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Debatte, Volume 5, No. 2,1997 • 203

CARL ZEISS JENA GMBH

Employee representation in

turbulent times

CLIVE EDWARDS

The celebratory mood that permeated the 150th anni-versary of Carl Zeiss, held in Jena (its birthplace) in November 1996, wasin marked contrast to the scenes which were played out there two yearsearlier. These celebrations marked, therefore, not only 150 years of thefirm's existence, but the status Jena has been recognized in the firm'sactivities, following the end of a turbulent period in the firm's history.

The representation of employee interests in the newfederal states has been dominated by one task, that is to cushion the effectsof one wave of job losses after the other. They have little power to holdback those waves and can only try to provide some hope and solace throughachieving adequate compensation and offering some prospect of findingwork later. In the case of Carl Zeiss Jena, many Works Councillors feel thatthe sum of the whole new Carl Zeiss should have at least been equal to thesum of its parts. Employees there had particularly high hopes of beingspared the uncertainty of those in firms acquired by either western Germanor foreign investors eager to pick out the most profitable sections. The lossof job for a proud, long-serving employee of Carl Zeiss was a particularlyhard blow and an unexpected one: "I never thought in this whole businessthat the west German company Zeiss turned up to lay us flat I thought thatfor the sake of tradition they're glad to have Jena." (Works Councillor)

This article traces developments which led to the dis-pute in the autumn of 1994 and the events which shaped the context ofemployee representation in the former People's Own Company (VEB) and

0965-156X/97/02203-17 © Carfax Publishing Ltd

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examines the role the Works Council seeks to, or is able to play in a periodof massive job-cuts. It also considers the legal framework within which theWorks Council has to function and the links in employee representationbetween Carl Zeiss Jena and Carl Zeiss Oberkochen in the context of amajor re-structuring programme affecting the whole company.

The future of Carl Zeiss Jena in the wake of unificationwas not only a matter for those bodies associated with industrial relations- management, Works Councils and trade unions - but also a politicalmatter, involving particularly the state governments of Thuringia andBaden Württemberg and even the government in Bonn. Much politicalpressure was undoubtedly brought to bear on decision-making at Carl Zeissand should be taken into account in a discussion of the turbulent periodunder consideration. For reasons of space, however, the question of Zeissas a political issue will have to be treated elsewhere.

Research was carried out by means of open-endedinterviews and documentary material at Zeiss locations in Jena and Oberk-ochen in the period autumn 1995 to autumn 1996.1 should like to thankall those representatives of management, Works Councillors and tradeunion officials who agreed to be interviewed and who gave so generouslyof their time and showed so much patience in answering my manyquestions.1

HISTORICAL BACKGROUND2

On the 17th November 1846 Carl Zeiss opened hisworkshop in Jena (having being unable to do so in neighbouring Weimar),a town whose university would become closely associated with his name.Carl Zeiss himself was an exacting, indeed pedantic task-master and set hisemployees high standards of workmanship. However, it was not until hispartnership with the Jena physicist and founder of the Carl Zeiss Founda-tion, Ernst Abbe, and with Otto Schott, a chemist specialising in high qualityoptical lenses, was established that the firm Carl Zeiss began to achieve aworld-wide status.

Like so much else in Germany after 1945, the firm facedan uncertain future. The Americans were the first to arrive in Jena andquickly set about preventing the scientific expertise ("the brain") at CarlZeiss falling into Soviet hands. Key personnel and data were transported

1 These visits were supported by a Small Personal ResearchGrant from the British Academy

2 Space permits only a brief outline of key events. For furtherreading see: Hermann, Armin, Carl Zeiss - Die abenteuerliche Geschichte einerdeutschen Firma, Munich 1995; Landeszentrale für politische Bildung Baden-Württemberg, Carl Zeiss - von Jena nach Oberkochen and Carl Zeiss — GeteiltesDeutschland, both 1986

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Carl Zeiss Jena GmbH • 205

unceremoniously on 14 army lorries to the Swabian village of Oberkochen,about 40 miles east of Stuttgart, where a new Carl Zeiss began to develop,initially under the name of Zeiss-Opton, and owned entirely by the ZeissFoundation. Meanwhile in Jena, where the Soviets had become the occu-pying power, large parts of the plant and machinery of Carl Zeiss weretransported to the Soviet Union. What remained was allowed to developinto the Kombinat VEB Carl Zeiss, a rival to its estranged blood relative inthe West. Years of wrangling followed concerning logo and marketingshares, which continued until the London Agreement of 1971 in which asettlement was reached concerning the countries in which new and oldlogo and trademarks would be used.

