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Tuesday, March 26, 2013

Across the board, union workers get higher pay


The Atlanta Journal-Constitution

The Biz Beat

Across the board, union workers get higher pay

(Associated Press)
(Associated Press)

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You’re sure to strike a nerve in many circles if you bring up the topic of unions and, in this case, union wages.

Unions have been receiving a lot of attention lately. Just this week Michigan’s governor signed right-to-work legislation that makes it illegal for unions to compel non-union employees in the private and public sectors, with some exceptions, to pay dues. (Georgia is also a right-to-work state). AT&T continues to negotiate new agreements with some of its unionized employees, although its 22,000 wireline workers in Georgia and other parts of the Southeast recently ratified new three-year contract.

CNN Money, relying on Bureau of Labor Statistics data, has looked into how the average pay of the top unions in this country stacks up against non-union workers’ wages. The bottom line is that across the board union wages are higher. Here are some of CNN’s highlights:

Government workers: “These workers make a median of $973 a week, roughly $230 more than their non-union counterparts.”

Teachers: “The union members earn $224 a week more than non-union educators, with median weekly earnings at $1,038.”

Firefighters and police officers: “Union workers make about $1,008 a week, and non-union workers make $627.”

Factory workers: “Union workers make about $836 a week, $56 a week more than non-union employees.”

Construction workers: “Union workers earn about $361 more per week than their non-union counterparts.”

Transportation and warehousing workers: “Union employees earn about $215 more per week, or 30%, than non-union workers.”

Utilities workers: “Union employees in this industry tend to earn 10.2% more per week than non-union workers.”

Georgia ranked 49th in union membership in 2011, with 3.9 percent of wage and salary workers belonging to unions. About 12 percent of U.S. workers belong to unions.

Autoworkers Earning Less in U.S. Happy to Compete Again


Debbie Werner is the face of an American workers’ revolution.

In a break with decades of U.S. auto-union tradition, the prevailing wage paid to new unionized autoworkers is less than that of the average laborer producing items ranging from metal and wood products to food and beverages.

Werner has lived through it all: She joined General Motors Corp. in 2008 before its bankruptcy, lost her job when the factory closed and then was rehired in 2011 when it opened again after the bailout -- joining thousands of new workers earning about half what autoworkers were paid before 2007 and without traditional pensions and retiree health care.

Part of President Barack Obama’s re-election platform is his 2009 decision to support an $85 billion bailout for the U.S. auto industry, the subject of a vigorous exchange at this week’s presidential debate. Less understood is the new class of autoworkers who, even before the bailout, started taking jobs that gave up decades of union gains and agreed to an uncertain economic future to bring thousands of jobs back to American factories.

“In 1960, an autoworker was the symbol of high productivity, global leadership and a middle-class future,” said Harley Shaiken, a professor of labor relations at the University of California at Berkeley. “Today, an autoworker is a symbol of all the pressures of the global economy.”

Werner, though, said she couldn’t be happier.

“It’s just an opportunity for me,” said the 30-year-old, who installs seat-belt covers and dashboard parts on Chevrolet Sonic and Buick Verano cars at General Motor Co. (GM)’s factory in Orion Township, Michigan. “It’s a better life for my kids.”

Union Concessions

Since 2007, the United Auto Workers has agreed to let automakers hire new workers who forgo traditional retiree health care, equal pay for equal work, job security and pensions in exchange for jobs that would have gone to Mexico or Asia. About 13 percent of GM, Ford Motor Co. (F) and Chrysler Group LLC hourly workers, or 15,155 employees, now are entry level.

The union’s concessions were inconceivable -- and easily rejected by labor leaders -- just a few years before. Now, as many as half the workers at the Michigan factory assembling Sonic and Verano sub-compact cars make less than the $19.10 hourly average U.S. manufacturing wage and lack traditional union retiree benefits.

The U.S. economic recovery has been built on the shoulders of autoworkers such as Werner, who left a $9 an hour job at a nursing home in November to earn $16.78 an hour at GM, and David Ramirez, 39, who earns $18.41 an hour installing mounting brackets for transmissions at the same plant. In August 2011, he escaped an $8 an hour job making doughnuts at Wal-Mart.

Significant Gains

While the rest of the U.S. economy continues to lag, the significance of the auto industry’s comeback is hard to overstate. Autos contributed 18 percent of the 2.2 percent average rate of growth for gross domestic product in the recovery that began in the third quarter of 2009 -- when GM followed Chrysler out of U.S.-backed bankruptcy -- to the second quarter of 2012, according to data from the Commerce Department.

The U.S. auto industry sold cars in September at a faster rate than in any month since March 2008, before the failure of Lehman Brothers Holdings Inc. GM earned $9.19 billion last year. Automakers throughout the U.S. have been on a binge of hiring that has led to third shifts in eight states.

“This is the reason we have job growth in the United States,” Kristin Dziczek, director of the labor and industry group at the Center for Automotive Research in Ann Arbor, Michigan, said in an interview. “I don’t think we would have seen the new investments and the job growth in the United States without some movement in labor costs.”

Closing Gap

The compromises will close the labor-cost gap at GM, Ford and Chrysler factories with those at U.S. plants for Toyota Motor Corp. (7203) and Honda Motor Co., Dziczek said. By 2015, GM’s total cost for wages and benefits will be about $59 an hour, compared with $56 at Toyota. In 2007, GM estimated the gap with Toyota at $25 to $30 an hour. Chrysler’s average hourly labor costs may fall by 2015 to $53, lower than Toyota’s, CAR said.

The price is steep in terms of an elite working-class standard of living that has been a hallmark of the UAW, said Shaiken, the labor professor. The risk is that the concessions will spread through the U.S. labor market in much the same way union gains of the past seven decades have benefited workers, he said.

‘Reasonable’ Lifestyle

“They’re making a wage where hopefully they can have a reasonable family life,” Michigan Governor Rick Snyder, a Republican, said in an interview at Bloomberg’s New York headquarters. “Everyone had to make some sacrifice. The cost structures were so high.”

