# EUR-Lex - 52014PC0116 - EN

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# 52014PC0116

**Proposal for a DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the mobilisation of the European Globalisation Adjustment Fund, in accordance with Point 13 of the Interinstitutional Agreement of 2 December 2013 between the European Parliament, the Council and the Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management (application EGF/2012/004 ES/Grupo Santana from Spain) /* COM/2014/0116 final */**

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EXPLANATORY MEMORANDUM

Article 12 of Council Regulation (EU,
Euratom) No 1311/2013 laying down the multiannual financial framework for
the years 2014-2020[1]
allows for the mobilisation of the European Globalisation Adjustment Fund (EGF)
within the annual ceiling of EUR 150 million (2011 prices) over
and above the relevant headings of the financial framework.

The rules applicable to the contributions
from the EGF for applications submitted until 31 December 2013 are laid down in
Regulation (EC) No 1927/2006 of the European Parliament and of the Council of
20 December 2006 on establishing the European Globalisation Adjustment Fund[2].

On 16 May 2012, Spain submitted application EGF/2012/004 ES/Grupo
Santana for a financial contribution from the EGF, following
redundancies in Grupo Santana[3]
and 15 suppliers and downstream producers in Spain.

After a thorough
examination of this application, the Commission has concluded in accordance
with Article 10 of Regulation (EC) No 1927/2006 that the conditions for a
financial contribution under this Regulation are met.

SUMMARY OF THE APPLICATION AND ANALYSIS

Key data: ||

EGF Reference no. || EGF/2012/004

Member State || Spain

Article 2 || (c)

Primary enterprise || Grupo Santana

Suppliers and downstream producers || 15

Reference period || 15.11.2011 – 15.3.2012

Starting date for the personalised services || 1.8.2011

Application date || 16.5.2012

Redundancies during the reference period || 330

Redundancies before and after the reference period || 689

Total eligible redundancies || 1 019

Redundant workers expected to participate in the measures || 285

Expenditure for personalised services (EUR) || 3 729 815

Expenditure for implementing EGF[4] (EUR) || 199 000

Expenditure for implementing EGF (%) || 5,07

Total budget (EUR) || 3 928 815

EGF contribution (50 %) (EUR) || 1 964 407

1.           The application was presented to the Commission on 16
May 2012 and supplemented by additional information up to 28 November 2013.

2.           The
application meets the conditions for deploying the EGF as set out in Article
2(c) of Regulation (EC) No 1927/2006, and was submitted within the deadline of
10 weeks referred to in Article 5 of that Regulation.

Link between the redundancies and major structural changes in world trade patterns due to globalisation

3.           In order to establish the
link between the redundancies and major structural changes in world trade
patterns due to globalisation, Spain argues that growth in automobile
manufacturing in the EU lags well behind that of its major competitors, thus
leading to a loss of EU market share in the sector. Globally, car production
increased by 22,4 % in 2010, after a 9,6 % downturn in 2009[5]. China, at 13,9 million
units produced, saw its output grow four times higher than production growth in
Europe, expanding by 33,8 % compared to 8,3 % growth in Europe in
2010. Japan, the world’s third largest producer, manufactured 21,1% more cars
than in 2009, followed by South Korea (+22,4 %), Brazil (+9,8 %),
India (+29,4 %) and the US (+24,4 %).

4.           The applicant further
refers to motor vehicle production statistics[6]
to demonstrate a decrease of the EU market share. In 2001, the EU-27 market
share in the world production of motor vehicles still was 33,7 %. In 2004 it
decreased to 28,4 % and further decreased to 26,3 % in 2010. During the period
2004-2010, the production of passenger cars, in absolute terms, increased by
6,7 % in the EU-27, against a growth rate of 32,2 % worldwide. This
decline in EU market share has been observed by the Commission in assessment of
previous EGF automotive cases based on trade related globalisation[7].

The declining share of the European market as a
proportion of the world market for passenger cars is also borne out by the Cars
21 final report, published on 6 June 2012[8].

5.           The main driving force of
this redistribution of world market shares are the geographical patterns of
consumption, in particular the rapid growth in Asian markets which EU producers
are less able to benefit from, being traditionally less well positioned on
these markets than elsewhere.

