CNH Industrial’s business is, by nature, labor intensive and this is reflected in the high number of hourly employees the Group employs. A large number of hourly employees are based in European countries and Italy in particular, where 26% of the total employees are based.
The following tables show the breakdown of the number of employees by segment and by region at December 31, 2014 and 2013:
|Total of Industrial Activities||68,043||70,124|
As of December 31, 2014, CNH Industrial had 69,207 employees, a decrease of 1,985 over the 71,192 figure at year-end 2013. The change was attributable to the difference between new hires (approximately 5,000) and departures (approximately 7,800) during the year, partially offset by an increase of approximately 800 employees due to changes of the scope of the operations, which included: approximately 230 employees attributable to the acquisition of the assets of the U.S. precision spraying equipment manufacturer Miller, and about 570 employees were due to the insourcing of purchasing activities from FCA in Italy and Financial Services activities in LATAM. Excluding the scope of the operations, the change compared to year-end 2013 is mainly attributable to a decrease of workers for manufacturing activities in LATAM due to the weak market demand and a decrease of salaried employees mainly due to actions to reduce selling, general and administrative costs and business support costs as a result of the transition to CNH Industrial’s regional structure. Minor increases included the first wave of hiring in the new plant of the joint venture Iveco South Africa Works in Rosslyn (South Africa) and new hiring for various functions in the emerging countries.
One of CNH Industrial’s key challenges is the need to grow and adapt to a constantly changing environment. The Group realizes that the nature of today’s socio-economic context calls for leaders with the ability to evolve. A solid people management process is the key to success, as it includes employees in the Group’s business goals, takes advantage of employee talent and fuels workforce motivation. CNH Industrial is committed to supporting its employees with training initiatives and recognizing and rewarding their achievements and contribution to business results. In this manner, the Group not only gauges itself against today’s expected levels of global competitiveness, but also gains insight into potential improvements and succession plans that are essential for the future. In 2014 CNH Industrial spent approximately $6 million in employee training.
As stated in CNH Industrial’s Code of Conduct, occupational health and safety is an employee’s fundamental right and a key part of CNH Industrial’s sustainability model. Safety management engages all employees in creating a culture of accident prevention and risk awareness, sharing common occupational health and safety ethical principles to achieve improvement targets. One of the initiatives developed by CNH Industrial is an effective health and safety management system which conforms to OHSAS 18001 standards. As demonstration of its commitment in this area 54 plants around the world are OHSAS 18001 certified and approximately 48,000 people are involved. In 2014, approximately $114 million was spent on improving health and safety protection. The investments in health and safety allowed saving on the insurance premiums paid to the Italian National Institute for Insurance against Accidents at Work (INAIL), for a total of over $7 million in 2014.
To achieve the challenging targets that the Group has set, all employees are involved in informational activities and in classrooms and hands-on training consistent with their roles and responsibilities. CNH Industrial provided over 253,000 hours of training on occupational health and safety in 2014. More than 32,000 employees were engaged in training on the job activities, 76% of whom were hourly. Owing to the Group’s many initiatives, the overall frequency rate in 2014 was 0.25 injuries per 100,000 hours worked, an 11% drop compared to the previous year.
Management of production levels
In 2014, CNH Industrial’s work with trade unions and employee representatives, to reach consensus-based solutions for managing market conditions, varied by business and market.
Also in 2014 several plants in EMEA utilized mechanisms to address fluctuations in production volumes such as overtime and temporary contracts, to support growth in demand, and/or plant stoppages, to cope with drops in market volumes. In Italy, compared to 2013, the Powertrain segment, Iveco brand and New Holland Construction Machinery resorted less to temporary layoff. In the first part of the year, almost all the plants of the Agricultural Equipment segment in EMEA made use of overtime as well as of temporary workers to cover production volumes, while, due to a market slowdown whose effects were felt especially in the second half of the year, there were production stoppages at the Italian, U.K. and Belgian Agricultural Equipment plants. At the Iveco Bus plants in Annonay (France) and Vysoke Myto (Czech Republic) the intense production flow required overtime and agency contracts. In Spain, at the Commercial Vehicle plant in Valladolid, the utilization of temporary layoffs was almost unchanged compared to 2013. In France and Germany, production stoppages through temporary layoff benefit schemes decreased significantly over the previous year. During the year, flexible working time agreements were applied to meet fluctuations in production at the Agricultural Equipment plants in Belgium and Poland as well as at the Commercial Vehicles plants in Annonay and Madrid. In North America, overtime diminished in the second half of the year and employment levels registered a modestly negative trend versus 2013 due to softening in the Agricultural Equipment market and relative stability in the Construction Equipment market. Several NAFTA plants in the Agricultural Equipment segment implemented workforce rebalance initiatives and additional down days to manage costs in light of the weaker business. In LATAM, declines in several CNH Industrial businesses were registered versus the year before. The decline in volumes was managed in the first part of the year mainly through a reduction of temporary workers; initiatives to re-balance the workforce based on the reduced production needs were then put into effect. Commercial Vehicles initially addressed the sharp market decline causing a downturn in production volumes with time banks and extensive use of collective vacation (mainly in Brazil) as well as temporary lay-offs (in Argentina and Venezuela); however the implementation of a restructuring program was then needed. In APAC the production volumes were quite flat compared to the previous year even if the Agricultural Equipment plants of Noida (India) and Harbin (China) experienced production volume increases, the latter due to the new product launch, managed through the use of overtime. Other plants like Naberezhnye Chelny (Russia), belonging to Agricultural Equipment, and Dandenong (Australia), part of the Commercial Vehicles production network, experienced decreased volumes compared to 2013, and implemented down days.
