The global automobile supply chain
The automobile industry began as craft-based local businesses, which turned into a national and international industry with the standardisation and mass production of vehicles, based on the principles of Ford (‘Fordism’) in the early 20th century, achieving considerable economies of scale (volume). The system of Fordism was challenged from the 1970s with the rise of flexible specialisation of auto production, developed by Toyota after World War II, combining craft-oriented customised products with mass manufacturing and rapid delivery of components and products (Just-In-Time, JIT). The principles of ‘Toyotism’ (also called lean production in a general sense) integrated economies of scale with economies of scope and speed, which enabled the auto manufacturer to provide a larger variety of auto models in a shorter time through lean production and JIT logistics, and hence, out-competing rivals in targeted customisation, high quality, low production costs, and fast delivery.
While the Fordist system aimed for integrated ownership control of most value-adding activities, the Toyota system was based on the particular Japanese keiretsu network of collaborating firms, which means that the auto manufacturer does not integrate all value-adding activities within the same concern or business group (see ALU 51, Japan profile for a fuller description of keiretsu). The auto manufacturer (also called the Original Equipment Manufacturer, OEM) divests or outsources non-core activities to independent companies in which the OEM may take an equity interest (i.e. buy shares in them) besides establishing a hierarchy of suppliers with first tier suppliers entering longer term relationships of mutual collaboration in design or even research and development (R&D) functions.
Toyota’s key component activities were separated into Nippondenso (now Denso) in 1949. General Motors (GM) and Ford sold off their component divisions only in the 1990s with the incorporation of Delphi and Visteon respectively, after Chrysler had pioneered the assembler-supplier networking strategy of outsourcing in their restructuring and revitalisation of the crisis-ridden corporation during the 1980s.
Yet, although the automobile value chain was split up, fragmented, and stretched internationally the chain was still governed by the OEMs, because they controlled the core technology, the brand, the marketing system, and the R&D capabilities. Hence, the global automobile industry is conceived as a producer-drivenglobal value chain, contrary to for example the global garment value chain, which is considered a buyer-drivenglobal value chain. It is a rather capital-intensive chain, which has traditionally been highly organised in the North by trade unions.
The producer-driven automobile chain has not (yet) generated the same amount of bad publicity as the buyer-driven value chains in garment, shoe, and football making did in the 1980s and 1990s, with many cases of sweatshops of young female workers and child labour. This may be caused by the way the global value chain is driven. But it may also be framed by the way of searching information and where we look. The method used here is to focus mainly on the OEMs and their subsidiary assemblers around the world, because they form a critical case in the sense that if workers’ conditions are bad in these firms they will be even worse down the supply chain. This follows from the argument that we deal with a producer-driven chain, and although changes are taking place, they do not seem to take the heat off suppliers, at least not off suppliers below the core system and modular suppliers.
Contemporary changes of the global auto value chain
With the increased specialisation and the de-merging of assembling and components production the global auto industry is becoming a more finance-driven global value chain, in which the OEMs move up the value chain emphasising higher value-adding functions like marketing, financing, and after-sales servicing but still keeping control over R&D. Simultaneously, the core suppliers become system and modular suppliers (also called half-tier suppliers) providing the assemblers with complete packages of doors, brake systems, electronics systems, and interior etc. These suppliers like Delphi, Bosch, Denso, and Lear have increased their leverage towards the OEMs in design and R&D capabilities, offering proprietary technologies which the OEMs cannot deliver themselves. The power relationship becomes less biased, but still fluent and reversible as witnessed by the troubles of Visteon, the disinvested component division of Ford. The hollowing out of the OEMs as manufacturers is counter-balanced by expanding higher value-adding activities in auto services and especially financing auto sales and insurance. This trend, combined with the focussing of auto companies in general, increases the pressure from shareholders on the OEMs to consolidate (merge or acquire competitors) and on the auto supply chain to rationalise and cut production costs, increase quality, and speed up delivery.
Moreover, the auto market is mature in the North (USA, Europe, and Japan) in the sense that the market is not growing. The OEMs thus chase emerging auto markets in Eastern Europe, Latin America, and especially the high growth markets of Asia, which combine two strategic advantages: huge growth potential in the future and cheap labour costs.
