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Spain: UGT and CC.OO campaign together for their members’ rights at bankrupt food company

18 March 2011 News
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Under the motto: "In defense of employment and workplaces at Nueva Rumasa" more than 3,000 workers marched in Madrid on 12 March in a demonstration called jointly by the UGT and CC.OO. agro-food federations.

Unpaid wages, jobs at risk and an uncertain future – this is the situation at the Nueva Rumasa group of companies, some of which are under bankruptcy protection and others have filed for bankruptcy, while redundancy procedures have been initiated at its dairy company Clesa and ice cream company Royne.

Nueva Rumasa is a family-owned conglomerate with holdings in the food industry, brandy and wines, retail, hotels and in a second division football club.

In recent years it has acquired numerous companies through a growth strategy based on buying up distressed companies at fire-sale prices. This was the case in 2007, when it bought dairy company Clesa from Parmalat, a purchase which included 7 factories and 1200 workers and all its brands (Clesa, Cacaolat, Ryalcao, Letona, Royne, La Levantina).

Today, Clesa workers are reliving the uncertainty they experienced during the 2003-2004 Parmalat collapse. Like Parmalat, Nueva Rumasa issued bonds without the funds to back them up. The company also claimed assets it didn’t even own as guarantee for the bonds. Since the initial bond issue in February 2009, the National Securities Commission (CNMV) had warned investors on seven occasions against investing in Nueva Rumasa. Nevertheless, some 5,000 investors bought bonds for an estimated EUR 140 million.

In the documentation presented to potential investors, the firm said funds from its bond issue would be used for acquisitions. What they didn’t say, however, was that Nueva Rumasa had already been cut off by the banks after failing to repay loans, and the funds were needed to pay down debt.

With EUR 700 million reportedly owed to banks and EUR 50 million in unpaid contributions owed to Spain’s social security administration, not to mention EUR 6 million in unpaid payroll, the company filed for bankruptcy protection in mid-February; this was followed by filings for its subsidiary companies Clesa (dairy), Dhul (desserts and ice cream), Trapa and Elgorriaga (chocolates), Quesería Menorquina (cheese), Hibramer (eggs), Carcesa (meat), Garvey (brandy) and the Hotasa hotel group. These companies’ combined debt stands at more than triple their combined net worth of EUR 159 million.

The IUF-affiliated agro-food federations of UGT and CC.OO. represent the approximately 5,000 workers in Nueva Rumasa’s food companies. The group employs a further 5,000 workers throughout its businesses.

Workers from Nueva Rumasa came from all over the country to the national demonstration on March 12. This followed numerous local demonstrations that have been taking place since January. The unions are calling for government intervention to find immediate and concrete solutions for the economic difficulties workers and their families are facing, adding that this crisis is also affecting the country’s agricultural and livestock sectors. The unions called on the government to commit to defending the agro-food industry as an important and vital industry for the country.

In the only response so far, the government of Menorca (Balearic Islands) has accorded a repayable advance of EUR 1 million to the workers at Quesería Menorquina. Nueva Rumasa acquired the cheese factory from Kraft in 2009 and signed a 3-year co-manufacturing agreement, which Kraft has now terminated because of repeated supply delays.

Kraft announced the closure of the cheese factory in December 2008, but following a vigourous union campaign supported by the government and civil society, finally agreed to sell it – but not the brand produced there since the 1930’s. In so doing, Kraft avoided having to pay workers’ compensation while ensuring itself continued revenues from the sale of its branded products, production of which was transferred to other Kraft factories.