Until now, autoworker pay has never dropped below the average industrial wage since Henry Ford instituted the $5-a-day wage for factory workers in 1914, according to a comparison of historic prevailing UAW wages provided by Ford in 2011 and pay data from the U.S. Bureau of Labor Statistics.

Applying the hourly rate for Werner and Ramirez to a 40- hour week, 52 weeks a year, would total about $35,000 to $38,000 annually. Overtime and other premiums, such as for working night shifts, can increase those totals. This is unfamiliar territory for a U.S. autoworker: between the 2011 median income of $50,502, and the poverty line of $23,000 for a family of four.

“Henry Ford pioneered it and the UAW and other industrial unions ensured it became a feature of life for the American worker,” Shaiken said of the middle-class lifestyle. “This just underscores that we’re in a very troubled time.”

Werner’s Arrival

Werner doesn’t feel troubled by her new job at GM. It’s much better that what she confronted four years ago, when she first came to GM for a temporary job at the Orion plant, which was then building Malibu sedans. Her cousin, who works at another GM factory in Michigan, helped her get that job. GM was about to enter bankruptcy and the plant was expected to close.

“In 2008, it was very depressing,” Werner said in an interview over lunch at a Denny’s restaurant not far from the elementary school her two sons attend in Sterling Heights, Michigan. “Both the permanent employees and the temps knew they were going to get let go.”

She said she didn’t want to live on unemployment benefits after the plant shut down, so she took the job at the nursing home. In the meantime, she went back to school to add a bachelor’s degree in health-care management to her associate’s degree in business from Baker College. Her bills mounted. Her sons, ages 6 and 8 now, heard “no” way more often than “yes,” she said.
“I gave up on GM,” she said. “I didn’t think I’d ever go back.”

‘Amazingly Hard’

The Orion plant closed in November 2009. While GM said at the time it might open at some point, workers weren’t sure.

One of them was Rachelle Wakefield, 27, a lower-paid, entry- level worker who got into the plant originally thanks to a referral from her father, Pat Sweeney, president of UAW Local 5960, which represents workers there. After Orion closed in 2009, Wakefield landed a different job with the union: calling members to help them find services and support to get back on their feet. In many cases, the phones of the 40 or so workers she tried to reach each day were disconnected because they couldn’t afford service. Many lost their homes.
“It was amazingly hard,” Wakefield said. “It was scary. We didn’t know if we were ever going to come back.”

Factory Changed

In August 2011, Orion did open, as a very different plant. The agreement means there are fewer of the expensive, specialized workers known as “skilled trades.” In addition, union workers share some of the 4.3 million square feet under the factory roof with outside subcontractors who do non-assembly jobs for even lower pay than entry-level GM workers, Sweeney said.

Orion began making Sonics in August 2011 and in November added the Verano.
On Nov. 24, Debbie Werner got a call to be at the Orion Township plant the next day if she wanted her old job back. She was a temporary worker until June, when she was hired full-time. All her benefits will kick in shortly after a probationary period expires, she said.

Suddenly, this $16.78 an hour job that seems austere by auto standards looks to Werner like a comfortable life, an escape from the hardship facing so many other people still struggling to dig out from the 2009 recession.

‘Real Christmas’

Werner has moved out of government-subsidized housing and bought a newer sport-utility vehicle with leather seats and a built-in television screen. She’s planning to use profit sharing next year to look at buying her first home.

“Now I can take my kids to Chuck E. Cheese,” she said. “They actually had a real Christmas last year and I’m debt- free.”

She picks her boys up from school, sometimes making a stop at McDonald’s, before she heads to the plant for a 5:30 p.m. shift start. Her father watches the boys overnight. She carpools with her sister, who is now a temporary worker at the plant, making a regular stop each night for cigarettes and energy drinks to get ready for the shift. She gets out in time to take the boys to school and then goes to sleep, she said.

“I think things will all just go up from here,” she said. “I feel secure in my job. I feel like I have room for advancement.”

Decades Past

Werner’s relative prosperity is a sharp contrast with the lives autoworkers lived in past decades when UAW members often made 20 percent to 50 percent more than the prevailing manufacturing wage -- particularly from the mid-1980s, according to U.S. data. Overtime during a truck boom in the late 1990s meant some workers cleared $100,000 a year.

The pay, which is still about $58,500 before overtime for a traditional worker, meant they could afford a robust middle- class life with perks such as cottages in Michigan’s northern vacation areas and collections of snowmobiles, jet skis or motorcycles. A fixed pension and health care plan helped workers maintain many of those perks in retirement.

The onslaught of cheaper models churned out by non-union workers with lower labor costs at the U.S. factories of Toyota and Honda finally weakened U.S. automakers to the point where the union was forced to make compromises in 2007 they had long resisted, said Art Schwartz, a top GM labor negotiator who worked on the agreement that created the entry-level workers before he left GM in 2009.

Share Erosion

GM, Ford and Chrysler’s share of the U.S. market fell from 87 percent in 1970 to about half of the market in 2007.
“The UAW lost their grip on the situation when the transplants came in and they couldn’t organize them,” Schwartz said. “They came to the realization that something needed to be done.”

The deal Schwartz helped craft allows automakers to hire new workers at a wage about half what traditional members were paid and exclude them from the current $36,000 a year retiree pension plans traditional ones will get, a benefit first negotiated in 1949.

Instead of the pension, the new workers such as Werner and Ramirez have a 401(k) program that includes a small provision toward health care. Under today’s contracts, the new workers may eventually reach the same pay as traditional workers. They never will receive the fixed pension or paid retiree health care.

The U.S. autoworkers went further than others: In 2006, Volkswagen AG employees in Germany agreed to extend their work week by six hours for no extra pay in return for VW’s promise that all of its German factories would remain open. The deal was an important part of VW’s renaissance.

Too Late

While the concessions were profound, they came too late to prevent GM and Chrysler from slipping toward bankruptcy in late 2008.

