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World's Largest Brewer InBev Leaves a Bitter Taste of Lies and Layoffs

Posted to the IUF website 17-Mar-2006

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If you drink beer, no matter what region of the world you are in, you are likely to be a customer of InBev. Stella Artois, Brahma, Beck's, Bass, Leffe, Labatt and Hoegaarden are just a few of the more than 200 brands owned by the giant brewer, a product of the 2004 merger between Belgian Interbrew and Brazilian AmBev. Given InBev's corporate slogan - "the world's local brewer" - you might think that behind prized beers stand centuries of traditional knowledge, respect for the work of expert master brewers and a commitment to preserving the heritage of local communities. Think twice. InBev's corporate strategy is built on purchasing premium brands, reorganising production in their original brewing sites and then consolidating them into industrial brewery complexes to cut costs. Cost reduction is the driver of InBev's journey from the largest to the most profitable brewer in the world. Along the way, it has trampled rights, shattered lives and broken promises.

InBev's corporate "culture" comes as no surprise to brewery workers. AmBev built its position through a merger process which left many thousands of Brazilian workers unemployed and without social plan. Now InBev's relentless pursuit of profit is hitting Western Europe, leaving behind an ugly record of destruction, layoffs and broken commitments to workers.

Golden Handshakes and Broken Promises

When the cost-reduction drive hit Boddingtons in 2002, UK Chief Executive Stewart Gilliland made a commitment to the IUF-affiliated T&G to keep Boddingtons in Manchester. Three years later, production was transferred to the Preston brewery in South Wales and the historic Manchester brewery shut down.

Closures are now targeting Belgium, the brewing home of InBev's ancestor Interbrew, where the company has decided to end the brewing tradition of Hoegaarden and Kriek Belle-Vue. Shortly after about 3000 citizens and political figures joined InBev workers in a mass demonstration against the closure, InBev management disclosed the names of workers slated for redundancy as a consequence of restructuring, although it had promised the Belgian unions that there would be no dismissals while talks over a social plan were ongoing. Production is to be shifted to the Jupille brewery. Like Boddingtons, the two Belgian brands perform extremely well. The choice of marketing several prized brands by operating a smaller number of industrial breweries rather than traditional ones will destroy 232 jobs in Belgium. Shareholders are happy: on 24 February InBev announced a 15.3 per cent increase in earnings to 3.3 billion, exceeding market expectations. It simultaneously announced that 360 jobs would be eliminated
in Belgium, Germany, Luxembourg, Hungary and the Czech Republic and that more redundancies may follow. While costs are cut on the back of employment and brewery heritage, the company recently paid a total of 31m to departing top executives John Brock, Stuart Gilliland and Patrice Thys. InBev, however, refuses to disclose its long-term plans to workers, and rejects negotiations with the unions on a European social framework for the announced restructurings.

While scrapping the traditional breweries which built the company's fortune, InBev remains true to its pattern of broken promises and commitments.

The Montenegrin Affair

Only a few years following Interbrew's 1997 acquisition of the "Trebjesa" AD brewery in Niksic (Montenegro), average monthly wages had dropped from 321 to 87 and 243 of the 547 workers had been laid off. Workers at the plant had long been organised in the Autonomous Union of "Trebjesa" AD Brewery (SDSPT). The union initially succeeded in resisting Interbrew management's assault on staffing and payment, but was twice forced to take strike action. Industrial action was crucial in limiting the dramatic wage reductions and finally securing a formal written commitment by Interbrew to negotiate a collective agreement. Interbrew, however, did not respect the agreement it had signed and refused to negotiate. The union was thus forced into a third strike in May 2002. Interbrew responded with a lockout and ultimately sacked more than 50 strikers in a brutal attempt to crush the union. Among those workers was SDSPT President Bozidar Perovic.

The Dubrovnik Agreement

With the Montenegrin industrial dispute stalled and attracting negative publicity, Interbrew accepted the IUF proposal to meet in September 2002 in the Croatian city of Dubrovnik to negotiate a fair settlement. Representatives of the IUF Belgian affiliates CCAS-CSC and FGTB-Horval, representing most of the workers' union membership in Belgium, were also present. Interbrew agreed to put an end to the bitter four-month dispute at the Trebjesa brewery and to resume salary negotiations, and guaranteed that the 303 brewery workers would all start receiving their wages again. Interbrew signed an agreement to protect union members and strikers from any discrimination and sanctions and to lift suspensions and all legal processes against fifteen leaders of the strike committee. The agreement was endorsed by Trebjesa workers who returned to work shortly after its conclusion. Interbrew guaranteed that it would honour the agreement in its entirety.

A company above the law

Interbrew did not honour this commitment. Although the other strikers were reinstated, union president Perovic was denied this right. In 2003 and 2004 Interbrew was twice found guilty in Montenegrin courts, which declared Perovic's dismissal illegal and ordered his immediate reinstatement with retroactive compensation for lost income. But union rights and Montenegrin law are not taken seriously by a company which counts among the most important foreign investors in the country and therefore believes it can pick and choose which laws to comply with. As a result, no job was found at Interbrew-Trebjesa for union President Perovic, who had meanwhile been re-elected and confirmed in his union position and still technically remained an Interbrew employee. Despite regular new hiring at the facility, local management insisted that Perovic's previous position had been eliminated and his skills did not qualify him for any other assignment.

Perovic has 34 years of experience at Interbrew and two "best employee of the year" awards. He was placed on forced leave in April 2005. The unofficial story from local management was that InBev headquarters would not allow his reinstatement and that there was no chance that he would return to work at the brewery. On 6 June 2005, Perovic reported for work but was sent home again. Suspended until November 2005, he was once again made redundant - an extraordinary act by management since they had never recognized that he had ever been reinstated! Interbrew simply ignored the rulings of the Montenegrin Labour Court.

The reality behind InBev's "human resource management excellence"

Interbrew has not only violated internationally recognised labour standards. It has also violated a signed agreement with the IUF and the two Belgian unions. The IUF demanded an explanation. InBev sent Human Resources Manager Marc Croonen to meet with IUF Secretary General Ron Oswald in Brussels in late 2005. At the meeting, Croonen repeatedly invoked InBev's model of "human resource management excellence", and committed himself to coming back with an answer concerning Perovic's right to receive his salary arrears for the period he was illegally kept away from work plus a fair compensation for his disgraceful treatment by the company.

The answer promised by Croonen never came. InBev informed the Belgian unions that Perovic would be paid a compensation sum and left it at that. Perovic's employment was again terminated in January 2006 and the only compensation he was offered amounted to 19,185 - which he refuses to accept as fair and just. This was the sum InBev, the largest brewer in the world with 2005 revenues totalling 11,656m, was ready to pay to get rid of a union president.

Perovic's struggle is not yet over. He and his family are living on the international solidarity organized by the IUF and affiliated organizations. He is still the elected President of the union at InBev "Trebjesa". New union elections will take place in Spring 2006 and workers are subjected to company pressure not to re-elect him. If Perovic is not re-elected, InBev will have demonstrated that it can flaunt international and Montenegrin labour law with impunity.

InBev's 2004 corporate citizenship report reads: "InBev respects the differing legal frameworks in which it operates, regarding the rights of employees to join organizations such as trade unions. We honour freedom of association and collective bargaining agreements." For those who produce its beer, InBev brands have never tasted so bitter.

Act now! What you can do

Workers have had enough of InBev's layoffs, violations of trade union rights, contempt for signed agreements and closures of historic brewing sites.

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