Global Manufacturing and Collective Bargaining: A Case Study of GM

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Global Manufacturing and Collective Bargaining A
Case Study of GMs United States Lansing Grand
River Assembly

• Richard N. Block
• Professor
• School of Labor and Industrial Relations
• Michigan State University
• For Presentation at
• Voice and Value Making It Work
• Conference Organised Jointly by the London School
  of Economics and Chartered Institute of Personnel
  and Development (CIPD)
• And the London Metropolitan University (Lonmetu)
• London, UK, 12 March 2004

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Michigan State UniversityLansing Grand River
Assembly Research Team

• Peter Berg, LIR
• Michael Moore, LIR
• Marietta Baba, Anthropology
• Terry Curry, LIR
• John Delaney, Management

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Manufacturing and Employee Participation

• Important for US
• Loss of manufacturing jobs requires thinking
  about ways to make U.S. manufacturing competitive
• 1998 17.6M, 2000 17.3M, 2003 - 14.5M
• 1998-2003, loss of app. 3M mfg jobs, -17
• 1998-2000, loss of 294,000 mfg jobs, -1.7
• 2001-03, loss of 1.9M mfg jobs, -11.7
• Important for UK and EU
• Directive on participation
• 2001-86

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General Motors in US

• From 1920s early 1980s
• Decentralized
• Independent divisions/nameplates
• Each with own marketing and manufacturing
  organizations
• Reorganization in early and mid 1980s
• To centralized manufacturing, production, and
  marketing
• Former divisions now only nameplates for
  marketing purposes
• Product allocated at the corporate level rather
  than by the divisions

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Collective Bargaining/Labor Relations National
Collective Agreement

• Between General Motors (US) and United Auto
  Workers International Union (UAW)
• Establishes
• wages and benefit levels for all unionized
  employees in GM system
• employment security no redundancies due to
  technological change

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Strategies of Parties

• GM Corporate
• Control of production facilities
• Allocation of product
• UAW (Inter)National
• Optimize Wages and Benefits
• Employment security for UAW-represented employees
• Maximize employment in UAW-represented facilities
  in US

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Lansing, Michigan

• A city of about 150,000
• 90 miles nw of Detroit, 220 miles ne of Chicago
• HQ for Oldsmobile from early 1900s through early
  1980s
• A complete self-contained carmaking system
• Design, Engineering, Marketing, Metal
  fabrication, Car Bodies, Paint, Assembly

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UAW Local 652

• Represents workers at multiple GM facilities in
  Lansing
• Other UAW locals also represent some GM workers
  at Lansing facilities
• Size
• About 13,500 in late 70s early 80s
• Currently about 6600

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Collective Bargaining Relationship

• Organic System
• Initiated and developed by GM-Lansing management
  and the Lansing UAW local 652
• with minimal involvement from GM corporate labor
  relations officials and/or UAW international
  officials.
• Industrial relations theory suggests that such
  organic labor relations systems possess staying
  power because the parties create, accept, and
  continually adjust them
• Cooperative, Respectful over the long term
• No local strikes since 1984 (data from GM and
  UAW)

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UAW Local 652 Strategy

• Employment Maximization through cooperation
• Today . . . I dont know that there (is) anyone
  that doesnt understand that sales and quality
  dictate the market. (Local 652 Official)
• From a union perspective, quality is job
  security (Local 652 Official)

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BARGAINING AT LGRA
An
Profitability- Employment Curve
A
Bn
M
B
Profitability
Production
P
C
C
Product B
Production- Employment Lines
Product A
A
B
Employment or Employee Hours
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What is the Linkage Between Manufacturing and
Collective Bargaining?

• Company (GM) Interests
• low-cost, efficient, high quality manufacturing
• Good relationship with UAW
• International Union, UAW
• Maintain employment and capacity among
  UAW-represented employees
• Local Union
• Employment for local membership
• In context of the national agreement

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Methodology

• Analysis of Local Collective Bargaining Agreement
• Open-ended, structured interviews
• Protocol
• Respondents for each question jointly identified
• Generally at least two respondents for each
  question
• Questionnaire addressed
• Site, Union, Collective Bargaining Relationship
  History
• Plant Location Issues
• LGRA and Local 652 Administration
• Joint Structures
• Labor Relations Structures of Manufacturing
• Relationships between site and higher
  organizational levels

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Lansing Grand River Assembly

• GMs newest assembly plant in the United States
• Products launched in 2002
• US 1 Billion
• About 1300
• Unionized hourly employees - 1100 production, 200
  skilled trades
• Nonunion salaried employees - 200
• Third Generation of GM US manufacturing
  experimentation
• Poletown in Detroit (early 1980s)
• Saturn in Tennessee (mid 1980s)

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Products

• CTS - 2002
• SRX - 2003
• STS
• CTS V-series - 2004
• All Cadillac Nameplates

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Insert Vehicle Photos Here
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GM Production Strategy

• Global Manufacturing System (GMS)
• It is the process that GM is moving toward to
  standardize production in all plants, worldwide
• Germany
• Brazil
• Belgium
• US
• Operator-centered rather than management centered

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What is GMS?