When the automakers first sought a bailout in late 2008, members of Congress cited UAW pay as an issue. They demanded the UAW and automakers eliminate the so-called jobs bank, a plan added in 1984 that allowed workers whose plant closed or job was eliminated to continue to receive most of their pay without having to work until they retired or found a new factory job.

Now, thanks to the UAW’s flexibility, lower paid entry- level workers and the ability to start the factory with a “clean sheet” design that allows for efficient technology, GM can afford to build small cars in Orion instead of Mexico, said Gerald Johnson, GM’s North America manufacturing manager since 2002.
Many of the techniques learned in Orion Township are spreading to other GM plants, Johnson said.

UAW Gains

As U.S. automakers hire new, lower-cost workers the UAW has posted two straight years of membership gains, to 380,719 members last year, according to a March union filing with the U.S. Labor Department. UAW membership peaked at 1.5 million members in 1979.

The UAW has said that Chrysler and GM can have as many as 25 percent of their workforce represented by entry-level workers by 2015 and Ford is capped at 20 percent. If the automakers have more workers than that in 2015 at the entry-level wage, some of those workers may be eligible to make $28 an hour.

Already, 9 percent of GM’s 49,500-member UAW workforce is entry-level, according to the automaker’s data. About 12 percent of Ford’s 42,700 hourly workers are new hires and 20 percent of Chrysler’s 27,000 hourly workers were entry level in June.

The UAW wasn’t allowed to strike GM and Chrysler in 2011, a condition of the bailout. In 2015, it will be a traditional bargaining session and if companies are still posting healthy profits, workers may try to get back some of the benefits they gave up, Dziczek said.

“What I make right now, I could live off of it,” Werner said. “Do I want to live off of it the rest of my life? No -- $16 an hour, single mom, is not going to put two kids through college.”

No Grumbling

While some workers may grumble about people who do the same job at the Orion factory and make more money, Ramirez isn’t one of them. He lost a GM factory job in 2009 at a plant that was closed in the automaker’s bankruptcy. He spent two-and-a-half lean years scraping by as he hoped and waited to be called back.

Besides the doughnut stint at Wal-Mart, Ramirez also tried to pay the bills by cutting lawns and by making doughnuts at a Tim Horton’s fast-food restaurant alongside a woman who had to live out of her car with her daughter.

Now, Ramirez says he feels he has been delivered from the edge of poverty onto a pathway to prosperity. Not only did his new GM job allow him to pay off his mounting debts, he also was able to afford what was once the epitome of American automotive luxury: a Cadillac. Sure, it’s an eight-year-old Caddy, but it beats the 21-year-old Ford Taurus he was driving.

“People were just surviving and now we have great jobs,” Ramirez said. “We’re the wave of the future.”

To contact the reporters on this story: Jeff Green in Southfield, Michigan, at jgreen16@bloomberg.net; Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net.

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

How Germany Builds Twice as Many Cars as the U.S. While Paying Its Workers Twice as Much

Frederick E. Allen
Frederick E. Allen, Forbes Staff
I am the Leadership Editor of Forbes.
12/21/2011 @ 5:42PM |207,422 views

How Germany Builds Twice as Many Cars as the U.S. While Paying Its Workers Twice as Much

LEIPZIG, GERMANY - NOVEMBER 05:  Workers assem...
A BMW assembly plant in Leipzig, Germany.

In 2010, Germany produced more than 5.5 million automobiles; the U.S produced 2.7 million. At the same time, the average auto worker in Germany made $67.14 per hour in salary in benefits; the average one in the U.S. made $33.77 per hour. Yet Germany’s big three car companies—BMW, Daimler (Mercedes-Benz), and Volkswagen—are very profitable.

How can that be? The question is explored in a new article from Remapping Debate, a public policy e-journal. Its author, Kevin C. Brown, writes that “the salient difference is that, in Germany, the automakers operate within an environment that precludes a race to the bottom; in the U.S., they operate within an environment that encourages such a race.”

There are “two overlapping sets of institutions” in Germany that guarantee high wages and good working conditions for autoworkers. The first is IG Metall, the country’s equivalent of the United Automobile Workers. Virtually all Germany’s car workers are members, and though they have the right to strike, they “hardly use it, because there is an elaborate system of conflict resolution that regularly is used to come to some sort of compromise that is acceptable to all parties,” according to Horst Mund, an IG Metall executive. The second institution is the German constitution, which allows for “works councils” in every factory, where management and employees work together on matters like shop floor conditions and work life. Mund says this guarantees cooperation, “where you don’t always wear your management pin or your union pin.”

Mund points out that this goes
against all mainstream wisdom of the neo-liberals. We have strong unions, we have strong social security systems, we have high wages. So, if I believed what the neo-liberals are arguing, we would have to be bankrupt, but apparently this is not the case. Despite high wages . . . despite our possibility to influence companies, the economy is working well in Germany.
As Michael Maibach, president and chief executive of the European American Business Council, puts it, union-management relations in the U.S. are “adversarial,” whereas in Germany they’re “collaborative.”

Does such a happy relationship survive when German automakers set up shop in the U.S.? No. As a historian observes in the article,  “BMW is a German company and it has a very German hierarchy and management system in Germany,” yet “when they are operating in Spartanburg [in South Carolina] they have become very, very easily adaptable to Spartanburg business culture.” At Volkswagen’s Chattanooga plant, the nonunionized new employees get $14.50 an hour, which rises to $19.50 after three years.

The article’s author, Kevin C. Brown, asked Claude Barfield, a scholar with the American Enterprise Institute, why the German car companies behave so differently in the U.S. He answered, “Because they can get away with it so far.”

 Read the complete Remapping Debate article here.

A tale of two systems

Original Reporting | ByKevin C. Brown | Alternative models, Labor
Dec. 21, 2011 ­— American autoworkers are constantly told that high-wage work is an unsustainable relic in the face of a hyper-competitive, globalized marketplace. Apostles of neo-liberal economic theory — both in the public and private sectors — have stressed the message that worker adaptation is necessary to survive. Indeed, Steven Rattner, President Obama’s “car czar” during the restructuring of General Motors and Chrysler in early 2009, spoke last week of his regret that the federal government had not required the United Auto workers to take a wage cut at that time to enhance the competitiveness of those companies, comments similar to those he made in a recently published book (after the outcry created by last week’s remarks, Rattner yesterday backed away from them, though reiterating his view that more “shared sacrifice” would have bolstered American competitiveness).

