WRITTEN QUESTION P-0089/03

by Regina Bastos (PPE-DE) to the Commission

(17 January 2003)

Subject: Closure of the C. & J. Clark footwear factory in Castelo de Paiva (Portugal)

On 10 January 2003 the multinational company C. & J. Clark Fábrica de Calçado, Lda, a maker of footwear located in Castelo de Paiva (Portugal), announced the closure of its factory, thus making 588 workers redundant.

The decision to close this factory is justified by the company itself on grounds relating to imports of vamps from India and Romania and the objective of maintaining a competitive price structure (cf. press release issued by the Clark management on 10 January 2003).

Clark set up operations in Castelo de Paiva in 1988, with both national and Community aid. In May 2000 the company signed a protocol with the local municipal council in which it undertook to continue operations up to at least 2007, in return for a significant level of investment from the municipality. Castelo de Paiva is a municipality located in the Portuguese interior, with a very fragile economy. The closure of this undertaking will bring in its wake disastrous economic and social consequences.

Given that this decision to close runs totally counter to the notion of corporate social responsibility, can the Commission answer the following questions:

- What sums were granted from Community funds, and when, to the company Clark Fábrica de Calçado, Lda in Castelo de Paiva?

- What conditions were required from this company in relation to the above Community funding?

- Should it be established that Clark is in breach of its obligations regarding its receipt of Community support, what action will the Commission take to prevent the factory's closure and ensure the continuation of its activities in Castelo Paiva, guaranteeing the workers' jobs?

- What political measures will the Commission take in order to prevent, and, ultimately, penalise actions of this nature, as frequently perpetrated by companies which establish themselves in the EU, receive Community funding and then, having exhausted its advantages and benefits (above all on the human level), relocate their operations?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(24 February 2003)

The Commission would like to provide the Honourable Member with the following information. The company C. & J. Clark Fábrica de Calçado, Lda. has received the following support:

1. Old Funds (1986-1989)

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These amounts were used to co-finance vocation training activities in 1989.

2. Community Support Framework (CSF) II (1994-1999)

The company received support from PEDIP II (Programa especifico para o Desenvolvimento Industrial Português), which was cofinanced by the European Regional Development Fund (ERDF) and the European Social Fund (ESF), under measure 3.1. Diagnósticos e Auditorias Empresariais and measure 4.6. Acção A Acções de Demonstração Empresarial.

The aim of these projects was modernisation, in the first case through diagnosis and study and in the second case through more flexible production and the associated vocational training.

The amounts approved came to EUR 680 372, and the following amounts were paid out:

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3. As regards ESF, OE and OSS support, the investment took place between 1995 and 1998, and 860 persons benefited from training. The projects financed did not involve any changes in terms of jobs.

The granting of ESF assistance for vocational training is not subject to conditions in terms of the continued existence of recipient companies, but requires compliance with the access and eligibility conditions laid down in the regulations on the granting of ESF assistance in force at the time.

The Commission feels that any investment in human resources is of the greatest importance at national and regional levels. It must be underlined that ESF funding does not support a company as such, but provides an investment in human capital and improves the employability of individual workers.

As far as the Commission is aware, the company in question has not contravened the rules on Structural Fund assistance.

4. ERDF support was granted by the Member State under an approved State aid scheme. The State must therefore monitor compliance with Community competition rules, more specifically the current Guidelines on national regional aid(1), which were adopted by the Commission in March 1998 and require the assets financed and the jobs created to be maintained in the establishment for at least five years from the date of the investment for which aid was granted. The Commission will ask the Portuguese authorities to ensure compliance with these rules in the case of the aid granted to the company C. & J. Clark.

5. The Commission would like also to point out that Directive 98/59/EC(2) concerning collective redundancies provides for information and consultation with the workers' representatives in cases where the employer is contemplating such redundancies. These consultations should be carried out in good time with a view to reaching agreement and should at least cover ways and means of avoiding collective redundancies or reducing the number of workers affected as well as of mitigating the consequences by recourse to accompanying social measures. These measures aim, among other things, at providing aid for redeploying or retraining workers made redundant.

More generally, the Commission advocates the idea that, when deciding on their relocation, enterprises should always take into account the effects that those decisions could have on their employees as well as on the social and regional context. This has recently been underlined in the Commission's Communication concerning corporate social responsibility (CSR) A business contribution to sustainable development(3).

Furthermore, the Commission invited the European social partners to engage in a dialogue on anticipating and managing change with a view to applying a dynamic approach to the social aspects of corporate restructuring. The social partners agreed to incorporate this important issue in their recently adopted multiannual work programme(4)(5).

(1) OJ C 74, 10.3.1998.

(2) Directive 98/59/EC of 20 July 1998 on the approximation of the laws of the Member States relating to collective redundancies, OJ L 225, 12.8.1998.

(3) COM(2002) 347 final.

(4) Orçamento da Economia

(5) European Social Fund.