6.           To date, the automotive
sector has been the subject of the most numerous EGF applications, with 16
cases, of which seven are based on trade related globalisation, while the other
nine are crisis related[9].

7.           The appreciation of the
Commission services is that the redundancies in Grupo Santana and its suppliers
can be linked, as required by Article 2 of Regulation (EC) No 1927/2006, to
major structural changes in world trade patters, in particular a reduction of
the EU share in world motor vehicle production.

Demonstration of the number of
redundancies and compliance with the criteria of Article 2(c)

8.           Spain submitted the
application under the intervention criterion of Article 2(c) of Regulation (EC)
No 1927/2006. This provision allows applicants to derogate from the
requirements of Articles 2(a) and 2(b) in small labour markets or in
exceptional circumstances when redundancies have a serious impact on employment
and the local economy. In this case the applicant must specify which of the
main eligibility requirements its application fails to meet, and thus from
which it is seeking derogation.

The Spanish authorities specified that the
application seeks to derogate from Article 2(a), where the normal threshold is
at least 500 redundancies over a four-month period.

9.           The application cites 330
redundancies in Grupo Santana and 15 suppliers during
the four-month reference period from 15 November 2011
to 15 March 2012 and a further 689 redundancies outside the reference period,
but related to the same collective redundancies procedure. All of these
redundancies were calculated in accordance with the first indent of the second
paragraph of Article 2 of Regulation (EC) No 1927/2006.

10.         All the enterprises
concerned by this application are located in Linares a town of the NUTS III
region of Jaen (ES 616). The longer chain of redundancies is described in
the application as follows: 670 workers were dismissed between 31 March and 14 November
2011, 330 workers in the 4-month reference period from 15 November to 15 March
2012. A further 19 workers were dismissed after the reference period. Together
this makes 1019 dismissals over eleven and a half months (ie about 90 layoffs
per month). The layoffs were gradually phased to reduce their impact on the
affected territory which made impossible to reach the minimum 500 redundancies
in a four month period as required by Regulation (EC) No 1927/2006.

11.         According to the Spanish
authorities, Jaen is in a very difficult situation. The gross regional product
(GDP) per capita of Jaen is 69,8% of EU average. The employment rate of people
aged 16-64 in Jaen decreased from 56,1 % in 2007 to 48,8 % in 2011
when the number of employed people fell from 235 767 to 209 047.
During the same period the unemployment rate rose from 13 % to 27,9 %
(from 21,13 % to 48,6 % for those under 25 years) and the absolute
number of unemployed workers increased from 35 567 to 81 153.

12.         Spain argues that the
redundancies in Grupo Santana have a significant impact on the NUTS III region
Jaen and in particular in Linares where Grupo Santana is located as the market
does not offer sufficient employment options for the workers. In 2011 compared
with 2008 the number of jobs available in industry, construction and services
decreased by 29,1 %, 45,3 % and 5,1 % respectively.

13.         The applicant also refers
to the fact that unemployment in Andalucía (NUTS II level) is higher than the
national average and the EU average (respectively 33,9 %, 24,63 % and
11,2 %). Andalucía is an eligible region under the Convergence Objective
and its GDP is 76,6 % of EU average.

14.         Andalucía was also affected
by other mass redundancies for which an EGF application was submitted to the
Commission: 1 589 redundancies in a four-month period related one more
time to the automotive sector (EGF/2008/002 ES Delphi, approved by the
Budgetary Authority in 2008, 2008/818/EC, OJ L285/13 (29/10/2008)).

15.         The Commission services
consider that the 330 redundancies in question along with the 689 redundancies
due to the same cause before and after the four-month reference period, which
have a serious impact on employment and the economy at local and NUTS III
level, together with the particularly fragile economic situation of the
affected territory combine to meet the criteria of Article 2(c) of Regulation
(EC) No 1927/2006. The exceptionality of the case lies in the combination of
these factors, which together pose an unusual and difficult situation for the
workers and the territory concerned.

Explanation of the unforeseen nature
of those redundancies

16.         The Spanish authorities
argue that despite the problems experienced by Santana following the decrease
of sales as a consequence of the economic and financial crisis, the bankruptcy
and closure were unforeseen.