Apostles of neo-liberal economic theory — both in the public and private sectors — have stressed the message that worker adaptation is necessary to survive.
Governments, too, the globalists have contended, should not think that markets can or should be controlled. As Remapping Debate reported earlier this year in an article about the role of large consulting firms in the promotion of the notion that national policy can and must allow global capital a free hand, McKinsey & Co. was already arguing back in 1994 that “a national government has no choice but to move forward to embrace the global capital market unless it wants to harm its own citizens, its economy and its own purposes.”

But the case of German automakers — BMW, Daimler, and Volkswagen — tells a different story. Each company produces vehicles not only in Germany, but also in “transplant” factories in the U.S. The former are characterized by high wages and high union membership; the U.S. plants pay lower wages and are located in so-called “right-to-work” (anti-union) states.

It turns out that “inevitability” has nothing to do with the differing conditions; the salient difference is that, in Germany, the automakers operate within an environment that precludes a race to the bottom; in the U.S., they operate within an environment that encourages such a race.

Sales and profitability

In 2010, over 5.5 million cars were produced in Germany, twice the 2.7 million built in the United States. Average compensation (a figure including wages and employer-paid benefits) for autoworkers in Germany was 48.97 Euros per hour ($67.14 US), while compensation for auto work in the United States averaged $33.77 per hour, or about half as much as in Germany, all according to 2007 data from the Bureau of Labor Statistics. For Germany-based auto producers, the U.S. is a low-wage country.

Despite German companies’ relatively high labor costs in their home markets, these firms are quite profitable. An examination of the latest publically available financial statements of BMW, Daimler (Mercedes-Benz cars), and Volkswagen reveals strong sales and profits even in the midst of the currently weak consumer markets in Europe and the U.S. In 2010, for example, BMW, produced 1.48 million cars (63 percent of them in Germany), and earned a before-tax profit from its automotive division of 3.88 billion Euros. The Mercedes-Benz car division of Daimler, likewise produced 1.35 million cars (72.4 percent in Germany) in 2010, and earned a before-tax profit of 4.65 billion Euros.

Race to the bottom in the U.S.

Officials in anti-union states have long sought to lure businesses with the promise of free rein in relation to labor (and to regulation more generally). Sen. Lamar Alexander (R -Tenn.) delivered the weekly Republican Party address this past June, telling his listeners frankly that, when he was Tennessee’s governor in 1979, the state’s right-to-work law was part of his successful pitch in getting Nissan to open an auto plant.

It turns out that “inevitability” has nothing to do with the differing conditions; the salient difference is that, in Germany, the automakers operate within an environment that precludes a race to the bottom; in the U.S., they operate within an environment that encourages such a race.
Alexander participated in a ceremony celebrating the opening of a new Volkswagen assembly plant earlier this year near Chattanooga, and again he cited the state’s right-to-work law as among the reasons that Volkswagen chose to come there.

At that Chattanooga plant, according to a company spokesperson, new employees earn $14.50 an hour, with wages gradually rising to $19.50 after 3 years on the job.

A representative of BMW’s Spartanburg plant declined to divulge wages employees earn in its South Carolina (non-unionized) facility, but the Washington Post reported last year that employees at the plant earned $15 per hour.

Workers at American companies have seen their wages eroded. As Remapping Debate has reported, the UAW has made significant concessions on wages, especially through the creation of a permanent “Tier 2” level for all new employees. Whereas incumbent “Tier 1” workers earn about $28 an hour, all new UAW hires at the GM, Ford, and Chrysler earn around $15 per hour.

The companies have argued that this new tier is essential. Marci Evans, a Ford spokesperson, told Remapping Debate, “It is our [Ford’s] preference to build competitively in the markets we sell in.” She added, “reduced cost through introducing an entry level [Tier 2] workforce” is an important part of that strategy.

Gary Casteel, the Region 8 director of the UAW, the region covering the whole southeast of the country, acknowledged the creation of “Tier 2” as “concessionary,” and said, “It’s never attractive to not have equal pay for equal work, but when you’ve got Nissan hiring in Mississippi for $12.50…and Volkswagen for $14…how are we going to maintain a wage level when our competition is doing this?”

The counter-example in Germany

Workers in the German auto industry maintain high wages and good working conditions through two overlapping sets of institutions. First, in the auto industry, virtually all workers are unionized members of IG Metall, the German autoworkers’ union. With such union density, workers have considerable power to keep wages high. German autoworkers have the right to strike, but as Horst Mund, head of the International Department of IG Metall explained to Remapping Debate, they “hardly use it, because there is an elaborate system of conflict resolution that regularly is used to come to some sort of compromise that is acceptable to all parties.”

According to historian and author Marko Maunula, “There is no real industrial nationality anymore.”
In addition to high trade union density supporting the power of German autoworkers’ wages, the German constitution itself includes a second mechanism for keeping employees involved in the decisions of the firm for which they work. The Works Constitution Act provides for the creation of Works Councils in each factory. The Works Councils provide a mechanism through which a company’s management must work with employees, whether they are in a union or not, on issues affecting work life, such as shop floor conditions, scheduling shifts, and other issues particular to the factory. This system, according to Mund, institutionalized “direct contact for workers’ representatives with management at various levels, from lower to middle to senior management in daily affairs. So you exercise some kind of dialogue where you don’t always wear your management pin or your union pin.”

Mund points out that the German example goes “against all mainstream wisdom of the neo-liberals. We have strong unions, we have strong social security systems, we have high wages. So, if I believed what the neo-liberals are arguing, we would have to be bankrupt, but apparently this is not the case. Despite high wages…despite our possibility to influence companies, the economy is working well in Germany.”

Are German unions nice and American unions nasty?
Mund says “there are strong contradictions between the way companies that…are used to dealing with unions in Germany, behave differently when they go elsewhere, not only in the U.S., but also in other countries.” What accounts for the differences?

