Global Labor Strategies

Labor and the Green Jobs of the Future

American auto workers and the UAW have been struggling – and even striking – to try to save their members' jobs.  In the last round of negotiations with GM and Chrysler the union won job guarantees for a segment of its shrinking membership. But tragically, most of the jobs it saved are jobs of the past, not jobs the future.

The UAW rescued jobs that will soon evaporate as the US transitions into a green economy.  Most are for building inferior gas guzzlers that not enough people want to buy. GM did announce during the negotiations that it would produce a new electric car called the Volt at a Michigan plant beginning in 2010. But according to some, the technology and the production plans are still very tentative. (It should also be noted that GM announced this week that it would open a major new research facility to develop green technologies—in China. GM’s US and Australian engineers who currently do this kind of work are worried.) By failing to mount a full scale challenge to GM’s product decisions and by joining GM in opposing stricter mileage standards, the UAW has helped make it likely that whatever jobs it “saved” under the new contract will soon be eliminated by environmental regulation – and global competition from vehicles with a smaller carbon footprint.

Job security for autoworkers no longer means simply limiting outsourcing, it requires shifting to cleaner, more energy efficient vehicles that offer genuine anchor for future job security. The UAW could have used this contract to demand that GM produce quality cars that address global warming concerns and that people want to buy. Instead, it let the automakers cast it in the role of “junior dinosaur.”

There is an alternative. Labor should actively promote the transition to a green economy. By doing so it can help create and retain decent union jobs with a future. The good news is that some parts of the labor movement are already hard at work on new strategies.

New York Times columnist Thomas Friedman, rarely a friend of labor, recently described the labor-backed Oakland Apollo Alliance’s successful creation of a "green-collar" union jobs program to train young low-income workers to install solar panels and weatherize buildings. A campaign by unions and allies persuaded the Oakland city government to kick in $250,000.  The effort has recently gone national, launching the "Green for All" campaign designed to pressure Congress to allocate $125 million to train 30,000 young people a year in green trades.

Challenging Corporate Secrecy in China

It’s hard to get accurate information about what’s really going on in China’s economy or its workplaces. This is a big problem for unions that need information about the companies they bargain with and the industries within which they operate. It’s also a problem for consumers who need to know about product safety and regulatory standards—as  recent scandals involving contaminated pet food, toothpaste, and children’s toys make clear—and for environmental organizations, human rights advocates, and other watchdog NGOs—all of which play important roles in the civil societies of the industrialized world.

It’s easy to blame the Chinese government for the information gap. But corporations in China—both foreign and domestic—are as much or more to blame. While how much information corporations can keep secret from the public as “proprietary knowledge” is contested in every country, in China corporations have far exceeded acceptable bounds by creating a raw capitalism based on secrecy and short term advantage. This is at odds with the transparency needed for the rule of law and social accountability. If labor laws, product safety standards, and environmental regulations are to be enforced public access to a wide range of information is required.

Now pressure is building for more transparency. For instance, on a recent trip to China US labor leaders agreed to an information exchange with their Chinese counterparts—something that could serve as the basis for further cooperation between Chinese and non-Chinese unions.  Some corporations are also questioning the corporate climate of secrecy and have even taken steps in the direction of transparency that could serve as the basis for a campaign by labor and civil society organizations to tear down the wall of secrecy that characterizes corporate business practices in China.

Just do it?

The global corporations that dominate the global economy are organized to minimize risk and avoid blame. They create complex supplier chains, strategic alliances, and networked production schemes that put distance between them and the production process; they employ contract labor to avoid long term commitments to workers; and they influence public discourse and public policy by financing think tanks, supporting business associations and lobbyists, and contributing to political campaigns.

If the products or services they sell are produced under sweatshop conditions, well, it’s not their fault, they don’t own the factories. If the business associations, the think tanks, and the political factions that they finance promote destructive social policies, well, it’s not their fault, these are membership organizations and they can’t be aware of everything that’s done in their name. Sometimes this gets them in trouble.

Case in point: Nike. Nike-- with hundreds of contractors in China producing for the domestic and export market-- has spent a great deal of energy in recent years sprucing up its operations and its image. By most accounts the company has been successful in improving working conditions in its supplier firms. So when both our report, Behind the Great Wall and a New York Times article, documented opposition by US based corporations to Chinese labor reforms and named Nike as a company that lobbied against the reforms “through the American Chamber of Commerce”, Nike bristled at being singled out. They claimed privately to a colleague that since they knew nothing about the proposed law they could not be accused of opposing it. We believe them. After all, this is exactly how companies avoid blame: they finance business associations to lobby for them. This gives them an arms length relationship to the grubby world of politics. Unfortunately, it doesn’t cut it for a company that claims to adhere to socially responsible business practices. (Click here for some interesting comment on this from sportswriter Henry Abbott.)