Global light vehicle production (cars and vans) is expected to increase from nearly 60 million units in 2004 to 69 millions in 2012. Nearly 50 percent of this growth is expected to take place in the Asia-Pacific area, and China is forecast to get a third of all growth.
This global and uneven distribution of auto manufacturing capacity and demand for automobiles creates a tension, which makes the OEMs add additional capacity in Asia through foreign direct investments while they cut capacity in the North. The rush to Asia is strengthened by the principle of ‘follow sourcing’, meaning that the OEMs demand that their core suppliers follow them to their new destinations in order to co-operate in the new context, deliver JIT, develop and adapt products to the new markets, and build a new, cheaper, and leaner supply base.
Global capacity utilisation was 75.5 percent in 2004, at present expected to improve to 79.6 percent in 2012. North America, EU, and Japan are above the global average with North America ranking highest with 79.0 percent, followed by Asia-Pacific and EU at around 77.8 percent. Middle East and Africa are down at 53 percent. The forecast for 2012 is that North America will improve its capacity utility most; the EU will be in the middle while Asia-Pacific will only increase capacity utilisation to 79.7 percent. Improving capacity utilisation is a must in the auto industry because it is very capital intensive.
With China in the WTO, all growth countries of Asia are part of this trade area and submit to WTO regulations. Hence, the wage differentials also play a significant role for production efficiency, cost advantages through off-shoring, and export opportunities from the new locations. Wage differentials are tremendous (although they may be less than the difference between unskilled workers and CEOs in the USA). In 2003, the Union Bank of Switzerland (The Economic Council 2004 p. 127) disclosed comparative figures stating that the average hourly wage/salary (13 job categories) paid in US (New York) equalled US$15.2, 22 times higher than in India (Mumbai), nine times higher than in Thailand (Bangkok), six times higher than in China (Shanghai), five times higher than in Malaysia (Kuala Lumpur), 2½ times higher than in South Korea (Seoul) and only 10 percent higher than in Japan (Tokyo). Wage/salary differentials vary with job categories, but Indian remuneration is generally very much below that in China, as is the Thai remuneration structure.
The International Metalworkers Federation (henceforth IMFmetal) has estimated wages in the auto industry in various countries 2003/04; German net hourly earnings are nearly 40 percent higher than in the USA, while US earnings (US$25.89) are 27 times higher than in India, ten times higher than in Thailand, 2.75 times higher than in South Korea and nearly 30 percent higher than in Japan. IMFmetal does not provide any figures for China, and it’s the first time they came up with figures for India!
The China challenge is formed by the combined huge market expectations and the relatively low costs of labour compared to the North. China differs from India in market potential, not in labour cost where India out-competes China. The differentials between US and the Asian countries indicate that the earnings in the US auto industry are relatively much higher in the US (US$25.89 to US$15.20), and hence that auto industry earnings are also higher within the particular Asian countries, for example India (US$0.96 to US$0.70) and South Korea (US$9.40 to US$5.90) (the gap is probably even wider because the auto earnings are net hourly earnings, while the other earnings seem to be gross hourly earnings, although around a year older).
Impact on autoworkers in the North
Higher capacity utilisation in the North in the early 21st century is due to persistent rationalisation of production, including downsizing, plant closures, retrenchments or voluntary separation schemes (VSS), pressure on wages and working conditions, and outsourcing of components production and even services. Automobile employment fell in the US from 1.313 million to 1.152 million between 1999 and 2002 and in Japan from 705,000 to 646,000 in the same period (IMF Auto Report 2004, Table 4.1). Both GM and Ford have recently announced larger workforce reductions in the US. The EU displayed divergent trends, with an increase in employment in Germany (to 867,000) and Sweden, status quo in Spain and France, and decreasing jobs in the UK and Italy. The UK auto debacle made headlines again with the collapse of MG Rover in April 2005 affecting around 25,000 jobs.
But the upward trend in certain European countries changed recently with the announcement in October 2004 that GM intended to downsize its European labour force by 12,000 employees from 63,000 in order to save US$618 million. This triggered mass strikes in European GM plants and beyond, involving over 100,000 persons in November. In December, the GM European Employees Forum (EEF) reached a framework agreement with management that avoided plant closures and forced redundancies, as demanded by the workers. Yet, the downsizing will take place during the next two years, affecting 20 percent of GM’s European labour force.