17.         The Santana business model
was a combination of production of own-brand vehicles, such as the jeep
"Anibal Santana" which has been sold to several European armies such
as the French and the Czech army and manufacture and assembling of vehicles for
other manufacturers such as the Italian Iveco group or the Japanese Suzuki.

18.         Strategic decisions were
taken by Santana's main customers which ended in a cancellation or no-renewal
of the on-going contracts as they prioritized producing close to the new
emerging markets, in particular in India or China.

19.         The combination of a drop
in demand for their own products together with the change in the strategic
plans of Santana's main clients was not easy to foresee.

Identification of the dismissing
enterprises and workers targeted for assistance

20.         The application relates to 1 019
redundancies in the three entreprises constituting the Grupo Santana and 15
suppliers.

Enterprises and number of dismissals

Grupo Santana || 392 || Fundiciones Mecacontrol SL || 4

Alstom || 2 || Iturri Santana SA || 3

Capgemini || 77 || Pintados Garley || 5

Casarubio Elevadores SL || 85 || Prosegur Cia de seguridad || 4

Cofely España || 44 || Servicios Logísticos Integrados || 67

Dictesa Jaén SL || 54 || Técnicas de tiempos y métodos || 3

Faescom 92 || 97 || Urbina SL || 1

FASUR || 151 || Windar logistic || 30

Total enterprises: 16 || Total dismissals: 1 019 ||

21.         The break-down of the workers
expected to participate in the measures is as follows:

Category || Number || Percent

Men || 234 || 82,10

Women || 51 || 17,90

EU citizens || 285 || 100,00

Non EU citizens || 0 || 0

15-24 years old || 4 || 1,14

25-54 years old || 265 || 92,99

55-64 years old || 16 || 5,61

> 64 years old || 0 || 0

22.         The Spanish authorities
argue that despite the efforts made in order to gather the information on the
occupational categories of the workers, the information is no longer available
since most of the enterprises already completed their liquidation processes and
no longer exist.

23.         In accordance with Article
7 of Regulation (EC) No 1927/2006, Spain has confirmed that a policy of
equality between women and men as well as non-discrimination has been applied,
and will continue to apply, during the various stages of the implementation of
and, in particular, in access to the EGF.

Description of the territory
concerned and its authorities and stakeholders

24.         All the enterprises
concerned by this application are located in Linares, the second biggest town
of the NUTS III region Jaen. It has a population of 61 116 people
according to the last census (2011).

25.         Since the middle of the
nineteenth century when Linares became an important mining centre until the end
of the twentieth century Linares was heavily involved in the mining and
smelting of lead and the production of gunpowder; dynamite and rope were pillars
of the local economy. When the last mine closed in 1991 the local economy
relied on Grupo Santana and to a lesser extent in Azucareras Reunidas[10]. In recent years a
production plant for components of wind turbines has been opened in Linares, as
well as an assembly plant of the train/tram manufacturer CAF. However Grupo
Santana remained until its closure the foremost employer in Linares.

26.         The main stakeholders are
the Junta de Andalucía (the autonomous government of Andalucía) and in
particular the regional Ministry of Economy, Innovation and Science; and the trade
unions MCA-UGT Andalucía and Federación de la industria de
CCOO-Andalucía.

Expected impact of the redundancies
as regards local, regional or national employment

27.         Registered unemployment in
Linares had increased by 270% at the end of 2011 compared with 2007 and
although the Linares population between 16 and 64 years represents only 9,4% of
the total population of the NUT III region Jaen, unemployed people from Linares
contribute by 15,7% to the total unemployment in Jaen. Furthermore half of the
job seekers are long-term unemployed people (>12 months). The closure of the
Santana Group and the resulting direct and indirect layoffs have a significant
impact on local and regional employment and pose an unusual and difficult
situation for the workers and the territory concerned.

28.         The financial situation of
the city of Linares is weak and the redundancies at Grupo Santana and 15
suppliers all of them based in the former Santana business park (now renamed as
Linares business park) will impact the tax revenues of the municipality. As an
employer, the city will probably have to lay off a number of its own employees,
and it will not be able to help the redundant Grupo Santana workers by offering
jobs to any of them.