It may well be that it is unrealistic to think all of the members of business and lobbying organizations like the American Chamber of Commerce will agree or even be informed on every issue, but companies like Nike should be informed on important issues and speak out when they disagree with the organization’s positions. Silence is consent.

If Nike did not oppose the new law, they said nothing publicly to disassociate themselves from AmCham’s letter of complaint. Until now. Recently, Nike officials have finally gone public with their support for expanded Chinese labor rights. We’ll sort of.

According to reporter Helen Jung of the Daily Oregonian:

Nike does not oppose the proposed legislation (although it is a member of the business group), said spokesman Alan Marks. "We absolutely support the direction of strengthening legal protections for workers" including "stronger worker dialogue" to improve factory conditions, he said. However, Nike is not planning to take a public stand on the law, leaving it to its contract factories to offer their thoughts on the changes if they want.”

So here we go again. On the one hand, Nike says it does not oppose the proposed legislation—thus breaking ranks with AmCham. On the other hand, Nike says it will not make any public statements, beyond what company officials have already said, in support of the proposed law. Instead, they will leave that up to their suppliers. It seems Nike not only  outsources the production of its products, it also outsources its social responsibility.

OUTSOURCE THIS! American Workers, the Jobs Deficit, and the Fair Globalization Solution

This report argues that the outsourcing of service and technical jobs represents a new phase in globalization. For the first time, the majority of American workers are now being forced to grapple with outsourcing as a threat to their own livelihood and the future prospects of their children.

The current debate over outsourcing is trapped in a centuries-old debate between “free trade,” “fair trade” and protectionism. None of these positions is adequate to understand—or to fix—the contemporary jobs problem. Today’s global economy can no longer be understood as a system of national economies trading with each other. Rather, it is a system of global markets, corporations, and institutions that cut across national boundaries.

Fair trade is not enough, fair globalization is needed.

Outsourcing would not be a problem if there were enough decent jobs. But a global jobs deficit allows companies to move work wherever labor is cheapest—and where governments are most desperate and therefore will provide the highest subsidies with the lowest environmental and social protections.

The task is to address the jobs deficit with strategies to create enough decent jobs for everyone.

A new alternative, “fair globalization,” that puts job creation and economic security at the center of economic planning is emerging. It includes action at the local, national, and global levels.

In the US, the current jobless recovery—and the anxiety produced by accelerating outsourcing of manufacturing and service jobs—may provide an opportunity for unions and other worker organizations, progressive political organizations, and social movements to change the direction of globalization. The paper proposes a series of steps that could be taken to begin to create a fair globalization alternative.

Download outsource_this.pdf

Labor's Search for a China Plan

Labor needs a China plan and it needs one fast.

The problem that the Chinese economy poses for the world’s workers—including Chinese workers-- is an extension of the core dynamic at work in today’s global economy. Corporations roam the world pitting workers and communities against each other in search of lower wages, lower taxes, more subsidies, few regulations, no unions or weak unions, and lax enforcement of any existing laws. The current final destination for this race to the bottom is China with its huge, disciplined, and very productive workforce on offer at rock bottom wages.

The downward pressure put on the world’s wages by China is enormous. Economist Richard Freeman estimates that the entry of India, Russia, and China into the world economy in the past few decades has doubled the workforce employed in the global economy.  China, alone, accounts for 50% of this increase. And because these countries did not add significant capital to the global economy, more workers are competing to be employed by essentially the same amount of capital, increasing the bargaining power of capital and decreasing that of labor. This contributes substantially to wage stagnation or decline in countries around the world.

Andrew Ross of New York University, who recently spent a year in China studying how workers are coping with the rapid changes of the last decade, writes:

But if [China’s] breakneck growth is a threat, it is not because Beijing harbors sinister ambitions for its industrial expansion. The real problem is that China is playing host to the largest, and most corrosive, environment for offshore labor in the global free trade economy. For more than a decade, it served as a fast-track incubator for foreign investment in the low-wage export sector, cocooned from accountability to any principle not devoted to raw profit…..

Free trade zones in other developing countries have hosted much the same kind of cynical runaway culture. So why is the China case so alarming? The answer lies not just in the jumbo scale of operations, but also in its all-encompassing spread. China is leapfrogging so fast up the technology curve it is attracting the highest level investments—in product design and innovation, for example—from industry leaders….

