Perspectives on Restructuring
Critical Analysis of the Auto Industry GM WORKERS AS GM SHAREHOLDERS
Recent issues of the General Motors St. Catharines Components Plant and Glendale Site newsletters featured Fidelity Investments advertisements bearing the Candian Autoworkers union logo enthusiastically encouraging GM workers to purchase GM stock and become GM shareholders. GM St. Catharines workers should greet this offer with deep skepticism not enthusiasm. As workers we should clearly understand that our interests are not best served by obtaining a direct economic interest in the success of GMs drive to maximize both profits and share value. We should know that our interests are best served by making common cause with all workers in our industry regardless of who their boss is.
Pattern bargaining has proven this beyond a doubt. Pattern bargaining involving workers employed by different auto corporations has been the decisive factor in achieving all of the gains we have made since the North American auto industry was first organized. Pattern bargaining has achieved this precisely because it is based upon workers employed in the same industry but with different bosses supporting each other and moving forward together as workers and not as employees (let alone shareholders) of a particular corporation.
When workers become shareholders in the corporation they work for they are taking a decisive step in a direction diametrically opposed to pattern bargaining. Workers who become shareholders, in effect, accept the corporate logic that tells them that what is good for the boss is good for them. They are embracing the notion that beating the competition is good for them even though it means supporting the boss efforts to slash costs and put their competitors (and the workers employed by their competitors) out of business. Furthermore, in doing so, they are helping the bosses destroy the basis for successful pattern bargaining.
When workers become shareholders in the corporation they work for they invariably change their view of their employer because they have become the employer. So, on an individual basis, they will see a benefit for themselves when the corporation they own shares in gets the most possible work from the fewest possible number of workers and reap greater profits as a result. They will also become much more likely to support labour-management cooperation programs and far less willing to strike to either resist contract concessions and or make contract gains.
After all strikes hurt profits and tend to cut into market share and these things lower share value. It follows that the more workers there are in a workforce who own shares in the corporation they work for the more likely they are to vote No in a strike vote and totally disarm their union.
This very real prospect highlights the fact that efforts to encourage workers to become shareholders in the corporations they work for are conducive to union busting. Ultimately this issue poses a question that dates back to the very earliest days of the labour movement. Namely, which side are you on?
March 24, 2000
SATURN WORKERS MAKE REAL GAINS
Saturn is no longer such a "different kind of car company". A two year long rank and file led battle by 7,200 Saturn workers in Spring Hill, Tennessee focused on getting rid of a deeply entrenched local union leadership committed to labour - management cooperation and then on the nightmare that was Saturn's "innovative" (non-pattern) labour relations system has resulted in the signing and ratification of a new collective agreement. The new collective agreement is much more in line with UAW agreements in place at other GM plants in the U.S. than the Saturn Memorandum of Agreement had been.
The new agreement ends Saturn's "risk and reward" pay system in which workers got just 88% of the base pay of other GM workers and only received more if they reached corporate productivity and quality goals. Now Saturn must pay its workers at least 95% of the wages of other GM workers under all circumstances. Consequently, with a 3% annual raise in base pay caluclated in the new agreement actually provides for an up front pay raise of between 10 and 15 per cent.
Saturn blinked. The Saturn corporation knew its workers had come to hate the Saturn Memorandum of Agreement which has been in force since the inception of the Saturn experiment and were fully prepared to strike for wages and other contract provisions in line with the UAW-GM National Agreement.
Saturn workers also forced their boss to give them the opportunity to be covered by the UAW-GM National Pension Agreements. Previously Saturn workers were stuck with grossly inferior pension agreements in which their benefits depended upon how much they contributed in deductions from their wages over the course of their employment. This meant that not all workers with the same pay rate got the same pension benefits. This also encouraged workers to work overtime and, consequently, cut Saturn's need for workers.
Saturn workers also gained more union representation in the plant. They won improved seniority rights as well. Under the Saturn Memorandum of Agreement seniority rights had been almost non-existent inside the plant. Such gains are historic. They are a body blow to the anti-union poison known as the team concept, pioneered in North America at the Saturn plant.
Saturn workers still have a long way to go however. Like all GM workers in the U.S. they are still not part of a real pattern agreement. A real pattern agreement would involve the total elimination of profit-sharing and all forms of payment tied to the achievement of corporate goals. Restoring a real pattern agreement in U.S. auto would also require a broadly based rank and file rebellion against the UAW leadership.
The gains achieved at Saturn serve as an example of what autoworkers can do if they stop identifying their interests with those of the corporate bosses they work for and start identifying their interests with those of autoworkers everywhere regardless of who their boss is.
March 19, 2000
THE NEW FRONTIER IN AUTO
Recent developments in Brazil show that things can develop in a different direction for autoworkers. Brazil is a laboratory for cutting edge innovation in auto manufacturing and, consequently, a magnet for new auto investment on a scale comparable to Mexico. The construction of nine new assembly plants has begun there in the last three years. They are owned by nine different auto makers and cost as much as five billion dollars each. One estimate asserts that there has been nearly twenty five billion dollars in new investment in Brazil and Brazils principal free trade partner, Argentina.
