Purchasing and Negotiation Training

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.

From the background, we know that economic forces beyond the control of the UAW or Volvo were the primary reason that reduction in the workforce could not be avoided.  To a lesser degree, the relocation of Mack truck operations to the Pennsylvania plant contributed to the job losses.

While observers cannot be certain of what was said at the bargaining table, we do know what was reported in the press, often via self-serving press releases issued by the parties.  We will examine these in a moment but there appears to be a lot of public dissembling, perhaps more on the part of UAW than Volvo.  This is the messy and devious part of labor and business negotiations that discourages me from participating.  Honest exchanges of motivations and information between trusting parties is where I excel in negotiation.

We know that all negotiations begin with High Initial Demands and proceed through concessions.  Local press, blogs, and position statements put out by the parties at the time are therefore a good starting point.

On January 8, representatives from both Volvo and UAW met to negotiate a new contract for union employees at Volvo’s New River Valley (NRV) Plant in Dublin. However, after the two parties were unable to reach an agreement by midnight of January 31 when the existing three-year contract ended, 2,467 union members working for VTNA in Dublin went on strike.

Union representatives stated that this strike is not about money, but about “unfair labor practices,” which include safety and seniority issues.  Volvo spokesperson Jim McNamara said that the Volvo was surprised by the allegations by union members in regards to health and safety issues.”

“The first thing that people need to understand from our perspective is that we wanted to keep negotiating and have everyone keep working while we negotiated,” John Mies, Volvo’s vice president of corporate communications, in an interview The Southwest Times. “We did not walk away from the table.”

As to Environmental Health & Safety (EH&S) issues cited by the UAW, Mies stated that, “Volvo is totally committed to having a healthy, safe environment in the NRV plant.”  The UAW demanded volumes of EH&S documents.  According to Mies, “Both before and during the negotiation process, there have been large requests for documents…  We were in the process of providing then when the UAW walked out.”   

Positions of the parties    UAW 

EH&S concerns were cited by union members as major issues of concern.  In response, John Mies said that Volvo is “totally committed to having a healthy, safe environment in the NRV plant.”  The UAW had requested a large volume of documents with respect to health and safety which were, according to Volvo, in the process of being produced when the UAW walked out of negotiations.

Health care was an issue for both sides. The union members had a so called “Cadillac” plan that was expensive for Volvo.  The UAW was also concerned with “recall rights”, a phrase relating to re-hiring laid off employees on terms more favorable to labor than management.

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NEGOTIATION ANALYSIS 

It is difficult to know exactly what was happening here.  As a self-insured operation, it is inimical to Volvo’s financial interests to cost itself money through poor EH&S practices.  Was this a Head Fake or Strawman tactic by the UAW?  If so, it was a poor choice.

Positions of the parties    VOLVO

By day 7 of the strike, no movement was perceptible to the outsider and talks were called off.  Volvo spokesman Jim McNamara was quoted in an interview as saying, “We do not comment on negotiations, which broke off when the union went on strike.  If it were up to Volvo, we would still be negotiating and people would still be at work.”  McNamara further stated that Volvo Trucks North America (VTNA)’s main focus remains “achieving a contract that is fair to both parties.” He said VTNA wants an agreement that “addresses improving workforce stability and reducing manpower movement [as well as] controlling the skyrocketing cost of healthcare and addressing a serious absentee problem that the UAW acknowledges.”

NEGOTIATION ANALYSIS 

Let’s pause to focus on this statement.  What does “workforce stability and reducing manpower movement” mean?  If it means a “no lay off” clause, that could lead to bloated and non-competitive labor costs.  Such labor excesses ruined Detroit.  Skyrocketing costs of healthcare and a serious absentee problem cannot be tolerated by any global manufacturer.  If the UAW acknowledged these contentions, shame on the union for allowing things to get his far.  Was the absentee problem due to a conscious effort on the part of the UAW to offset the planned reduction in force?  If true, that would be disingenuous, at best.

Volvo denied assertions regarding recall rights and health and safety concerns.  In a letter announcing a return to bargaining, Per Carlsson, president and chief executive officer of Volvo Trucks North America, focused on three separate issues: “increased health care cost sharing,” “the exceptionally high degree of manpower movement and higher-than-average absenteeism in the factory.”