No industrializing country has been able to compete for the top-end slot at the same time as it absorbs jobs lower down the production chain….To command this spread---from the lowest assembly platform work to the upper reaches of industry and services—is to be in a position to set the global norm for employee standards as never before. Given the chronic disregard for job security and workplace rights in China’s foreign-invested private sector, such a norm is a clear threat to the stability of livelihoods everywhere. [From a paper delivered at the Cornell Global Labor Conference on February 10, 2006. Ross is author of the forthcoming book A Fast Boat to China : Corporate Flight and the Consequences of Free Trade; Lessons from Shanghai. April 2006]

Two recent stories in the New York Times lend support to Ross's observation about the range of China’s industrial reach. The first describes China’s efforts to produce high tech, high quality cars by producing fuel efficient engines using state of the art technology. A joint public-private Chinese venture is negotiating to purchase a sophisticated engine plant from BMW and Daimler Chrysler in Brazil, take it apart, and move it to China. The second article reports on the increasing outsourcing of high skilled R&D and design work to countries like India and China. A survey of more than 200 multinational corporations revealed that 38 percent planned to shift R&D work to countries like China and India. 

But if the Chinese economy poses a threat to the current or potential living standards of people around the world, it also offers a major opportunity: workers all over the world have a common interest in coming up with a solution to the race to the bottom. It’s no longer a North--South issue, it’s global. In a previous blog we told the story of what happened when the Namibian employees of a Malaysian based global corporation organized to improve their abysmal wages and working conditions: the company closed shops and moved the jobs to China. The message was clear: if you make waves, you loose your job. But the solution also becomes clearer: global action is needed to reduce the ability of corporations to pack up and move.

The issue for labor is not China vs. the rest of the world. The Namibian example highlights an essential point: the most powerful actors in the global economy are global corporations. It was a Malaysian based company that moved the jobs to China. And it is American, British, French, Japanese, German and other foreign based companies that are moving jobs and investments to China. According to Morgan Stanley’s Stephen Roach, “… 65% of the tripling of Chinese exports… – from $121 billion in 1994 to $365 billion in mid 2003 – is traceable to outsourcing by Chinese subsidiaries of multinational corporations and joint ventures” 

To take another example: according to Jenny Wei-ling Chan of Hong Kong University and the Chinese Women Workers Network, Wal-Mart alone contracts with 20,000 suppliers in China, and is the 5th largest export destination for Chinese goods, ahead of Germany and the UK. This gives Wal-Mart the power to set wages and determine working conditions for hundreds of thousands of workers around the world and to exert significant influence over both the Chinese and the US economies.

To reverse the downward spiral, labor needs a plan that moves along several tracks at the local, national, and global level. These tracks include: policies to create more jobs that stay put; providing more support for those workers who loose jobs; a renewed fight for new global institutions to replace the corporate dominated ones like the IMF, World Bank, or WTO; public policies at all levels to regulate corporate/capital mobility; and a global drive for labor rights including democratic unions and worker organizations. Together, these tracks have been characterized as “fair globalization” and global labor must make fighting for fair globalization part of its core activity. For more on fair globalization see the ILO report A Fair Globalization and our report, Outsource This? .

A critical part of any labor supported China plan must include reaching out to Chinese workers who are already fighting to improve their living and working conditions and for a greater voice in the direction of their country and their economy. In our next blog we will look at what’s happening in China and how the global labor movement can support efforts by Chinese workers in their struggles.

Big Trouble for Auto Workers

The North American automobile industry looks more and more like a crash scene-- each day seems to bring more bad news for auto workers and their communities. The debris is everywhere.

In the past few months

•    GM announced that it will shut 12 plants and lay-off 30,000 workers over the next few years. Ford followed suit with a plan to close14 plants and lay-off 30,000 workers. Since 2000, 140,000 jobs have been lost in the old Big Three auto companies.

•    Both GM and Ford asked for and got mid-contract concessions on benefits from the UAW. GM now plans to ask for even more concession to help bail out its North American operations.

•    The parts industry continues to implode. Delphi—GM’s largest supplier and a company it spun off in 1999 in an earlier restructuring-- is now in Chapter 11 and has asked the courts to allow it to get rid of its union contracts covering 33,000 hourly workers. The company wants huge pay and benefit cuts. Many of Delphi 44 plants in North America are likely to close.  Tower Automotive, another large parts producer, is also on Chapter 11 and has also petitioned to dump its contract covering thousands of workers. . The outlook for parts workers is grim: some experts say that one-third of the parts industry is headed for bankruptcy court. Expect the massive shift to off-shore production to intensify.

•    Further “downstream”, car hauler Performance Transportation, which operates Leaseway and two other companies, has also filed for Chapter 11, citing reduced business as a reason. The fate of its 1,900 Teamster drivers is uncertain.

This crash has been a long time coming. The big US auto companies have been in a perpetual state of reorganization for decades as they struggled to come to grips with global competition. Each re-organization has been bad news for workers and each has failed to stabilize the companies or the industry.

