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Home » Opinion » Foreign Views
Toyotism or unionism: US workers try Japan
By Terutomo Ozawa |
November 4, 2009, Wednesday
|
Print Edition
Print Edition
US President Obama has been supporting a new bill, the Employee Free Choice Act, designed to promote labor unions' drive for unionization.
This bill, if enacted, will surely be a big boon for unions as it enhances their bargaining power vis-a-vis businesses.
An important issue here, however, is how such reinforced unionism contributes to the US' much-needed industrial competitiveness and employment - and, more specifically, how this new policy will affect the US as a host to FDI in the auto industry.
In 2008, GM yielded its world's top position to Toyota. Unfortunately, Detroit's woes have been caused in significant part by the ever-restrictive work rules and legacy costs (ie, generous wages and retirement and health care benefits) obtained by the United Auto Workers union.
For this, however, the UAW alone should not be blamed. It has been acting in its own interest within an institutional setup that was created by the National Labor Relations (Wagner) Act of 1935, a law that was legislated amid the Great Depression and in understandable sympathy with the plight of massive numbers of laid-off workers, the victims of then-unbridled capitalism.
US unionism was thus fostered by Congress as a way of giving workers countervailing power against "uncaring" management that considered them mere cogs in the machine.
Unfortunately, however, labor and management have ever since been trapped in a relationship that was inherently antagonistic and adversarial.
True, such unionism helped secure unprecedented benefits for tens of thousands of US workers - so long as Detroit enjoyed unchallenged competitiveness.
It was, however, not long before the rest of the industrialized world had caught up, altering the competitive environment. Most importantly, Fordism-cum-Taylorism came to be outcompeted by flexible production that was initiated by Toyota.
Auto FDI in the US (known as "transplants") is centered in non-unionized southern states. Foreign multinationals there can produce automobiles cost-effectively largely because of a flexible workplace that is unencumbered by restrictive union rules.
Japanese transplants in particular thrive on Toyota-style management and production. They are known for their workplace "democratization" where the supervisory structure is flattened and where both management and workers share common facilities (such as parking lots, cafeterias, and rest rooms) and common activities (group calisthenics and recreation).
Brain vs brawn
The pay/compensation gap between executives and the rank-and-file is much smaller than that in comparable US companies. Also, the transplants treat workers as "brain" workers who perform multi-tasks on a rotation basis to avoid monotonous single-task assignments.
This is in sharp contrast to the status of workers as "brawn" workers who are assigned to simplified repetitive tasks in mass production (as satirized by Charlie Chaplin's "Modern Times").
Moreover, the transplants minimize layoffs and furloughs during a downturn, retaining and retraining workers.
Some of these practices are emulated by US auto makers, but their management culture in general and the restrictive work rules in particular get in the way.
Flexible production is not intended to exploit labor but to create a larger pie to share with workers. Wagner Act-enabled collective bargaining disregards the size of a pie, even if it shrinks because of workplace inflexibility and disruptive strikes.
The transplants pay higher compensation (about 20 percent more) than the national average - currently employing more than 400,000 Americans at the average annual pay of US$63,538.
At least, southern members of Congress, governors, and mayors - and workers themselves - understand the benefits of flexible production and are eager to attract more auto FDI to create well-paid manufacturing jobs locally.
It is critical for law makers - and management, as well as labor - all to realize that the antagonistic mode of labor relations institutionalized by the Wagner Act is utterly outdated. A more cooperative relationship is called for.
(The author is professor emeritus of economics, Colorado State University; research associate, Center on Japanese Economy and Business, Columbia Business School. The material is reprinted with permission from the Vale Columbia Center on Sustainable International Investment. www.vcc.columbia.edu. The views are his own.)
This bill, if enacted, will surely be a big boon for unions as it enhances their bargaining power vis-a-vis businesses.
An important issue here, however, is how such reinforced unionism contributes to the US' much-needed industrial competitiveness and employment - and, more specifically, how this new policy will affect the US as a host to FDI in the auto industry.
In 2008, GM yielded its world's top position to Toyota. Unfortunately, Detroit's woes have been caused in significant part by the ever-restrictive work rules and legacy costs (ie, generous wages and retirement and health care benefits) obtained by the United Auto Workers union.
For this, however, the UAW alone should not be blamed. It has been acting in its own interest within an institutional setup that was created by the National Labor Relations (Wagner) Act of 1935, a law that was legislated amid the Great Depression and in understandable sympathy with the plight of massive numbers of laid-off workers, the victims of then-unbridled capitalism.
US unionism was thus fostered by Congress as a way of giving workers countervailing power against "uncaring" management that considered them mere cogs in the machine.
Unfortunately, however, labor and management have ever since been trapped in a relationship that was inherently antagonistic and adversarial.
True, such unionism helped secure unprecedented benefits for tens of thousands of US workers - so long as Detroit enjoyed unchallenged competitiveness.
It was, however, not long before the rest of the industrialized world had caught up, altering the competitive environment. Most importantly, Fordism-cum-Taylorism came to be outcompeted by flexible production that was initiated by Toyota.
Auto FDI in the US (known as "transplants") is centered in non-unionized southern states. Foreign multinationals there can produce automobiles cost-effectively largely because of a flexible workplace that is unencumbered by restrictive union rules.
Japanese transplants in particular thrive on Toyota-style management and production. They are known for their workplace "democratization" where the supervisory structure is flattened and where both management and workers share common facilities (such as parking lots, cafeterias, and rest rooms) and common activities (group calisthenics and recreation).
Brain vs brawn
The pay/compensation gap between executives and the rank-and-file is much smaller than that in comparable US companies. Also, the transplants treat workers as "brain" workers who perform multi-tasks on a rotation basis to avoid monotonous single-task assignments.
This is in sharp contrast to the status of workers as "brawn" workers who are assigned to simplified repetitive tasks in mass production (as satirized by Charlie Chaplin's "Modern Times").
Moreover, the transplants minimize layoffs and furloughs during a downturn, retaining and retraining workers.
Some of these practices are emulated by US auto makers, but their management culture in general and the restrictive work rules in particular get in the way.
Flexible production is not intended to exploit labor but to create a larger pie to share with workers. Wagner Act-enabled collective bargaining disregards the size of a pie, even if it shrinks because of workplace inflexibility and disruptive strikes.
The transplants pay higher compensation (about 20 percent more) than the national average - currently employing more than 400,000 Americans at the average annual pay of US$63,538.
At least, southern members of Congress, governors, and mayors - and workers themselves - understand the benefits of flexible production and are eager to attract more auto FDI to create well-paid manufacturing jobs locally.
It is critical for law makers - and management, as well as labor - all to realize that the antagonistic mode of labor relations institutionalized by the Wagner Act is utterly outdated. A more cooperative relationship is called for.
(The author is professor emeritus of economics, Colorado State University; research associate, Center on Japanese Economy and Business, Columbia Business School. The material is reprinted with permission from the Vale Columbia Center on Sustainable International Investment. www.vcc.columbia.edu. The views are his own.)
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