GM employed 32,000 in Germany at the end of 2003, and the German company, GM/Opel, will face a reduction of 6,500 jobs through VSS with severance packages, retraining, and job placement. A 50-year-old Opel worker with 30 years of service could achieve a severance payment of €216,000, full retirement benefits and a year of retraining. Other workers may accept voluntary early retirement packages, and some may be transferred to divested firms, joint ventures, and partnerships. Management staff will face a reduction of 15 percent. In Sweden, Spain, Belgium, and the UK 2,000 jobs will go.
GM acquired Swedish Saab in the early 1990s, but in September 2004 announced its intention to concentrate production of Saab 9-3s and Opel Vectras in one plant in Europe by 2008. Currently, the Saab model is manufactured at Saab Automobile in Trollhättan, Sweden and the Opel model is produced at the Opel plant in Rüsselsheim, Germany. The Swedish trade unions, Metall, SIF, and CF, the European Metalworkers’ Federation and the German metalworkers’ union IG Metall were united in their response to this shocking ‘divide-and-rule’ tactic. In a joint statement they called on GM to respect signed collective bargaining agreements (CBA), recognise the international solidarity between workers in Sweden and Germany, and negotiate an acceptable solution. The trade unions also protested against the lack of information about, and consultation with, the European Works Council by GM’s management prior to this announcement. In March 2005, GM announced that Rüsselsheim ‘won’ the contest, after both companies had offered huge concessions with support of state agencies!
The global DaimlerChrysler (DC) has also faced huge problems since Daimler-Benz acquired Chrysler. In 2004, DC management demanded longer working hours without compensation and threatened to cut 6,000 jobs at the company’s largest Mercedes plant in Sindelfingen, Germany, and shift some of the new C-class Mercedes’ production to Bremen and East London, South Africa, if the workers did not accept.
While the negotiations were in progress, DaimlerChrysler workers staged walkouts to protest the company’s pressure tactics. Around 60,000 Mercedes workers downed tools in a nationwide demonstration, followed by additional work stoppages at Sindelfingen. Finally, an agreement was reached in July 2004 between the works council, IG Metall, and management regarding job security and labour cost savings. The compromise safeguarded jobs at Sindelfingen and other plants until at least 2012; the workweek for service employees will be increased gradually through 2007 to 39 hours, and from the age of 60, work hours will be reduced to 34.5 per week. Workers accepted a 2.79 percent pay cut for 2006, which will be offset by a one-off payment of the same amount. Pay increases, which should level blue- and white-collar wages and salaries, will be kept at 1.5 percent. Future models of the Mercedes E-class car will be manufactured in Sindelfingen, and further outsourcing of services will be avoided.
VW, the other large German automaker, also demanded jobs and wage reductions, but after negotiations between VW and IG Metall a CBA providing job security and a one-off payment (€1,000) to workers was agreed upon covering six VW plants and 103,000 employees. The so-called ‘Collective Agreement for the Future’ includes a contractual job guarantee until the end of 2011. VW also made commitments regarding future products and investments for the six plants covered by the agreement, for example from 2007 a small off-road SUV will be built in Wolfsburg. However, wages of existing staff will be frozen for more than two years, while future employees and apprentices will see a cut in wages. Although new workers’ wages will be lower than those existing at VW, they will still exceed the level of wages agreed for the metal industry in the local area. More flexible working time arrangements are also agreed upon.
Impact on autoworkers in an emerging auto market: The Czech Republic
Unlike Western Europe, Eastern Europe has seen a trend of expanding auto foreign direct investments (FDI), production, and sales during the 1990s, although the auto market has fluctuated. The Czech Republic has received a share of this growth, but the core Czech auto industry has also been overtaken by foreign automakers with VW in front.
