Aldo Belloni, who will serve for a two-year period to end in 2018.

A merger of Linde and Praxair should not disadvantage the employees that made Linde successful, said Xaver Schmidt, an employee representative on the German company’s supervisory board said, commenting on the agreement.