In 1990, following the unification of Germany, CarlZeiss at Jena faced an uncertain future for the second time. Not only wereJena's product lines practically identical with those of Oberkochen, butJena's own marketing share in the former Soviet Union and eastern Europequickly collapsed. Despite the (in retrospect) naively optimistic view that"1 + 1 would make 3" in terms of synergetic effect, a question mark beganto grow over Carl Zeiss at Jena and indeed over the VEB as a whole.

As a consequence of the economic policy in the GDRof creating huge conglomerates, each of which was an economic entity inits own right and thus having a significant role in achieving overallproduction targets, the VEB Carl Zeiss Jena became the flagship of GDRprecision technology with, from the late 70s, defence systems, spacetechnology and micro-electronics becoming increasingly important areasof activity, in addition to the traditional areas of microscope systems,surveying instruments and astronomical telescopes. The total workforcegrew to over 60,000 spread over 25 plants, located mainly in Thuringiaand Saxony. Thirteen of these, with a total workforce of 30,000, wereconstituent parts of the Combine VEB Carl Zeiss Jena and twelve, althoughthrough their activity affiliated to the combine, remained undertakings intheir own right. This inflated workforce was, in the wake of unification, anearly victim of the policy aimed at breaking up such conglomerates. The12 independent undertakings were converted into limited liability or jointstock companies (GmbHs or AGs) which, with a total workforce of 30,000between them, took their own independent course to privatization. As notall of these were successful, job losses followed. Approximately 30,000employees of the former combine remained the responsibility of the VEBCarl Zeiss Jena which, together with Carl Zeiss Oberkochen, VEB JenaerGlaswerk and Schott Glaswerke (Mainz) signed, at Biebelried in May 1990,a declaration of intent to merge under a single Carl Zeiss Foundation aftera period of transition. In June 1990, the two VEBs were converted intoGmbHs under the ownership of the Treuhand. In September 1990 it wasagreed that VEB Carl Zeiss should be re-named Jenoptik Carl Zeiss Jena

3 Dr Horst Skoludek, chair of the Executive Board at Carl Zeiss,Oberkochen, Zeiss im Bild 1990, p.6

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206 • Clive Edwards

GmbH, which in the following November signed a further agreement withCarl Zeiss (west) "to utilize all opportunities for co-operation". A majorstep in this direction was made in June 1991 when Carl Zeiss (west)acquired from the Treuhand a 51% controlling share in Jenoptik Carl Zeiss;the remaining share was to be held by the state of Thuringia. This BasicAgreement paved the way for the creation, on the basis of an initial sum of587 million DM from the Treuhand, of a separate undertaking, namelyCarl Zeiss Jena GmbH which would be responsible, with a workforce ofabout 3,000, for the traditional "core business" areas (including surveyinginstruments and industrial metrology). It was to be owned jointly by CarlZeiss, Oberkochen (51% of shares), and by Jenoptik (49%), which, with aworkforce of 7,000, would retain responsibility for non-core business areasof the former Jenoptik Carl Zeiss Jena GmbH, for example defencesystems, space technology and microelectronics.

CARL ZEISS AND CARL ZEISS JENA GMBH:BOARD STRUCTURE AND EMPLOYEEREPRESENTATION5

Carl Zeiss as a company within the Carl Zeiss Founda-tion is subject to the Foundation Statutes which were drawn up by ErnstAbbe in 1889. The Foundation is responsible for representing the companyas a legal entity and for the administration of its assets and for thesafeguarding of the Statutes' principles. The day-to-day running of Zeissoperations is the responsibility of an Executive Management Board (Vor-stand) which is answerable to the Foundation through a FoundationDeputy who also is the chairperson of the Company Board (Un-temehmensrat). This Board supervises the Executive Management Board'srunning of operations with particular regard to the economic state of thoseoperations and the social interests of all staff involved in them. TheCompany Board is made up of twelve members: six internal and sixexternal, the latter by virtue their appropriate expertise. Among the sixinternal members are two Works Council representatives. According toSection 64 of the Statutes, elected worker representatives have the right tobe consulted by management on all matters relating to the operation inwhich they have been elected. In a later comment on this Section, Abbeemphasized that this right applies even if the management does not seekthe opinion of the workers' committee; furthermore, management should,"out of decency" reply giving reasons.6; in practice, the rights of these

4 Reprinted in Zeiss im Bild (Extrablatt), September 19905 See also: Oakeshott, Robert and Schmid, Felix, The Carl Zeiss

Stiftung, Its First Hundred Years of Trust Ownership, London 19906. Abbe, Ernst "Über die Aufgaben des Arbeiterausschusses", in:

Abbe, Ernst, Vorträge, Reden und Schriften sozialpolitischen und verwandten Inhalts,

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Carl Zeiss Jena GmbH • 207

Works Councils at workplace-level are those rights determined by theWorks Constitution Act (Betriebsverfassungsgesetz [BVG]). There is noofficial trade union representation on the Company Board unless suchrepresentation is co-opted at the discretion of the chairperson.

