Labor Management Negotiations at Volvo’s NRV Truck Plant, Part One
Robert Menard
Certified Purchasing Professional,
Certified Professional Purchasing Consultant, Certified Green Purchasing Professional, Certified Professional Purchasing Manager
Editor’s note: In this blog, most references to other than commercial negotiations, between buyers and sellers, have been minimal. A notable exception is the recent series of four posts on the military negotiations between Grant and Lee that ended the Civil War. Another departure was into business labor negotiation of Boeing vs. Machinists Union surrounding the 787 Dreamliner plant in South Carolina. This series represents another foray into business labor negotiation.
This time we will examine the Win-Win outcome of the 2008 strike at Volvo’s New River Truck Plant in Dublin, VA in this four part story. Parts One and Two deal with the background because everyone comes to the negotiation table with his own experiences in addition to their own bias. Nothing in humanity happens in a vacuum. Past events are prologue to the future. 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.
Historical background
When I heard about the 2008 strike during a plant tour in August, 2013, it recalled the intransigence of the UAW during the 1980s that ultimately resulted in the decimation of the vibrant US auto industry and the economic and physical ruination of the city of Detroit that continues to this day. When I was a kid, Detroit’s population was almost 1.9 million; today it is barely 700,000. This enormous drop is result of an economic reality. When businesses fail, jobs suffer, and people move on and out.
This strike at Volvo’s largest truck manufacturing plant in the world put hundreds of union workers on the curb instead of on the line. Negotiations began in early January 2008 when the contract expired before breaking down into a strike on February 01 that went on for 7 weeks.
Automobile manufacturing was on the rise in Asia since WW II and not recognized as a threat to the US industry as late as the 1970s. Ironically, Dr. W. Edwards Deming, an American scholar and teacher inspired and guided the spectacular rise of Japanese industry after World War II.
Negotiations between big labor and big management have always fascinated me because in my lifetime, the strategy of each party has mostly been Win-Lose . In the auto industry, for the first three decades of the post WW II period, labor escalated its economic demands to uncompetitive heights as the global competition imposed crushing results on the auto industry. Management had accommodated the excesses of labor demands to the breaking point. Those lessons learned are now painful memories of how to fail in negotiation and destroy jobs.
In 2008, the US economy began its swirl around the bottom of the bowl. Decades of excesses of both parties in Washington, DC artificially inflated values in the housing market. Its collapse triggered colossal failures in the financial markets. Those incompetent politicians who created these disasters attempted to fix it by enacting the Troubled Asset Relief Program (TARP) which only made the mess much worse. The ascension of socialist policies following the overwhelming victories of Democrats in the fall 2008 elections produced a drastic decline in employment that is now structurally integrated into the US economy.
These opinions are admittedly arguable. What is not arguable is the fact that businesses make decisions on their assessment of the future. If you ever heard reference to the stock market having already factored in a future event, this is one example. Companies must justify large capital expenditures to management and stock holders. Any expansion, acquisition, or growth plan must be justified be analysis of likely (and even unlikely) future events.
Part Two examines the positions of the parties that led to the impasse.