Back in July, I brought you news of some rather significant strife occurring within the walls of Pelikan’s Vöhrum factory, the production facility where the company manufactures its fine writing instruments. Workers at the plant, a force numbering approximately 230 strong, had staged a public demonstration in order to protest and bring awareness to several perceived injustices. Christmas bonuses not yet paid in full and June’s wages being delayed contributed to tensions boiling over. Imagine that scenario playing out in an environment where employees have already given up five days of vacation and 15% of their collective wages in a bid to keep their jobs. Concerns had also previously been put forth about a lack of investment in the plant itself. Of course, none of this news made much of a splash outside of the local papers but the post here exposed the issues to a larger audience and generated a lot of conversation about the health of the factory and the future of Pelikan’s fine writing division, not only on this blog but on many of the pen forums as well. I have frequently been asked for updates on the situation and have continued to monitor the news out of Germany. There hasn’t been much to report until now. If you recall from my original post, works council chairman Walter Dettmer had called upon Hubertus Heil (SPD), Federal Minister of Labor and Social Affairs, to get involved in the dispute. A trip to the Peine-Vöhrum plant was scheduled for mid-August and occurred as planned just a few weeks ago. Thanks to some local reporting, I can update you with some of the goings on at that meeting.
On Thursday, August 19th, Hubertus Heil (SPD), shown in the photo to the right, paid a visit to Pelikan’s factory. He is certainly no stranger to the area or the brand, having grown up in the region, which is one of the reasons he readily accepted the invitation to hear out the concerns of the workforce and to better assess their needs. Mr. Heil is currently serving in the fourth cabinet of Chancellor Angela Merkel and has been in his current position since March 2018. Accompanying him on the visit was a somewhat large gathering of interested parties; commercial plant manager Ranier Niermann, works council chairman Walter Dettmer, union secretary Cihan Yüksel, district councilor Henning Heiss, technical plant manager Harald Schmidt, Thomas Zwiebler (SPD Vöhrum), and the mayor of Peine, Klaus Saemann (SPD). Mr. Heil was on site to investigate first-hand the unrest that has gripped the factory which culminated in a meeting held behind closed doors on the premises. The President and CEO of the company, Loo Hooi Keat, also participated from his location in Malaysia via video conference. After the meeting, Mr. Heil spoke with reporters. Paraphrasing his comments, he related that the situation was not an easy one but also that the mood was not one of doom. The discussions, as he characterizes them, were ‘solution oriented’ based on the reporting of Jörg Kleinert in the Peiner Nachrichten. The overall take home message seemed to be that Mr. Loo Hooi Keat was intent on maintaining the factory location in Vöhrum.
The developments sound positive thus far though solutions are still yet to be fully developed and implemented. The parties walked away with a list of action items that need follow up and another meeting was tentatively set up for some time in October. Mr. Heil, in his statements, stressed that Mr. Loo Hooi Keat needed to make some serious decisions about investment in the plant. It seems there was some suggestion that state and federal government support could assist with that endeavor, but only after clear agreements are reached beforehand. For his part, Mr. Loo Hooi Keat appeared to decry the ongoing burdens of the pension fund which currently sets the company back by about three million euros ($3,565,050) annually. Ten years ago, the fund consisted of approximately 2,000 employees at a cost of six million euros ($7,130,100) annually, so the burden has lessened over time but is still not insignificant. Mr. Heil did rightly emphasize that the social obligation that the company owed to past employees could not be avoided. To conclude the day, Mr. Heil and party were afforded a factory tour.
Pelikan’s production facility in Peine-Vöhrum
I was hopeful that when Pelikan International sold their logistics center to free up capital, that some of the funds generated would find their way to the Vöhrum factory instead of shareholder’s pockets. Based on the available reporting, I’m not so sure that has been the case thus far. Still, it’s encouraging to hear the measured though seemingly optimistic tone coming out of the recent meeting. Works council chairman Walter Dettmer was quoted afterwards as saying, “The workforce hopes that with political support and the prospect of state aid, clarity for the future can be created.” I’m sure that we are all hopeful that such support might spur the company to take the appropriate steps necessary to shore up the factory and preserve the brand’s 183 year heritage in Germany. It would appear that the ball is in Mr. Loo Hooi Keat’s court.