Carl Zêiss Jena GmbH, still running at a loss, continuesas a non-Foundation operation and as such subject to the managementboard structure as defined by the Law on Co-determination of 1976, asignificant feature of which is that half the Supervisory Board (akin infunction to the Unternehmensrat) is made up of employee representatives,including trade union representation. The chairperson of the ExecutiveBoard at Oberkochen is also a member of the three person senior manage-ment team at Jena.

EMPLOYEE REPRESENTATION AT JENA

The transition period between unification and themonths following the creation of Carl Zeiss Jena GmbH brought for theworkforce not only the threat of loss of job, but also loss of status foremployees of this firm. Prior to unification, Carl Zeiss, although havingbeen converted to a VEB in 1948, had had a particular prestige in the GDR,having being allowed to retain something of its character as a Foundationoperation in so far as workers there benefited from special pension rightsand social advantages in line with the Statutes laid down by Ernst Abbe.Although the body representing the workforce at the workplace was inessence controlled by the party and concerned mainly with social matterssuch as the provision ofcreche facilities, maternity benefits and holidayaccommodation, its chairperson, together with the local party secretary,had close contact with management and could ensure that employees werepaid wages commensurate with the firm's special status.

The chairperson of the interim worker representativebody, which was constituted in 1990 and which consisted entirely ofmembers elected for the first time, pointed out (and confirmed by a seniormanager) that he and his colleagues had been able to exercise considerableinfluence in determining who of the old management should go and whoshould stay and also in establishing permanent employee representation inthe new company. Many former VEB employees continued in managementpositions, but were unfamiliar with the new legal requirements and thushad to be enlightened in this respect by worker representatives, whetherinternally elected or trade union officials. Since then, however, the tradeunion role internally has been considerably curtailed, in line with therequirements of the Works Constitution Act, and Works Councils have

Hildesheim/Zürich/New York 19897 Letter from the central office of the SED in Thuringia to the

First Secretary of the Jena Branch of the SED, 16.7.1951; Zeiss archive in Jena

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208 • Clive Edwards

come to recognize the limits to their influence, all the more so as WestGermans, who were familiar with the legislation, began to take overmanagement posts. These constraints have made unpleasant compromisesall the more necessary, as, for example, with the introduction of a hardshipclause regarding wage increases.8 Indeed, the task of explaining to theworkforce the legal restrictions to which the Works Council was subject,in a situation where the future of Carl Zeiss at Jena was increasinglyperceived to be at risk, was a particularly difficult one. Long-standing Zeissemployees in Jena had to come to terms with the fact that they were nolonger an elite workforce at Carl Zeiss, but employees at a Carl Zeisslocation and possibly quite dispensable in the harsh reality of the marketeconomy. Yet despite these limitations, imposed by the overriding commit-ment to saving the Jena location, the Works Council quickly became, as isargued below, a body able to articulate the anxieties of the workforce and,together with the trade union, to mobilize opinion and action againstjob-cuts and above all to increase management accountability.

CARL ZEISS JENA GMBH: THE 1993-1995DISPUTES OVER JOB LOSSES

The first annual report (1991-92) of the newly createdCarl Zeiss Jena showed, according to Hermann Franz, Commissioner ofthe Carl Zeiss Foundation "very few positive trends".9 The companylocation at Jena had fallen far short of its turnover target of 200 millionDM, achieving only 101 million DM with two-thirds of the approximate3,000 workforce on short-time. The great hopes which had been placed inthe eastern European markets quickly evaporated, and in the west CarlZeiss was having a hard struggle to maintain its market share against fareastern competition. Job losses were again on the agenda. Although thedecision on job cuts was postponed to the autumn of 1993, further darkclouds were beginning to gather. It was estimated that the turnover therewas on course to increase by 40% by the end of the financial year,September 1993, as against a targeted increase of 70%. In fact turnovercame to 151 million DM with losses amounting to 100 million DM. A totalof 850 jobs were now threatened at Jena.

A respite from the waves of job losses at Carl Zeiss Jenacame early in January 1994 with an agreement between the state govern-

8 The application of this clause (Härtefallregelung), introducedinitially in the new federal states, allows a firm to award wage increases below the ratenegotiated with the trade union if the economic situation of the firm justifies such ameasure. Although Carl Zeiss, by virtue of its Statutes, is not a member of an employers'association, it acknowledges the regional settlement (Anerkennungstarif) negotiated bythe Metal Workers' Union, IG Metall with the employers' federation, Gesamtmetall.

