Italian Factory Owner moves Company to Poland while staff are on Holiday

Italian factory owner moves company to Poland while staff are on holiday
It was an audacious move that has divided public opinion in Italy and brought into focus the country’s low productivity and high labour cost crisis.

Fabrizio Pedroni said he was driven to the drastic course of action because he was being strangled by high salaries, crippling taxes and dismal rates of productivity Photo: Alamy
By Nick Squires, in Rome
4:18PM BST 23 Aug 2013
248 Comments
Earlier this month, the owner of an electrical components factory in the north of the country waved his employees off on their summer holidays. Then, without informing them, he moved the entire operation, lock, stock and barrel, to Poland.

Fabrizio Pedroni, 49, said he was driven to the drastic course of action because his factory, located near the city of Modena, had not turned a profit for five years and he was being strangled by high salaries, crippling taxes and dismal rates of productivity.

Moving the factory to Eastern Europe was the only way of saving his company, which was founded 50 years ago by his grandfather.

When his 40 employees found out what had happened, they were furious. They were not due to return from holiday until next week but got wind of the covert operation in mid-August and turned up at the Firem factory in the town of Formigine to find the place devoid of machinery.

They blocked the last of around 20 trucks from leaving the plant, but the rest were long gone, en route to the town of Olawa in south-west Poland.

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Mr Pedroni says he has received death threats and will not be returning to Italy anytime soon.

“If I had told the unions that I intended to transfer production to Poland, they would have had my property confiscated, just as they tried to block the lorry,” the businessman told Radio 24, an Italian radio station.

“I had to make a choice. Our competitors in Romania and Poland offer much lower prices. I had three options – either close, move the factory, as many other businesses have done, or shoot myself in the head.”

Labour costs were high because firms like his had to pay generous social insurance, health insurance and pensions, he said.

“An employee who is paid €12,000 a year in fact costs the company €30,000. It’s unacceptable. We haven’t made a profit since 2008.”

The saga has become a national cause celebre, sparking a debate about the number of Italian companies that are relocating their business to Eastern Europe and beyond, prominent among them Fiat, which has a plant in Poland.

Italy’s thickets of red tape, high social welfare costs and corruption mean that it fares dismally in terms of economic competitiveness.

In the World Bank’s most recent Ease of Doing Business survey, Italy ranks 73rd out of 185 countries, behind the likes of Tonga, Kazakhstan and Belarus.

While much of Europe appears to be slowly emerging from the worst recession since the Second World War, the Italian economy is going backwards, shrinking 0.2pc in the second quarter of this year.

Prosecutors in Modena announced this week that they had launched an investigation into the closure of the factory.

“Even in a period of serious economic difficulties, the behaviour of the owners of the Firem factory deserves censure, both in the way it was done and in the timing,” the local town council said in a statement, vowing to rally around the abandoned workers.

“Employees are not lemons to be squeezed or machines which you can move around at your pleasure in the name of profit,” said Giancarlo Muzzarelli, a regional politician.

Even if businesses had faced acute economic challenges, they needed to face them “without resorting to subterfuge or sleight of hand”, he said.

As the transferral of the factory faces a possible legal challenge, the fate of the employees who have been left behind is unclear.

This week they held intensive discussions with union officials, regional politicians and a lawyer representing Mr Pedroni.

“We are fighting not just for ourselves but to prevent our company from creating a dangerous precedent for the rest of the country,” one of the employees told the local press.

Meanwhile, Mr Pedroni says he has had messages of support from many business owners in Italy, as he prepares to open his new Polish factory on September 2.

http://www.telegraph.co.uk/finance/newsbysector/industry/10262743/Italian-factory-owner-moves-company-to-Poland-while-staff-are-on-holiday.html