A recent article in Fortune Magazine noted that this massive flow of investment is part of a global shift to more and bigger vehicles along with a move to force suppliers construct plants largely dedicated to one customer and as close as possible to an assembly line.
Brazilian wages are a fraction of West European and U.S. wages. But low wages are not drawing Capital to Brazils auto industry. The attraction is the increasing prevalence of modular operations and the fact that management in these operations start with a clean slate. From the outset these operations employ fully cross-trained workers who perform a variety of tasks and flattened, team-based organizational structures. In short, the plants ramp up with fully lean and modular operations. Auto corporations are also flocking to Brazil because they expect it to be the worlds fifith largest vehicle market within ten years.
One thing sets the situation in Brazils auto industry dramatically apart from the situation here. To begin to appreciate this it must be noted that the bulk of the new investment and the construction of these cutting edge facilities are located outside of Brazils equivalent of Michigan, the Sao Paulo region. The region is where the metalworkers section of Brazils largest labour confederations strength is concentrated.
That is why lean manufacturing and competitive work practices encounter stiff resistance in the Sao Paulo regions auto plants. And that is where worker militancy is commonplace.
The Sao Paulo regions workforce was largely responsible for the fact that in early 1999 some 70,000 Brazilian autoworkers were on strike. And the regions autoworkers are largely responsible for a movement to go beyond the prevalence of enterprise by enterprise and company by company contracts towards the establishment of national auto contracts.
This is critically important. This movement constitutes a frontal assault upon the logic and continued development of lean manufacturing in Brazils auto industry. It does because the lean system encourages workers to identify their interests with their employers and to compete with other workers; exactly what is becoming prevalent in North Americas auto industry. In effect, the lean system is being seriously fought in Brazil and the most advanced section of the working class is leading that fight. Brazils other more corrupt and right-wing auto unions are even supporting the fight for national auto agreements.
Brazil shows that autoworkers can take the offensive in this period.
January 4, 2000
DELPHI NEGOTIATES A NEW WORKFORCE
Appearances can be deceiving. And those things that are not said can be more important than those that are. The latest developments at Delphi Automotive Systems in the U.S. are a case in point in both respects.
The UAW negotiated wage and job guarantees for former GM workers who recently found they had become employees of a new corporation, Delphi Automotive Systems. The UAW also negotiated the same pension improvements for these workers that workers at GM and Daimler Chrysler will get. These amount to 18% in pension increases over a four year agreement.
These pension improvements are especially significant in relation to the job guarantees negotiated at Delphi. The latter require Delphi to hire new workers to replace those forced out due to corporate downsizing and the number depends on how much employment levels decline in a bargaining unit. Notably, if the employment level in a bargaining unit drops to below 80% of what it was when the contract was signed Delphi will, in theory, have to replace each job eliminated.
Furthermore, thousands of Delphi workers will be rushing to take advantage of the pension improvements right away because if they retire by January 1, 2000 they can do so with GM pensions. Older Delphi workers want to retire as GM workers. They dont want their future economic security tied to unpredictable developments at Delphi.
The combination of these pension improvements and the negotiated job guarantees is certain to generate a hiring wave at Delphi operations. And that is why Delphis new contract with the UAW will pay off handsomely.
Each time Delphi hires it will reap the benefits of the UAWs renewed acceptance of wage concessions. Delphi is not going to be contractually required to pay new hires the same rate of pay that those who worked at GM will receive. The UAW-Delphi contract even leaves the door open to locally negotiated pay for knowledge wage scales. Delphi will, in effect, be able to employ large numbers of new workers whose wages will be more in line with what bosses in the auto parts industry think auto parts workers deserve.
In addition, Delphi will reap the long term benefits of retiring large numbers of workers accustomed to working under traditional Big Three collective agreements. Delphi will then replace them with large numbers of much younger and more carefully screened, new workers who are more adaptable to corporate demands for flexibility and to flexible collective agreements. This, in turn, will facilitate further efforts to downsize the Delphi workforce and further employment of new and lower paid Delphi workers as older workers flee into retirement. There will be an accelerated transformation of the composition of the Delphi workforce.
Delphis negotiators knew exactly what they were doing during this years contract talks with the UAW. Delphis negotiating strategy was guided by shrewd, long term thinking. This was less evident on the other side of the negotiating table.
October 5, 1999
MODULAR MANUFACTURING AND THE CAW
Modular manufacturing was one of the most challenging issues addressed at the 1999 Canadian Autoworkers (CAW) Collective Bargaining Convention. Modular manufacturing involves a radically different approach to organizing work. It also involves a more fundamental departure from the mass system of production than the Toyota Production System did.
Modular manufacturing will reconfigure automotive final assembly plants by blurring the distinction between supplier firms and assembly operations. Modular manufacturing will do this by outsourcing the design and assembly of entire auto components to supplier firms. Consequently, the amount of work that will be performed by auto corporations' final assembly operations is going to be sharply reduced and there will be a corresponding reduction in the size of the final assembly workforce. Modular manufacturing will take outsourcing to an entirely new level. Nearly all of the major auto manufacturers are taking an active interest in modular manufacturing or modularity.
