Dean Barber

Culture Shock May Give Unions Inroads

In Site Selection on January 5, 2015 at 11:41 am

Some years back, I was touring a Korean automotive parts manufacturing plant in Alabama, where the HR director told me that her biggest challenge was educating management on how to talk to Alabamians.

Part of the difficulties lie in the difference in cultures as well as the English skills of the Korean managers. She said they would say things like “I command you to do” such and such.

The HR director said she had to keep reminding the Koreans that you don’t “command” these Alabama workers to do anything. If you simply ask with a semblance of respect, they will do it.

She also confided that the Korean managers of this tier one automotive supplier to Hyundai had little notion of worker safety or the fact that there was something out there called OSHA, which could make life very uncomfortable for the company.

I left that new plant thinking that if there was a fertile ground for a union, this would be it. But it never happened. The plant was, after all, in the rural Alabama, where just having a job is considered a blessing.

It’s no great secret that Alabama, like its neighboring right-to-work states, doesn’t so much cotton to unions, especially in comparison to the Midwest and Northeast.

Culture Matters

So again, culture matters, and not just between countries, which I believe may be creating certain inroads for certain unions, but even between regions of this country. Southerners, by and large, are more suspicious of unions.

Like the Korean automotive supplier plant in Alabama, I think the evolving story of Volkswagen in Chattanooga, Tenn., also illustrates some profound differences in culture.

As you may recall, workers at the Volkswagen plant in Chattanooga voted 712-626 against UAW representation last February. I subsequently proclaimed in my all knowing, consultant guru wisdom that the industrialized union movement in this country was pretty much dead.

As proof, I cited that Michigan and Indiana had become right-to-work states, and that efforts to unionize a new steel plant in Akron, Ohio, about a year ago had failed miserably with workers voting two-to-one against union representation.

I wrote a blog with a rather catchy title – “The Night the Union Died.” Man, did I get that one wrong. (A blasphemous remark for a consultant.)

They Did Not Go Away

For the UAW did not just slink away from Chattanooga like a beaten dog. That’s because I believe the union got a tacit “stick around” message from VW management, who needed the UAW so that the company could initiate its tried and true works council model.

And so the union did stick around, announcing in July, four months after losing the National Labor Relations Board vote, the formation of Local 42. A charter-signing ceremony was held a few miles from the plant, where 1,500 workers assemble the Volkswagen Passat sedan.

And now here we are in 2015, and the UAW is on the precipice of reaching its longstanding goal of organizing a foreign-owned automotive manufacturer in the South, albeit with a little help from management.

Now this scenario is inconceivable for most U.S. companies, which have historically viewed unions as at the very least an impediment and at the worst a threat. Union activity or the mere presence of unions is often a factor in a site selection project as some companies will go to great lengths to avoid them.

VW’s World

But Volkswagen, Europe’s biggest automaker, is not like most U.S. companies and here is where culture again comes in. The truth is the German industrial sector is far more accepting of trade unions and this quasi-union thing called works councils. (They also incorporate worker apprenticeship programs which I believe U.S. manufacturers could actually learn from.)

Under German law, a works council’s explicit charge is to work for the interests of blue-collar and white-collar workers and company, finding non-conflictual ways of dealing with new technologies, reorganization of jobs, and plant closings. Works council members are elected by non-management employees and are paid by management.

But here’s the rub: The works council model, commonplace in Germany, is contrary to U.S. labor law, which says that management cannot “dominate” a labor organization nor “contribute financial or other support to it.”

VW soon figured out that a works council only would be legal in this country if the workers had their own independent representative: a union. And so the UAW fills that bill.

Management’s New Engagement Policy

You can bet that the company’s Global Works Council, with representatives from factories around the world, noted that Chattanooga plant was the only major VW facility in the world not to have a works council. As labor represents 10 of the company’s 20-member supervisory board, management got its marching orders.

The company’s solution was unveiled that past fall with the unveiling of a new policy that it called a “community organization engagement policy.”

The stated policy does fall short of recognizing the UAW as the only bargaining agent, but it does say that an organization that has membership support from more than 45 percent of the employees becomes entitled, among other things, to meet biweekly with VW management.

Not surprisingly, the other shoe dropped last month when an accounting firm hired by the company verified that the UAW had membership support from more than 45 percent of VW employees at the Chattanooga plant.

And now representatives of Local 42 will be attending VW’s Global Works Council meeting at corporate headquarters in Wolfsburg, Germany, later this month.

Mercedes in the Crosshairs

About 200 miles southwest of Chattanooga, in Tuscaloosa, Ala., Mercedes Benz has also been dealing with a revived UAW, which officially established Local 112 in October.

There is no indication that the company is playing footsy with the union, as the NLRB in November upheld a ruling that Mercedes violated federal labor laws by stopping UAW union supporters from handing out literature inside its Alabama plant.

As a result, Mercedes must update its employee handbook to say that workers are allowed to discuss union issues during non-work times and that they can solicit their colleagues in mixed-use areas like team centers and atriums.

The factory must also post notices to acknowledge the violation and to reaffirm that management won’t “interfere with, restrain, or coerce” workers seeking to unionize the plant.

Mercedes management officially is taking a “neutral position” on union representation, which in itself is a culture shift from most U.S. companies.

A Governor Pleas

But Alabama Gov. Robert Bentley, like his counterpart in Tennessee, Gov. Bill Haslam, has made it clear that he would prefer no unions, citing the belief that they would hamper the state’s ability to attract future corporate investment.

Bentley went so far as to write a letter on Nov. 5 to workers at the $100 million, Chinese-owned Golden Dragon Copper USA plant, urging them to vote against representation by the United Steelworkers.

A vote for a union “could have a possible negative impact on your community by discouraging other companies from locating there,” Bentley wrote. The governor said he believed Golden Dragon was “firmly committed” to competitive wage and benefit packages.

By the narrowest of margins, workers at the plant in Pine Hill, Ala., which began operations last May, rejected Bentley’s plea, and voted in favor of the union, 75 to 74. Objections to the vote were immediately filed and a hearing was held last month. An NLRB ruling is expected soon.

Culture Weighs on Both Sides

Thomasville, Ala., Mayor Sheldon Day, who played a role recruiting the company to the area, told the news organization that cultural and language barriers weighed heavily “on both sides” — the Chinese and local residents.

And the company’s use of proprietary methods at the copper tube manufacturing plant meant many of the engineers came in China, which didn’t help.

In business as in life, cultures can and frequently do clash. Foreign-based companies establishing new manufacturing operations in the U.S. need to be highly aware of this.

Not surprisingly such conflicts are foundational to the UAW’s “southern strategy.” Let’s watch how this thing plays out.

I’ll see you down the road.

Dean Barber is the president/CEO of Barber Business Advisors, LLC, a site selection and economic development consulting firm based in Plano, Texas.

If your company needs an optimal location for future operations anywhere in North America, we can help. If your community needs to improve its competitive standing, we can help.

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  1. The question remains whether the UAW will function as a Works Council and provide qualified workers dedicated to producing a quality product or assume their more traditional role of protecting unqualified workers and taking little to no interest in the health of the company, or the majority of the employees.

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