When Does Union-Management Cooperation Work? A Look at NUMMI and GM-Van Nuys

Standardized for type of car, capital stock, and technology, GM plants at Fremont and Framingham used 50% more labor than the Toyota plant in Japan. Krafcik John , “Learning from NUMMI.” Internal Working Paper, International Motor Vehicle Program, MIT, September 15, 1986. Krafcik worked at NUMMI as a quality control engineer.

Ibid.

The Nova is identical to the Toyota Corolla produced in Japan. NUMMI added production of a second car, the Corolla FX16, in September 1986; this car is sold by Toyota dealers.

The FCC approved the joint venture for an initial twelve-year period.

General Motors has stationed about two dozen managers in the plant, but responsibility for management rests primarily with Toyota.

This figure was cited by Dennis Cuneo, General Counsel and Corporate Secretary, NUMMI, at a Research Seminar at the Berkeley Roundtable on the International Economy, University of California at Berkeley, July 21, 1987.

“New United Motor Manufacturing, Inc. and the United Automobile Workers: Partners in Training,” U.S. Department of Labor, Bureau of Labor-Management Relations and Cooperative Programs, Labor-Management Cooperation Brief, No. 10, March 1987, p. 1. Joel Smith, formerly the chief UAW representative at NUMMI and currently Western regional representative, notes that a load of five to six thousand grievances was not unusual at GM-Fremont. Smith Joel Childs William , “Imported from America: Cooperative Labor Relations at New United Motor Manufacturing, Inc.,” Industrial Relations Law Journal, 9/1 (1987): 71.

Productivity is expressed in vehicles per worker, and corrected for differences in capital stock per worker, use of intermediate parts from suppliers, and so forth.

Krafcik , op. cit., provides a careful calculation of comparative productivity levels. Gross figures (Krafcik, Table 2) show NUMMI productivity as double that of GM-Fremont or GM-Framingham. This gross figure is often cited by NUMMI management. Krafcik's corrections for technology, product complexity, and so forth yield the fifty percent differential. Some academics, such as Harley Shaiken, believe the productivity differential is overstated in these calculations. The before and after rankings were cited by Mark Hogan, GM's General Manager at NUMMI, Faculty Seminar at Stanford University, December 4, 1987.

According to William Childs, General Manager for Human Resources at NUMMI, the product quality is equivalent to the Toyota, the industry leader for quality. ( Smith Childs , op. cit., p. 77) High quality translates not only into greater sales, but also lower warranty repair cost. The Nova has received high ratings from several leading consumer magazines (U.S. Department of Labor, 1987, p. 1). For example, in the most recent Consumer Reports survey (April 1988), Nova owners rank in the highest group in customer satisfaction.

San Francisco Chronicle, February 6, 1988, p. B1. Low sales of the Nova are causing negative earnings for NUMMI in 1988. The innovative responses of the company and the union to this volume reduction are discussed later in this article.

Two other frequently-mentioned aspects of the Japanese management system—relationships with suppliers, and the use of just-in-time inventories—also can reduce costs by reducing inventory costs and by placing greater pressure on the achievement of quality standards.

Yoder Dale Staudohar Paul , “Management and Public Policy in Plant Closure,” Sloan Management Review, 26/4 (Summer 1985): 49.

Smith Childs , op. cit., p. 71.

The cycle of layoffs and recalls that is endemic to the U.S. automobile industry is now also beginning to be played as a cycle of announced plant closings, followed by reopenings. When General Motors recently announced the closing of its Framingham plant, few of the workers believed the company sufficiently to search for new employment opportunities. In fact, the plant re-opened six months later. A similar cycle was repeated at Framingham in late 1987/early 1988.

GM did not announce that the plant was closed permanently until April 1983.

Community Relations Department, NUMMI, “Background Information” Release, January 19, 1985; Yoder Dale Staudohar Paul , op. cit., p. 47. According to Henne Douglas Levine Marvin J. Usery W. J. Jr. Fishgold Herbert , “A Case Study in Cross-Cultural Mediation: The General Motors-Toyota Joint Venture,” The Arbitration Journal, 41/3 (September 1986) 4:6. Toyota and GM had been holding informal discussions about a joint manufacturing venture throughout 1982. It was GM that suggested the Fremont plant as the location for the joint operation.

Turner Lowell , “Industrial Relations and the Reorganization of Work in the U.S. Auto Industry,” Ph.D. dissertation in progress, U.C. Berkeley.

New United Motor Manufacturing, Inc., pamphlet prepared by NUMMI's Community Relations Department, June 1988. An initial group of 240 production workers were sent to Japan for three weeks training. All hires were put through three days at an assessment center and five days of orientation. Clearly, some commitment is indicated simply by the willingness to undergo such a lengthy process.