The CAW's response to modularity was presented at the convention. It is based upon the CAW's concept of "work ownership" which it put forward during its 1996 negotiations with the U.S. Big Three (now Big Two) auto makers. The CAW's concept of work ownership asserts that if a company is making a quality product and a profit with a low-cost and highly productive workforce then the CAW members performing that work could claim that work as their own. This concept was developed to prevent work from being sold to whatever bidder has the lowest wages. Applied to modular manufacturing this concept means that work which is outsourced should continue to be performed by the workforce which has traditionally done it. The workforce has the option of going with the work.
In order to prevent the affected workers from being disadvantaged in terms of wages and benefits the CAW is taking the position that the work outsourced to suppliers will remain part of the bargaining unit it originated from even though the employer involved has changed. The result will be an "umbrella agreement" covering all of the workers involved.
Significantly, the CAW has only partially spelled out what umbrella agreements will mean in practical terms. The CAW has stated that the workers employed in the outsourced modular operations will be covered by the applicable Master Agreements spelling out the wages and benefits, etc. paid by the firm the work originated from. The CAW has yet to state that the concept of umbrella agreements will apply to contractual provisions normally belonging to local collective agreements specific to individual plant locations. This leaves a number of critically important questions to be answered. Furthermore, it is clear that the answers to these questions will only become known if and when umbrella agreements are negotiated.
One question cries out for an answer. How much will local negotiating committees give up to attract new, modular operations? This question will be particularly important with respect to locations where large numbers of workers are either on layoff or faced with layoff in the near future. Indeed, United Autoworkers locals in the U.S. involved in negotiations to bring modular operations to their plant locations have already shown that they are prepared to make huge contract concessions to get the new work. If local CAW negotiating committees prove to be inclined to do likewise the union's national leadership must be prepared to intervene to stop them.
Another question is certain to be front and centre with respect to modular operations. Will the workers employed in modular operations be able to transfer from one operation to another operation with relative ease as has been the case in vertically integrated (all encompassing) mass production auto plants run by one corporation? This question must be asked because different operations are certain to be run by different employers
The employers involved in modular operations can be expected to stubbornly oppose this. Bosses will not want to see workers who have been given substantial training and who have acquired valuable experience performing work in their operations leaving virtually as they please. In other words, employers involved in modular operations can be expected to do everything within their power to frustrate the meaningful exercise of seniority rights when it comes to filling job openings in different operations managed by different employers. A major fight will have to be waged to insure that workers can exercise their seniority in a meaningful way by being able to easily move to the operations they want to work in.
The advent of modularity heightens the significance of a disturbing trend evident in the North American auto industry today. Employers that take over parts or components operations sold off by corporations like GM are agreeing to continue to pay the same wages and benefits but have managed to couple this with either weaker, more "competitive" local agreements or more lax enforcement of traditional collective agreements. This disturbing trend involves a weakening of union power consistent with the efforts of supplier firms to downsize their workforces and shrink their labour costs through the lean manufacturing practice of cost down restructuring.
The end result will be bigger bucks for the bosses all the way around. Corporations like GM will extract a higher rate of profit by outsourcing their generally less lucrative, "non-core" operations and by being able to focus exclusively on their "core" operations. Supplier firms that acquire the outsourced operations will be able to extract a higher rate of profit by having what amounts to a lower tier of labour costs in more lean operations. Labour meanwhile will take a step backwards away from the goal of bringing auto parts workers up to the same level as final assembly workers. The latter will become an even smaller, more isolated elite within the working class as a result.
This bleak scenario is avoidable. The first step towards avoiding it will be for the CAW to keep local unions from being whipsawed by corporations into accepting weak, concession-riddled local agreements in modular operations for the sake of getting new work. The second step will be to translate the CAW's questionable claim to embody a "culture of resistance" into a day to day reality on the shop floor of modular operations and insure there won't be lax enforcement of collective agreements by in-plant union leaders. Finally, modularity highlights the indispensable need for the CAW to aggressively promote real parity between auto and auto parts workers.
Ultimately, the advent of modular manufacturing should serve to remind us and demands that we, as auto and auto parts workers, must consistently view ourselves as and act like we are a part of a much larger social class with common interests intrinsically at odds with those of the employers
June 17, 1999
Available Texts by Bruce Allen June 26 Speech to the 5th Congress of the Sao Jose Dos Campos Region of the Metalworkers Section of Brazil's CUT.
November 16, 1999 Speech on the 1999 CAW - Big 3 Negotiations
Many other texts are posted at:
Praxis 1871 Publications Reengineering and the Harris Agenda by Bruce Allen $1.00
Stepping Beyond Lean to Agile: Work Reorganization in the Auto Industry by Bruce Allen Introduction by Bill Hunter $6.00
Liverpool's Dockworkers and the Globalization of Class Struggle by Bruce Allen The Liverpool Dockworkers, Transportation and the Lean Agenda by TJ Baker Introduction by Neil Fettes $2.00
NAFTA and Mexican Labour Law Reform by Bruce Allen Introduction by David McNally $1.50
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