Skoda Auto, controlled by VW, today employs around 20,000 workers across three plants. Recently, the Metalworkers’ Federation in the Czech Republic (OS KOVO) claimed that productivity at Skoda Auto is at levels comparable to the EU. The company’s profits in 2004 were also more than double those of 2003. Yet, management refused to increase real wages despite the company’s improved performance; after more than 50 meetings the union staged a demonstration, including short interruptions of work. OS KOVO contended that failure to increase real wages in 2005 equates to ‘social dumping’ because the Czech workforce keeps EU productivity levels and is paid far less. With the mobilisation of 17,000 workers the union secured a new CBA with around eight percent increase of total remuneration from 2005 to 2006.
The Skoda case indicates that it takes a struggle by the autoworkers’ unions to get a decent wage improvement even when the company is performing very well.
Impact on autoworkers in Asia
The expansion of production in Asia at the present pace means additional jobs in China, India, and the Association of Southeast Asian Nations (ASEAN), yet comparable figures are not available after 1999 when the Chinese auto industry employed 1.807 million (assembly and parts), the Indian industry 289,000, and South Korea 194,000. Although rapid growth of production means more jobs, it does not necessarily imply more employment in every company, and some plants may even face downsizing or closure depending on the parent TNC performance or sheer profit calculations. Nor does growth of production and sales translate into improved wages and working conditions, and it does not by implication widen the space for collective organisation and bargaining, or civil and political human rights’ development.
With a regional trend of expanding auto production and sales, one would expect to find a lot of offensivelabour struggles aiming to improve wages, working conditions, and industrial relations in general. Yet, not many struggles have been reported; several of them even date back to the East Asian financial crisis and its aftermath while few have been successful (see ALU October-December 2003; Chang & Shepherd 2004).
In India, the dominant auto manufacturer, Maruti Udyog (MUL), was established as a joint venture between the Indian state (majority equity) and Japanese Suzuki in the 1980s, but during the 1990s Suzuki increased shares and took majority control. The company has intensified production and increased productivity, e.g. 1992-2000 saw a quadrupling of production while the workforce only increased 65 percent. Problems also intensified between management and the trade union, the Maruti Udyog Employees Union (MUEU), until the union called a strike in September 2000 over management’s demand that workers sign a code of conduct, which the union perceived as an attempt to undercut the union. The strike ended in January 2001 without the management agreeing to re-employ dismissed worker activists and union leaders and continuing to retrench employees. During 2001 it also launched a Voluntary Separation Scheme and yet another in 2003, taking advantage of the formation of a new, pro-management union. By early 2004, the MUL workforce had been downsized and made more flexible, with only 2,100 regular rank-and-file workers, 1,700 supervisors and managers, and a contract labour force of daily wage workers numbering 800-1,000, up from 100-150 before the dispute broke out. Finally, the management and the new union agreed on a new CBA, which runs for 10 years with much lower wage increases than before.
The MUEU’s struggle has been supported by civil society groups and international campaigns, including workers at Suzuki, Japan. Yet, the bleak fate of the MUEU is not much different from the happenings in another Indian auto industry district around Pune, south of Mumbai. Here, a survey of 15 companies showed that during 1994-2004 capital (management and executives) increased its share of value-added from 15 to 45 percent while the workers’ share fell from 15 to seven percent. In the same time, the autoworkers’ unions lost members, work was outsourced or subcontracted, casual workers replaced regular workers, and voluntary retirement schemes were applied.
In China, the auto industry is mainly composed of joint ventures between state-owned enterprises and foreign TNCs. The old labour regime has changed in certain ways into regular, now termed limited employment with additional insurance and welfare benefits stipulated. Yet, the unions are still legally subordinate to the Party and work primarily for the benefit of the company, although divergent and mutual beneficial interests are acknowledged.
Finally, South Korea seems to be a relatively bright spot on the Asian autoworkers’ map. With the ‘Great Worker Struggle’ from 1987-89 a new independent and democratic labour movement emerged, aiming for economic and political and social goals and institutions, building up industrial unions with centralised collective bargaining. The Struggle took the auto industry as one of its platforms, forming the Korean Metal Workers Federation and later the centralised Korean Metal Workers Union, which mainly had auto suppliers’ unions as members while the two big unions in Hyundai Motors (HMC) and Daewoo Motors (DMC) reluctantly stayed independent.