Interview with Steven Berzon, attorney for the UAW local at NUMMI, March 2, 1988.

According to a company representative (Cuneo seminar, July 21, 1987) those workers who were not rehired had such poor records, such as assault of co-workers or supervisors, that they would have been discharged in a traditional adversarial labor-management system. The union activists who were rehired included several who had pressed the lawsuit to block the joint venture in the first place. According to UAW Shop Committee Chair George Nano, the union was able to obtain second chances for employment even for workers who tested positive on drug tests.

The median age of the NUMMI workforce is 42, over ten years higher than at Toyota plants in Japan. About one-fourth of the NUMMI workforce are women, and an equal proportion are minorities.

United Automobile Workers, “NUMMI: A New Kind of Workplace,” Solidarity, 28/8 (August 1985): 14.

The contrast is especially great with Toyota's very selective hiring practices at its (nonunion) Georgetown, Kentucky, plant. Although 90,000 applications were received for 2,700 production jobs, Toyota is moving very slowly to fill these positions. See, for example, Koenig Richard , “Exacting Employer: Toyota Takes Pains, and Time, filling Jobs at its Kentucky Plant.” Wall Street Journal, December 1, 1987, p. 1. Over 100,000 people filed applications for 3,200 positions when the (also nonunion) Nissan plant opened in Smyrna, Tennessee in 1982. See Noble Kenneth B. , “Union Organizer's Task is Uphill at Nissan Plant,” New York Times, April 3, 1988, p. 12.

Absenteeism is low also because NUMMI management strictly enforces attendance rules. Nearly 150 worker were dismissed in 1986 and 1987 for poor attendance records. Hogan seminar, Stanford University, December 4, 1987.

“Perfect attendance” in a given year earns the worker one more vacation day; less than standard attendance reduces vacation time by 20%. After five consecutive days of sick leave, a worker is eligible for unpaid leave of absence. Vacation days declined from 16 days in the first year of the contract to 14 days in the third year. Paid vacation days increase with seniority. (Agreement between NUMMI and UAW, July 1, 1985, Articles XXI, XXII, XXIII.) The five days the plant shut down for retooling in July 1988 were required vacation days.

NUMMI can afford high wages in part because management and the union built Health Maintenance Organizations and restructured pension plans into the compensation package, holding down overall compensation costs.

Mann Eric , Taking on General Motors, Institute of Industrial Relations, UCLA, 1987.

UAW's brochure summarizing the local agreement, distributed to the rank and file as the basis for their voting.

Reproduction of leaflet in Mann, op.cit., p. 246.

The Norwood local had resisted implementing teams, and GM said Norwood had an older, less desirable building structure. On the positive side, Norwood's central location saved it $70 million annually over Van Nuys in shipping costs. Mann , op.cit., pp. 124, 252–254.

Teams were being successfully implemented at the Fiero plant under Schaeffer until GM began massive layoffs as sales fell because of recalls.

Training manuals used at the training for all workers. Also, telephone conversation (March 23, 1988) with Gloria Busman, Coordinator at the Center for Labor Research and Education, IIR, U.C.L.A. Busman was one of the principal instructors in charge of the training program.

Mann , op.cit., pp. 285–286, ch. 12.

Interview with Jerry Shrieves, UAW Local President, May 5, 1988.

Interview with Ernest Shaefer, Plant Manager (promoted to a position in GM headquarters in April 1988).

Bulletin board poster, CPC-Van Nuys plant, May 5, 1988.

Daily Labor Reporter, Sept. 23, 1987, Section D; October 23, 1984, Section D. This is the source of the following description of the UAW national agreements with Ford and GM, which are basically the same on these issues.

For every two jobs lost through attrition (retirement, quit, or death), only one would be subtracted from the total number of guaranteed jobs. In addition, Ford and GM agreed to no new plant closings (other than those already announced) during the life of the contract, which expires in 1990.

In addition, measures taken before layoffs do not include salary reductions for management, and any measures taken must be jointly agreed-upon.

Agreement Between New United Motor Manufacturing, Inc. and the UAW, July 1, 1985, Sections II and III.

The 1987 local agreement stated that “all employees shoud share in adjustments necessary to avoid indefinite layoffs of large groups of employees.”

Daily Labor Reporter, op. cit.

Noble Kenneth , New York Times, March 15, 1988, p. 1; Mann Eric , Los Angeles Times, February 22, 1988.

Warren Alfred , Vice President for Industrial Relations, GM. Faculty Seminar at Stanford University, March 18, 1988.