29.         In conclusion, in such
circumstances, the redundancies can be seen to have a significantly negative
effect on the local and regional labour market.

Co-ordinated package of personalised
services to be funded and a breakdown of its estimated costs, including its
complementarity with actions funded by the Structural Funds

30.         Taking into account the
particularly fragile situation of the employment market in the affected
territory (Linares) the regional authorities together with the main
stakeholders decided to top up the standard measures provided by the
public employment offices with an ad-hoc package of measures designed to tackle
both the lack of job offers and the lack of vocational skills of the workers,
other than the skills related to the automotive industry.

Outline of the package of measures "Plan
Linares Futuro[11]"

In order to address the first issue (i.e the
lack of job offers) two measures were designed: (1) Refurbishing the former
Santana business park[12]
(modernization of power, voice and data networks, rehabilitation of about
twenty units which made up the factory, improving the rail connection serving
the park, etc.), so it can host enterprises with high added value. The cost of
the rehabilitation of the former Santana business park is estimated at EUR 6,2
million. This measure has being carried out since January 2011 and is expected
to end in May 2014. (2) Setting up an office which on the one hand will
promote the business park among high added value enterprises in view of
their establishing in the park and on the other hand will also be in charge
of active job search assistance and job matching activities in support of
former Santana workers by promoting these workers among the new businesses
establishing in the park. The total cost of the office is estimated at EUR 525 000
(EUR 150 000 per year for the period 1 July 2011 to 31 December
2014). No EGF co-funding has been requested for these two measures.

To tackle the lack of vocational skills of the
workers, they will be provided with vocational 'on-the-job' training. This
measure aims to provide the workers with vocational skills which either cater
for the identified need of enterprises settling in the business park or will be
on demand, for instance administrative management of SMEs, vocational licensing
such as the required for food handling, passenger transport CPC[13], private security
guard, etc. The distinguishing feature of this training activity is that the
class-room training will be complemented by on-the-job training and also the
length of the training (about 840 hours). Through on-the-job training activities
participants will have the opportunity to gain some experience through training
in the workplace while receiving a 'training wage' equivalent to
150 % of the Spanish minimum wage, plus a pro-rata part of the 13th and
14th monthly wage[14].
The relevant social charges are also included in the total cost of this
training wage estimated at EUR 1 483 monthly per worker.

31.         The expenditure for
implementing the EGF, which is included in the application in accordance with
Article 3 of Regulation (EC) No 1927/2006, covers preparatory,
management and control activities as well as information and publicity.

32.         The personalised services
presented by the Spanish authorities are active labour market measures within
the eligible actions defined by Article 3 of Regulation (EC) No 1927/2006. The Spanish
authorities estimate the total costs at EUR 3 928 815, of which
the expenditure for personalised services at EUR 3 729 815 and
the expenditure for implementing the EGF at EUR 199 000 (5,07 %
of the total amount). The total contribution requested from the EGF is EUR 1 964 407
(50 % of the total costs).

Actions || Estimated number of workers targeted || Estimated cost per worker targeted (EUR) (*) || Total costs (EGF and national cofinancing) (EUR) (**)

Personalised services (first paragraph of Article 3 of Regulation (EC) No 1927/2006)

Vocational on-the-job training (Cursos de formación) || 285 || 4 191 || 1 194 295

Training wages (Contratación beneficiarios) || 285 || 8 897 || 2 535 520

Sub total personalised services || || 3 729 815

Expenditure for implementing EGF (third paragraph of Article 3 of Regulation (EC) No 1927/2006)

Preparatory activities || || 60 000

Management || || 104 000

Information and publicity || || 15 000

Control activities || || 20 000

Sub total expenditure for implementing EGF || || 199 000

Total estimated costs || || 3 928 815

EGF contribution (50 % of total costs) || || 1 964 407

(*) To avoid decimals, the
estimated costs per worker have been rounded. However the rounding has no
impact on the total cost of each measure which remains as in the application
submitted by Spain.

(**) Totals
do not tally due to roundings.

