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 can’t 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 employer’s 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, % 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 ITT in 1973 Lear in 1997

31 Sample Seat Track System Assembled At Lear-Elsie

32 Employment Issues Variation in employment – – – 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