Laboring To Find Common Ground

April 9, 2009
Launching a continuous-improvement initiative within a union shop involves a number of significant challenges, not the least of which is overcoming the adversarial nature of labor-management relationships.

The sight of 200-plus union employees huddled together on the floor of their former Chicago workplace during a December sit-in struck a chord with labor-rights activists, who likened the resistance to the 1936 "sit-down" strike at a GM plant in Flint, Mich., that helped legitimize the United Auto Workers.

The employees were members of the United Electrical, Radio and Machine Workers who said Republic Windows and Doors closed its Chicago plant without paying its severance and vacation obligations to the displaced operations staff. The union eventually won its fight, and another window manufacturer plans to reopen the plant. But the workers' battle didn't end there. In early March the members of the UE Local 1110 used the momentum gained from their victory to visit union halls throughout the United States where they promoted the Employee Free Choice Act, a bill that would effectively eliminate secret-ballot elections and allow laborers to organize by signing a card.

More than a week later Democrats introduced the legislation in Congress. The proposed bill has become another power struggle between unions and management, potentially further fracturing the longtime tenuous relationship that was already under tremendous pressure as Detroit automakers worked to restructure labor contracts, and manufacturers nationwide shed jobs.

Union concessions over the past few years indicate labor bosses and their constituents realize many U.S. manufacturers have reached a crossroads: Either reduce wages and benefits to the level of foreign competitors or close up shop.

That was evident March 9 when Ford Motor Co. said an agreement reached with the UAW is expected to narrow the pay gap between the company and its Japanese competitors' wages. But manufacturing experts know the Big Three automakers didn't fall behind Toyota because of pay and benefits, alone. Rather, the Japanese automaker also focused on lean manufacturing and innovation to propel itself ahead of Detroit.

Siemens workers in Norwood, Ohio, assemble a stator for an industrial motor. Management changes at the plant have led to a more empowered workforce. Photo courtesy Siemens Energy and Automation

That being said, union and management collaboration will become even more important as U.S. manufacturers try to forge ahead with their continuous-improvement plans. So is it possible for two natural adversaries to come together on a strategy that will ultimately determine their survival?

Yes, says Julie Brockman, assistant professor in Michigan State University's School of Labor and Industrial Relations. "I see a real trend­ -- really based on the economy and downturn -- in partnership," says Brockman, who also serves as a consultant for the school's Program on Innovative Employee Relations Systems. "People are starting to scramble for resources. They're saying, 'We don't have the resources we need to do what we have to do for our constituents, so who else is doing similar things that we're doing? Who else has the same goals that we have, and how can we come together and do more than what we can do alone? I would suggest that is a major trend with labor and management."

Specifically, Brockman points toward a higher level of employee empowerment and increased union flexibility regarding job descriptions. Some of the more successful unionized operations have made efforts to include organized labor in their decision-making process.

Siemens Union Says 'Danke Shoen'

Over the course of 32 years at the same plant, Wayne Cupp has seen a major cultural shift at Siemens Energy and Automation Inc.'s Norwood, Ohio, facility toward more union inclusiveness in overall plant functions and strategy. When Siemens introduced lean manufacturing in September 2008 to the facility, where the company makes industrial motors, the 525 unionized electrical workers were skeptical about the initiative and fearful about losing their jobs, says Cupp, president of the IUE-CWA Local 84765.

But earning the union's trust was less cumbersome than it may have been in years past. Cupp credits the arrival about six years ago of a plant manager from Germany, where parent company Siemens AG is based, for a sea change of union/management relations. "He treated us the same whether hourly or salaried," Cupp recalls. "Hourly employees in years past felt they were held to a higher standard, and he expected everyone from the highest to the lowest to follow the same work rules -- and if everyone wasn't involved, no one was involved."

One action the new plant manager took that gained the union's appreciation was eliminating funding for a "management club" that met monthly but excluded labor, Cupp says. "When they approached him about funding, he asked if hourly people were a part of it, and when they said 'no,' he wouldn't fund them until we were a part of it too," he explains.

That plant manager has since left the facility, but his message of inclusion has carried over to the current management staff, Cupp says. With its renewed trust in leadership, the union understood that lean would not result in job losses but would help them work more efficiently and that their input would be valued.

As part of Harley-Davidson's agreement with its Kansas City operations' unions, represented employees have a say in most business decisions at the plant.

"The biggest change is that people see their ideas implemented, whereas in the past this wasn't necessarily true," Cupp says. "During those times employees could bring up suggestions and it fell on deaf ears." Nowadays worker suggestions are held in such high regard that the company selected the employees' plan to reconfigure the work area where they make motor coils over the managers' proposal, according to Cupp.

As the lean implementation progressed through the early part of 2009, the coil department moved from batch processing to one-piece flow and reduced lead times from seven-and-a-half days to 16 hours and cut about $150,000 of work-in-process inventory out of the cycle, says Barry Hamilton, the plant's continuous-improvement manager.

Hamilton attributes some of the success to a two-hour lean training session with employees prior to the program's rollout, which helped reduce apprehension among the union members.

"That did a lot to solidify people's minds that it's not a flavor of the month and gave them an overall perspective of what we're trying to accomplish," he says. "The union leadership is 100% behind it, and they know it's necessary for our long-term survival."