The old integrated corporate structure has been replaced by much more decentralized “just-in-time” systems based on complex global supply chains. Some of companies in these supply chains—like Delphi--are spin-offs from the Big 3. On the shop floor work has been reorganized and intensified to increase productivity.

Meanwhile, Asian and European car companies built assembly plants in the US and gained a growing share of the US market. More are planned. They bring tons of money, build modern plants; institute state of the art production systems; hand-pick a more compliant workforce mostly in the non-union US South; and successfully use union avoidance schemes to stave off organizing drives. They have none of the “legacy’ costs of the Big 3 and provide much less generous benefits than those the UAW has negotiated over the years. To take one example: GM health care premiums add $1500 per car; non-union Toyota health care costs adds $300.  The newcomers also build higher quality products that people want to buy. Today, “transplant” account for 40% of sales in the US market.

But let’s not forget that Ford and General Motors are also global companies that produce and sell cars around the world and quite profitably. Last year GM sold more cars outside the US than it did within the US. It’s now the leading producer of cars in the growing Chinese market, where its plants operate at capacity. Ford turned a profit on its far-flung overseas operations as well.

The continuous reorganizations of the last two decades are part of a powerful and highly successful campaign to roll back wages and benefits for auto workers throughout the world. Global companies operating in global markets are outflanking auto workers and their unions everywhere. Despite the relative power of auto worker unions in many countries, conventional national union strategies are proving inadequate for blocking the auto companies attack.

That’s why, in the US, even though by the conventional measures of union strength—high density, active organizing, and good collective bargaining agreements—auto workers should be well positioned to resist the corporate attacks, they have been unable to do so.

Consider the following:

High density  60% of all of the cars and trucks sold in North America are assembled by union workers.(2003 numbers) While this is down from the 82% level of the late 1970s, it’s still a union density that is unimaginable in most sectors.

In the parts industry, union density is much lower. As a former division of GM, Delphi’s North American operations are essentially unionized wall to wall. Contracts basically carried over from GM meant that Delphi workers have wages and benefits up to core industry standards.  But Delphi and other union producers are competing against a growing number of companies producing in Mexico and other low wage countries and with non-union plants in the US. In the late 1970s some 56% all parts workers in the US were unionized, today it’s more like 25%.

Organizing There is active organizing in the parts sector and it’s meeting with some success. The UAW has been able to use its leverage with big auto makers to help organize 17,000 workers at parts suppliers like Johnson Controls and Metaldyne in the last few years. Union density rates actually increased in the parts sector from a low of 23% to 25% in 2004.  But workers have been unable to achieve wages and benefits at anything like those that have historically prevailed in the auto industry. The union has had little room to maneuver: in a highly competitive system since the alternative to pay cuts is often unemployment.

The UAW has made several unsuccessful runs at organizing the “transplant” assembly plants in the South. It’s still trying, but it’s likely to be tough going if workers perceive that the union can’t maintain wages and benefits or protect their jobs from going elsewhere.

Collective bargaining. The high union density in the auto industry gave the UAW the muscle to negotiate good collective bargaining agreements. But over the last two decades bargaining has been defensive--focused more on preserving rather than improving wages and benefits.

It’s difficult to say what more the union can do within the confines of the existing industrial relations system. Most of the key issues facing auto workers today can’t be adequately addressed through collective bargaining as it is currently practiced.

•    Management incompetence and poor product selection are both legally and customarily outside the scope of traditional collective bargaining.
•    A global glut of cars makes it difficult for companies to make adequate profit margins.
•    Preserving a private welfare system  puts union companies at a competitive disadvantage.
•    Global competition puts downward pressure on wages, especially in the parts industry.
•    Macro economic factors like the strength of the US dollar affect the cost of production in the US

The fact is, despite the best efforts of workers and their unions—despite high union density, aggressive organizing, and good collective bargaining agreements—auto workers are bumping up against the limits of conventional trade union strategies.

The situation is tough but not at all hopeless. Auto workers and their unions have been fighting corporate attacks on their wages, working conditions, and benefits for a long time. The lessons they have learned will serve them in the defensive battle that they must fight. But alongside that defensive fight new strategies must be created. A first step is building strong global alliances with other unions and allies to resist corporate attacks on wages and working conditions. These global alliances need to fight for new international agreements that reduce the ability of corporations to blackmail workers with threats of job mobility and disinvestment. And these alliances must be built into the fabric of the union at all levels. With the framework of such global alliances it will begin to be possible to  develop a labor alternative for the big questions that face the international auto industry and its workers.

In coming blogs we will look at what’s now being done to build alliances, how workers around the world are confronting the assault on wages and working conditions, and at suggestions from a variety of perspectives on what more could be done.