The struggle between Israel Chemicals (TASE: ICL: NYSE: ICL) management and workers at the company's Bromine Compounds subsidiary is escalating. Management today sent a letter to all the Bromine Compounds workers warning them that if their sanctions, including strikes, continue, and if the company loses customers as a result, the company will suffer material damage that will require increasing the number of layoffs by 57, beyond the list of those already laid off in the company's announced cost cutting plan.
Management writes, "The strike at Bromine Compounds continues. Nevertheless, the company has continued to supply the needs of its customers from the inventory it stores all over the world in order to retain its customers and ensure its future.
"As the strike continues, however, the inventory of product is running out, and it is no longer possible to supply the customers' needs. We are therefore obligated to inform the company's customers that we will be unable to continue supplying them with products in accordance with the existing agreements and undertakings to customers. We began sending formal notification to customers stating our inability to meet our obligations due to a force majeure event last week.
"It took the company years to gain customers and build up trust between it and them. There is no doubt that the notices that the customers will receive will harm this trust and the company's business connections. Concern exists that the company will be unable to resume its sales to these customers. Already now, even before the force majeure letters were issued, customers are abandoning the company, after finding an alternative source of supply.
"The situation is even more serious concerning the products produced exclusively by the company, and there are no other suppliers in the world capable of supplying these materials, These products include ammonium bromide, PBBPA, trinol, dinol, and EDB.
"Customers who bought these exclusive products as raw materials did so after recognizing the quality of our product and the company's reliability in production and supply, and therefore agreed to invest a great deal of money in adapting their production lines to our products.
"If we do not succeed in supply these exclusive products, our customers will be forced to alter the composition of their products and their production lines, so that they will be able to use other raw materials. If they do this, they will not go back to using our materials.
"If this risk materializes, the facilities producing ammonium bromide (Facility 610), trinol and dinol (Facility 640 and Spectrum) and PBBPA (Facility 930) will longer be used even after the strike is over, and will be closed. As a result, 57 more workers will be added to the list of workers laid off from the company, beyond the cost cutting plan already published.
"These facts were presented to the workers committee and the Histadrut (General Federation of Labor in Israel) during the negotiations that took place before the holiday, when it was known that the negotiations would continue. In order to make it possible to save the product, and consequently the facilities and the additional workers, the workers committee was asked to help to remove the inventory on the factory premises in order to delay the halt in supply by several weeks. The workers committee refused the request, cynically proposing that it would be better for the company to bring forward the sending of the force majeure letters to its customers.
"Company management took a big step towards the workers committee, and was willing to cut in half the number of layoffs, which required, as part of a package of mutual compromises designed to solve the first disputed question, but the workers committee rejected the proposal out of hand, in effect sacrificing all the Bromine Compounds workers on the altar of its declaration that 'no workers will be laid off.'
"We call on the workers committee to sober up and take the good of the hundreds of workers it represents into consideration, agree to removal of inventory for special customers in order to avoid burning their bridges, and agree to management's far-reaching proposal, while discussing the other issues on the agenda."
Published by Globes [online], Israel business news - www.globes-online.com - on April 5, 2015
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