Harley-Davidson Reaches a Consensus

Managers at the Harley-Davidson Inc. manufacturing facility in Kansas City, Mo., are faced with a situation that might push leaders at other plants to early retirement. The facility is home to two unions, the United Steelworkers and the International Association of Machinists and Aerospace Workers (IAM). As part of the organizational structure of the plant, the two union presidents are on the same level as the general manager, says Tony Wilson, the plant's IAM president. That means they attend the same meetings as managers and are involved in all decision-making matters for the plant.

The partnership goes back to 1995 when the company decided to expand in Kansas City with more of a symbiotic union/management relationship in place. Both unions fall under the same labor agreement with a stipulation that the plant would maintain the same 70/30 mix of IAM workers to USW members that existed when the factory was launched to avoid conflicts between the labor groups, says Mike Fisher, product plant manager. In addition to the labor agreement, the plant has what it calls its Kansas City Operating System (KCOS). Part of the KCOS is a requirement that most business resolutions be approved with a majority vote from the two unions. While the arrangement may seem like another wrench in management's ability to drive change, it actually makes life easier in the end for everyone involved, says Fisher, who transferred from another Harley-Davidson plant in the past year.

"When I was at other facilities, if management wanted to implement a continuous-improvement project, we would just go out and do it and spend a lot of calories explaining why it made sense."
-- Mike Fisher, product plant manager, Harley-Davidson

"When I was at other facilities, if management wanted to implement a continuous-improvement project, we would just go out and do it and spend a lot of calories explaining why it made sense," he says. "In this culture, the thing that I very much appreciate is we may have a fair amount of dialogue upfront because of the consensus decision-making process, but once there's a group consensus -- from the leadership side -- the calories we put into it are done. The workforce will take it, they own it and they'll implement it."

Employees at Harley-Davidson's Kansas City plant also work unsupervised in natural work groups, which comprise eight to 15 people who are responsible for determining the most efficient way to operate their equipment and meeting their internal customers' needs, Wilson says.

"Anytime you can create a situation where people have more ownership of what they're doing it allows their creativity to come out," Wilson explains. "And usually you can get better involvement and decisions made."

The lack of supervision doesn't worry Fisher because he says there are safeguards in place to ensure workers meet their expectations. For instance, the organization has established a plant leadership group composed of salaried and hourly workers who identify goals for each work area. If a particular group doesn't meet its targeted metrics, that team must establish and carry out a corrective action. If issues persist for an extended time period, management has the power to take over the group until the problem is solved, Fisher says.

Tough Road Ahead

Unions often are criticized for having too-rigid job descriptions that preclude them from performing tasks that might be crucial for a manufacturer's continuous-improvement efforts. That's not the case at Harley-Davidson's Kansas City plant, Wilson says. While there are rules that prevent lower-skilled production workers from performing maintenance jobs for safety reasons, it's not uncommon to see higher-level production staff helping out on the assembly line when needed, says Wilson.

Xerox Corp. negotiated with its union to work some wiggle room into job duties. The union agreed to restructure job classifications in the past year so the company could move forward with continuous-improvement initiatives, says Philip Harlow, director of diversity, industrial relations and business ethics for Xerox. Harlow attributes the successful negotiations to regular dialogue with the local UNITE union between contract negotiations, including an annual summit with labor leadership.

Unions are more receptive to such changes when they're assured of certain protections, says David Fairris, a professor of economics and vice provost for undergraduate education at the University of California Riverside. "I think you see a willingness to entertain alternative arrangements and new technologies if labor can be guaranteed a voice -- an empowered voice -- in the changes themselves," he says. "When they come from up high with little discussion with workers and clearly some negative impact on working conditions, they're going to be resistant."

"I think you see a willingness to entertain alternative arrangements and new technologies if labor can be guaranteed a voice -- an empowered voice -- in the changes themselves."
-- David Fairris, professor of economics, University of California Riverside

But a business lawyer based in Cleveland says it's organized labor that typically stifles progress when changes are necessary. "In the past, unions would not renegotiate much of anything," says Eric Baisden, a partner in the labor employment department at Calfee, Halter & Griswold LLP. "That has changed because of the way their jobs have been eroded. They do realize they have to have some concessions, but a typical situation is where there has been an us vs. them mentality in the workforce, which does not foster the type of cooperation that is needed to have this kind of continuous improvement."

Brockman says management and unions both share a role in making their relationship work. "For management, I think they need to really believe that the union and the union structure as well as the employees can be value-added -- that it's not just a nice thing to do," she says. "If management as a whole does not believe that the union can be a value-added partner, then in my opinion [the relationship] is not going to last long."

As for the unions, Brockman says they "need to want to understand the challenges of the industry as a whole and listen and search out for understanding. They have to be able to toggle between the broader economic picture as well as their individual members and that's a very difficult balance to keep."

Visit for more information about the Employee Free Choice act and other issues impacting union/management relationships.

About the Author

Jonathan Katz | Former Managing Editor

Former Managing Editor Jon Katz covered leadership and strategy, tackling subjects such as lean manufacturing leadership, strategy development and deployment, corporate culture, corporate social responsibility, and growth strategies. As well, he provided news and analysis of successful companies in the chemical and energy industries, including oil and gas, renewable and alternative.

Jon worked as an intern for IndustryWeek before serving as a reporter for The Morning Journal and then as an associate editor for Penton Media’s Supply Chain Technology News.

Jon received his bachelor’s degree in Journalism from Kent State University and is a die-hard Cleveland sports fan.

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