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Case Study Evidence from the Clothing, Food, IT and Public Sector Deliverable 10.1: WP 10 Organisational Case Studies – Synthesis Report

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Case Study Evidence from the Clothing, Food, IT and Public Sector Deliverable 10.1: WP 10 Organisational Case Studies – Synthesis Report Restructuring across value chains and changes in work and employment Case study evidence from the Clothing, Food, IT and Public Sector Deliverable 10.1: WP 10 Organisational Case Studies – Synthesis Report Jörg Flecker - FORBA Ursula Holtgrewe - FORBA Annika Schönauer FORBA Wolfgang Dunkel - ISF Pamela Meil - ISF CIT3-CT-2005-006193 Copyright (2007) © Work organisation and restructuring in the knowledge society - WORKS project Project number: CIT3-CT-2005-006193 All rights reserved. No part of the report may be reproduced, stored in a retrieval system, or transmit- ted in any form or by any means, electronic, mechanical, photocopying, recording; and may not be quoted or cited, without prior permission in writing from the Project Co-ordinator. The authors are solely responsible for the content of this report. It does not represent the opinion of the Community. The Community is not responsible for any use that might be made of data/information appearing therein. WORKS partners and case study authors Arbetstagarkonsult. AB & ATK Arbetsliv, Sweden Pernilla Sternälv, Per Tengblad Det Nationale Forskningscenter for Arbejdsmiljø, National Research Centre for the Work- ing Environment, Denmark Brigitte Gorm Hansen Fondation Travail-Université (FTU), Work & Technology Research Centre, Belgium Valérie Devos, Maïra Muchnik, Gérard Valenduc, Isabel Vandenbussche Forschungs- und Beratungsstelle Arbeitswelt (FORBA), Austria Jörg Flecker, Christoph Hermann, Ursula Holtgrewe, Annika Schönauer Hoger Instituut voor de Arbeid (HIVA) – Katholieke Universiteit Leuven, Belgium Tom De Bruyn, Monique Ramioul Institut für Sozialwissenschaftliche Forschung e.V. (ISF), Germany Wolfgang Dunkel, Pamela Meil Institute for Technology Assessment and System Analysis (ITAS), Forschungszentrum Karlsruhe GmbH, Germany Martin Bechmann, Bettina Krings, Linda Nierling Institute of Sociology, Bulgarian Academy of Sciences, Bulgaria Todor Galev, Rumiana Jeleva, Vassil Kirov, Svetla Stoeva Institute of Sociology, Hungarian Academy of Sciences, Hungary K. Bácsi, Peter Czismadia, Miklós Illéssy, Csaba Máko, G. Mazsu Instituto di Ricerche Economiche e Sociali (IRES), Italy Marcello Pedaci, Mariangela Piersanti Panteion University of Political and Social Sciences, Department of Social Policy, Greece Stavros P. Gavroglou, Linardos Petros Research Centre on Innovation of Enterprises and Work (IET), Fundação da Faculdade de Ciências e Tecnologia – UNL, Portugal Antonio Moníz, Margarida Paulos, Ana Vasconcelos da Silva, Tobias Woll School of Business, University of Twente, Netherlands Duco Bannink, Marcel Hoogenboom, Willem Trommel SINTEF Technology and Society, New Praxis, Norway Carla Dahl-Jørgensen, Turid Saetermo, Hans Torvatn Working Lives Research Institute (WLRI), London Metropolitan University, United King- dom Simone Dahlmann, Alison Gosper 5 Table of contents 1 Introduction by Jörg Flecker 9 2 Changing fashions of work organisation. The clothing industry by Jörg Flecker/Ursula Holtgrewe 13 2.1 Value chain reorganisation 13 2.1.1 The branded producers: outsourcing and forward-integration 15 2.1.2 The private label producers’ response to competition and retail power 17 2.1.3 Manufacturing subcontractors on the way to outsource production 19 2.1.4 The fashion logistics companies and intermediaries 20 2.1.5. … and a textile company fighting the dragon 22 2.2 Employment 23 2.3 Work Organisation 24 2.4 Skills, knowledge and learning 26 2.5 Industrial relations 28 2.6 Conclusions 29 3 Bringing research to the market. IT Research & Development by Ursula Holtgrewe/Pamela Meil 31 3.1 The companies and the value chain 31 3.1.1 The cases: R&D as internal service and cost centre: NO, FR, UK 32 3.1.2 R&D as specialised units and external contractors: AT, BE, DE 34 3.2 Functions and workflow 36 3.3 Changes in employment conditions 39 3.4 Changes of work organisation 40 3.5 Skills, knowledge and training 42 3.6 Industrial relations 43 3.7 Summary: power, time, dilemmas 44 4 Not ‘one best way’ of offshoring. Software development by Ursula Holtgrewe/Pamela Meil 47 4.1 The companies and the value chain 47 4.1.1 The cases 48 4.2 Functions and workflow 50 4.3 Changes in employment 55 4.4 Changes of work organisation 57 4.5 Skills, knowledge and learning 59 4.6 Industrial relations and regulations 61 4.7 Conclusions 63 7 TABLE OF CONTENTS 5 Faster Food. Production and logistics in the food processing industry by Pamela Meil/Annika Schönauer 65 5.1 Introduction: general overview of the sector and business function and the companies involved 65 5.2 Company and value chain (re-)organisation 67 5.3 Functions and