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Global Manufacturing and Collective Bargaining: A Case Study of GM’s United States

Lansing Grand River AssemblyRichard N. Block

Professor

School of Labor and Industrial Relations

Michigan State UniversityFor 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) London, UK, 12 March 2004

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Michigan State UniversityLansing Grand River Assembly

Research Team

• Peter Berg, LIR

• Michael Moore, LIR

• Marietta Baba, Anthropology

• Terry Curry, LIR

• John Delaney, Management

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Manufacturing and Employee Participation

• Important for US– Loss of manufacturing jobs requires thinking about

ways to make U.S. manufacturing competitive• 1998 – 17.6M, 2000 –17.3M, 2003 - 14.5M

• 1998-2003, loss of app. 3M mfg jobs, -17%

• 1998-2000, loss of 294,000 mfg jobs, -1.7%

• 2001-03, loss of 1.9M mfg jobs, -11.7%

• Important for UK and EU– Directive on participation

• 2001-86

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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

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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

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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

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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

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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

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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)

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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)

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Profitability

Employment or Employee Hours

Production

P

Production-EmploymentLines

Profitability-Employment Curve

Product B

Product A

M

A

B

BBn

AAn

BARGAINING AT LGRA

C C

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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 UAW-

represented employees

• Local Union– Employment for local membership

– In context of the national agreement

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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”

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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)

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Products

• CTS - 2002

• SRX - 2003

• STS

• CTS V-series - 2004

• All Cadillac Nameplates

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Insert Vehicle Photos Here

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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

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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

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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

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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 Leaders

• Team Members

– Duties of each

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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

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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?)

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Training

• Jointly done– LGRA Management– UAW Local 652 Officials

• All employees trained for 40 hours in first week

Preferred Customer:

Blache, Wedley

Preferred Customer:

Blache, Wedley

Preferred Customer:

Preferred Customer:Preferred

Customer:

Preferred Customer:

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Waste: Correction Adjustments of a Product or Service to Fulfill Customer Requirements

Poor Customer/Supplier Relations Questionable Quality High Inventory Levels Weak Process Control Deficient Planned Maintenance Non-Robust Product Design Inadequate Education and Training Undefined Requirements

Causes

• Rework, Repairs, and Sorting/Scrap• High Inventory Buffers• Added Inventory Cost

Just-In-Case Management• Loss of Customer Confidence and

Business

Adverse Affects / Results: Cost Lead Time Quality

“Golden Rule”“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.”

EXAMPLE

SOURCE: LGRA Training Materials

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Waste Exercise WorksheetIdentification of Waste Prescription

Operation Name : _______________________________

1

3

2

4

6

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Observations Impact Areas Root of Waste Recommend Changes

What types of wastedo you see?

What isthe wastecategory?COMMWIP

Plant Other(List)

What Would YouDo To Remove

The Waste?Qua

lity

Pro

duct

ivity

Lead

Tim

e

Cos

t

Operator Excessive WalkingEXAMPLE

M(Motion) X XX Remove Excess

InventoryReduce Container size

Definitions: Correction: Adjustments of a product or service to fulfill customer demands Waiting: People waiting for machines, ,material waiting for processingOverproduction: Producing more or faster than the customer demands Inventory: Supplies in excess of customer demand or JIT inventoryMaterial Movement: Excess material movement Processing: Effort which adds NO value tthe product or service, or adds cost or motionMotion: Any movement of people or machines that does not add value

SOURCE: LGRA Training Materials

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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

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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• Extra work, better quality

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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.’”

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General Issues Related to “Staff” -type Functions

• Examples– Team Concept Area Committee– Team Leader Selection

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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 representation system and production process

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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 passes assessment• Discussion with team members• Jointly created questionnaire created by TCAC

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Insert Team Leader Assessment Form

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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

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. . .

“GM, the world's biggest automaker, said it sold 6 percent

more vehicles in February compared with the same month

last year, including a 9.4 percent increase in car sales and a

3.4 percent rise in truck sales.

. . .

"We also saw sales gains by important car entries like the

Cadillac CTS and Pontiac Grand Prix," (J ohn) Smith (GM

vice president for North American sales, service and

marketing) said.

CTS sales were up 36.2 percent in February compared with

the year-earlier month.

Lansing Grand River, the plant that makes the CTS, added

an extra shift Feb. 28 to meet demand for the car.

"It's been outstanding. The demand for the CTS in the

market is very strong," GM spokeswoman Heidi Magyar

said.

. . .

Year to date, GM's sales were up 2.1 percent.

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

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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