Outsource discourse

After a springtime skirmish in the media with General Motors execs over a new manufacturing method called "modular assembly," United Auto Workers President Steve Yokich finally pronounced the issue "dead."

Despite Yokich’s obituary, the issue is very much alive and, according to industry observers, will be a key subject as GM negotiates contracts with the UAW this summer.

Under the automakers’ dream scenario, modular manufacturing would dramatically cut the amount of work done inside assembly plants by highly paid union members. No longer would hundreds of suppliers transport tens of thousands of parts daily to these plants, where several thousand UAW members screw, bolt, and snap them together. Instead, most of the work would be done by supplier companies, delivering large chunks of the vehicle ("modules") already assembled. One company might provide the chassis, another the "cockpit" (interior), a third could take over the painting operation.

Workers at the Ford Escort plant in Wayne, for example, used to put together about 120 parts to make an instrument panel on a separate subassembly line within the plant. Today, the instrument panel comes in as a single module; Ford workers add the radio and not much else.

The advantage to management is that supplier workers are usually nonunion and always lower paid than Big Three workers. It is simply a matter of substituting cheaper labor for the more expensive variety. Yokich denounced modular at the union’s bargaining convention March 28, calling it "just another word for ... outsourcing ... another way to destroy good-paying jobs and benefits."

In addition, modular assembly means design and engineering costs can be shifted to suppliers; factories can be much smaller, assembly times faster.

All the Big Three automakers use modular techniques in some overseas plants, particularly in Brazil. But the UAW is resisting GM’s "Project Yellowstone" – four modular plants to be built in North America. The company had demanded deep concessions from two local unions – one in Lansing and another in Lordstown, Ohio – in exchange for a promise to build modular plants there. But Yokich stepped in and shut down those talks in February, preferring a national, united approach to modular rather than a bidding war among the locals.

By that point, a different Lansing local had already voted to make work rule concessions to attract modular work.

The jury is out on whether modular can "work" for the automakers.

For one thing, many observers say modular is just a fancy word for outsourcing – the purchasing of parts manufactured by others instead of the auto companies doing the work themselves – a practice that’s already well-advanced. Another question is whether modular is feasible in a high-volume plant (the Brazilian plants are low-volume truck assemblers). And do the Big Three want to turn over that much responsibility – and power – to suppliers? Would technical problems create bottlenecks?

The shape that modular takes in the next decade is perhaps less important than the union response it provokes today. Analyst James Harbour of Troy-based Harbour and Associates declared GM’s touting of modular to be not so much about factory methods as "an effort to bust the union."

"They lost money, and now it’s payback time," he said in reference to the 1998 UAW strikes.

At the bargaining table, Yokich will likely try to maintain membership numbers by pushing the Big Three to pressure their module suppliers to accept the union. This would be a shortcut, if top-down, method of organizing. The union may also seek transfer rights (the ability for employees to transfer from one plant to another without losing seniority) from Big Three plants to module suppliers, and income supplements for those who transfer. GM execs have said they’re willing to see their suppliers unionize. But management at those companies may not be so happy to sign on. GM awarded the largest single contract at Yellowstone to Magna International, a fiercely antiunion supplier. Of its 83 facilities in the United States and Canada, Magna has not a single union plant. The Toronto Globe and Mail reported last month that Magna is in talks to take over vehicle assembly at GM’s Ste. Therese, Quebec, factory.

Referring to Magna, Wayne State University auto industry watcher Steve Babson says, "It’s hard to imagine that leopard changing its spots just because of a memo from (GM Chairman) Jack Smith."

But the new arrangements may actually give existing UAW members more power to help nonunion workers achieve recognition. University of Michigan auto analyst Sean McAlinden points out that because a strike at a module supplier instantly shuts down one or more Big Three assembly plants, workers in unionized module plants will have a lot of clout. They could use it to help organizing efforts by their nonunion workers in the same company.

The UAW has recently restructured its organizing department to focus on the auto parts sector (rather than the public employees, graduate students and miscellaneous workers the union has recruited instead in recent years). That move comes just in time.

The question is whether the union will seek a quiet, back-door solution to maintaining membership numbers – one that uses corporate power rather than union power – or whether leaders will help workers themselves to take advantage of their possible new leverage.

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