9 Ostthüringer Zeitung, 13 December 1992; Blick in die Wirt-schaft 13 December 1992

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Carl Zeiss Jena GmbH • 209

ment of Thuringia and Carl Zeiss Oberkochen concerning the financing ofmeasures which would decrease the number of job losses for operationalreasons ("betriebsbedingt") to 300. Loss of employment in this categorywas to be compensated by a sum calculated on die basis of final wage, ageand length of service. Additional payments would be made for dependentchildren, single parents, one-person households and disability. These dis-missals were to be spread over six months, that is between the end ofFebruary and end of August 1994. A further 350 employees would be puton short-time contracts for up to two years, doing such work as deemedappropriate. During this time they would be given preferential considera-tion for any job vacancies (the so-called "Warteschleife"). The remainingjob losses were to be absorbed through work-sharing and outsourcing. Nofurther losses should occur before the end of 1995.

Although the Works Council felt that it had made "adecisive contribution to Carl Zeiss at Jena" (thereby fulfilling one of its keyconstitutional commitments) the threat of job losses there was to remain.In an interview in October 1994, following the end of the financial year inSeptember, Hermann Franz (the Foundation Deputy), using an imagewhich has since entered the history of Carl Zeiss, compared the companyto a car heading for a concrete wall at a speed of 100 kilometres an hour.10

A crash (i.e. total bankruptcy) was inevitable unless a firm control was takenof the steering-wheel. Over the first three financial years after unificationthe shortfall in turnover in Jena had, by September 1994, amounted to 260million DM. Total company losses were running at 180 million DM, 140million of which were incurred in Jena. Corrective measures introducedhitherto such as job-cuts and increased short-time were proving insufficientin solving the basic problem, which in management's view lay primarily inwage and salary costs and the increases in these which, although acknow-ledged to be politically justified, were quite out of line with the company'sfinancial situation. The Treuhand funds which had so far cushioned thelosses incurred at Jena were running out and would last only another sixmonths. A further adjustment of personnel to the company's businessrequirements and the optimal use of personnel were therefore high onmanagement's agenda. As early as March 1994 the Boston ConsultingGroup had been commissioned to present proposals for saving the companyfrom, in management's mind at least, a seemingly inevitable disaster. Thereport formed the basis of the restructuring plan ("Sanierungskonzept")presented by the Executive Board in October 1994.

The most controversial proposal to come out of thisreport was to reduce the overall workforce world-wide by about3,000 overtwo years. Most of the job losses would occur at the locations in Baden-Württemberg, namely in Oberkochen, Aalen, Nattheim and Bopfingen(total: 1,300 out of 6,600) and in Jena (total: 650 out of 2,500, to bereduced by previous agreement to 2,050 by end of 1994) which now faced

10 Hermann Franz, Welt am Sonntag, 28 October 1994

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210 • Clive Edwards

losing, within the last two financial years, half the workforce strength laiddown in the Basic Agreement of June 1991. Detailed information was notmade available by the Executive Board on this and other proposals, whichincluded: concentration on successful business areas (consumer optics,medical technology and semi-conductor optics) and withdrawal from lessprofitable areas; improving the production efficiency at the various loca-tions with transfer of some production areas to Hungary, e.g. binoculars;the current situation, which had developed historically and whereby pro-duction was spread over so many locations, was no longer in keeping withpresent needs - in future no more than two locations should be responsiblefor any one product line.11 There were no plans for the closure of any ofthe Zeiss locations, but a policy which was designed not to hurt too manytoo much meant that all the Zeiss locations faced a time of unrest anduncertainty.

As the issue in this dispute affected all the Zeiss loca-tions, actual discussions with the Zeiss Executive Board took place initiallynot through the individual Works Councils, but through the CompanyWorks Council (Konzernbetriebsrat [KBR]) on which each of the locationswas represented, in Jena's case by chair and vice-chair of the local WorksCouncil. In early December an agreement (Konsensvereinbarung) wasstruck between the KBR and the Zeiss Executive Board in an attempt toadvance the discussion towards an agreed solution in a less public mannerand to prevent the east-west aspects of the dispute dominating all else. Adeadline was set for the completion of the informative phase, namely bythe end of January 1995, and for the beginning of negotiations on recon-ciliation of interests and a social compensation (Interessenausgleich andSozialpläne, (see BVG., Para. 112 and 112a) (from mid-February to end ofMarch 1995). It was also agreed that the KBR should be allowed (a requestpreviously denied) to call in an advisory body (IMU) which would be givenaccess to all relevant data on which to base its own independent report.