The auto chaebols (Korean term for a conglomerate of many companies clustered around one parent company; the firms usually hold shares in each other and are often run by one family, similar to the keiretsu in Japan), Hyundai Motors, Daewoo Motors, Kia, and Ssangyong had anti-union managements, but they were all unionised after 1987, while the latecomer, Samsung Motors, managed to keep independent unionisation at bay. During and after the financial crisis 1997-98, Kia and Daewoo defaulted and were acquired by Hyundai Motors and GM respectively; Samsung Motors was taken over by French Renault, which also had acquired 44 percent of Japanese Nissan, the technology supplier to Samsung Motors; and Ssangyong went to one of the ‘big three’ in China, SAIC, which is now targeting Italian Fiat after GM bought itself out of an agreement to acquire Fiat. HMC stayed as a Korean-owned and -managed company, being de-merged from the Hyundai Group and taking in German DC as a minority partner together with Mitsubishi Motors, which is in dire troubles.
One of the big battles in the Korean auto industry concerned the defaulted DMC, which the government saved from collapse and finally sold to GM. The new GM Daewoo Automotive Technology Co (GM Daewoo) does not include the old DMC plant south of Seoul (Pupyong) but uses it as a contract manufacturer. Yet, the Pupyong employees continue in the union. The militant policy of the union did not change with the GM takeover. Recently, workers voted down an agreement, including a pay raise of 12 percent, reached between management and the trade union. The union had been demanding 16½ percent wage increase and a five-day working week with no cut in pay. Rejecting the deal by a margin of 55 percent, the approximately 8,000 GM Daewoo union members went on full or partial strike at the company’s two plants. The union also pressured GM Daewoo to purchase the Pupyong plant.
In Southeast Asia, several important auto TNCs have more or less successfully applied union-busting tactics, irrespective of their Western or Japanese roots, and also of their global corporate viability (Toyota, Honda), problems (Ford), or decline (Mitsubishi’s plant in Indonesia is closing down in 2005, with production transferred to Thailand at a loss of 480 jobs, while the Philippines plant runs with reduced production). Autoworkers’ unions have won only in two instances, or at least have not lost the case (AAT, Thailand; AMI, Malaysia). The most severe, important, and ongoing industrial conflict in the region evolved at Toyota Motor Philippines Corporation (TMPC) in early 2001 and has been an uphill struggle, but the dispute is being internationalised, the union is lining up with a radical Japanese union network, and is supported by an international movement called ‘Protest Toyota Campaign’.
Toyota started production in the Philippines in 1988 and added a second plant in 1996. In 1992 workers registered the first union, the Toyota Motor Philippines Corporation Labor Union (TMPCLU). The company challenged the registration vehemently and was supported by the Supreme Court.
A second attempt at unionisation followed, with the registration of the Toyota Motor Philippines Corporation Employees and Workers Union (TMPCEWU). But management persuaded a group of members to sign a letter cancelling the union’s registration. To avoid a prolonged legal dispute, in 1998 the union leaders registered a new union, the Toyota Motor Philippines Corporation Workers Association (TMPCWA). In 2000, a certification election was held at the company, and 503 of 948 workers voted for the union. However, the company claimed that an additional 120 employees were eligible to vote. Arbitration quashed these ‘challenged’ votes and recognised the TMPCWA as the proper rank-and-file union of the company. Toyota’s appeal against the ruling was also rejected. The union filed another request for collective bargaining, but again Toyota refused using a new legal excuse.
In January 2001, the union gave a notice of strike to the Department of Labor and Employment (DOLE) to force the company to accept collective negotiations and court rulings. When DOLE surprisingly called a hearing to clarify the case in February 2001, both parties mobilised employees to prove that they represented the majority. When the union tried to prove their case by bringing 300 members to the court, the management denied their applications for leave. They left anyway, and on return, after the court hearing, the company accused them of staging an illegal strike and threatened them with dismissal. When the court recognised the TMPCWA as the representative union for collective bargaining with management on 16 March, Toyota dismissed 227 workers and six union officers. A total 291 dismissals and 30 suspensions were issued in following days.
The union declared a strike involving 900 rank-and-file workers on 28 March, paralysing Toyota for two weeks. The union contends that after Toyota and 10 other Japanese companies threatened to divest from the Philippines, the DOLE assumed jurisdiction of the dispute, called off the strike and ordered the company to reinstate the workers, at least at payroll level. DOLE passed on the case to the National Labor Relations Commission (NLRC), a very corrupt state agency according to union opinion. Four months later, the local NLRC declared illegal the union strikes in February and March and sustained the 233 dismissals.
