The authors develop a general model of local-level bargaining in the multi-plant firm. According to this model, when the parent firm has the ability to allocate production differentially across plants, the local union may be motivated to work with local management to reduce production costs and increase profitability, in order to increase plant employment or minimize reductions in plant employment. A case study using data from General Motors' Lansing Grand River Assembly (LGRA) and United Auto Workers Local 652, collected in part from interviews conducted in 2003–2008, shows how the parties established a joint responsibility system of collective bargaining that encouraged the union to reduce production costs and increase profitability by accepting responsibilities traditionally borne by management. The authors also demonstrate that General Motors, consistent with budget, capacity, and political constraints, invested in LGRA and assigned new product to LGRA, thus supporting the hypothesized incentive structure.
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