Labour Unions and General Motors

Labour Unions and General Motors

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The Workings of Automotive Unions

     The last bolt is screwed on as a relieved automotive worker marvels at his wondrous creation: a car. With the roar of an engine, the car slowly disappears into the distance. The worker gradually turns around, picks up his tools, and continues to work on a new car. As a consumer, we rarely wonder how things are made; we simply take everything we own for granted. For once, have you wondered how many hours of hard labor many automotive workers must go through? The automotive industry has been around for many years, but it has not always been as efficient as it currently is. As the industry continues to evolve, many new innovative ideas are still being developed. In the past, automotive workers have had to work in harsh conditions without much security or job benefits. Nevertheless, through the continuous development of organized collective bargaining, workers are being treated as they should be. Being the largest automobile manufacturer in the world, General Motors Corporation has been greatly affected by the needs of their workers. Rick Wagoner, CEO of General Motors, is currently in charge of “running the show” at GM. Being the most successful automotive company since 1931, it is obvious that he not only has to satisfy customers, but also the workers within the company. From the smallest things such as a work raise to bigger things such as the working condition, the management of General Motors has been pressured to make both positive and negative changes to the way the company is run as a whole in order to satisfy the workers who are part of the UAW Union. Therefore, the formation and development of unions encompasses both pros and cons.
     As the automobile industry made its first appearance in the early 1900s, General Motors had already slowly begun its formation. GM was founded in 1908 by William C. Durant, a carriage manufacturer of Flint, Michigan, and today operates manufacturing and assembly plants and distribution centers in many countries, including Canada . Its major products include automobiles and trucks, a wide range of automotive components, engines, and defense and aerospace materiel. General Motors has a long history of business and technological innovation designed to deliver ever-increasing value to their customers and society. GM today has manufacturing operations in more than 30 countries and its vehicles are sold in about 200 countries.