overall workflow in the value chain 68 5.4 Changes of employment 70 5.5 Changes of work organisations 73 5.6 Skills, knowledge and learning 77 5.7 Industrial relations & regulations 79 5.8 Conclusions 81 6 Going Private. IT Service Outsourcing in the public sector by Jörg Flecker 85 6.1 Introduction: A business function becomes an industry 85 6.2 Company and value-chain reorganisation 88 6.3 Functions and overall workflow in the value chain 91 6.4 Changes in employment 93 6.5 Changes in work organisation, skills and knowledge 97 6.6 Industrial relations and regulations 101 6.7 Summary 103 7 Reorganising the front line. Customer service in the public sector by Wolfgang Dunkel/Annika Schönauer 107 7.1 Introduction 107 7.2 Company and value-chain (re-)organisation 110 7.3 Functions and overall workflow in the value chain 113 7.4 Changes of employment 118 7.5 Changes of work organisation 124 7.6 Skills, knowledge and learning 126 5.7 Industrial relations & regulations 129 7.8 Summary and Conclusions 132 8 Conclusions by Jörg Flecker/Ursula Holtgrewe 137 Bibliography 153 8 1 Introduction JÖRG FLECKER Since the early 1990’s, there has been a general trend in corporate restructuring towards a ‘concentration on core activities’ and outsourcing of tasks in a range of business functions. Companies seeking to focus on what they define as their core business tend to outsource non-core activities to other companies that are specialists in those areas (OECD, 2004: 32). Apart from costs, this is motivated by considerations relating to management capacities, human resource and knowledge management and quality aspects. More recently, the re- location of work and the emergence of global value chains in more and more industries triggered a vivid debate on ‘offshore outsourcing’ in particular of service activities and high-skilled work (Huws, Flecker & Dahlmann, 2004; WTO, 2005; OECD, 2005). These processes of restructuring involve a decomposition and re-composition of sectors, compa- nies, workplaces and jobs. They obviously have far-reaching consequences for employ- ment levels, job security, work organisation and the quality of work life. The restructuring may also intensify the segmentation of labour markets and lead to a fragmentation of em- ployment both in the private and the public sector (Marchington, Grimshaw, Rubery & Willmott, 2005). Moreover, the growing complexity of governance and control of the new organisational relationships results in an increased instability, unpredictability, and inse- curity of power relationships at the level of the value chain or network, the organisation, the workplace and for the individual (Gereffi, Humphrey & Sturgeon, 2005; Huws, 2006). While subcontractors or supplier companies are often SMEs that are in a dependent posi- tion vis-à-vis their clients, it is also true that outsourcing is part of a structural shift in the economy that led to the emergence of large scale, global service provider and supplier companies (Flecker, 2007). The WORKS project aims to shed light on these issues by looking at the relationship be- tween changes taking place at the level of the European and global economy and changes taking place at the workplace level. To analyse this relationship the concept of the global value chain is used because it makes it possible to examine the interactions between the different levels. To investigate current restructuring processes, the concept is extended beyond manufacturing to cover the service and the public sectors. On this basis, the divi- sion of labour along value chains and changes in work flows were analysed that directly impact on employment relations and day-to-day work practices. Organisational case stud- ies were conducted to provide windows into the restructuring of value chains at strategic points to illuminate changes in the organisation of work within and between organisa- tions. The data capture the effects of restructuring by going beyond the boundaries of in- dividual companies and sectors. The WORKS project selected a range of business func- tions in particular sectors for investigation. A business function is defined as the ensemble of specific tasks or activities which contribute to the overall process of producing goods and services. Typical business functions include research and development, design, pro- duction, marketing, financial processing, customer services, logistics, human resource management, training and data processing. These are generic, in the sense that they apply 9 CHAPTER 1 across many different industries. The increasing standardisation of business processes ac- companying the introduction of information and communication technologies makes it easier to separate the performance of business functions into separate units and either re- locate them geographically or outsource them to another company or both (see WORKS Glossary). A central focus of the research was the impact that restructuring had
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