Global Manufacturing and Collective Bargaining A Case Study

Global Manufacturing and Collective Bargaining: A Case Study of GM’s United States Lansing Grand River Assembly Richard N. Block Professor School of Labor and Industrial Relations Michigan State University For Presentation at Voice and Value: Making It Work Conference Organised Jointly by the London School of Economics and Chartered Institute of Personnel and Development (CIPD) And the London Metropolitan University (Lonmetu) 1

Michigan State University Lansing Grand River Assembly Research Team • • • Peter Berg, LIR Michael Moore, LIR Marietta Baba, Anthropology Terry Curry, LIR John Delaney, Management 2

Manufacturing and Employee Participation • Important for US – Loss of manufacturing jobs requires thinking about ways to make U. S. manufacturing competitive • • 1998 – 17. 6 M, 2000 – 17. 3 M, 2003 - 14. 5 M 1998 -2003, loss of app. 3 M mfg jobs, -17% 1998 -2000, loss of 294, 000 mfg jobs, -1. 7% 2001 -03, loss of 1. 9 M mfg jobs, -11. 7% • Important for UK and EU – Directive on participation • 2001 -86 3

General Motors in US • From 1920’s – early 1980’s – Decentralized – Independent divisions/nameplates • Each with own marketing and manufacturing organizations • Reorganization in early and mid 1980’s – To centralized manufacturing, production, and marketing – Former divisions now only nameplates for marketing purposes – Product allocated at the corporate level rather than by the divisions 4

Collective Bargaining/Labor Relations: National Collective Agreement • Between General Motors (US) and United Auto Workers International Union (UAW) • Establishes – wages and benefit levels for all unionized employees in GM system – employment security – no redundancies due to technological change 5

Strategies of Parties • GM Corporate – Control of production facilities – Allocation of product • UAW (Inter)National – Optimize Wages and Benefits – Employment security for UAW-represented employees – Maximize employment in UAW-represented facilities in US 6

Lansing, Michigan • A city of about 150, 000 – 90 miles nw of Detroit, 220 miles ne of Chicago • HQ for Oldsmobile from early 1900’s through early 1980’s – A complete self-contained carmaking system • Design, Engineering, Marketing, Metal fabrication, Car Bodies, Paint, Assembly 7

UAW Local 652 • Represents workers at multiple GM facilities in Lansing – Other UAW locals also represent some GM workers at Lansing facilities • Size – About 13, 500 in late 70’s – early 80’s – Currently about 6600 8

Collective Bargaining Relationship • “Organic” System – Initiated and developed by GM-Lansing management and the Lansing UAW local 652 • with minimal involvement from GM corporate labor relations officials and/or UAW international officials. – Industrial relations theory suggests that such organic labor relations systems possess staying power because the parties create, accept, and continually adjust them • Cooperative, Respectful over the long term • No local strikes since 1984 (data from GM and UAW) 9

UAW Local 652 Strategy • Employment Maximization through cooperation – “Today. . . I don’t know that there (is) anyone that doesn’t understand that sales and quality dictate the market. ” (Local 652 Official) – “From a union perspective, quality is job security” (Local 652 Official) 10

BARGAINING AT LGRA Profitability. Employment Curve Profitability An A M Bn B Production P C C Product B Production. Product A Employment Lines A B Employment or Employee Hours 11

What is the Linkage Between Manufacturing and Collective Bargaining? • Company (GM) Interests – low-cost, efficient, high quality manufacturing – Good relationship with UAW • International Union, UAW – Maintain employment and capacity among UAWrepresented employees • Local Union – Employment for local membership – In context of the national agreement 12

Methodology • Analysis of Local Collective Bargaining Agreement • Open-ended, structured interviews – – Protocol Respondents for each question jointly identified Generally at least two respondents for each question Questionnaire addressed • • • Site, Union, Collective Bargaining Relationship History Plant Location Issues LGRA and Local 652 Administration Joint Structures Labor Relations Structures of Manufacturing Relationships between site and “higher organizational levels” 13

Lansing Grand River Assembly • GM’s newest assembly plant in the United States – Products launched in 2002 • US $1 Billion • About 1300 – Unionized hourly employees - 1100 production, 200 skilled trades – Nonunion salaried employees - 200 • Third Generation of GM US manufacturing experimentation – Poletown in Detroit (early 1980’s) – Saturn in Tennessee (mid 1980’s) 14

Products • • • CTS - 2002 SRX - 2003 STS CTS V-series - 2004 All Cadillac Nameplates 15

Insert Vehicle Photos Here 16

GM Production Strategy • Global Manufacturing System (GMS) • It is the process that GM is moving toward to standardize production in all plants, worldwide – – Germany Brazil Belgium US • Operator-centered rather than management centered 17

What is GMS? • The elimination of waste by everybody in the plant, including production employees – GMS is a set of tools that permits employees to participate in taking waste out of the system • Global – Management – Union • Independent of union • A way to build cars • Team-Based 18

GMS Approach • Standardization • Reduce idiosyncratic characteristics of particular plants – In production • “all gas tanks will go into all products as step #241 of the process” (Plant Manager) • Production system designed to support the hourly operator/team member 19

Collective Agreement • Typical Collective Agreement in the US – – – Wages Benefits Seniority Grievance Procedure Management Rights • What to Produce • How to Produce • LGRA Agreement – The production system is the agreement • • Area Managers Group Leaders Team Members – Duties of each 20

Staffing of LGRA • Volunteers – From LCA – Opened to bids • constructed a mock assembly line so employees could experience it before volunteering – “Not for everybody” • Rationale – Acceptability within UAW Local 652 – For GM, motivated employees for a new production system 21