The lower level NLRC decision was appealed to the national NLRC, which upheld the ruling. Again the union appealed to the Court of Appeals. Toyota furthermore filed criminal charges against 25 union members and officers for intimidating employees while picketing. In March 2002, the Metropolitan Trial Court ordered the arrests of the 25 but they were bailed out temporarily. In February 2003, the Court of Appeals confirmed the verdicts and nullified the severance payment awarded. Combining intimidation with divide-and-rule, Toyota management then offered severance pay to employees who cancelled union membership and involvement in the dispute. Half a year later, two thirds of the original 233 employees still backed the union, while warrants on 18 of the 25 members had been recalled. Today, 150 of the 233 dismissed employees are still union members (Protest Toyota Campaign Newsletter No. 9, 23 March 2005).
In September 2003 the union’s appeal succeeded when the Supreme Court acknowledged the TMPCWA was the legal union entitled to negotiate with TMPC, whose appeal for re-trial was rejected in early 2004. Yet, Toyota took the case to the Court of Appeals, and the company ignored a public hearing to resolve the conflict called by the House of Representatives in January 2005 (Protest Toyota Campaign Newsletter No. 9, 23 March 2005).
Meanwhile, in November 2003 the Committee on Freedom of Association, International Labour Organisation (ILO), recommended to Toyota management and the Philippine government that the dismissed employees be reinstated, that the management begin negotiations with the union, cancel criminal cases filed by the company, accept investigation by a consultative mission, and amend the labour code to strengthen the rights of freedom of association and organising. A year later, nothing had happened, and the ILO regretted this openly.
In March 2004 the union and the Protest Toyota Campaign complained to the Organisation for Economic Co-operation and Development’s (OECD) National Contact Point in Japan that the TMPC and Toyota Motors Japan had violated the OECD’s ‘Guidelines for Multinational Enterprises’, but nothing was issued (Protest Toyota Campaign Newsletter No. 8, 30 October 2004; No. 9, 23 March 2005). Toyota, having committed itself to Corporate Social Responsibility (CSR) in Europe, is defending its conduct arguing that the case was being heard by the Philippines’ Court of Appeals! Finally, having been an independent union outside the Philippine union federations, TMPCWA decided to join the All Japan Shipbuilding Labour Union Kanto Region, Kanagawa Regional Union (Zenzosen) in order to pave the way for direct negotiations with Toyota HQ, and when Toyota rejected the invitation to bargain collectively, the union alliance brought the case of unfair labour practice to the regional labour commission (Protest Toyota Campaign Newsletter No. 8, 30 October 2004; No. 9, 23 March 2005). The union also met with the union at the Toyota subsidiary plant in Valencienne, France, in mid-2005, to increase international pressure.
In the Philippines, because the company ‘union’, Toyota Motor Philippines Corporation Labor Organization (TMPCLO), established with the help of the management in late 2002, had demanded a certification election for early 2005, wanted the government to undertake a new certification election so the TMPCLO could replace the TMPCWA and make a CBA with Toyota (Protest Toyota Campaign Newsletter No. 9, 23 March 2005). The union busting tactics of TMPCWA activists continues inside and outside the plant.
To sum up this short and selective review of current industrial relations of the global auto industry, we can look at how autoworkers faired on the key indicator: net hourly earnings. IMFmetal’s purchasing power data in the industry indicate that the German and American autoworkers earn the most; Japan, France, and Korea are in the middle; and Thailand, Mexico, Malaysia, Indonesia, and the Philippines are lowest (among countries mentioned here). Over time Korean autoworkers have improved very much even compared to wage levels before the financial crisis, which hit industries in 1998. From 1997 to 2003/2004, Korean auto workers raised their net hourly earnings from US$6.67 to US$9.40, around 40 percent. In the same period, Japanese autoworkers raised earnings from US$18.43 to US$20.26, or 10 percent. However, the relative increases are even higher in Indonesia and Thailand, at more than 60 percent and nearly 75 percent respectively, although the evolution of respective auto industries are quite diverging.
