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Focus: Manufacturing

Feature Article from Our Manufacturing Subject Area - See All

From SCDigest's On-Target E-Magazine

- Nov. 19, 2013 -

 
Supply Chain News: German Workers Throw Weight Behind Unionizing US Auto Factories

 

Lower Cost US Factories Threat to Jobs Back Home; UAW Loves the Idea, but will the Workers Here Agree?

 

SCDigest Editorial Staff

While the South remains solid in terms of maintaining non-union plants in the auto sector in terms of foreign manufacturers operating factories in the US, another force has been added to the mix - pressure from German workers and unions to organize US labor.

SCDigest reported a few weeks ago on the new tactics the United Auto Workers union is taking to organize a Nissan plant in Mississippi. tactics which range from picketing Nissan dealerships in Brazil as the company prepares to co-sponsor the 2016 Olympics in Rio de Janeiro to training US college students on distributing pro-labor flyers. The strategy is to put external pressure on the company to accept a union, versus the usual approach of trying to win over the hearts and minds of workers and then lead a successful unionization vote.(See United Autoworkers Last Stand at Mississippi Nissan Factory an Inflection Point in Union Fate.)

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US auto workers received about $37per hour in wages and benefits on average last year, compared with about $59 in Germany.

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Now, the US factories of multi-nationals are facing pressure from another source - their own unions back home.

As we previously reported, the new Volkswagen factory near Chattanooga, TN is being pushed hard by the powerful IG Metall union in Germany to recognize a union there without even conducting a vote. The Chattanooga factory is the only one of Volkswagen's 62 plants worldwide that isn't unionized.

Volkswagen has recently said it would cooperate with the UAW to form a workers council at the facility. Such councils, common in Germany, usually include blue-collar and white-collar employees. They may or may not be legal in the US without a union.

Now, Daimler is receiving similar pressure from its union relative to the Mercedes plant in Vance, Alabama.

 

The issue is more than just one of working to help their potential union brethren in the US - the German unions perceive the non-union plants offshore as potentially a threat to their own jobs and wages - and rightly so.

 

"As Mercedes-Benz decides where to build future vehicles, German workers fear high-cost, union plants in Germany will be bypassed in favor of Vance, which is one of the newest and most cost-competitive Daimler plants in the world due to the weak dollar and non-union workforce," the Wall Street Journal notes.

 

Helmut Lense, a former labor representative on Daimler's supervisory board, the equivalent of a U.S. board of directors, adds that "When there is even one plant with no union, the company can do whatever it wants."

 

The UAW has smartly picked up on this opportunity, and has sent delegations to meet with auto workers in Brazil, Japan, South Africa and South Korea.

 

South Korea's Hyundai Motor and sister company Kia Motors have seen significant labor strife in recent years in their home country, including one union campaign to eliminate third-shift work and a just ended strike that cost it many millions in lost production, but their US plants remain non-union.


(Manufacturing Article Continued Below)

CATEGORY SPONSOR: SOFTEON

 
 

The UAW believes a breakthrough at the Volkswagen plant Tennessee or the Mercedes one in Alabama would be a historic turn for the union and manufacturing in the union-averse South, perhaps ultimately leading to a domino like action at other facilities.

However, it should be noted that Honda and Toyota factories in states such as Ohio and Indiana have also remained non-union even while operating in union-heavy rust belt areas.

 

The German workers are at least in part correct about the threat to their own jobs from non-union factories not only in the US but in India and other parts of the world too.

 

For example, in 2014 Mercedes will begin making a redesigned version of its C-Class sedan, a vehicle that up to now has been exported from Germany to the US. Would the extra costs associated with a unionized plant have altered that decision? That's hard to say, but when the plan to move C-Class production was first announced in 2009, 12,000 Daimler workers in Germany protested at the main production site of the car. Ultimately, Daimler reacted to the strife by agreeing to forgo involuntary layoffs in Germany until at least 2020. potentially creating something like the infamous "jobs banks" US companies endured for a couple of decades.

 

Some workers from the Vance plant have apparently gone to Germany to learn from IG Metall officials about German-style labor relations. But overall, US workers are in a different place - their wages are roughly equivalent to unionized workers here, and of course the new work to builld the C-Class vehicles is coming to the Vance plant, not being taken away.

 

But the labor costs in the US are generally much lower than costs in home markets in Germany and Japan. US auto workers received about $37per hour in wages and benefits on average last year, compared with about $59 in Germany.

 

Putting extra pressure on the UAW is the fact that the foreign transplants are in general growing faster than those of the "big three" US automakers that are heavily unionized, but whose numbers were decimated during the Great Recession, as that shock finally gave the US automakers the flexibility to shed capacity and close plants. Many auto parts makers did the same thing.

 

The number of union members in the auto sector has fallen from about 700,000 in 2000 to just under 400,000 today - about the same number as the recently rising count of non-union members. Thirty years ago, all cars made in the US were assembled by union workers at GM, Ford and Chrysler. Today, 38% of the vehicles made in the U.S. are built in non-union, foreign-owned factories.

 

Despite the collaborative and increasing global approach of the UAW with the German unions and others, and the pressure on German US factories, union success in the South is far from a given. Many of the workers at the Volkswagen and Mercedes plants here still do not want a union.

 

The Wall Street Journal quotes one Vance worker as saying he didn't trust IG Metall.

 

"They don't want us to get any more jobs in Alabama. They want to make sure jobs stay in Germany," he said.


Will the US Southern auto plants be unionized?
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