A key date in this timetable was for Jena the 16 Februarywhen the supervisory board was due to meet in order to pass or reject thenegotiated plan for the location. The Works Council had two choices: toreject the restructuring plan and fight on (to what might have been a bitterend) or to accept the plan and negotiate acceptable terms. Rejection of theplan, in the hope that the Jena operations would survive, would have meant,as Hermann Franz bluntly put it, that the supervisory board would have topass at the same time a resolution regarding the future financing of thelocation. There would be no money from Oberkochen and the chances ofobtaining credit practically nil. According to the chairperson of theWorks Council, he and his colleagues had to bear in mind the worst possibleoutcome for Jena: bankruptcy. There were, therefore, prior to the meeting

11 Zeiss im Bild, 21 October 1994; Aalener Volkszeitung 22October 1994

12 Wrtsckaftsivoche, No.8 16 February 1995

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Carl Zeiss Jena GmbH • 211

of the supervisory board, long and tough negotiations, but it was onlyduring the meeting of the board itself that the agreement of the WorksCouncil, following an impromptu meeting called during a break in theboard meeting, was secured, and that, according to the chairperson of theWorks Council, by just "a narrow margin".

The revised restructuring plan as presented to the su-pervisory board by the newly appointed, and current chairperson to theExecutive Board, contained, in the view of the Works Council, a numberof improvements on the original plan presented the previous October,namely further strengthening of Jena as a key location in the Zeiss Group,being responsible for, besides microscopy, medical systems, ophthalmologyand for surveying instruments; in fact, Jena was to be eventually responsiblefor generating a quarter of future turn-over and, significantly, a key centrefor research and development within the Group. This latter concession washard fought for by the Jena Works Council which saw in it the re-estab-lishment of the historical links between the firm and the university. Theacceptance of this plan would mean, however, the eventual loss of 650 jobs,an issue which clearly divided the Works Council and made the decisionto accept these proposals such a soul-searching one.

Jena's gain, particularly in the field of microscopy, wasOberkochen's loss, which was suffered not without a hard fight. The newcompany structure, known as the "5-Column-Model", was unveiled for-mally by the chairperson of the Executive Board at a works assembly inOberkochen on 20 February. The company's main activities were now tobe structured within five areas: proprietary products (optics, binoculars),medical technology, microscopy, optical-electronic systems and industrialmeasuring systems, with a clear division of responsibility amongst thevarious locations for a product line. Whereas Oberkochen remains thenumber one location, Jena's status has been raised to number two. Thisrevised plan was accepted also by the Company Board for the Foundationlocations on 6 March. The way was now prepared for discussions onreconciliation of interests and a social compensation plan and thus for thecompletion of the negotiations by the deadline agreed in the ConsensusAgreement of December.

The agreement reached between the management andWorks Council at Jena provided a framework of measures designed toreduce the number of compulsory redundancies tó a minimum and repre-sented what the Works Council considered achievable ("das Machbare")under the circumstances. Of the 650 redundancies envisaged, 250 wereabsorbed by an employment and requalification company financed by thestate of Thuringia (which, however, refused to provide funds for offsettingfurther losses at Jena). A further 250 employees accepted early retirement(100 more than originally agreed) and 100 found jobs through outsourcing.The remaining 50, made redundant "for operational reasons", receivedpayment on terms agreed as part of the compensation plan. These redun-

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dancies, however, would not be declared until April 1996 and not becomeeffective before the end of that year.

DECISION-MAKING IN OBERKOCHEN: JENAAS OUTPOST

The desperate situation that developed in Jena up to theautumn of 1994 was in part due to events beyond the control of Carl Zeiss,but also in part to the excess of optimism concerning the synergetic effectof allowing the Zeiss operations in Jena to run parallel to those in the west.The equation "1 + 1 = 3" was also no doubt a means of "selling" thedecision to acquire a controlling share in Carl Zeiss Jena in the face ofconsiderable scepticism, but it was a contributory factor to management'sfailure from the start to grapple with the problem of a division of respon-sibility and thereby to give Jena a more clearly identifiable role as a location.As optimism began to fade, the hope of "scraping through" {"die Kurve zukriegen'"), as one senior manager admitted, prevailed and fuelled thesuspicion amongst so many employee representatives in Jena that theintention in Oberkochen was to let Zeiss at Jena drift into insignificance.Jena's lack of competitiveness had been an issue, it was argued by the WorksCouncil, which had not been seriously addressed by management inOberkochen. The policy of allowing Jena to function as "an extendedworkbench" of Oberkochen with an overlapping of production at thesetwo locations had only exacerbated the problem. In addition, questionswere raised regarding the way the way much Treuhand money had beenspent on buildings at the expense of promoting new product lines withgenuine marketable prospects. Such suspicions were further kindled notonly by the continuous flow of job losses, but also by the fact that, untilrecently, the senior management teams were composed entirely of westGermans, only one of whom remained in post until last year. Theseappointments, made on the grounds that such managers, particularly in thearea of marketing, had greater expertise than east German counterparts,often meant, it was admitted in interviews, there was a lack of appreciationof "the mentality of the people in this region" at that critical time. It alsoadded to the feeling that all the decisions were being taken in Oberkochenand then transmitted to Jena by western "agents".