Global labour advances, challenges and strategic responses
Overall, we may conclude that the changing international division of labour in the auto industry paves the way for defensive labour strategies and struggles in the North, facing downsizing and unemployment, while the expansion in Asia could create a fertile ground for offensive labour strategies and struggles. The whole age of global transformation could even provide a platform for international if not global labour strategies and practices, based on the understanding that the auto industry is more or less one global auto system composed of competing and collaborating auto chains which are governed by the TNC automakers with increasing emphasis on financial functions and issues.
Evidence indicates that downsizing is taking place in the North but at huge costs for the TNCs because the unions and their allies are able to mobilise against mass retrenchment and target high compensation, retraining, and replacement. The auto TNCs are moving up the value chain while they outsource and offshore lower value-adding activities like simple and advanced assembly and component making, squeezing the suppliers wherever they operate.
The unions are most successful where there is less economic space, so to speak, that is among the Western automakers and in particular the US giants, GM and Ford, and the two German giants, DC and VW. Yet, European auto companies (DC, VW, BMW, Renault, and component maker SKF) agreed to sign International Framework Agreements1, which acknowledge core ILO labour standards and make assembly contractors responsible for their suppliers’ labour conditions too. On the other hand, Toyota, the most profitable volume producer and upcoming world number two automaker (Maxton & Wormald 2004 chapter 7) seems to be outside the reach of foreign union power, targeting ‘greenfield’ locations abroad, and if unavoidable, underpinning in-house unionism and decentralised bargaining at the expense of industrial unionism and industry-wide collective bargaining. This most prosperous auto TNC gets away with blatant breaches of core ILO standards in the Philippines while it promotes itself as a socially responsible company in Europe!
It is time to sustain and enlarge the Protest Toyota Campaign. There is not much hope for workers in competing auto firms and down the supply chain, be they assembly contractors or component manufacturers, before Toyota is forced to accept that Toyota HQ has the responsibility to respect core labour rights for unionisation and collective bargaining wherever it operates. It is not a national issue in the Philippines alone, as the Toyota management and Toyota union argue, when strategic decisions are made in Japan.
Among developing countries, Korean autoworkers present a model that integrates trade union and political issues and mobilisation for social democracy and welfare; it took Korean workers along a quite successful path, having sustained a radical labour movement which has gained a powerful position in business as well as politics, represented by, for example, the autoworkers unions and the Democratic Labour Party now holding a key position in the parliament although it is yet a small party, for the time being.
1. Global Union Federations (formerly known as International Trade Secretariats) draft rules of conduct known as International Framework Agreements for transnational companies to follow to respect labour rights and conditions. They are negotiated at global level and require the participation of trade unions.
Asian Labour Update (ALU), Issue 49, October-December 2003
Autofacts (relevant years) Executive Perspectives, 2004 Q4, 2005 Q1.
Chang Dae-oup & Ed Shepherd (eds) (2004) Automobile workers and industry in globalising Asia, Hong Kong: AMRC & Centre for Education and Communication.
Dicken, Peter (2003) Global Production Networks in Europe and East Asia: The Automobile Components Industries, GPN Working Paper 7, May 2003: Manchester: Manchester Business School, University of Manchester.
IMF NewsBriefs (relevant years), Geneva: IMFmetal
IMFmetal (2004) Auto Report 2004, Geneva: IMFmetal.
IMFmetal (relevant years) The Purchasing Power of Working Time. An International Comparison, Geneva: IMFmetal.
OICA statistic (2004) www.oica.net
Maxton, Graeme P. & John Wormald (2004) Time for a Model Change. Re-engineering the Global Automotive Industry, Cambridge: Cambridge University Press.
Protest Toyota Campaign Newsletter No. 8, 30 October 2004; No. 9, 23 March 2005.
The Economic Council (2004) Danish economy, Fall 2004, Copenhagen: The Economic Council (in Danish)
The Solidarity Center (2004) Justice for All. The Struggle for Worker Rights in China, Washington: Solidarity Center.
Veloso, Francisco & Rajiv Kumar (2002) The Automotive Supply Chain: Global Trends and Asian Perspectives, ERD Working Paper No. 3, Manila: Asian Development Bank.