WRITTEN QUESTION P-1805/99

by Ilda Figueiredo (GUE/NGL) to the Commission

(1 October 1999)

Subject: Threat of job losses at Siemens Group factories in Portugal

The Siemens Group is threatening a major cut-back in production and employment at its factories in Portugal and is preparing to transfer part of its operations to other countries.

For example, at Indelma (Indústrias Electrodomésticas SA), which is based in Casal do Marco (Seixal district), the company's governing body has already announced that all production of cables for Renault cars will be transferred to Lithuania, with the loss of 700 jobs.

According to trade union sources, Siemens has ended telecommunications equipment production at its factory in Corroios and has switched orders to Germany, with the consequent loss of 80 jobs.

A similar state of affairs is in evidence at the company's factories in Evora and Sabugo (Sintra district).

The fact of the matter is that the companies within the Siemens Group, including Indelma, are profitable and have in the past received over one billion escudos' worth of aid and subsidies from various sources, including Community funds.

Would the Commission answer the following questions:

1. Were the Siemens Group companies in Portugal granted Community funds? If so, what amounts were involved and under which programmes were they made available?

2. If Siemens continues to relocate its operations outside Portugal (thereby causing job losses), will it be required to return the Community funds it has received?

3. What other action does the Commission intend to take in response to this state of affairs?

Answer given by Mr Barnier on behalf of the Commission

(28 October 1999)

Firms belonging to the Siemens group in Portugal have received payments from the structural funds of 43 million up until 4 October 1999 for projects approved in the course of the present Community support framework 1994-1999 in the industry programme PEDIP II. These payments are based on commitments

of 77 million; the final amount for payments will only be known when all projects have been concluded. The commitments correspond to investments of 559 million. The grants are made in conformity with contracts concluded between the investor and the Portuguese authorities. The European regional development fund (ERDF) and European social fund (ESF) pay 75 % of the public expenditure financing the aid schemes providing the grants.

According to the Portuguese authorities, they have no knowledge at this stage of any collective redundancies or relocations linked to the projects carried out by Siemens.

If an enterprise were not to respect the terms of a grant contract concluded with the Portuguese authorities, it would be for these latter to take the legal action referred to in the contract, including, if necessary, measures to ensure a refund of the relevant part of the grant.

In the next programming period, Article 30 of Council Regulation (EC) No 1260 of 21 June 1999 laying down general provisions of the structural funds(1), provides that the Member States shall ensure that an operation retains the contribution from the funds only if that operation does not, within five years of the date of the decision of the national authorities or the managing authority on the contribution of the funds, undergo a substantial modification resulting notably from a cessation or change in location of a productive activity.

In the guidelines issued earlier this year for the next programming period, there is a statement of principle that the structural funds should not be used for the mere relocation of existing activities.

(1) OJ L 161, 26.6.1999.