February 2, 2016
By Mark Terry, BioSpace.com Breaking News Staff
Paris-based Sanofi executives met yesterday with French union representative to discuss the company’s restructuring plans and job cuts. Apparently more than 500 jobs will be cut in France.
According to Thierry Bodin, a Sanofi union representative, in an interview with BloombergBusiness, there were 296 research and development jobs that were expected to be filled in France, and they have been eliminated. Another 100 corporate jobs will be cut, and 155 jobs in Sanofi’s commercial operations.
Talks are still continuing today and through mid-week.
Just last week, Sanofi Genzyme announced that it was expanding its administrative operations in Westborough, Mass. Employees from the Framingham, Mass. location are expected to be relocated to the Westborough center.
The Westborough office houses more than 500 employees. An additional 300 are going to be added, although it’s not clear if they will be transfers from the Framingham operation or new hires.
This is all a part of the company’s new strategy. It plans to expand into new markets and is evaluating whether to spin off its animal health unit, Merial and its European generics business. The plan is to cut $1.63 billion in costs over the next five years.
One reason the talks with French union representatives is so interesting is because of how notoriously difficult it has been in the past for Sanofi and other French companies to get concessions from the unions.
Of Sanofi’s 110,000 employees worldwide, about 27,000 are in France. In October, Olivier Brandicourt, Sanofi’s chief executive officer, expressed concern over the cost of industrial sites and their effects on the company’s gross profit margin. He pushed for French union workers to put in longer hours, cut the number of vacation days and rearrange duties.
At the time, Patrick Rojo, a leader at CGT union, said, “They say there is a competitiveness problem, but they haven’t demonstrated it to us,” it was reported by AFP.
Brandicourt’s predecessor, Chris Viehbacher, who was ousted by the Sanofi board in late 2014, clashed with French union officials, which expanded to battles with France’s former Minister of Industrial Renewal, Arnaud Montebourg. Although Viehbacher and the Sanofi board had other issues, unions and job cuts were significant problems.
When Viehbacher tried to cut about 2,500 French jobs, a decrease in about five to seven percent of the company’s workforce, they were met by union strikes and public protests. Eventually Viehbacher slashed about 900 jobs in a process that lasted for months.
France’s unions have a lot of influence, although it’s not based on their numbers. In France, according to The Economist, less than eight percent of employees are union members, lower than the 30 percent rate in the 1950s. “French union strength today is the statutory powers they enjoy as joint managers, along with business representatives, of the country’s health and social-security system, and as employee representatives in the workplace,” wrote The Economist. “Under French law, elected union delegates represent all employees, union members or not, in firms with over 50 staff on both works councils and separate health-and-safety councils.”
The upshot is that company chiefs are required to consult with union representatives on a broad variety of managerial decisions.
What makes Sanofi’s desire to eke more productivity from its workers is that, according to Bloomberg, Sanofi ranks nine out of ten on sales per employee in the ten biggest pharma companies. AbbVie ranks number one, with nearly $800 million in sales per 1,000 employees, followed by Pfizer with approximately $640 million per 1,000 employees.
Sanofi, however, reports about $400 million per 1,000 employees, below Novartis , with about $425 million per 1,000, and above GlaxoSmithKline , which reports about $375 million per 1,000 employees.
These figures are one way of tracking a company’s efficiency. However, that may not be persuasive to French unions, which are likely to respond by pointing out that Sanofi’s estimated profit for 2015 is expected to be about $7.63 billion.
Some analysts expect that Sanofi will then respond by making more job cuts in the U.S. and other countries.