The re-structuring programme presented in October1995 on the basis of the BCG study was a belated attempt to get a firmer"control of the wheel", but very much in the spirit of the Statutes as drawnup by Ernst Abbe which give, at least according to the order they appear inSection One, priority to securing the financial state {"die wirtschaftlicheSicherung") of the company over fulfilling larger social commitments {"dieErfüllung größerer sozialer Pflichten").13 The appeal from Oberkochen to

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Carl Zeiss Jena GmbH • 213

the workforce, management and worker representatives in Jena to playtheir part in safeguarding the rightful place of that location within theCompany by making good the lack of efficiency and productivity stillevident there must have sounded very bland to the Works Council which,faced with the prospect of seeing the workforce at Jena being reduced toat least half the number of employees "guaranteed" jobs to December 1995three years earlier, saw itself being drawn more and more into a manage-ment role. '

THE LEGAL FRAMEWORK FOR ACTION

It became quite evident from interviews that WorksCouncillors in Jena were very familiar with the legislation relating to theiractivities, notably the BVG. This Act of 1972, however, fell short of theoriginal draft of the then Minister of Labour and Social Affairs in Brandt'sgovernment, Walter Arendt (SPD), and gives in its present form onlylimited rights of participation in economic matters, and even then manypassages are open to interpretation and consequently the cause of legaldisputes. It was an on-going criticism by all the Works Councils that, intheir interpretation of the BVG, management had fallen far short of itscommitment to their right to be, either directly or through the economiccommittee (Wirtschaftsausschuß), informed "thoroughly" {"umfassend")and in good time ("rechtzeitig") on economic issues relating to the com-pany in so far as such information does "not jeopardize company andbusiness secrets". It was this proviso which Hermann Franz, the Deputy tothe Foundation, invoked when questioned in October 1994 why the reportof the Boston Consulting Group had not been passed earlier to staffrepresentatives: "If competitors get hold of such detailed figures, they arein a position to adapt their strategies accordingly. That would furtherweaken Zeiss."14 The first opportunity the Works Councils had of seeingthe study by the Boston Consulting Group was when they were given copieson 26 October, however "not to keep".

The dispute concerning legal rights continued with therefusal of the Executive Board to allow the Works Council to commissionan alternative proposal to that of the Boston Consulting Group in accord-ance with Para. 80, Section 3 (BVG). This led to a threat from the KBR oflegal proceedings which added to the unfortunate situation in whichmanagement and Works Councils were communicating with each otherthrough their legal representatives. There was no movement on this issueuntil the new chairperson of the Executive Board had been appointed.

13 Zeiss im Bild, 21.10.199414 Hermann Franz, Welt am Sonntag, 28 October 199415 Frankfurter Allgemeine Zeitung, 26 October 1994

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214 • Clive Edwards

The IMU report was an important factor in movingthings forward, even though at its submission on the 30 January each sidein the dispute sought to present it to its own advantage. The reportconfirmed, in management's view, that its planned course of action was inlarge measure correct: Zeiss was a "Sanierungsfall". Fuller comment wasgiven by the chairperson of the KBR who quoted the following extract ata press conference: "There is a great need for action to get the companyon its feet. The plan presented by the management board does not do justiceto this need. The plans as they stand lack detail and are incomplete. Theydo not present a viable way forward for the individual locations, but insteadare confined to a policy of laying-off employees." Management criticizedthe KBR for going public in its comments on the report, thus jeopardising,as management saw it, both the spirit of trust essential to the negotiationsahead and the firm's competitiveness.17

ROLE OF SUPERVISORY BOARD IN JENA

Although Jena's future is ultimately dependent on deci-sions taken by the Company Board in Oberkochen regarding the flow ofmoney to Jena and the general development of business sectors within thecompany, employee representatives (Works Councils and trade unions)have through the supervisory board an important channel of influence onissues within the location and of modifying company policy in the bestinterests of Jena. This was particularly apparent at the meeting on 16February 1995 where employee representatives, supported by repre-sentatives of the state government and Jenoptik, could achieve a numberof concessions from the Executive Board, for example the postponementfor one year of all compulsory redundancies and the appointment of thirtyyoung scientific personnel to be responsible for research and development.As, however, the total workforce at Jena is to fall below the requisitenumber of employees necessary for the application of the 1976 law onco-determination, it is likely that employee representatives will only haveone third representation on the supervisory board instead of the current50% representation.