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As the leading global automotive sales leader since 1931, the General Motors Corporation employs about 355 000 people .
     With almost half a million workers employed for General Motors, it would be difficult to satisfy all its workers. However, through collective bargaining, it is now almost possible for GM to hear all the voices of its employees. Collective bargaining is a method of “jointly determining working conditions, between one or more employers on one side and organized employees on the other” . Through this method, members of the union employed by General Motors would have their voices heard. In 1935, not long after GM was declared the top automobile manufacturer in the world, the United Automobile Workers Union was formed with the passage of National Labor Relations Act (Wagner Act). This act protects employees by recognizing their right to join unions and engage in union activities. As one of the largest and most diverse unions in the world, the UAW union is the main arbitrator in terms of the automotive industry. With members in virtually every sector of the economy, the UAW is a powerful bargaining-machine. The UAW Union has approximately 710,000 active members and over 500,000 retired members in the United States, Canada and Puerto Rico. Throughout its years of existence, UAW members have benefited from a number of collective bargaining breakthroughs, including: the first employer-paid health insurance plan for industrial workers, the first cost-of-living allowances, and landmark job and income security provisions .
     “The automotive business is extremely challenging no matter how you look at it. It is complex, demanding and continuously changing. It’s a highly capital-intensive business, the competition is fierce and the margins are slim” As quoted by the Chief Financial Officer of GM, the automotive industry is like an unpredictable roller-coaster ride. The industry is increasingly demanding, as workers are constantly striving for perfect working conditions. From the point of view of a manager, the formation of unions can be both good and bad. “Unions have perceived management as aloof and uncaring in dealing with the needs of auto workers”. On the other hand, General Motors management disagrees and states that their workers are very lucky to be working with them, as they are one of the giants of the industry and offer many benefits.
     In today’s competitive and challenging global economy, cooperation between unions and employers seems to be gaining headway. Therefore, it can be safe to say that presently, there exist more pros than cons regarding the union movement. Firstly, with nearly half of its currently employed workers in the UAW, General Motors is able to satisfy the majority of its workers. Through negotiating, administering, and interpreting a labor contract, General Motors is trying hard to protect worker interests through complex work rules and expensive compensation packages. Secondly, unions not only benefit workers themselves, but also the economy as a whole. With so many employees around the world, General Motors deems to be a company many countries rely on to hold up its economy. For example, in 2001, GM made a decision about the fate of its Camaro/Firebird sports cars, which meant that the plant where they were manufactured, in Quebec, might soon be closed. If the plant was to close, thousands of employees would loose their jobs, which would in turn affect the Canadian economic drastically. Furthermore, the formation of Maquiladoras (foreign manufacturing plants that operate in Mexico with special privileges) has had a significant impact on the automotive industry. With an increase of jobs exported to Mexico where the pay is evidently lower, many workers are loosing jobs. This issue has been brought up by the UAW, and General Motors has become aware. From 1935 when the UAW has been formed until the present, it has been an important factor in understanding that the productivity and future survival of the automotive industry depends on the cooperation and mutual adjustment to new and challenging times. The union movement has embraced the “contingency thinking” method, whereas there is no right way to deal with a situation.
     On the other hand, although the union movement has had a positive impact on the automotive industry, it does have its flaws. “The automotive industry has become a vital element in the economy of the industrialized countries—motor vehicle production and sales are one of the major indexes of the state of the economy in those countries” Although unions have increasingly helped improve working conditions for GM workers, they sometimes ignore the importance of the role the automotive industry plays in the economy. In June 1998, 60,000 GM workers idled over the issue of GM exporting jobs to Mexico. As a result, Thirteen of GM's 28 wholly owned major assembly plants and 59 parts plants in the United States, Mexico and Canada were closed or partially closed. This strike cost General Motors at least forty million a day. Like an echo of the famous strike in 1936 at Flint, Michigan, the strike in 1998 had negatively affected the economy. The effect of motor vehicle manufacturing on other industries is very great. “Almost one-fifth of American steel production and nearly three-fifths of its rubber output go to the automotive industry, which is also the largest single consumer of machine tools.” The indirect effects are also considerable through the many auto-related businesses, such as motor freight operators and highway construction firms. In addition, truck transportation has grown steadily throughout the world, which is yet another industry, which ties into the automotive industry. Therefore, the strike not only encompasses the automotive industry, but many other industries in the world. A loss for General Motors would greatly impact the many global industries in the world which rely on the automotive industry. The UAW Union should look more into the consequences from a wider perspective before coming to a consensus to strike, boycott, or picket.
     When dealing with unions such as the UAW Union, the majority of decisions are made by top level management. As the CEO of GM Corporation, Rick Wagoner must make quick and smart decisions. As a manager, there are many things he can do to deal with unions. In a traditional adversarial view of labor-management relations, managers may use lockouts, strike-breakers, and injunctions to make things difficult for unions. Although rebelling may sometimes work, “the traditional adversarial model of labor-management relations is, to some extent, giving way to a new and more progressive era of greater cooperation” . For that reason, Rick Wagoner and his fellow managers must analyze situations carefully to ensure that their desire will ultimately benefit the workers, the economy, and also the company as a whole. In the 21st century, cooperation with unions deems to be an important factor in the decision making process. Managers are becoming more aware of their environment when making decisions. In a unionized work setting, the labor contract and its legal implications must be considered when making human resource management decisions.
     When the picket-signs are seen risen high in the air and loud shouting is heard, it is a sign of a union in action. Through the years of the union movement, it has been evident how important worker security and benefits are. Nonetheless, it is equally as important for a company such as General Motors to be able to run without disruption. General Motors has a commitment to “being a positive force in the communities in which we operate, through the ingenuity and dedication of our people, our contribution to the economy, the taxes we pay and our charitable giving”. This commitment will be the starting point towards a better future for the workers of the company, the society in which it functions in, and the overall performance and success of the company.
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