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Becoming "partners
in knowledge"
In Uruguay, workers and employers join hands
to save jobs and increase profits
Economic, export and environmental realities required the replacement and upgrading of machines at the Fanapel paper mill in the Uruguayan town of Juan Lacaze if it was to stay in business. Along with change came new challenges - for workers to learn new production skills and for management to learn new management methods. Mario Trajtenberg explains how a unique collective bargaining and training agreement has broken new ground, helping save jobs and improving output.
JUAN LACAZE, URUGUAY - As a cellulose mixture dries and a ribbon of glossy paper snakes through massive rollers, Aníbal Villanueva's fingers fly over a computerized terminal.
"We used to access pushbuttons unit by unit and stop the rollers manually when things went wrong," says Mr. Villanueva who, at age 45, has been working at the Fanapel paper mill here since age 18. "Now," he says, "I do most of the control from here".
Times have changed since Mr. Villanueva and many of his colleagues worked in the old-fashioned control house, monitoring the progress of each machine step-by-step. Today, the specially-designed software, using clear shapes and vivid color, gives him real-time information about each machine, showing exactly how fast the cellulose mixture is drying and how regularly the resulting paper ribbon advances through the chain.
The changes in working conditions have helped Fanapel stay viable, but have brought new challenges for both workers and managers in their wake.
"Before these changes, if a worker detected flaws on the paper, such as fluff, he was not supposed to react; quality control was not his concern," he says. "Now we have to send back any defective pieces." This means that a worker can no longer afford to be passive; he acts both as a purveyor and as a customer, and has to anticipate complaints by the buyers.
Still, retraining for a changed job hasn't been a smooth process for all workers, and several had preferred to stay with routine jobs or move elsewhere.
"Forty-eight tons of paper are now produced by an eight-hour shift, whereas in the old days the output was twenty-five," he said. "We had to adapt to a new workload, to new responsibilities, and to a large increase in the information we process."
Small is beautiful
This paper factory, Fanapel, became the largest employer in the Uruguayan town of Juan Lacaze when the local textile mill closed down seven years ago, causing a loss of 800 jobs. Fanapel employs just under 500 people, owns its own eucalyptus forests and is the main producer in the country, selling 63 million US dollars' worth of paper every year.
This is not a large amount compared to the production of neighbouring Argentina and Brazil. However, there are some advantages to small-scale production even in a market dominated by giants. A decade ago the firm was advised by Finnish consultants to concentrate on top-quality print paper. As a result, it is now known for its coated (glossy) paper, used for such things as labels and publicity flyers. The large mills prefer leaving this item, needed in relatively small quantities, to a smaller producer.
Even so, the local Uruguayan market could still use imported paper, which is cheaper, especially now that such imports have become duty-free inside Mercosur, a four-country customs union. "True, but we hold a further advantage", says Aníbal Grasso, the human resources manager. "We deliver in 24 hours, and ensure product service after we do."
The radical changes in production which were introduced six years ago called for replacement and upgrading of a number of machines. These included some that were intended to make environmental control much more stringent - a key concern, says Mr. Grasso, since paper production used to be the second most polluting industry in Uruguay, after tanneries. It has also succeeded in driving up exports of its own production from 30 per cent to 65 per cent.
The significant investment then made included the cost, in time and resources, of personnel retraining. With support from analysts in Cinterfor, the ILO training clearinghouse in Montevideo, key skills were identified in several processes such as provision of inputs, supervision, manufacturing, safety and health. On that basis a training programme was devised, and Brazil's Industrial Apprenticeship Service (SENAI) helped to train instructors. Thanks to this cooperation, the firm now has an in-plant training tool which has been instrumental in raising productivity.
A groundbreaking agreement
But the unique character of this training and retraining operation lies in the fact that it was negotiated between Fanapel and the industry-wide paper and cellulose workers' union.
"This is a rare example of collective bargaining with a strong training component," says ILO regional expert Oscar Ermida."It contradicts an ingrained resistance by the employers, who have an eye on the cost of training. They now know that new production and management methods make personnel retraining inescapable if they are to succeed.
"The second obstacle that has to be faced is that you need an educated labour force to cope with the new demands." In Fanapel, says Mr. Grasso, 73 per cent of the staff have a secondary education and this facilitated the changeover.
"And the third problem is that the enterprises have not evaded the general trend to cut down long-term contracts, without which a training programme is meaningless." The 1995 collective agreement does regulate subcontracting to outside firms, some of which have in fact been set up by former employees now working on their own.
Employment safeguards
The collective agreement signed by Fanapel in 1995 sets out to "regulate labour relations in the framework of a shared vision of the role of the firm... implying technological change and a new organizational design". The Fanapel management - in tune with ILO standards - undertook to share with the workers information about the economic and financial situation of the firm, and about its market and investment prospects. The agreement also created a worker-employer committee with authority to oversee any layoffs.
It allows for some jobs and specific tasks to be subcontracted, "when they are either too highly specialized or require no specific skills, when they are of a temporary nature or when they are not part of the central production process". The agreed procedures include acceptance of layoffs, of which a minimum (involving 50 jobs) were deemed inevitable when the new organization was introduced.
The agreement acknowledged that training of the workers, and their identification with the aims of the firm, were vital to the shaping of the flexible jobs required by a newly productive and competitive factory. Training was to be a free choice of each worker, but their career would depend on performance and also on the theoretical and practical knowledge acquired.
Another original feature of this compact is the new salary scheme described. For each job a basic salary is fixed, based on the level and complexity of the tasks involved. A further element of "variable pay" is determined by the overall performance of the enterprise, taking account of its financial situation and competitiveness.
How the workers see it
Asked about the strength of the union and how it reacted to the collective agreement, union secretary Omar Díaz says "90 per cent of our workers on daily pay are unionized, and 20 per cent of the white-collar staff. We feel supported in our policy of staff-management relations. Nearly all members of our union committee have shared a common list and have been re-elected during the past 16 years", i.e., including the period when the plant was overhauled, the job structure was changed and the new salary scheme was adopted.
From the union's point of view, he said, it was clear that when production processes were stood on their head, and a strong need for training was created, new issues became negotiable.
"As for the motivation of the management", he added, "my own feeling is that such an extensive change involving technology and quality control could not have taken place without cooperation between the two sides. It also became clear that, for the firm to remain competitive, costs had to be lowered and supervisory methods changed. The production line was needed as a partner in knowledge."