Restructuring and reorganization
At the Valle Ufita plant (Italy), December 31, 2014 marked the end of the third year of extraordinary temporary layoff benefits, granted after the business closure on December 31, 2011. Effective January 1, 2015, approximately 300 workers still employed at the end of December 2014 were transferred, along with the plant and in the framework of a transfer of undertaking, to Industria Italiana Autobus S.p.A., a newly created company belonging to the entrepreneur identified for the re-industrialization of the area by the Ministry of Economic Development.
In the U.S., it was announced in June 2014 that the Calhoun (Georgia) plant which produces excavators and dozers for Construction Equipment would be shut down in the third quarter of 2015. The excavator production at the Calhoun plant ceased in the last quarter of 2014, and dozer production will be transferred to the Burlington plant (Iowa) during 2015. The Calhoun plant closure affects approximately 100 employees.
The plant complies and will continue to comply with all federal and state notification laws, and severance payments, benefit continuation, and other assistance consistent with Group policies applicable to non-unionized employees will continue to be provided.
In LATAM, due to the sharp decline registered in Commercial Vehicles, CNH Industrial implemented a restructuring program whose objectives include reducing the permanent workforce at plants in Brazil, Argentina and Venezuela. In the latter country, this has been pursued mainly through voluntary dismissals. Trade unions have been engaged in the workforce reduction process although this was not mandatory.
In China, due to the closure of Shanghai New Holland Agricultural Machinery Corporation Limited, a 60% owned joint venture, an agreement has been reached with the trade unions and the employees representatives on a Placement Plan elaborated in accordance to applicable labor laws and regulations with the purpose of minimizing the social impact of this closure. The plan provides for the placement in the company of the former joint venture partner of the employees meeting certain conditions and for a severance payment in the other cases.
The main wage and regulatory agreements signed in 2014 at the company/plant level include: in Italy the renewal of the collective labor agreement covering both pay and employment conditions, applicable to all the managers of the Group and valid until December 31, 2015; the renewal of the sections dealing with pay-related and with regulatory aspects of the Collective Labor Agreement (“CLA”) applied in Italy to all CNH Industrial employees (except managers), providing, respectively, for a lump sum payment in July and for some changes to the regulation aimed, among others, at allowing a more flexible use of the paid leaves, at extending the flexible entry time, at establishing some specific provisions for the workers attending education courses at the school or at the University; the agreements reached through the annual negotiations in France, which resulted in salary increases varying from levels slightly below the inflation to levels slightly above it also in consideration of business results; the agreement signed in Czech Republic, which provides wage increases higher than inflation, due to country specificities and positive business results; agreements in Brazil envisaging pay increases, benefit and working conditions in line with the ones applied within the country’s industrial sector, and further agreement on one-off bonuses.
In United States, unions represent a small portion of CNH Industrial’s production and maintenance employees. The collective bargaining agreement with the UAW, which represents approximately 1,250 of the hourly production and maintenance employees, continues through April 2016. The CLA with the International Association of Machinists, which represents approximately 600 of CNH Industrial’s employees in Fargo, North Dakota, expires in April 2018.
In Europe, most employees are covered by CLAs stipulated either at the company level or by the employer association for the specific industry, to which the applicable CNH Industrial companies belong. In some cases, the CLAs in the same country, stipulated at the extra company level, differ by territory.
In Italy the overall level of labor unrest in the year was low. The hours of work lost were more than in the previous year, but less than the ones of 2012. The overall levels of labor unrest in 2014 in countries outside Italy were negligible.