COLLECTIVE BARGAINING, EMPLOYMENT PROTECTION/ CREATION AND COMPETITIVENESS IN THE UNITED STATES: THE IMPACT OF A POLICY OF INDIFFERENCE AN THE ABSENCE OF STRUCTURES

1
COLLECTIVE BARGAINING, EMPLOYMENT PROTECTION/
CREATION AND COMPETITIVENESS IN THE UNITED
STATES THE IMPACT OF A POLICY OF INDIFFERENCE AN
THE ABSENCE OF STRUCTURES

• Richard N. Block
• School of Labor and Industrial Relations
• Michigan State University
• Funded by the International Labor Organization
• For Presentation at the Annual Meeting of the
  Industrial Relations Research Association
• New Orleans, Louisiana
• January 7, 2001

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.

3
Context

• Legal
• Institutional
• Economic

4
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 cant agree

5
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-by-workplace
  
• multi-unit bargaining only by continuing consent
  of all parties involved
• Minimal government involvement in process or
  outcomes

6
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

7
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

8
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

9
BASIC POINTS (CONT.)

• The focus of the law is not on problem-solving
  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.

10
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
  employers second
• Employer Institutions tend to be lobbying or
  partisan research and education organizations

11
Institutional Context

• Union Institutions
• mixed
• IU can encourage or force locals to do something,
  but locals must implement
• locals fundamentally autonomous
• competition among locals

12
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

13
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

14
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

15
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?
• Long-run effect on employment opportunities
• Some evidence that unions negatively associated
  with firm survival

16
U.S. Industrial Relations System

• A decentralized, collective bargaining system
• Law creates unit-by-unit bargaining
• Absence of overarching structures
• Actors
• Employer competitiveness
• Union democracy
• Strong market orientation
• Supports Business unionism

17
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

18
GM-Lansing and UAW
1999 Oldsmobile Alero
19
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

20
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

21
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

22
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
• New plant under construction to start-up in late
  2001 or early 2002
• Maximize employment opportunities
• Lansing to be a GM center of small car production

23
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

24
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

25
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

26
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

27
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

28
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

29
Conclusions on Alcoa-Rockdale

• Mature Relationship
• Trust
• Partnership Teams
• Simultaneous Focus on
• Competitiveness
• Job Protection

30
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

31
Sample Seat Track System
Assembled
At Lear-Elsie
32
Employment Issues

• Variation in employment
• 1991 - 305
• 1995 - 900
• 1996 - 290
• Associated with specific work brought in and out

33
Competitiveness Issues

• Major competitors
• Bertrand Pfaume
• Johnson Controls
• Mariner
• Several left market since 1990
• Customers
• GM, Ford, DaimlerChrysler, Saturn, Toyota

34
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

35
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

36
Noncontractual CB Responses for Competitiveness

• Planning Team
• high level union and manage
• Joint Steering Team
• Union and Management reps
• Design and development teams

37
Job Security

• Not administered
• Directly linked to competitiveness

38
Conclusions on Lear-Elsie

• Importance of Corporate Strategy
• Visibility of Customers
• Focus on Competitiveness
• Job Security a Derivative of Competitiveness

39
Sparrow Health Systems (Hospital) and Michigan
Nurses Association

• Largest health care system in Lansing, Michigan
  area
• about 5600 employees
• 1600 members of PECSH

40
Competitive Environment

• Competition from non-hospital health care
  providers
• 3rd party payers - insurance companies
• Strong competitors through consolidation

41
Mutual Gains Committee

• Patient Focused Care Implementation
• Hiring
• Awards for ees in short staffed areas

42
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
• Acceptance by unions of market-based job security
  
• Little administered job security
• Consistent with business unionism