Michael Maibach, president and chief executive officer of the European American Business Council, described this apparent difference by saying that union-management relations in the U.S. were “adversarial" as opposed to the "collaborative” German model. J. Ed Marston, a spokesperson for the Chattanooga Area Chamber of Commerce, likewise told Remapping Debate that “Workers councils in Germany promote cooperation between workers and managers and they deliver value and they continue to thrive…Compared to UAW, where there is an adversarial relationship.”

German union official Horst Mund sees the lauding of “cooperation” in the German context as profoundly misleading, saying companies "would not talk to us either if they had the choice.”
According to Mund, however, “The accusation that American unions are more radical and destructive…definitely has to do with the hostile environment in which the unions have to act. How can they be constructive and friendly if their asses are kicked all the time?” Mund sees the lauding of “cooperation” in the German context as profoundly misleading, saying “they would not talk to us either if they had the choice.”

Mund emphasized the importance of the trade union and works councils in maintaining workers’ participation and high levels of remuneration, and said that the focus was not to maintain the good will of individual firms. He said, “Companies in Germany, while they are bound by law to work with us in works councils, and we are present on supervisory boards, they just have to do this. For most of the companies, not for all, it is not something they would do if they were not forced to do that. The companies are there to make profit, and in the eyes of many managers we are not conducive to making as much profit as possible, but rather a hindrance.”

Because they can get away with it”

Marko Maunula, a historian and author of the book, Guten Tag, Y’All: Globalization and the South Carolina Piedmont, 1950-2000, told Remapping Debate that foreign-based manufacturers like BMW “are very cognizant of the political climate of communities,” and they behave differently depending on the legal and social context within which they find themselves. Globalization over the last 20 or 30 years, Maunula suggests, has resulted in a situation where “there is no real industrial nationality anymore.” Though “BMW is a German company and it has a very German hierarchy and management system in Germany…when they are operating in Spartanburg they have become very, very easily adaptable to Spartanburg business culture.”

Coming from a very different perspective, Maibach told a very similar story: unlike in Germany, where unionization and high wages are normalized by law and custom, “the U.S. has a different tradition” and “companies have a choice to make” about where to locate their facilities, often deciding on places where the risk of unionization is lower.

Mund relates the initial perplexity of his American counterparts in response to the anti-union stance taken by German automakers in the U.S.: “In the past we frequently had the impression that our American colleagues thought we would just have to talk to management here in Germany in the sense that ‘look, behave decently, you know us, we’re the good guys, our American colleagues from the UAW they are equally good, so behave mutually and everything will be fine.’”
But,” Mund said with understatement, “It is not working like this.”

When asked why German firms operate so differently with respect to labor in different countries, Claude Barfield, a resident scholar at the American Enterprise Institute where he studies international trade and globalization, told Remapping Debate that they do so, in part, “because they can get away with it so far.”

Though a Volkswagen-Chattanooga spokesperson told Remapping Debate that “it is up to our production team members to decide” whether to join a union, Barfield points out that all of the German-based auto manufacturers in the U.S. located in right-to-work states are “not unhappy with the situation they have now,” citing the fact that they “have more authority, they have more power” than they would in a unionized context.

Barfield said that factors other than wages brought the German carmakers to right-to-work states. A central reason for their interest in those states, he says, “has to do with not wanting to…get involved with work rules and seniority.”
They have, he continued, “a much greater flexibility just in assigning work, and to be able to have plants change as conditions change. So, they’re not unhappy with that. They would not say they are happier with this than the system they deal with in Germany, but they probably are.”

Making choices

Returning to the experience of Germany’s domestic auto industry, Mund says that, while “it is not a law of nature that you have to be non-unionized to be successful,” companies are clearly choosing not to be union where they don’t have to.

“When the Democrats were in [full control of Congress] under Obama, they promised to change” — making it easier for unions to organize through a card check system — but “that didn’t happen.” — Claude Barfield, American Enterprise Institute
Could conditions in the U.S. be changed to produce a structure that, like Germany, protects workers against declining wages and conditions?

Barfield noted that “you’d have to change major state law as well as federal law.” His prognosis is not that it is impossible as a legal matter, but that, as a practical matter, “it will never look like Germany.”

In the U.S., there’s no prospect that we will change our laws,” he continued. “When the Democrats were in [full control of Congress] under Obama, they promised to change” — making it easier for unions to organize through a card check system — but “that didn’t happen.”

More broadly, Barfield said, “It’s a different tradition of business, government, and labor relations. Three pieces of things all together in Germany and the U.S. never had that. So I don’t think it’s just that the laws per se, it’s the attitude of corporate leaders and union leaders and governments. Not because of one specific piece of legislation.”

If he is right — and no one we spoke with disputed Barfield’s short-term political assessment —— conditions for labor in the U.S. auto industry will continue on their current path, a path described by the UAW’s Casteel as “spiraling downwards.”

On the other hand, despite Barfield’s reference to tradition, the “tradition” in the U.S. through the 1970s was having a highly unionized auto making industry, one that paid good wages. Indeed, the tradition was such that the initial forays of German automakers into the U.S. saw them accept unionization in their transplanted factories (see box below).

Casteel and Mund hope for a return to that tradition, with Casteel saying, “Corporations aren’t going to give back to the workers unless they are made to.” The UAW has said that it is renewing its efforts to organize the southern transplants, but has not released specifics on its strategy or timetable.
A different beginning
Despite the current differences in auto industry labor practices in Germany and U.S., German auto firms’ foray into manufacturing in the U.S. initially conformed to the high-wage, unionized mode of German industry. As part of a wave of foreign direct investment in the U.S. by European-based firms, in 1978, Volkswagen opened the Westmoreland Assembly Plant, 35 miles outside of Pittsburgh. At the time, most autoworkers in the United States were members of the United Auto Workers, and Westmoreland became no exception, and the plant rapidly unionized.

