Thursday, March 6, 2014
We've seen a couple of these situations recently -- merger announced, employees or local partner of Chinese-based manufacturing facilities essentially revolt, transaction slowed.
Following announcement of Apollo's acquisition of Cooper Tire, Cooper's Chinese JV partner locked Cooper personnel out of their Cooper Chengshen Tire operation. This -- in part -- led to the collapse of the transaction. After Nokia announced sale of its handseet manufacturer to Microsoft, hundreds of employees at its Dongguan manufacturing plant protested the transaction. Employees at Nokia's plant were reportedly concerned that the merger would result in their being required to take pay cuts under their new American employers:
An executive of the factory told Xinhua that the workers gradually resumed their duties from Sunday after the two sides reached a compromise, with help from the local authorities.
"Microsoft has promised that the workers' salaries and benefits will stay the same as their current standards within 12 months after the acquisition," according to an internal mail.
Gao Xiang, head of communications of Nokia China, said its Dongguan factory will also give a 1,000-yuan bonus (about 164 U.S. dollars) to each worker who did not join the strike.
Those who refuse to go back to work will be fired, according to an internal mail. A worker surnamed Liang said more than 200 of his colleagues had already been sacked.
Should I comment on the utter fecklessness of Chinese labor unions? Strike and you'll get fired? Perhaps not.
Next up, Chinese workers at IBM's manufacturing facilities are striking in opposition to the sale of IBM's sale of its low-end server business to Lenovo:
"So far, we've heard nothing from the management or the government in response to our demands," said Hou Hongbo, a 10- year worker at the factory. "The company's attitude so far is to ignore us, but the entire production remains shut down."
The workers want higher pay if they choose to transfer to Lenovo or higher severance packages if they choose to leave. Hou said they were determined to keep their action going.
"We will definitely keep striking tomorrow," he said.
These kind of occurrences are increasingly common. It raises the question whether the costs of labor disturbances at foreign facilities should be explicitly carved out of material adverse change clauses. right now, one could reasonably read these kinds of labor disturbances in the language that carves out of the MAC definition events that arise from the announcement or pendency of the transaction. Nevertheless, particularly with global businesses, it's worth considering whether or not to call out such issues in the MAC, call it a globalization carve-0ut?