Numsa – IG Metall Project Prepared by Melanie Roy, Elias Kubeka, Carmen Ludwig and Hendrik Simon 18th and 19th April 2017

Challenges Along the Value Chain Outsourcing and offshoring (relocation) of production as dominant features of the restructuring processes in the auto industry on the national and global scale → Cost reduction pressure on component suppliers and outsourcing has increased. → fragmentation of labour standards

Background Information on Value Chain Project Numsa- IG Metall Project: Objectives Both trade unions have decided to organize along value chains and to reject the division into ‘core’ and ‘non-core’ workers → Project between IG Metall and Numsa to organize along global value chains: Two Parts of the Project: Workshop and Research

Background Information on Value Chain Project Numsa- IG Metall Project: Objectives Workshop: Building a common understanding among participants from Germany and RSA Building lasting transnational links and solidarity between the two unions NUMSA and IG Metall and between shop stewards from supplier and logistics companies Research: Identifying and expressing workers experiences on the shop-floor and therefore, provide a participatory view Gathering empirical information on the structure of value chains in South Africa as compared to Germany

Auto Value Chain Germany

Auto Industry Germany About 800.000 employees auto industry (excluding steel) - 450.000 to 500.000 OEMs - 80.000 to 100.000 truck manufacturing - 250.000 to 270.000 suppliers Current trends: - digitalisation and automation - de-carbonisation/electrification - - relocation particularly to eastern European countries

Example 1: Supplier Seat Manufacturing to OEM 1 Mutual dependency with OEM as the dominant player Governance through “open book philosophy” OEM determines all components and conditions: cost pressure through competition OEM is decreasing dependency: The 1st, 2nd and 3rd tier of seat production for OEM1 is provided by five main international suppliers to varying and interchangeable degrees 81 per cent of costs materials, 19 per cent influenced by supplier → pressure on employees (wages, working time) → supplementary bargaining agreement

Example 2: Contract Logistics Company in Plant of OEM 2 - Logistics Company: Particular strong dependency on OEM plant - OEM as the centre of power in the value chain → Quotes of works council members: Dependency on OEM: A: 'Customer is always right.' A: 'The OEM gets what it wants.' B: 'In the end, we are completely dependent on OEM 2.' Imbalance of Power: A: '[Counter-Power via] Strikes is possible. But only once. Then OEM 2 will simply replace your company.' (discipline and punish)

Example 2: Contract Logistics Company in Plant of OEM 2 Perfection in Outsourcing: OEM 2's new company policy: Allocating logistical ‘options’ as small as possible → circumvention of the power of trade union organisation in individual companies → Increasing Competition (The Curse of 'Competitiveness') Works council member B: 'War of nerves.'

Value Chains as Catalysts of Inequality Inequality Along the Value Chain: A: 'We live in a four class-society.' 1. Employees by OEM 2. Labour broker worker by OEM 3. Employee by Supplier/Contract Logistics Company 4. Labour broker worker by Supplier/Contract Logistics Company → Value Chains as catalysts of inequality Mixed experiences with solidarity among OEM's and supplier/logistics' workers in the same plant

Income Differentials

Counter-Strategies IG Metall Regulation Collective Framework Agreement Metal and Electrical Industry (ERA) In-house agreements on labour broking Global Framework Agreements Organising Organising campaigns targeting suppliers and new sectors (renewable energy) Shop steward Committee JIT Transnational Partnership Initiatives

Auto Value Chain South Africa

The Automotive Industry Value Chain in South Africa and Economic Perspective Auto industry is characterised by the concentration of few dominant original equipment manufacturers (OEMs) worldwide The suppliers to the industry Steel companies Workshop Equipment Suppliers OEM Parts manufacturers ( 7 in Total) Generic Parts Suppliers Paint suppliers Insurance Companies Fitment Companies Tyre companies Manufacturers of shock absorbers, exhausts and other parts Recycling companies

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