Volkswagen’s quick acceptance of labor organizing at its first American plant was apparently not out of the ordinary for newly arrived foreign-based firms. In 1981, two economists asked in the U.S. Labor Department’s Monthly Labor Review, “Do foreign owned U.S. firms practice unconventional labor relations?” Noting that “it is very possible that unionization may pose no great problem for foreign-owned firms, especially those with European parent companies, because they have been dealing with unions successfully for many years,” the authors’ survey of unions and firms in the U.S. concluded that “foreign owned companies do not differ from domestically owned companies in their approach to most labor relations issues.”

South Africa Auto Workers Win Raise


South Africa Auto Workers Win Raise

Agence France-Presse/Getty Images
Truck drivers strike in Cape Town on Thursday.

JOHANNESBURG—Toyota Motor Corp. 7203.TO -0.20% agreed to raise wages at its South African plant following a three-day illegal strike, a move that ends a costly disruption for the Japanese auto maker and signals that walkouts are paying off for workers in the continent's largest economy.

The National Union of Metalworkers of South Africa, which represents auto workers, said Toyota agreed on Thursday to increase hourly wages by 5.7% at its plant in Durban, where the company makes cars, trucks and minibuses. The strike wasn't permitted under South African labor laws because the union hadn't informed the company of its intention to strike, yet the union intervened to resolve the dispute.

Toyota said an agreement was reached to end the strike, but declined to comment on details of the deal. The company said employees would return to work on Friday, and that it had lost 2,428 vehicles worth of production, about 14% of its monthly average, during the wildcat strike, which started Monday.

The strike marked the first big work stoppage in South Africa's manufacturing sector and came amid a continuing wave of unrest at the country's mines.


The Toyota wage increase, following South African platinum miner Lonmin LMI.LN +5.01% PLC's decision to raise wages last month to end a six-week illegal strike at its Marikana mine, suggested that workers are likely to continue hold out for better pay.

"What happened at Marikana has emboldened people," said Chris Gilmour, an investment analyst with Absa Private Client Management. "People who aren't earning a lot are being hit with higher fuel and food prices so they think they have nothing to lose now."

Strikes have continued at some of the country's biggest platinum and gold mines, stemming in part from efforts by rival labor unions to retain members or win new ones.

Anglo American Platinum Ltd., the world's biggest producer of the metal, said this week its Rustenburg mines remain shut while violence has escalated with protesters clashing with police.

South Africa's labor minister has been involved in talks with mining companies and unions and other industries on strike, such as the trucking sector. A spokesman for the labor department said the burden for resolving the unrest remained with the companies and the unions. "Sometimes there's not much the department can do," a spokesman for Labor Minister Mildred Oliphant said.
South Africa's factories represent a sensitive spot for the economy.

Manufacturing accounts for 15% of the country's gross domestic product, and the government has been keen to show that big-name manufacturers can use the country as a base to expand into the rest of the continent. After emerging Asia, Africa is the fastest-growing region in the world and home to a new middle class.

Other car makers were watching closely for signs of labor unrest. Auto factories, which account for 10% of South Africa's manufacturing output, play a crucial part in helping the government achieve its goals of reducing unemployment—now hovering around 25%. Along with Toyota and General Motors Co., GM -0.04% Ford Motor Co., F +0.15% BMW AG BMW.XE +0.09% and Nissan Motor Co. 7201.TO -1.90% produce cars in the country mostly for export.

But the current turmoil and rising costs remain a concern for companies. "Any kind of industrial action is a concern," says Denise van Huyssteen, a spokeswoman for General Motors in South Africa. "It sends all the wrong messages."

Business confidence in South Africa declined in September to near a decade low. South Africa's purchasing-managers index, a survey of private companies' spending on goods and services, also fell in September to a three-year low, signaling the expectation that production will drop in the months ahead.

South Africa's trade deficit grew to $1.5 billion in August from $790 million in July, thanks to plummeting demand from the European Union.

Labor unrest threatens to compound strains from weak overseas demand, said Hugo Pienaar, senior economist at the Bureau of Economic Research. "It's a bit of a double whammy for the manufacturing sector," he said.

Toyota is fending off factory troubles beyond South Africa. In September, it cut back production in China as orders and sales dropped amid anti-Japanese protests. In South Africa, Toyota is among many companies feeling the pain from striking workers.

Foxtec-Ikhwezi (Pty) Ltd., a small company that makes suspension struts for Daimler AG DAI.XE +0.10% in the port city of East London, had already seen business fall 8% this year before a trucking strike cut off its access to most of the aluminum it needs to make parts for Mercedes plants in South Africa, Europe and China.

If the strike goes on, Foxtec will have to stop production next week, said executive director Pieter Bosch.

"The mining industry has set some very dangerous precedents for manufacturers and for the whole country in general," Mr. Bosch said. "That could have unintended consequences for the balance of the economy."

South Africa's currency, the rand, fell to its weakest level in a month on news of widening strikes. On Thursday afternoon the rand traded as high as 8.50 to the dollar, down more than 2% since the start of this week.

A weaker currency should make life easier for manufacturers, because it makes their products cheaper to customers abroad. But South Africa's central bank chief noted this week that the dynamic doesn't work if no one wants to buy those cheaper products.

"South Africa can produce all these things but if you've got more than half the euro-zone countries in recession, you haven't got a market," said Gill Marcus, governor of South Africa's Reserve Bank.

Write to Devon Maylie at devon.maylie@dowjones.com and Patrick McGroarty at patrick.mcgroarty@dowjones.com

Membership drop sends union advocates into the South


Membership drop sends union advocates into the South

The United Auto Workers Local 174 is seen Friday outside the union building in Romulus, Mich.
The United Auto Workers Local 174 is seen Friday outside the union building in Romulus, Mich. / AP
From a sprawling United Auto Workers hall outside Detroit, Mich., John Zimmick has seen factories close and grown men cry when their jobs disappear. Through all the economic uncertainties of life in auto country, there has been one constant: the union.

In its nearly 80-year history, Zimmick's UAW Local 174 has been tested by bitter strikes, foreign competition and tenacious opponents. Now comes a new reason for anxiety.

