COLLECTIVE BARGAINING,
EMPLOYMENT PROTECTION/
CREATION AND
COMPETITIVENESS IN THE
UNITED STATES: THE IMPACT OF
A POLICY OF INDIFFERENCE AN
THE ABSENCE OF STRUCTURES
Presented by
Richard N. Block
School of Labor and Industrial Relations
Michigan State University
Funded by the International Labor Organization
1
Co-Authors
•
•
•
•
Peter Berg
Michael Moore
Mike Polzin
Dale Belman?
2
How Does the Collective Bargaining
System in the United States Address
Competitiveness and Employment
Protection?
• No formal structures in the United States
that focus on these issues
• Little governmental involvement in
substance of collective bargaining in U.S.
• Is the formal, written, fixed duration
collective agreement the best vehicle for
determining how CB addresses
competitiveness and employment
protection/creation?
3
Importance of the Employer
• Employer is now key actor in the IR system
– past 20 years
4
Context
•
•
•
•
Legal
Institutional
Joint and Governmental
Economic
5
Legal Context
• Most Important
–
–
–
–
accessible
public
coverage
coercive
• Establishes basic structure
–
–
–
–
who must negotiate and for whom
meaning of “negotiate”
about what must parties negotiate?
what happens if parties can’t agree
6
Basic Legal Principles
• No presumption that CB “normal”
– default is employer determination
• Legal bargaining (election) units
– representation rights limited to these units
• Bargaining is unit-by-unit, workplace-byworkplace
– multi-unit bargaining only by continuing
consent of all parties involved
• Minimal government involvement in
process or outcomes
7
Implications for Competitiveness
and Employment Security/Creation
• Employers often have competitiveness
options away from union
• multiple-union firms
• no obligation to agree to employment
security or matters that will link employee
welfare and competitiveness
• no system for encouraging cooperation
unless both parties agree
• systems protects right of either party not to
agree on TCE
8
Obligation to Bargain
• meet at reasonable times
• no obligation to agree
• limited to “terms and conditions of
employment” (TCE)
– not all er decisions that that affect employment
a TCE
– changes in capital structure or product mix of
firm for the purpose of increasing firm
competitiveness generally not considered to be
TCE
• basic changes in nature of business not TCE
9
BASIC POINTS
• Law indifferent to use of CB system for
competitiveness and job creation/protection
– enables CB system to be so used if both parties
wish it
– enables CB system to not be so used if one
party does not wish it
• Treats these matters no differently than any
other subject of bargaining
10
BASIC POINTS (CONT.)
• The focus of the law is not on problemsolving or on linking the issues of
competitiveness and job security.
• The focus of the law is on the individual
employer decision and whether or not the
employer has the right to make that decision
without negotiating with the union about the
decision.
11
Institutional Context
• Employer Institutions
– No overarching er structures that encourage CB
as a vehicle for competitiveness and job
protection creation
– Employers are competitive firms first and
employer’s second
– Employer Institutions tend to be lobbying or
partisan research and education organizations
12
Institutional Context
• Union Institutions
– mixed
– IU can encourage or force locals to do
something, but locals must implement
– locals fundamentally autonomous
– competition among locals
13
Joint and Governmental
Structures/Context
• Not many
– Collective Bargaining Forum
– a group of union and employer executives
under auspices of USDOL
– In April, 1999, issued a report entitled
“Principles for New Employment
Relationships”
14
“Principles of New Employment
Relationships” (1999)
– (a)cceptance . . . by
union leaders and
members of their
responsibility to work
with management to
improve the economic
performance of their
enterprises in ways that
serve the interests of
workers, consumers,
shareholders, and
society
• (a)cceptance by
corporations of
employment security, the
continuity of employment
for its workforce, as a
major policy objective that
will figure as importantly
in the planning process as
product development,
marketing, and capital
requirements
15
“Principles . . .”
• National Association of Manufacturers
refused to sign
• Indicates decentralization on employer side
16
Economic Context
• Laissez Faire with respect to employment
and competitiveness
• Full employment not even discussed as a
policy issue
• Monetary policy - minimize inflation
– job security - wage increase link?
• Fiscal Policy - none
• Trade Policy - open markets, with
exceptions
• REINFORCES TENDENCY TOWARD
17
VARIATION
Incidence: CB and
Competitiveness
• Voos-Eaton, 1992
– up to 79% had participatory programs
– app. 40% had profit sharing
• Industry analyses
– high incidence: steel (National Steel), auto
assembly, aerospace, telecommunications,
paper (forced)
– low incidence: auto parts, meatpacking,
trucking, textiles
• Gray, Gray, Myers, 1999 - 14.8% of
agreements
18
Incidence: CB and Employment
Protection/Creation
• IRRA Studies
– very little
• GGM
– 1-3% of agreements
• Well developed systems in auto assembly
and National Steel
• In general, employment security in the U.S.
is market-based rather than administered
19
Empirical Results on Impact
• CB and Organizational Performance
– no evidence that CB, per se, reduces
productivity; actually can enhance it
– gains do not necessarily go to shareholders in
unionized firms
– profits and rates of return generally lower in
unionized than nonunion firms
• supercompetitive profits in nonunion firms or
undercompetitive in unionized firms?
20
Empirical Results on Impact
(cont.)
