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Italian plant’s abrupt shutdown stirs up debate

Thursday, 5 Sep 2013 | 10:12 AM ET
Wesley VanDinter | E+ | Getty Images

Like it or not, Italy's labor force recognizes that the long manufacturing slump may make factory closings inevitable. But this, they say, is no way to do it.

At the start of August, the 30 workers of Hydronic Lift, an elevator components company, wished one another well and left on long-planned summer vacations. But when they returned to work three weeks later, they found the gates bolted with chains and padlocks. The company has not disclosed its plans.

"Not to be emotional, but if a worker goes on holiday with the fear that he might not come back to a job, well, that can cause serious damage to one's peace of mind," Alberto Larghi of the metalworkers' trade union said. "Events like this can ruin vacations for all workers."

(Read more: Italian stocks tumble as Berlusconi battle heats up)

It was only the latest in a headline-grabbing series of factory closures in Italy that the metalworkers' union, FIOM-CGIL, which represents the workers at Hydronic Lift, denounced as the "popular sport among businessmen in the summer of 2013: transforming the summer shutdown into a definitive termination, with no forewarning, taking advantage that the employees are absent."

Summer sport is a bit of an overstatement; there have been only a handful of cases, including a factory near Modena where the boss moved the production line for electronic components to Poland under the cover of the August doldrums. But they have stirred a national debate in a country struggling to revitalize manufacturing, and now floundering during a prolonged economic downturn and facing the pressures of globalization.

Though the Hydronic Lift workers are, of course, concerned about the future, they say what upset them most was the furtiveness of the closure. They got no indication it was afoot. Just before the vacation season, employees said, orders were filled, new security cameras were installed and discussions began on increasing production bonuses — hardly a sign of a company on the verge of collapse.

"It's like a knife to the stomach," said Domenico Carbonara, an employee who was in Croatia with his family when he got the news that production was shutting down. For more than a week, he and his co-workers have maintained a round-the-clock stakeout in front of the gates of the midsize factory in an industrial district just outside Milan, fearful that management might try to remove the machinery and make the shutdown irrevocable.

Officials with Hydronic Lift, which is privately held, did not return calls and e-mails seeking comment.

On Tuesday, labor and management met at Labor Ministry offices in Rome to try negotiating an agreement to reopen the factory or to redistribute the work force among its other factories. But the company seemed disinclined to accept either option, said Mr. Larghi, who was at the meeting. "They claim they've had a 40 percent drop in sales, but they've also halved their employees," Mr. Larghi said.

"We're too young to retire, but too old to find work easily," said Antonio Fusarpoli, who is 50 and began working at the Hydronic Lift factory 26 years ago, around the same time as many of his co-workers. He despairs of finding work at his age during a recession. "It's tough all over."

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Over the last 15 years, Hydronic Lift halved its work force, and more recently it occasionally took advantage of a government-endorsed temporary layoff program to scale workers back to a four-day week.

A study released in June by the national business lobby Confindustria showed that 15 percent of the manufacturing sector had been lost since the economic crisis hit Italy in 2009. Italy's industrial output is down 25 percent from its peak in 2007. Unemployment stands at 12 percent.

Despite a series of measures by the governments of Prime Minister Enrico Letta and his predecessor, Mario Monti, growth continues to elude Italy. August data from Eurostat, the official statistics office of the European Union, showed that while Germany and France were breaking out of recession, Italy's economy continued to lag, shrinking two-tenths of a percent at an annualized rate.

(Read more: Italy launches tax on high-frequency transactions)

And in its interim economic assessment issued Tuesday, the Organization for Economic Cooperation and Development forecast that Italy's gross domestic product would drop 1.8 percent in 2013, the only one among the world's seven largest economies expected to contract this year.

In Pero, workers contend that Hydronic Lift is not one of the Italian companies in financial straits. On its Web site, the company claims that "more than 200,000 lifts worldwide employ the products of our Pero factory." Just before the summer recess, workers said, they filled enough orders to send 15 trucks off to various destinations.

"This was not the time to shut down a factory, because there was so much work," said Daniele Fiore, a Hydronic Lift worker who had been on vacation with his family in the Marche region of central Italy.

"Normally if there is a crisis, there is discussion, there is negotiation," Mr. Fiore said. "There is something barbaric in the way they went about it."

(Watch: Italy's public finances worsen)

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