On Thursday, Michigan's right-to-work law takes effect, a stunning shift in this symbolic capital of organized labor. The historic change is just the latest sign of turmoil in the union movement that has seen its nationwide membership shrink to its lowest levels since at least the 1930s — a paltry 6.6 percent in the private sector.

With 14.4 million members, unions still can be a potent political force at the ballot box. But protests in recent years over the passage of right-to-work laws in Michigan and Indiana, clashes over collective bargaining in Wisconsin and Ohio and a sharp drop in union elections across the U.S. have raised larger questions:

--Where do unions go from here?
--How they do mend their battered image?
--Can they recruit new members?
--And is organized labor even a movement any longer?

Zimmick looks for answers in a union hall steeped in history. It's filled with photos, meeting minutes and other memorabilia belonging to Local 174's first president, Walter Reuther — even a phone used by the legendary leader who transformed the UAW into an economic and political powerhouse. Modern-day realities are far different: With layoffs and some 30 plants closing in the last five years, the local's ranks have dropped by more than a third, to about 5,000.

There could be even more losses with right-to-work, signed into law last December by Michigan Gov. Rick Snyder. Though employees won't have to make mandatory payments to unions that represent them in collective bargaining agreements, Zimmick isn't expecting the measure to have a major impact. "It's going to weaken us," he says, "but it's not going to kill us."

Still, Zimmick worries not just about his local — but the fate of all unions.
"It weighs on me every single night before I go to bed," he says. "Unions don't have the leverage and power that we used to. It doesn't mean we won't regain it. The unions, in my opinion, will come roaring back. ... But the image is terrible right now. The media spins us as hurting business and the non-union workers — there's animosity and jealousy toward us."

Organized labor is fighting to extend its reach in the private sector, including in the South, generally hostile turf for unions.

The UAW has lost two bids to organize workers at the Nissan Motor Co. auto plant in Smyrna, Tenn. The union is now trying to get the Japanese automaker to allow it in the plant to make its case to workers in Canton, Miss.

Black ministers, college students, the NAACP and political leaders, with an assist from actor Danny Glover, have formed an alliance, staging press conferences, holding rallies and making TV appearances, casting the campaign as a civil rights battle.

Everlyn Cage, a Nissan worker, wants UAW representation. "A union," she says, "would help us have a voice at the plant. It would help us sit down and negotiate our safety."

Cage says Nissan has used "fear tactics," including roundtables with company officials suggesting the plant will close if workers unionize. Similar complaints have come from some Smyrna workers. Many colleagues, she says, tell her they'd support a union "but they don't want to come out publicly. They say, 'We have families and children and we need our jobs.'"

Nissan says accusations of intimidation are "simply false." It also notes the company didn't lay off any U.S. workers during the recession when demand dropped and workers shifted to non-production jobs without getting pay cuts.
Kimberly Ragsdale, a Nissan worker in Canton, says her job helped finance two of her kids' college educations — something that would have been impossible in her previous $10-an-hour position driving a forklift.

She thinks unions are pointless. "Why," she asks, "would you pay somebody to talk for you when you have the freedom to voice your own opinion?"
Her message for union supporters: "If they're not satisfied with Nissan, they should leave and leave us alone. If it was that bad here, why have you been here all these years?"

It's no surprise the UAW faces an uphill battle in red-state Mississippi, where unions represent a small fraction of workers.

Unions still have influence in blue-state strongholds, but the days are long gone when labor leaders were household names and generous contracts were virtually assured. Even in friendly terrain, there are both die-hard supporters and workers who've abandoned the movement.

John Consentino paid his first union dues at 18, following his father on the Ford assembly line in Ohio; now 39 years later, he credits the UAW with lifelong security. When friends who don't belong to unions tell him they're doing OK, he says he warns them: "Wait until the hiccup, when things aren't going fine. You're going to wish you had a union."

Don McGough lost his job as a union steelworker. He found a new position and a decade later, he voted no when the machinists' union tried to organize workers at his company, JWF Industries, in Pennsylvania. "There are so many companies that just closed their doors because the union wouldn't budge," he says.

So, are unions to blame for their dwindling numbers? Yes and no, according to Gary Chaison, an industrial relations professor at Clark University in Massachusetts. He says unions haven't been nimble dealing with globalization and an increasingly mobile workforce.

"I think there still is a labor movement," he says, "but it's having a very difficult time finding its relevancy. It's not sure what to do or how best to serve its members. ... They're sort of wallowing around without direction. They still have a power in their presence. They don't have a power in their mission."

But unions, he says, have been buffeted by forces beyond their control: Improved productivity and technology have reduced the number of workers needed.

Non-union employers have expanded in right-to-work-states. Companies have waged aggressive, successful campaigns to keep unions out. Plant closings make it almost impossible to replenish the number of union members lost.

Also, potential recruits are wary. "For most workers, joining a union is a risky deal and it has very little payback," Chaison says. "Most unions have not put their hearts and treasuries into organizing. It's so difficult and the payoff is minimal."

Zimmick knows firsthand. His local tried to organize workers at an auto supplier two years ago. The company, he says, responded by giving employees raises. "They said, 'Don't talk to those union guys. We're going to take care of you.'" The campaign didn't get to the vote stage.

The number of elections to certify unions has dropped dramatically. In fiscal year 2012, there were about 1,200 with more than 83,000 eligible voters, according to the National Labor Relations Board. In 1971, there were more than 7,500 with nearly 550,000 eligible voters.

The silver lining for union organizers: Approval rates have been near or above 60 percent since 2006. In contrast, they were just half in 1990. In the heyday of unions in 1950, though, three of four workers voting wanted to sign on.

Union membership declined to 11.3 percent of the workforce last year from 11.8 percent in 2011, according to federal statistics. Especially notable was a loss in the private sector, even as the economy created 1.8 million jobs.

"I chuckle every time I hear the words Big Labor— 6.6 percent is not big," says Jefferson Cowie, a Cornell University labor historian, referring to the share of private-sector workers in unions.