• CB and Competitiveness
– capability of firm to maintain a reasonable
market share through selling its product or
service at a competitive price
– special efforts by labor and management to
address issues of competitiveness may improve
product quality and productivity, but their
effects may not be large. Rarely is labor
relations the bases or one of the major bases, on
which the firm maintains its position in the
product . Labor relations a contributor, but not a
major determinant of competitiveness.
21
Four Case Studies
•
•
•
•
GM-Lansing, Michigan and UAW
Alcoa-Rockdale, Texas and Steelworkers
Lear-Elsie, Michigan and UAW
Sparrow Hospital (Lansing, Michigan) and
Michigan Nurses Association
22
GM-Lansing and UAW
1999 Oldsmobile Alero
23
GM-Lansing and UAW
(continued)
• Four Divisions
–
–
–
–
Worldwide Facilities
Sheet Metal
Powertrain
Assembly (small car)
• about 8600 hourly and 2500 salary
• History
– Hometown for Oldsmobile from turn of century
24
GM-Lansing and UAW Local
652: Competitive Environment
• Declining Market Share
• Corporate Reorganization
– nameplates became marketing divisions only
– Lansing must now compete for work
• Nature of Product
– small cars, losing money
• Nature of Production Process in Lansing
– trucking bodies
25
GM-Lansing and UAW Local
652: Noncontractual System
• Pervasive Jointness
– “star system”
• Unitary labor relations in a multidivisional
system; consistency
• Movement across all four divisions provides
job security when a redundancy in one
division
– “affiliated corporations”
26
GM-Lansing and UAW Local
652: Noncontractual System
• Examples
–
–
–
–
small car profit
signs in Sheet Metal
camshaft line in Powertrain
no contractual prohibition on subcontracting,
but an informal prohibitions
27
Alcoa-Rockdale, Texas and
United Steelworkers Local 4895
• Aluminum(Aluminium) extracted from
other substances via process of smelting
– Bauxite
– Alumina from bauxite
– Alumina decomposed into aluminum and
oxygen via an electrolytic process
– Aluminum then cast into ingots (large bars) or
“hogs” (small bars) suitable for melting or
casting
28
Alcoa-Rockdale, Texas and
United Steelworkers Local 4895
• smelter
– produces aluminum and aluminum powder
– major customer is an Alcoa flat-rolled plant in
Iowa
– other customers are ordinance, rocket fuels,
lithographic, paint, and personal care industries
29
Collective Bargaining
• History
– Generally harmonious consistent with Alcoa
corporate philosophy
– one national strike in 1986
– resulted in reduced job classifications
• Basic characteristics
– trust
– information sharing
30
Competitive Threats
• Market pressure on price of aluminum due
to increases in supply
– volatility from $1/lb. to $.58/lb. in two years
• Information Flows
– London Metal Exchange
• Environmental Regulations
– emissions
– strip mining
• Expense of coal vis-à-vis hydro
31
Collective Bargaining and
Competition
• Plant must make money at $.50/lb.
• Contract Changes
– reduction in rate of increase in base wages
– increase length of contract
– reduce number of job classifications
32
Collective Bargaining and
Competition
• Noncontractual Changes
– Partnership Team on directive from corporate
and Int. Union
•
•
•
•
plant manager
LR staff
department heads
bargaining committee
• Examples
– recycle scrap metal
– yard work
– janitorial work
33
Conclusions on Alcoa-Rockdale
•
•
•
•
Mature Relationship
Trust
Partnership Teams
Simultaneous Focus on
– Competitiveness
– Job Protection
34
Lear and UAW 1660
• Description
– automotive components - seat systems
– about 500 ees in plant
– Ownership changes
• private from 1966-73
• ITT in 1973
• Lear in 1997
35
Employment Issues
• Variation in employment
– 1991 - 305
– 1995 - 900
– 1996 - 290
• Associated with specific work brought in
and out
36
Competitiveness Issues
• Major competitors
–
–
–
–
Bertrand Pfaume
Johnson Controls
Mariner
Several left market since 1990
• Customers
– GM, Ford, DaimlerChrysler, Saturn, Toyota
37
Change in Ownership/Corporate
Strategy Issues
• ITT
– Corporate Strategy - maximize short-run rate of
return
• Lear
– Corporate Strategy - maximize market share in
automotive interior components market
38
Production Process
• Production Teams/Cells for each customer
– Employees can see a customer come and go by
examining the plant
– no cell, no employment; a cell, employment
39
Noncontractual CB Responses
for Competitiveness
• Planning Team
– high level union and manage
• Joint Steering Team
– Union and Management reps
• Design and development teams
40
Job Security
• Not administered
• Directly linked to competitiveness
41
Conclusions on Lear-Elsie
•
•
•
•
Importance of Corporate Strategy
Visibility of Customers
Focus on Competitiveness
Job Security a Derivative of
Competitiveness
42
Sparrow Health Systems
(Hospital) and Michigan Nurses
Association
• Largest health care system in Lansing,
Michigan area
• about 5600 employees
• 1600 members of PECSH
43
Competitive Environment
• Competition from non-hospital health care
providers
• 3rd party payers - insurance companies
• Strong competitors through consolidation
44
Mutual Gains Committee
• Patient Focused Care Implementation
• Hiring
• Awards for ees in short staffed areas
45
Overall Conclusions
• No system in place that focuses on CB,
competitiveness, and job protection/creation
– left to legalities and the parties
• Competitiveness fairly common issue in CB
• Much of this outside formal agreement
structure
• Administered Job Protection rare
– job security is market-based, on
competitiveness, rather than administered
46