Auto industry globalisation: how to respond?

The takeover of Delta Motor Corporation by General Motors early this year, marked the end to South African owned car assemblers. South African auto workers are now firmly tied in to the global network of auto production. Jenny Grice pulls out key features of this production system drawing from two reports on the auto industry.

Over-supply of cars resulting in the under-utilisation of capacity in car producing plants has been the prime factor motivating car producers to focus on cutting production costs by whatever means possible says a Trade Union Research Project (TURP) report.

The report, written two years ago as background information for the automobile industry jobs summit, details the strategies used by car companies to come to terms with this challenge.

First the assemblers adopted Japanese “˜just-in-time’ techniques. Stocks were cut drastically in favour of ordering parts needed for production as and when required.

Then they turned to outsourcing non-core businesses. This achieved two aims for the assemblers: it reduced the core workforce thus weakening union organisation and it lowered the assemblers’ costs. The assemblers outsourced to workers in the supplier industry who worldwide earn lower wages than auto workers.

The move to a “modular component and assembly strategy” assisted the outsourcing trend. Suppliers could deliver “fully assembled complex modules (dashboards, front-end, doors etc) that are then combined in final assembly,” says an International Metalworkers Federation (IMF) 2004 auto report.

But competition on the showroom floor continued to increase. Whereas before, the same model would run off the line for eight years and could still find a buyer, consumers’ desire for cars that displayed the latest design and shape forced assemblers to reduce this to between two to four years.

This pushed up the cost of design. So assemblers responded by outsourcing the design to supplier companies.

Simultaneously, the proliferation of mergers, alliances and the consolidation of global ownership in the automobile industry has resulted in cost savings. Global companies can now produce new models off the same platform using the same basic chassis (body) or the same engines. In this way, they have recouped their investment in production from a number of different models and/or cars.

Mergers and acquisitions have also promoted the global car. Such a development has both positive and negative spinoffs for workers – positive because with just-in-time systems, striking workers can quickly stop production in plants to which they supply. And negative because employers can also quickly switch production from striking workers to a plant across the globe that is not affected by industrial action.

How can labour respond to these developments?

The biggest priority for the IMF is to build strong industry-wide trade unions that will prioritise the reduction of existing disparities among workers. Strengthening links all along the value-added chain of the auto industry, including the supplier chain, comes a close second.

In Numsa’s case, it would mean establishing which local companies supply to the assemblers. Then, finding ways to link these companies to the auto sector much more closely – this would imply a much closer relationship between the auto sector and components suppliers falling under the engineering and motor sectors.

As Numsa has done in the past, the IMF recommends that trade unions negotiate to make retrenchment payments very expensive so as to discourage employers from shrinking their workforces. It also urges trade unions to negotiate for retrenched workers to be retrained.

Questions for discussion :

“¢ How do IMF proposals on how unions should respond to globalisation differ from Numsa policy?

“¢ How do IMF proposals on responding to workplace restructuring differ from Numsa policy?

“¢ What links exist between Numsa’s assembly workers and workers that supply components and parts to them? How can we strengthen those links?

“¢ Can World Company Councils and International Framework Agreements help?


Acknowledging the “˜global car’ (a car which is assembled from different parts manufactured across the globe), the IMF recommends that where suppliers are outside the country of the assembler, that its own International Framework Agreements (IFA) must be used. IFA’s commit auto manufacturers to pressurise their suppliers to respect core labour standards. For the agreements to be successful, there must be increased international union contact and co-ordination through the World Company Councils (meetings of shop stewards from the same companies across the world – eg DCSA, VW.)

Instead of workers taking a backseat in work organisation, the IMF recommends that unions should be involved in designing new forms of work organisation and that they should be strongly represented in any new structures that are formed.

If the new work organisation is team-based, rotating team leaders are preferable, the IMF believes. They allow more workers to acquire skills. They also reduce the chance that new parallel and potentially management-influenced representative structures will develop.

If there is no rotation of team leaders, then unions should ensure that workers have a strong voice in choosing their team leader. Unions should train team leaders to keep them on the side of the union.

However, the IMF believes that this kind of shopfloor activity is not enough to break the stranglehold of neo-liberal ideas that hold sway in governments and companies across the globe. While social welfare states strived for full employment and provided protection for the unemployed, the new neo-liberal states rate “competitiveness” and “enhancing shareholder value” more highly.

To break this noose requires that unions get massive support from quarters where historically support has been weak – the youth, women and the informal sector as well as social movements “that share trade unions’ understanding in collective action and opposition to the anti-social aspects of a corporate driven deregulation. Unions strengthened by such activities will be more likely to win political and public relations struggles for union-friendly labour law reforms, the defence and expansion of social partnership systems, and industry wide collective bargaining.”