Labor Negotiations at Volvo’s NRV Truck Plant, Part Four
Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager
Editor’s note: This four part series of blog posts examines the Win-Win outcome of the 2008 strike at Volvo’s New River Truck Plant. Parts One and Two deal with the background. Parts Three and Four dissect the negotiation. Facts, opinions, quotes, and some commentary were collected from research into local and industry press reports and documents of the two parties. Some interesting influences in this dispute are analyzed in sections labeled NEGOTIATION ANALYSIS.
Was the UAW out of position?
According to Chris Brady, president of Commercial Motor Vehicle Consulting, “The strike won’t have a big impact on fleets for the time being simply because there are still plenty of trucks at dealerships. It’s not going to impact fleets from getting trucks because the companies all have excess [inventory].” Brady added that, “The timing of the strike is not beneficial to the UAW. “The union is not in a great position right now. They’d prefer to strike when [order] backlog is high.”
If this is so, the union picked a bad time for a fight. Volvo could sell off inventory while creating a shortage in time for negotiation settlement. The market was already deep in recession so the timing could not have been better for Volvo.
So what were the real issues?
There appears to have been three other contributing issues that played into the negotiation: recall & workforce sustainability, absenteeism, and technology.
Volvo’s Mies expressed the opinion that “people might be confusing recall issues with workforce stability issues.” When parties report to the press about the progress of negotiation, the skeptical observer must impute a measure of spin to the party’s statement. In this case however, Mies continued with a credible clarification. “We do feel that we have to work with UAW to address the excessive amount of bumping of personnel in the facility (NRV plant) when we bring in additional people to work.” The excessive amount of manpower movement in the facility has a negative impact on the quality of production and negative impact on the ability of the plant to be competitive.”
Absenteeism apparently played a big role. Mies cited an “…excessive degree of absenteeism“, causing Volvo to “…maintain far more people than we would have to otherwise cover for the absenteeism that we have on a regular basis.”
Technology introduced at the plant in 2007 played a significant role. As with any new technology, implementation problems must be expected. Troubles with the technology caused Volvo production problems at the NRV plant. The result was falling behind in customer orders. The temporary solution was to hire more employees temporarily, even amidst the doldrums of the poor economy. Volvo had intended to discharge as many as 650 temporary employees about the time the strike began in winter 2008.
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NEGOTIATION ANALYSIS
The intertwined nature of these issues makes for a messy negotiation, a giant game of Whac–A-Mole. It is important to recognize that negotiation is not done by checklist. That is, Volvo and UAW could not check off a solution on technology, for example, because it had an impact on workforce sustainability, recall, and absenteeism.
This principle is identical to commercial negotiation where the impact on Quality, Service, Delivery, or Price all affect the Total Cost of Ownership (TCO) You cannot “agree” on Quality, check that box, and then move onto the next cost element. No matter how good the quality, if they cannot Deliver, the Quality is next to worthless.
The UAW may have been purposefully introducing Head Fake and Straw-man arguments. If so, that would be bad faith and underserving of negotiation between two long time partners. Absenteeism, bumping, recall, and technology had real and substantial influence on Volvo’s ability to compete and ultimately to stay in business at the NRV plant.
The denouement
Members of UAW Local 2069 voted Saturday, 15 March, 2008 to ratify a new three-year contract with VTNA, ending a strike of more than six. The contract was approved by 90 percent, according to the local union’s President Lester Hancock. ive years later, in October of 2013, employees represented by United Auto Workers agreed to a five-year contract covering employees at the VTNA’s NRV plant at Dublin.
Denny Slagle, president and CEO of VTNA announced that “We are the only manufacturing group still building trucks for this market exclusively in the United States, and agreements like this one help us keep American manufacturing competitive”. Working with the UAW, we’ve arrived at an agreement that increases Volvo Trucks’ long-term competitiveness in the North American market, while continuing to offer our employees a great quality of life.” He also noted, “Volvo gained two points of market share in 2010 and the stability this agreement provides will help us continue that momentum as the market improves.”
NEGOTIATION ANALYSIS
It seems that both UAW and Volvo learned and grew from the 2008 strike and collaborated five years later. While this non-strike renewal does not constitute a streak or a predictor of future peace and love, it is an encouraging sign for labor and management.
Was there a winner and a loser? I do not think so, at least as settlement is concerned. The UAW may have initially adopted a Win-Lose strategy . If so, that was a foolish and destructive choice. It would have been better to establish High Initial Demands as to its most important issues (presumably recall rights and workforce sustainability) while baking in concessions on lesser issues (presumably absenteeism and temporary workforce due to technology).
Volvo was facing overwhelming economic headwinds in winter of 2008. They may have failed to fully disclose the threat to UAW or the union may have disregarded it. This speaks to the importance of ongoing open and honest communication between two contracting parties.
During my 2013 visit to the NRV plant, preliminary negotiations on the ultimately renewed October 2013 may have already been underway, I detected no animus from either side. On the contrary, there was a palpable collegial atmosphere projected no matter to whom I spoke.
It is the nastiness and lack of candor, which seems so much more endemic to labor-business negotiations, that keeps me persuaded of the wisdom of not participating. Dealing with business pros, who understand the value of mutual benefit, is a more satisfying pursuit.