Presented by Richard N. Block School of Labor and Industrial Relations Michigan State University

1. COLLECTIVE BARGAINING, EMPLOYMENT PROTECTION/ CREATION AND COMPETITIVENESS IN THE UNITED STATES: THE IMPACT OF A POLICY OF INDIFFERENCE AN THE ABSENCE OF STRUCTURES Presented by Richard N. Block School of Labor and Industrial Relations Michigan State University Funded by the International Labor Organization

2. Co-Authors • Peter Berg • Michael Moore • Mike Polzin • Dale Belman?

3. 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. • Is the formal, written, fixed duration collective agreement the best vehicle for determining how CB addresses competitiveness and employment protection/creation?

4. Importance of the Employer • Employer is now key actor in the IR system • past 20 years

5. Context • Legal • Institutional • Joint and Governmental • Economic

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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.

12. 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

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

14. Joint and Governmental Structures/Context • Not many • Collective Bargaining Forum • a group of union and employer executives under auspices of USDOL • In April, 1999, issued a report entitled “Principles for New Employment Relationships”

15. (a)cceptance . . . by union leaders and members of their responsibility to work with management to improve the economic performance of their enterprises in ways that serve the interests of workers, consumers, shareholders, and society (a)cceptance by corporations of employment security, the continuity of employment for its workforce, as a major policy objective that will figure as importantly in the planning process as product development, marketing, and capital requirements “Principles of New Employment Relationships” (1999)

16. “Principles . . .” • National Association of Manufacturers refused to sign • Indicates decentralization on employer side

17. 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 • REINFORCES TENDENCY TOWARD VARIATION

18. 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

19. 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

20. 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?

21. Empirical Results on Impact (cont.) • CB and Competitiveness • capability of firm to maintain a reasonable market share through selling its product or service at a competitive price • special efforts by labor and management to address issues of competitiveness may improve product quality and productivity, but their effects may not be large. Rarely is labor relations the bases or one of the major bases, on which the firm maintains its position in the product . Labor relations a contributor, but not a major determinant of competitiveness.

22. 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

23. GM-Lansing and UAW 1999 Oldsmobile Alero

24. 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

25. 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

26. 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”

27. 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

28. 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

29. 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

30. 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

31. 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

32. 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

33. 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

34. Conclusions on Alcoa-Rockdale • Mature Relationship • Trust • Partnership Teams • Simultaneous Focus on • Competitiveness • Job Protection

35. 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

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

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

38. 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

39. 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

40. Noncontractual CB Responses for Competitiveness • Planning Team • high level union and manage • Joint Steering Team • Union and Management reps • Design and development teams

41. Job Security • Not administered • Directly linked to competitiveness

42. Conclusions on Lear-Elsie • Importance of Corporate Strategy • Visibility of Customers • Focus on Competitiveness • Job Security a Derivative of Competitiveness

43. Sparrow Health Systems (Hospital) and Michigan Nurses Association • Largest health care system in Lansing, Michigan area • about 5600 employees • 1600 members of PECSH

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

45. Mutual Gains Committee • Patient Focused Care Implementation • Hiring • Awards for ees in short staffed areas

46. 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 • Administered Job Protection rare • job security is market-based, on competitiveness, rather than administered