The Truth About Unions
With organized labor like the United Auto Workers (UAW) union looking to organize major automobile factories like Mercedes, unionization has continued to be a heated topic in Alabama. While debates across the state rage about whether or not to unionize, nationally, union membership has seen a steep decline.
According to the Bureau of Labor Statistics, only 11.3 percent of wage and salary workers belonged to unions in 2013, which is down 20.1 percent from the early 1980s. At their peak in the mid-1950s, unions boasted a membership of approximately 34.8 percent. UAW alone has lost hundreds of thousands of members since its peak in 1979 when it boasted 1.5 million members. Today its membership is just approximately 390,000. The decline of union popularity has been attributed to numerous factors, but to many, the statistics on what unions have done for job security speak volumes on the topic. As noted by UnionStats.com, in 1983, there were approximately 19 million manufacturing jobs in the United States, 5.3 million union jobs and 13.7 million non-union jobs. In 2012, the total number of manufacturing jobs in the United States was approximately 14 million, with 1.3 million being union jobs and 12.6 million being non-union jobs. Overall, with a 27 percent decline in manufacturing jobs during that timeframe, non-union jobs decreased only 8 percent while union jobs declined 74 percent.
“For any industry to grow, there needs to be a healthy economy,” said Tom Scroggins, an attorney at Rosen Harwood in Tuscaloosa, Alabama, that exclusively represents management in labor and employee matters. “The data shows that being heavily unionized is not the path to expansion, growth and prosperity. In fact, research has shown that unionization, independent of wages and benefits, will range from about 15 percent to 30 percent of additional costs due to things like collective bargaining, grievance handling and redundancy. These additional ‘transactional costs’ in addition to the fixed wages and benefits that unions demand usually exceed the competitive market rate, causing job losses in the unionized sector of the economy.”
In addition to additional costs for employers, unions typically bring about numerous risks to employees as well. “Unions love to say it’s all benefit and no burden, but the reality is that unionization brings a whole new set of working conditions and risks and consequences,” said Scroggins. “For example, workers are never told by a union that they can lose what they have in collective bargaining. The unions tell them they are going to make things better for them without telling workers that not only do you pay union dues as a member but you run the risk of losing your job in a strike and you run the risk of making your company noncompetitive and go out of business or relocate. During organizing campaigns, unions also make promises of higher wages, defined benefit retirement plans and improved working conditions without truthfully stating that all the union can do is ask for those things at the bargaining table. There is no guarantee any of it will be achieved. Employees who vote for a union are often perplexed to find that the contract that is actually negotiated fulfills few, if any, of the promises that were made to obtain the employees’ vote.”
Perhaps nowhere is this more evident than in the state of Michigan. According to 2010 U.S. Census data, the state of Michigan lost 48 percent of all of its manufacturing jobs from 2000 to 2010. More telling are the numbers coming out of Detroit, a longstanding stronghold for labor unions and birthplace of the UAW. Detroit-based automobile companies alone have shed 200,000 jobs in the last 12 years, which accounts for three-fifths of its hourly workforce. The city’s tough economy has led to a dwindling population—in the 1970s the city had a population of approximately 1.5 million and in the last census had just over 700,000—high unemployment (a rate of close to 18 percent, far above the national average), increased crime (Detroit holds the title as one of the most dangerous big cities in the United States, according to FBI statistics) and in 2013 led to Detroit becoming the largest U.S. city to enter bankruptcy (the city was $18 billion in debt). In the meantime, the UAW voted to increase its membership dues rate—a 25 percent increase that brings the dues rate to two-and-a-half hours of pay per month per worker—that will give it an extra $45 million every year.
To try to combat the state’s ailing economy, Michigan Governor Rick Snyder (R) signed into law a “right-to-work” bill in 2012, which officially made Michigan the 24th right-to-work state. As defined by the National Right to Work Legal Defense Foundation, a right-to-work law “guarantees that no person can be compelled, as a condition of employment, to join or not to join, nor to pay dues to a labor union.” Research shows that right-to-work states grew faster in nearly respect than their union-shop counterparts between 2000 and 2012 when it came to gross state product, personal income, population and payrolls.
UNIONS TURNING ATTENTION TO THE SOUTH
With the once strong Rust Belt suffering from economic decline and loss of population and jobs, unions like the UAW are looking south to numerous right-to-work states that have thrived in recent years. Foreign-owned automobile manufacturers like Nissan, Volkswagen, Mercedes-Benz, Honda and Hyundai are all operating with non-union factories, and the UAW wants nothing more than to unionize each one due to the fact that in the last 30 years, almost every job lost at a U.S. car factory has been at a unionized plant and most job gains have been at non-union companies.