And yet, unions still have considerable muscle, capable of raising tens of millions of dollars for political campaigns — largely for Democrats — and getting out the vote. Last fall, the AFL-CIO announced it had registered more than 450,000 new voters from union households in the previous 18 months.

The union vote was considered critical to President Barack Obama's victory in states such as Ohio.

While unions representing U.S. manufacturing might — auto and steel — have become smaller, the emphasis in recruiting new members has shifted to the service sector.

The Service Employees International Union, which represents nurses and lower-wage service employees including janitors, security, hospital, home health and child care workers, has doubled in size since 1996, to 2.1 million workers. It says it has added 50,000 workers annually in the last decade.

The union recently organized about 3,000 security officers in Philadelphia commercial office buildings, hospitals and universities, winning a three-year contract that provides salary increases, health care for full-time workers and sick days.

Kevin Upshaw, a 46-year-old Army veteran and security officer at the University of Pennsylvania, says the contract will eventually boost his hourly wage from about $13 to about $15. Just an importantly, he says it'll also reduce medical expenses for his asthmatic wife, which have cost them about $11,000 over the past three years. "That's taking a big load off our shoulders," he says.

"The union gives us a lot more stability," Upshaw says. "It's making this job a career and it's taking us out of poverty."

Upshaw says he had some doubts at first about unions, but the more he heard, the more he liked. "Some people think they're only out to take our money," he says. "But like anything in life, you've got to pay for any service that's provided."
Gabe Morgan, president of the SEIU Pennsylvania State Council, says the yearlong campaign succeeded because it wasn't directed at a single company and workers had a common purpose.

"You have folks who live in the same neighborhoods, who may or may not know each other, doing the same job at different places," he says. "That kind of gives each other the strength to persevere. ... Ironically, it also made the employers more comfortable. It was easier for them to agree to something when they know their competitor was doing the same thing. No one was individually at risk."
Morgan also says the union label still is appealing in working-class communities where organized labor already has a foothold.

"If you're a low-wage worker living on the north side of Philadelphia or the West Side of Chicago, the only person who owns a house or has a lawn mower ... the only person making a decent living is someone with a union job," he says.

Though some unions have been forced to make concessions to save jobs in recent years, wages still can be very attractive.

Michael Bronson, who's starting an apprenticeship next month at Ironworkers Local 55 in northwest Ohio, expects to someday nearly triple the salary he's earned as an auto mechanic.

"For 10 years, I thought it was as good as it was going to get," says the 28-year-old Bronson. "I was just settling for whatever was offered. I was making $11 an hour and I had no health benefits. That was my future. ... You're expendable. They can pick up another guy at $8.50 and fire you."

Bronson began looking for a union job after noticing his in-laws — including a pipefitter — didn't share his financial pressures. "I knew they didn't live like I did, paycheck to paycheck, wondering what's going to happen next month," he says. "That's what persuaded me."

When he completes a four-year apprenticeship, Bronson expects an hourly wage of about $30. "Middle class to me is heaven," he says. "I've been $10,000 below poverty the last 10 years."

Six months ago, Bronson knew nothing about unions. Now he's a convert.
"It's kind of like a religion," he says. "Once you realize what a good union can do for you, you'll live it the rest of your life and you'll push it on everybody."

That attitude isn't universally shared. Approval of unions hovered around 60 percent through 2008, but it's now 52 percent, according to a 2012 Gallup poll. There's great political disparity: The favorability rate among Democrats is 74 percent; among Republicans, it's 31 percent.

Gallup also found slightly more than half those surveyed predict unions will become weaker, with only about one in five thinking they'll be stronger in the future.

Nowadays, fewer people have family roots in organized labor, and that colors the perception of unions. "The image goes back and forth between non-existent and the boogeyman," says Cowie, the Cornell historian.

The image in recent years has been shaped by skirmishes in the public arena, where union membership is nearly 36 percent. Massive protests in two industrial Midwest states in 2011 ended with opposite results.

In Ohio, voters overwhelmingly rejected a sweeping law that placed restrictions on public employee unions — a huge victory for labor. But in Wisconsin, the GOP-controlled Legislature approved Gov. Scott Walker's proposal that effectively ended collective bargaining for most public workers — a move that sparked an unsuccessful gubernatorial recall.

The Wisconsin law may have long-term ramifications. The number of unionized public workers there fell by about 48,000 in 2012 — about a quarter of the total, according to an analysis by Barry Hirsch, a labor economist at Georgia State University.

That suggests the incentive for being in one of those unions is now much weaker, Hirsch says, but it's too early to tell if that will be a trend.

But last fall in Pennsylvania, workers at JWF Industries, a metal manufacturer for the defense, oil and gas industries in Johnstown, voted 194-38 against joining the International Association of Machinists and Aerospace Workers.

Bill Polacek, company CEO and son of a union steelworker, appealed to his workers, saying he could point in every direction to unionized companies that were vacant or torn down. "If the union can promise you job security, why are all these companies not here anymore?" he says he told them. "A union can't promise you anything. All they can do is promise you union dues."

Still, he insists he's not anti-union.

"I think they have a purpose," he says. "There are companies that don't treat their employees right." But in his case, he adds:, "If the union had come in, it would have been a failure on my part. I wouldn't have been doing the right thing."

Don McGough, an 11-year veteran at JWF, rejected the machinists' bid. A former member of the steelworkers union, he lost his job at a machine shop when staff was cut after a 15-week strike.

That experience, he says, taught him a lesson about union leaders and negotiators. "They're worried about themselves," he says. "They're not worried about us. ... You're really putting your future in the hands of people you don't really know, compared to here. I know the owner really well and trust him."
In Michigan, Zimmick, the UAW man, says if unions don't like their leaders, they can vote them out. He says he knows his members and they aren't happy when he has to deliver painful messages about concessions or higher health care costs, but are pretty accepting.

Now the union faces new pressures with right-to-work, but he says it's a temporary setback. He expects the law will be a major issue in the state's 2014 elections — and his side will rebound.

"Unions will come back," he says. "I don't know when, but they will. They're here for a reason."