Behind the gates of a tea factory draped in protest banners, in an office with pictures of Che Guevara hung on the walls, trade union official Gérard Cazorla offers a spirited defense of a workers’ occupation that has been the subject of an angry industrial dispute for two years.

“When you occupy a factory, of course it is always illegal. We admit that,” he says. “But we wanted to protect the machinery. We have a realistic plan to put the factory back to work.”

With a laugh, he adds: “It’s part of the class war!”

The dispute at Fralib, a Unilever subsidiary making teas and infusions near Marseille, southern France, is just one of a series of plant closures at the center of an intense debate over reform of the country’s labor market rules, with unions resisting business demands for greater flexibility to hire and fire.

But it illustrates how hard it can be for companies to downsize — and how politicized such cases can become. Fralib employed only 182 people, but it shot to prominence when François Hollande made a high-profile visit during his presidential election campaign to champion the workers’ cause.

“Fralib became an icon of the presidential campaign and was a closure that became subject to huge media focus,” says Angel Llovera, the managing director now based in a temporary office a short distance from the Fralib plant.

“It shows that unions who know the law and get political support can make a conflict last a long time. It is a caricature of what can happen in France.”

The dispute began when Unilever announced its plan to close the plant in September 2010 due to overcapacity. It said Fralib was losing money and accounted for 27 percent of the costs of its four tea plants in Europe, while making up just 5 percent of production.

The communist CGT union countered that Fralib remained a profitable prospect. “They had slowly taken away our production. They always intended to close the factory,” Cazorla says.

What followed has been a two-year struggle in the courts, the media, the factory — and even the Elysée palace, where a workers’ delegation was received late last month.

Along the way, the plant has been occupied twice, the second time in May when Unilever says about 60 hooded people armed with batons and tear gas “stormed the plant” in the early hours. The union, which has held the plant since, denies it ever used violence.

Llovera, who now has bodyguards, says that at one meeting during the dispute someone tried to set fire to his shirt with a lighter. “The climate has been tense, the ambience pretty aggressive,” he says.

It took Unilever until April this year to gain court approval for the “Employment Protection Plan” that it was obliged to produce under French labor law. The first two it filed were rejected — the third is still under appeal by the union.

Under the third plan, Unilever has committed to offer all those employees who have not already accepted redundancy terms a job at one of its six other plants in France; to give each employee not accepting a job transfer 75 percent of his or her salary for a year; and to provide a 1.5 million euro fund to back new job creation in the area.

Unilever sold the plant machinery, worth 7 million euros, for 1 euro to Marseille Urban Communities (MUC), a grouping of local councils. It has also promised some 5 million euros in funding for the workers’ cooperative that the CGT wants to set up.

Unilever now says the issue is closed as far as it is concerned. But the government is pressing on with efforts to reopen the plant and may yet approach Unilever for more concessions. Eugene Caselli, Socialist leader of the MUC, says: “We cannot be indifferent to what’s happening at Fralib. We have sympathy for the workers who are fighting for their jobs.”

The union is demanding that Unilever hand over the Elephant infusion brand, founded locally and well established in France, and give it a supply contract to get the cooperative off the ground. Hollande has backed the plan, telling the workers: “This brand, which is yours, should be ceded [by Unilever] for free.”

Unilever has flatly refused this, or a supply contract — and has reacted sharply to suggestions by the unions that the brand should be requisitioned by the state. But Olivier Leberquier, leader of the CGT at Fralib, says: “François Hollande says you can’t legally do it — but you can change the law.”

Paul Polman, Unilever chief executive, issued a clear warning to the government not to take this path in an interview with the newspaper Le Figaro: “In Cuba and North Korea, brands are not protected. I’m not sure that is to the economic benefit of those countries.

“If France does not respect its laws, that would pose a risk for investments in France,” he said.

A potential compromise lies in a 5 million euros offer by a local entrepreneur who makes potato chips to take over the plant to expand his production and employ up to 90 people over the next two years. The unions have so far rejected this plan, insisting that the plant must continue to make tea.

Negotiations are set to continue for some time. But for Llovera, the end can’t come soon enough. When it is all over, he says he will leave Unilever.

“I’ll do something else,” he says. “I don’t know what — but definitely not close a factory.”

— Financial Times