16 Schwäbische Post, 2 February 199517 Zeiss im Bild, 3 February 1995

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Carl Zeiss Jena GmbH »215

EMPLOYEE REPRESENTATION THROUGHTHE COMPANY WORKS COUNCIL(KONZERNBETRIEBSRAT)

The 1994-95 dispute showed the problematic role theKBR had taken upon itself in seeking to establish an agreement for all theZeiss locations. This particular body is, according to Section 58 of the BVG,responsible for dealing with issues affecting the company as a whole whichWorks Councils at plant level are unable to settle. The law, however, doesnot set the KBR above the plant-level Works Council, which implies thatthe latter retains its freedom of decision regarding the implementation ofany settlement reached by the KBR. The ability of the KBR to negotiate asettlement applicable to the whole company must remain, therefore, ratherrestricted. Given the extent of the restructuring measures and the fact thatat issue was, as described by one member of the management team, "amanagement of shortages" (i.e. in orders and jobs), it was inevitable thatquite considerable tensions should build up within the KBR itself whichproved difficult to control, and which therefore made a consensus basedon the legitimate wishes of all locations difficult to achieve. Even aframework agreement on a reconciliation of interests which would applyto all locations proved impossible.

The issue which finally brought negotiations betweenthe KBR and management to an end, however, concerned the legal statusof the reconciliation of interests, that is the agreement to be reachedbetween the negotiating parties on when and how the structural changesare to carried out. Whereas a social compensation plan is legally enforce-able, a reconciliation of interests is not. The KBR attempted to remove thisdistinction by seeking to negotiate the reconciliation of interests and socialcompensation plan as one since, as its legal advisor argued, the former "isinconceiveable without financial safeguards".18 In addition, the KBR at-tempted to strengthen the future position of the Works Council in theimplementation of the proposed changes. It argued namely that restructur-ing is a highly complicated process over time on which there could be nofinal settlement in advance of its completion; a continuing participation inthe decision-making process was essential. Although it was conceded ininterviews by members of the KBR that this demand did go beyond theletter of the law, it constituted primarily a negotiating position, but became"over-interpreted" by management as being an attempt, by the trade unionin particular, to blur the clear division there has to be between managementfunctions and the role of employee representatives and also to blur theimportant legal distinction between a reconciliation of interests/socialcompensation plan and a collective agreement Management insisted,

18 Konzernbetriebsratinfo (newsletter of the company workscouncil)

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216 • Clive Edwards

however, that (in the spirit of the BVG) entrepreneurial decision-makingcannot be subject to any form of co-management.

Much of this discussion was, for the Jena delegation inretrospect, something of a "carry on" ("Theater") in which divisions werebeing created instead of bridged. As time was pressing and uncertaintyamong the Jena workforce so great, the Works Council there was the firstto take up the opportunity of negotiating directly with management theterms of a reconciliation of interests and a social compensation plan andthe first to achieve a setdement, even though, in the view of the WorksCouncil in Oberkochen, "risky" since not until some time after the settle-ment had been signed was the financing of the Employment PromotionCompany by the state government of Thuringia made watertight. Such wasthe pressure on the Works Council at Jena to achieve a settlement.

WORKS COUNCIL-TRADE UNION RELATIONS

The particularly noticeable presence of the trade unionin negotiations at Oberkochen has its constitutional basis in the specialresponsibility this branch has been given by the union headquarters inFrankfurt for representing employee interests at Carl Zeiss at companylevel. For this reason a union official sat alongside members of the KBRduring their negotiations with the personnel management (formally byinvitation by the KBR) and later alongside members of the body repre-senting the combined interests of the Foundation locations (Gesamtbe-triebsrat) after the KBR-management talks had been broken off. From thestart of the dispute concerning the restructuring programme, therefore, thetrade union was very much in the front line of negotiations with manage-ment much to the irritation of the latter for whom "the shoulder to shoulderapproach" of (it was emphasized in interviews), some members of the KBRwith the trade union was felt to be quite unnecessary, especially as the firmwas not a member of any employers' association and, by virtue-of itsstatutes, not the place for conflict between capital and labour.

In Jena there is more of a semi-detached relationshipbetween union and Works Council; the Works Council can easily call onthe help of the trade union (advice in negotiations and co-operation inorganising public demonstrations and discussions), but can get annoyed ifthe union becomes too intrusive in matters it considers to be its ownbusiness, for example local bargaining on working time. This relationshipreflects to some extent the more distant relationship between the workforcegenerally and the trade unions in the new federal states20, compared with

19 Zeiss im Bild, 3 February 199520 See also: Oakeshott, Robert and Schmid, Felix, The CarlZeiss

Stiftung, Its First Hundred Years of Trust Ownership, London 1990

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Carl Zeiss Jena GmbH • 217

that in the West. As during the time before unification, so now do workersassociate their interests more with their "in-house" representatives.