• • Reduction of Seven Types of Waste is Responsibility of Employees Corrections-errors Overproduction Material Movement Motion Waiting Inventory Processing (do what is necessary on a car but no more - exactly how many bolts and studs does one need to attach a headlight to a car body? ) 22

Preferred Customer: Blache, Wedley Training • Jointly done – LGRA Management – UAW Local 652 Officials • All employees trained for 40 hours in first week 23

EXAMPLE Waste: Correction u Adjustments of a Product or Service to Fulfill Customer Requirements Causes u Poor Customer/Supplier Relations u Questionable Quality u High Inventory Levels u Weak Process Control u Deficient Planned Maintenance u Non-Robust Product Design u Inadequate Education and Training u Undefined Requirements Adverse Affects / Results: Cost Lead Time Quality • Rework, Repairs, and Sorting/Scrap • High Inventory Buffers • Added Inventory Cost Just-In-Case Management • Loss of Customer Confidence and Business “Golden Rule” SOURCE: LGRA Training Materials “Quality is the basis for everything. Defects must be traced to their root cause for permanent resolution. ” “Do not accept, build, or ship a defect. ” 24

Waste Exercise Worksheet Operation Name : ________________ Identification of Waste Operator Excessive Walking EXAMPLE M (Motion) X Root of Waste Plant Cost What is the waste category? COMMWIP Lead Time What types of waste do you see? Productivity Impact Areas Quality Observations Prescription X X Other (List) Recommend Changes What Would You Do To Remove The Waste? Remove Excess Inventory Reduce Container size 1 2 3 4 5 6 Definitions: Correction: Adjustments of a product or service to fulfill customer demands Overproduction: Producing more or faster than the customer demands Material Movement: Excess material movement Motion: Any movement of people or machines that does not add value SOURCE: LGRA Training Materials Waiting: People waiting for machines, , material waiting for processing Inventory: Supplies in excess of customer demand or JIT inventory Processing: Effort which adds NO value tthe product or service, or adds cost or motion 25

Basic Line Organization • Salaried – Area Managers • Paint, Body, Quality, Housekeeping, General Assembly, Materials, World Facilities Group (metal fabrication) – Group Leaders • 4 -6 Teams in area • Hourly/Represented by Union – Team Leaders – Team Members • 4 -6 per team 26

Paint on Studs on Car Bodies Made It Difficult to Affix Parts to the Body • Production Worker Responsibility: Traditional Manufacturing – Production worker informs supervisor • Prod. Wkr. Responsibility LGRA/GMS – Assembly team learns excess force necessary to affix bolts to studs • Andon cord pulled each time – documented – Team performs root cause analysis • Bolt specification? • Tool not working properly? – Determination of root cause excess paint on studs – To Paint Shop Team • Designed cardboard stud covers – Solution • Covers removed at assembly 27 • Extra work, better quality

Team Member Comment • “Well considering my job, …it’s two of us that can paint. Me and this guy, if we run upon a problem that we ain’t never seen, he’ll come and get me. He’ll ask my opinion and what I think and vice versa what I do with him. And we’ll say “I’ll do this. ” Or “We’ll do this. We’ll try this. ” What we’ll do is we’ll get together, and if we get a job that we haven’t seen before… something that he might send us… so we get to scratching our heads…and we say “How are we going to fix this? ” Because we’ve got to fix this. If we can’t fix it we got to repaint it. If it’s a three timer, we got to scrap it. And when we scrap a car that cost General Motors $1, 500. So, a lot of cars that are supposed to be scrapped, we save them. So, that’s money in their pocket. So we get together on a big job and say ‘Man, we got to do something because this is a three timer, this is do or die. If we don’t get it, this car is dead. ” So, that’s what we do. ’” 28

General Issues Related to “Staff” -type Functions • Examples – Team Concept Area Committee – Team Leader Selection 29

Team Concept Area Committee (TCAC) • One for Each of Seven Divisions Within LGRA – Paint, Body, Quality, Housekeeping, General Assembly, Materials, World Facilities Group (metal fabrication) • Membership – Production System • Area Manager (mgt) • Shift leaders for trades and production (union) • QN rep (union and mgt) – Collective Bargaining System • District Committee – trade and production (union) – Facilitator QN rep (union and mgt) • Linkage between collective bargaining/employee 30 representation system and production process

Example: Selection of Team Leader • Opening Posted • Team Member Application • Assessment Tool (jointly created per agreement) • Possibilities – One applicant • Chosen if successfully pass assessment – More than one applicant passessment • Discussion with team members • Jointly created questionnaire created by TCAC 31

Insert Team Leader Assessment Form 32

Selection of Team Leader (continued) • Team Members complete questionnaire – Back to TCAC – joint decision-making process • Selection – “compelling” based on questionnaire responses, that person becomes team leader – Not “compelling” • “tiebreaker” – seniority (generally), attendance, discipline, performance – Talks to all candidates • What might be considered a management decision in some places becomes a joint decision through a jointly created, agreement-based procedure 33

34 SOURCE: Lansing (Michigan) State Journal and Associated Press, March 3, 2004

Conclusions • Importance of employment security • Organic relationship builds foundation of trust over a long period of time • Consistency between business structure (product allocation) and local union strategy • Facilitative Higher Level Institutions – Importance of assigning production to UAW members – International union accepts “competition” among local unions provided production allocated to a UAW local • Transfer rights • Employment Security • No fundamental inconsistency between employee participation and competitiveness 35