33.         Spain confirms that the
measures described above are complementary with actions funded by the
Structural Funds and that all double financing will be prevented. Spain will
put in place the necessary control procedures to eliminate any risk of double
funding and will also ensure a clear audit trail for EGF funded activities.

34.         The complementarity between
the EGF and the European Social Fund (ESF) in particular lies in the
possibility of tackling the issue of the redundancies from two time perspectives:
The EGF provides a quick, one-off, time-limited individual support geared to
helping workers who have suffered redundancy as a result of globalisation
whilst the ESF pursues long-term strategic objectives and the resources cannot
usually be reallocated to deal with a crisis triggered by mass redundancies due
to globalisation. The training measures in support of the former workers of
Santana have been designed to cater for the needs of the enterprises settling
in the Linares business park while taking into account the workers profiles.
These ad-hoc training courses are neither part of the training provided under
the 2007-2013 ESF operational programmes for Andalucía nor under the
Adaptability and Employment Programme 2007-2013. Nevertheless, if the
particular needs of a worker could be better served by participating in one of
the training activities co-funded by ESF the worker will be provided with the
relevant ESF training.

35.         Continuous follow-up of ESF
and EGF actions with similar aims and the workers concerned will avoid any
overlap between ESF and EGF measures.

Date(s) on which the personalised
services to the affected workers were started or are planned to start

36.         Spain started the
personalised services to the affected workers included in the co-ordinated
package proposed for co-financing to the EGF on 1 August 2011. This date
therefore represents the beginning of the period of eligibility for any
assistance that might be awarded from the EGF.

Procedures for consulting the social
partners

37.         The autonomous government
of Andalucía consulted the trade unions MCA-UGT Andalucía and Federación de la
industria de CCOO-Andalucía on the whole package of measures at the time of the
negotations prior to the closing down of Grupo Santana and later during the
application process. Moreover these trade unions are monitoring the
implementation of the EGF measures.

38.         The Spanish authorities
confirmed that the requirements laid down in national and EU legislation
concerning collective redundancies have been complied with.

Information on actions that are
mandatory by virtue of national law or pursuant to collective agreements

39.         As regards the criteria
contained in Article 6 of Regulation (EC) No 1927/2006, the Spanish authorities
in their application:

· confirmed that the financial contribution from the EGF does not
replace measures which are the responsibility of companies by virtue of
national law or collective agreements;

· demonstrated that the actions provide support for individual workers
and are not to be used for restructuring companies or sectors;

· confirmed that the eligible actions referred to above do not receive
assistance from other EU financial instruments.

Management and control systems

40.         Spain has notified the
Commission that the financial contribution will be managed and controlled by
the same bodies that manage and control the ESF. The Servicio Andaluz de Empleo
will be the intermediate body for the managing authority.

Financing

41.         On the basis of the
application from Spain, the proposed contribution from the EGF to the
coordinated package of personalised services (including expenditure to
implement EGF) is EUR 1 964 407, representing 50 % of the
total cost. The Commission's proposed allocation under the Fund is based on the
information made available by Spain.

42.         Considering the maximum
possible amount of a financial contribution from the EGF under Article 12 of Council
Regulation (EU, Euratom) No 1311/2013, as well as the scope for
reallocating appropriations, the Commission proposes to mobilise the EGF for
the total amount referred to above.

43.         The proposed decision to
mobilise the EGF will be taken jointly by the European Parliament and the
Council, as laid down in point 13 of the Interinstitutional Agreement of 2
December 2013 between the European Parliament, the Council and the Commission
on budgetary discipline, on cooperation in budgetary matters and on sound
financial management[15].

44.         The Commission presents separately
a transfer request in order to enter in the 2014 budget specific commitment
appropriations, as required under point 13 of the Interinstitutional Agreement
of 2 December 2013.

Source of payment appropriations

45.         Appropriations allocated to
the EGF budget line in the 2014 budget will be used to cover the amount of EUR 1 964 407
needed for the present application.