Although senior management has likewise expressed anuneasy relationship with the trade union in Oberkochen and a rejection of"Funktionärsdemokratie", Carl Zeiss is seen, despite its special charac-teristics, essentially as an enterprise like any other in terms of its need toincrease competitiveness, a goal which can be best achieved throughacceptance of a duality of roles between management and Works Councils.The fact that the current chairperson of the Executive Board (and also amember of the senior management board at Jena) was not appointedinternally as the Statutes require, but from Siemens, a company which hasundergone major restructuring over the last few years with a consequentimprovement in productivity, is significant in this respect.

CONCLUSION

The years 1990 to 1995 in the history of Carl Zeissreflect the initial hopes, optimism and subsequent rude awakening anddisillusionment that have characterized the unification process as a whole.Although the celebrations marking the firm's 150th anniversary indicateda return to some measure of hope and optimism, a testing time remainsahead, particularly for Jena which has still has some way to go beforemoving out of the shadow of further uncertainty. The awareness that somuch is at stake, together with the debilitating experience of so many joblosses over such a short period of time, has left the workforce there withlittle inclination for further confrontation with management. The difficulttime the Works Council has been through and its struggle to maintain somedegree of credibility as a representative of staff interests has made its courseof action very much one of "steadying the buffs".

Given the magnitude of the changes at Jena since theWorks Council was constituted there and the amount of homework theWorks Council has had to do in order to familiarize itself with new labourlegislation, it has developed relatively quickly into a hardened repre-sentative body, well aware that the Jena corner has been, and continues tobe, a difficult one to defend. Oberkochen, as the flagship of the Zeiss fleet,has overall command and thus the last word on all matters relating topersonnel, research and development and production. The Works Councilfeels neverdieless that, measured against some of the proposals in the reportof the Boston Consulting Group which, it was feared, may have resulted ina much smaller workforce at Jena than at present, much has been achieved.The restructuring process is having a positive effect even though time is inshort supply. The hardship clause on wage increases, although renewed inAugust 1997, will expire end of June 1998. There is some conflict potential,

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218 • Clive Edwards

therefore, if Jena cannot move into the profit zone well before then and sopave the way towards becoming a member of the Foundation on equalterms with other locations and with representation on the Company Board.The awareness the Works Council shares with management at Jena that thelocation has yet to be fully secured at its current workforce level has tendedto draw the two together in pursuance of that goal. The Works Councilwill, therefore, seek co-operation with management, and consensus on suchissues that put an intolerable strain on it in its role as a representative ofstaff interests. The appointment to the senior management (Geschäftslei-tung) at Jena of a long-standing former east German employee of thecompany in 1996 (despite reported resistance in western Germany) has,according to worker representatives, made for a more positive relationshipthan existed there previously.

Disputes concerning the interpretation of legal rightsshow that in the last resort the influence of the Works Council depends onnot only the letter of the law, but a company culture which is conducive to(in Brandt's words) "risking more democracy". Zeiss's record under currentlegislation, and in the early stages of this last dispute suggests that thecompany still had its 1968 to come. Whereas there is firm opposition toextending Works Council rights beyond those laid down in the BVG,worker representatives have welcomed the move away over the last twoyears from authoritarian leadership to a "Dialogkultur" and the acceptanceof more employee involvement and responsibility in processes of changewithin the company which are aimed at increasing productivity and thus athelping to safeguard jobs. There has also been a positive response to theintroduction of "communication officers", that is representatives from eachsection who have direct access to the members of the Executive Board orGeschäftsleitung, in the case of Jena, even though some concern wasexpressed in Oberkochen that such a channel of communication couldpossibly develop "in competition" with the Works Council.

The image of Carl Zeiss as a learned fraternity ("univer-sity with workshop attached"), not particularly mindful of customer needsand expectations, has passed. The Annual Report for 1995-96 proudlyannounced an "upswing on time for the Anniversary" ("Aufschwung zumJubiläum") with the operating loss of the Carl Zeiss Group being reducedto about one third of the previous year's figure; Carl Zeiss Jena had alsoachieved a significant reduction in operating losses and was on a verywelcome course of development ("auf einem erfreulichen Entwicklung-sweg"). The basis for the way forward has been laid by management and isbeing supported by the Works Councils in a spirit of increasing, if onoccasion wary co-operation. Works Councillors, and particularly those in

21 For discussion of Works Councils and co-management seeRöbenack, Silke "Handlungsbedingungen und Institutionalisierung ostdeutscher Be-triebsräte - Versuch einer Typisierung sich entwickelnder Interaktionsformen" in:Bieszcz-Kaiser, Antonina, Lungwitz, Ralph-Elmar, Preusche, Evelyn (eds) IndustrielleBeziehungen in Ost und West unter Veränderungsdruck. München 1995

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Carl Zeiss Jena GmbH • 219

Jena, are probably more aware than ever before of the order in which Abbelisted the aims of the Foundation... .

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