• The elimination of waste by everybody in the
  plant, including production employees
• GMS is a set of tools that permits employees to
  participate in taking waste out of the system
• Global
• Management
• Union
• Independent of union
• A way to build cars
• Team-Based

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GMS Approach

• Standardization
• Reduce idiosyncratic characteristics of
  particular plants
• In production
• all gas tanks will go into all products as step
  241 of the process (Plant Manager)
• Production system designed to support the hourly
  operator/team member

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Collective Agreement

• Typical Collective Agreement in the US
• Wages
• Benefits
• Seniority
• Grievance Procedure
• Management Rights
• What to Produce
• How to Produce

• LGRA Agreement
• The production system is the agreement
• Area Managers
• Group Leaders
• Team Leaders
• Team Members
• Duties of each

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Staffing of LGRA

• Volunteers
• From LCA
• Opened to bids
• constructed a mock assembly line so employees
  could experience it before volunteering
• Not for everybody
• Rationale
• Acceptability within UAW Local 652
• For GM, motivated employees for a new production
  system

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Reduction of Seven Types of Waste is
Responsibility of Employees

• Corrections-errors
• Overproduction
• Material Movement
• Motion
• Waiting
• Inventory
• Processing (do what is necessary on a car but no
  more - exactly how many bolts and studs does one
  need to attach a headlight to a car body?)

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Training
Preferred Customer Blache, Wedley
Preferred Customer
Preferred Customer

• Jointly done
• LGRA Management
• UAW Local 652 Officials
• All employees trained for 40 hours in first week

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EXAMPLE
Waste Correction

• Adjustments of a Product or Service to Fulfill
  Customer Requirements

Causes
Adverse Affects / Results Cost Lead Time
Quality

• Poor Customer/Supplier Relations
• Questionable Quality
• High Inventory Levels
• Weak Process Control
• Deficient Planned Maintenance
• Non-Robust Product Design
• Inadequate Education and Training
• Undefined Requirements

• Rework, Repairs, and Sorting/Scrap
• High Inventory Buffers
• Added Inventory Cost Just-In-Case Management
• Loss of Customer Confidence and Business

Golden Rule Quality is the basis for
everything. Defects must be traced to their root
cause for permanent resolution. Do not accept,
build, or ship a defect.
SOURCE LGRA Training Materials
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Waste Exercise Worksheet
SOURCE LGRA Training Materials
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Basic Line Organization

• Salaried
• Area Managers
• Paint, Body, Quality, Housekeeping, General
  Assembly, Materials, World Facilities Group
  (metal fabrication)
• Group Leaders
• 4-6 Teams in area
• Hourly/Represented by Union
• Team Leaders
• Team Members
• 4-6 per team

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Paint on Studs on Car Bodies Made It Difficult to
Affix Parts to the Body

• Prod. Wkr. Responsibility LGRA/GMS
• Assembly team learns excess force necessary to
  affix bolts to studs
• Andon cord pulled each time documented
• Team performs root cause analysis
• Bolt specification?
• Tool not working properly?
• Determination of root cause - excess paint on
  studs
• To Paint Shop Team
• Designed cardboard stud covers
• Solution
• Covers removed at assembly
• Extra work, better quality

• Production Worker Responsibility Traditional
  Manufacturing
• Production worker informs supervisor

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Team Member Comment

• Well considering my job, its two of us that
  can paint. Me and this guy, if we run upon a
  problem that we aint never seen, hell come and
  get me. Hell ask my opinion and what I think
  and vice versa what I do with him. And well say
  Ill do this. Or Well do this. Well try
  this. What well do is well get together, and
  if we get a job that we havent seen before
  something that he might send us so we get to
  scratching our headsand we say How are we going
  to fix this? Because weve got to fix this. If
  we cant fix it we got to repaint it. If its a
  three timer, we got to scrap it. And when we
  scrap a car that cost General Motors 1,500. So,
  a lot of cars that are supposed to be scrapped,
  we save them. So, thats money in their pocket.
  So we get together on a big job and say Man, we
  got to do something because this is a three
  timer, this is do or die. If we dont get it,
  this car is dead. So, thats what we do.

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General Issues Related to Staff -type Functions

• Examples
• Team Concept Area Committee
• Team Leader Selection

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Team Concept Area Committee (TCAC)

• One for Each of Seven Divisions Within LGRA
• Paint, Body, Quality, Housekeeping, General
  Assembly, Materials, World Facilities Group
  (metal fabrication)
• Membership
• Production System
• Area Manager (mgt)
• Shift leaders for trades and production (union)
• QN rep (union and mgt)
• Collective Bargaining System
• District Committee trade and production (union)
  
• Facilitator QN rep (union and mgt)
• Linkage between collective bargaining/employee
  representation system and production process

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Example Selection of Team Leader

• Opening Posted
• Team Member Application
• Assessment Tool (jointly created per agreement)
• Possibilities
• One applicant
• Chosen if successfully pass assessment
• More than one applicant passes assessment
• Discussion with team members
• Jointly created questionnaire created by TCAC

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Insert Team Leader Assessment Form
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Selection of Team Leader (continued)

• Team Members complete questionnaire
• Back to TCAC joint decision-making process
• Selection
• compelling based on questionnaire responses,
  that person becomes team leader
• Not compelling
• tiebreaker seniority (generally), attendance,
  discipline, performance
• Talks to all candidates
• What might be considered a management decision in
  some places becomes a joint decision through a
  jointly created, agreement-based procedure

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SOURCE Lansing (Michigan) State Journal and
Associated Press, March 3, 2004
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Conclusions

• Importance of employment security
• Organic relationship builds foundation of trust
  over a long period of time
• Consistency between business structure (product
  allocation) and local union strategy
• Facilitative Higher Level Institutions
• Importance of assigning production to UAW members
• International union accepts competition among
  local unions provided production allocated to a
  UAW local
• Transfer rights
• Employment Security
• No fundamental inconsistency between employee
  participation and competitiveness