Proposal for a

DECISION OF THE EUROPEAN PARLIAMENT
AND OF THE COUNCIL

on the mobilisation of the European
Globalisation Adjustment Fund, in accordance with Point 13 of the
Interinstitutional Agreement of 2 December 2013 between the European
Parliament, the Council and the Commission on budgetary discipline, on
cooperation in budgetary matters and on sound financial management (application
EGF/2012/004 ES/Grupo Santana from Spain)

THE EUROPEAN PARLIAMENT AND THE
COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the
Functioning of the European Union,

Having regard to Regulation (EC) No
1927/2006 of the European Parliament and of the Council of 20 December 2006
establishing the European Globalisation Adjustment Fund[16], and in particular
Article 12(3) thereof,

Having regard to the Interinstitutional
Agreement between the European Parliament, the Council and the Commission of 2 December
2013 on budgetary discipline, on cooperation in budgetary matters and on sound
financial management[17],
and in particular point 13 thereof,

Having regard to the proposal from the European
Commission[18],.

Whereas:

(1)       The European Globalisation Adjustment Fund (EGF) was
established to provide additional support for workers made redundant as a
result of major structural changes in world trade patterns due to globalisation
and to assist them with their reintegration into the labour market.

(2)       The EGF shall not exceed a
maximum annual amount of EUR 150 million (2011 prices), as laid down in
Article 12 of Council Regulation (EU, Euratom) No 1311/2013 laying
down the multiannual financial framework for the years 2014-2020[19].

(3)       Spain submitted an
application to mobilise the EGF, in respect of redundancies in the enterprise Grupo Santana and 15 suppliers and downstream producers, on 16 May 2012 and supplemented it by
additional information up to 28 November 2013. This
application complies with the requirements for determining the financial
contributions as laid down in Article 10 of Regulation (EC) No 1927/2006.
The Commission, therefore, proposes to mobilise an amount of EUR 1 964 407.

(4)       The EGF should, therefore,
be mobilised in order to provide a financial contribution for the application
submitted by Spain,

HAVE ADOPTED THIS DECISION:

Article 1

For the general budget of the European
Union for the financial year 2014, the European Globalisation Adjustment Fund
(EGF) shall be mobilised to provide the sum of EUR 1 964 407 in
commitment and payment appropriations.

Article 2

This Decision shall be published in the Official
Journal of the European Union.

Done at Brussels,

For the European Parliament                        For
the Council

The President                                                 The
President

[1]               OJ L 347, 20.12.2013, p. 884.

[2]               OJ L 406, 30.12.2006, p. 1.

[3]               Santana Motor S.A.U.;
Santana Motor Andalucía S.L.U. and Santana Militar S.L.U.

[4]               In accordance with the third paragraph of Article 3
of Regulation (EC) No 1927/2006.

[5]               European
Automobile Manufacturers' Association – ACEA
(http://www.acea.be/news/news_detail/vehicle_production_on_recovery_path_in_2010/)

[6]               Organisation
Internationale des Constructeurs d’Automobiles – OICA (www.oica.net)

[7]               EGF/2007/002 FR Peugeot suppliers COM(2007) 415;
EGF/2008/002 ES Delphi COM(2008) 547 and EGF/2008 ES Castilla y León &
Aragón COM(2009) 150

[8]               http://ec.europa.eu/enterprise/sectors/automotive/files/cars-21-final-report-2012_en.pdf

[9]               Regular updates here: http://ec.europa.eu/social/main.jsp?catId=326&langId=en
check related documents (summary of EGF applications)

[10]             Azucareras Reunidas de Jaen S.A. a beet sugar producer
which in recent years also produces biodiesel from rapeseed oil, palm oil,
soybeans, and sunflower oil.

[11]             Plan for Linares' future.

[12]             After being refurbished the former Santana business
park changed its name to Linares business park.

[13]             Certificate of Professional Competence (CPC) is the
certificate attesting that certain professional drivers passed the courses and
tests required by Directive 2003/59/EC.

[14]             In Spain, the contractually agreed annual salary is
divided into fourteen equal parts, twelve of which are paid monthly and the
13th and 14th are deferred and paid in June and December together with the
relevant monthly salary.

[15]             OJ C 373, 20.12.2013, p. 1.

[16]             OJ L 406, 30.12.2006, p. 1.

[17]             OJ C 373, 20.12.2013, p. 1.

[18]             OJ C [...], [...], p. [...].

[19]             OJ L 347, 20.12.2013, p. 884.