In this day and age with the corona virus pandemic, it would appear that Pelikan employees have endured more than their share of misery. Hopefully, there will be feet put forth to these talks and not just verbal sparring.
I think the momentum is currently on the employee’s side. Hopefully the company will do the right thing by them. Perhaps I’m naive but I’m optimistic that this will all work out.
Thanks for keeping us in the loop, Josh. It seems like a delicate and complicated situation that I sincerely hopes works out to the benefit of the marketplace vs shareholders.
Indeed. There seems to be a lot of moving parts and issues that have been festering for a while. I’ll try to keep the updates coming as I learn more.
Thank you for the followup, Joshua. It will be interesting to see how this all plays out.
You’re welcome. Stay tuned as I’m sure there will be more to come, hopefully after that next meeting in October.
Thank you. I hope that the Pelikan factory remains open. I love their pens.
I suspect that it will. I think Pelikan would have a lot to lose with its closure or relocation.
Thank you, Joshua, for keeping us updated on this. Many moving parts here. Germany is a wonderful, yet challenging, environment to do business in. Hoping for a good outcome…
Labor and the cost of doing business is certainly not cheap but the brand cachet is too valuable to move it elsewhere is my suspicion. They will simply have to work with German officials to strike the best balance possible for the company and its employees.
Can anyone enlighten me on how the pension fund in germany works? I only know continuous system, where every employee is paying a certain percentage every month. This is than used by state for current pensions.
By the wording in the article, there seems to be a system, where the company has to pay to previous employess: “…that the social obligation that the company owed to past employees could not be avoided.” How does that work? That seems like a really big burden for any company to the future. Or is it a “benefit” that was negotiated by the union in the past? Or am I completely mistaken and reading it wrong?
I’m by no means an expert but it’s my understanding that past labor contract negotiations yielded a pension plan that served employees under that agreement. Newer employees, would not be included as the benefit was later done away with. Those retirees still living continue to collect benefits. It may even have been something that the current owners inherited when they took over the company in the mid-90s. Regardless, it’s a contractual obligation from which the company has no remedy and must continue to pay until the existing retirees pass on.
Thanks Josh, for keeping us updated on this important story. The ongoing stories of the people and companies that make and sell our pens is a big part of why I am a user and collector.
You’re welcome. I too find these stories fascinating and enjoy bringing them to you.
It sounds like the classic management complaint that the pension plan negotiated by labor in the past is now “too expensive.” We’ve heard this tune before countless times, including cities vs teachers and public safety workers as well as corporate vs labor right here in the USA. (Nabisco workers are hearing that tune right now.)
In this day and age, when most of the public no longer has a pension because such benefits have been gutted, it is often hard to remember that workers gave up things to get those pension benefits, most likely an increase in wages. Management wants you to forget that, and be unsympathetic because these hard earned benefits are better than yours.
All over the world we are seeing large corporations trying very hard to get rid of “legacy” benefits because they cut into their profits compared to the new and improved, and severely discounted benefits hires in later years now receive.
As a supporter of labor, I will be watching to see that the corporation owning Pelikan does right by its employees. If they choose not too, it will be an easy matter for me to choose to stop buying their products. If I want a Pelikan pen I can always buy a vintage one!
You aren’t wrong. This has been a long standing battle between employees and employers of all stripes. I think it is important to remember that these benefits were at one time agreed to by both parties and need to be honored because of that. As you point out, workers often sacrificed to secure these benefits. I don’t believe Germany would allow Pelikan to get out of the arrangement even if they wanted too, no matter how burdensome the cost.
My heart sank when I read that the CEO decried the burden of the pension fund. He will have prepared for his retirement and that pension fund is part and parcel of the workers renumeration.
Pellikan is not just another manufacturing unit either. It carries a long history of German endeavour and excellence. Pelikan is part of the German cultural tapestry.
Thank you for keeping me up to date.
It seems that this is a common refrain amongst companies today. I think that even though the company is held by a Malaysian firm, the way that Pelikan is weaved into German culture is not lost on them. I fully expect the company to continue to meet its obligations to employees. They may not be happy about it but I don’t think the government would allow for anything less.
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