Historically, the south has been the least unionized region of the United States. In fact, in 2013, all southern states, minus Alabama, had a union rate less than 6.5 percent, according to the Pew Research Center. Alabama’s unionization rate was 10.7 percent, which was still below the national rate. “Alabama and Louisiana tend to be the more unionized states in the southeast,” said Frank McRight, an attorney at BURR & FORMAN. “Part of that is historical, and part of it is the particular mix of manufacturing found in both states. Extraction industries like paper and coal and steel—industries where you don’t locate manufacturing far from the source of raw materials—have historically been unionized, and those are many of the industries that have been located in both states.”
THE FIGHT FOR THE SOUTH
Numerous factories across the South are facing the threat of unionization by the UAW. Although workers at most factories are fighting back and resisting the UAW’s urge to unionize, the fight is far from over. At German carmaker’s Volkswagen plant in Chattanooga, Tennessee, it’s no surprise UAW is fighting for unionization. The plant produces the Passat, which won the 2012 Motor Trend Car of the Year Award and that very same year there were more than 110,000 Passats sold. While Volkswagen is forced to maintain neutrality (a requirement that means the company cannot involve itself in any matter), U.S. Senator Bob Corker (R-Tennessee) led the charge against UAW, speaking out against the UAW and educating the factory’s employees and the city about the risks that come with unionization, including the risk of losing a second assembly line that Volkswagen was considering adding to the Chattanooga plant that would add a second automobile to the factory’s output. Tennessee Governor Bill Haslam also warned that voting to unionize would discourage auto parts suppliers to open factories in Chattanooga. An election was held at the Volkswagen plant in February 2014, and despite the UAW’s best efforts, workers voted against unionization. A few months later, Volkswagen announced it would build its midsize SUV in Chattanooga, a more than $600 million investment in the region that would add 2,000 new jobs at the plant.
Despite losing the election in Chattanooga, UAW has not given up. In fact, the UAW has managed to bypass the election loss and create a local union to represent the factory’s workers. The UAW enlisted the help of the IG Metall union in Germany to force Volkswagen to agree to a “community organization engagement” policy that allowed for three levels of management-employee engagement based on percentages of membership. “Unions are trying new and creative ways to organize workplaces without having to go through a traditional election where employees have the right to vote by secret ballot,” said Scroggins. “This includes having employers recognize the union after a majority of employees sign authorization cards, corporate smear campaigns and getting foreign unions to put extreme pressure on their companies with operations in the U.S. to simply recognize a union. The situation at Volkswagen is a prime example of that where Volkswagen gave unprecedented access and cooperation with the UAW both before and after last year’s failed unionization vote, all while Volkswagen’s German union is doing all it can to force unionization.”
In Mississippi, the UAW has been trying to unionize the Nissan plant for years. The Canton, Mississippi, plant produces almost half a million Altimas, Sentras and other vehicles every year and is one of the state’s top employers. The UAW has launched a strategy that employs tactics such as protests, demonstrations, enlisting civil rights organizations like the NAACP and even bringing in celebrities like Danny Glover to speak at events.
While Mississippi workers and citizens must wait and see if the UAW will be able to force a vote, some cities and states are being extremely proactive when it comes to protecting its jobs and workers from unions. Kentucky, one of the few southern states that’s not a right-to-work state, recently had a county approve a right-to-work law. In Warren County, the local General Motors plant is a closed shop, so workers have always had to pay union dues to work there. That will no longer be the case. In December 2014, the Warren County Fiscal Court passed a right-to-work law that bans the practice. According to the National Right to Work Legal Defense Foundation, Warren County is the only local government in the country to approve a right-to-work law.
In South Carolina, Governor Nikki Haley has denounced unionization, stating publicly that the state appreciates the manufacturing jobs it currently has from companies like BMW, Michelin and Boeing and hopes to attract more industries in the future. Haley acknowledged that unionization of its current factories would discourage that from happening. “I love that we are one of the least unionized states in the country,” said Haley. “It is an economic development tool unlike any other. We’ll make the unions understand full well that they are not needed, not wanted and not welcome.”
Like so many other states in the region, Alabama is facing its own battle with unionization. Historically, Alabama was a heavily unionized state in industries such as steel, paper, textiles and construction until the 1980s. “Alabama lost thousands of unionized jobs in the steel industry, we lost the apparel industry, paper manufacturing declined and we saw coal mine strikes,” Scroggins said. “Most of our unionized facilities went into decline or closed in the 1970s and 1980s. They lost a lot of jobs when the facilities went out of business. So this state has a painful history when it comes to unions. Mercedes was the game changer and was the catalyst for the dramatic amount of manufacturing growth seen in the last 25 years.”
When Mercedes opened its plant in Vance in the 1990s, industry was reborn in Alabama. Mercedes’ success here, as well as the allure of Alabama being a right-to-work state without a heavy union presence, attracted industries back to the state. “The Business Council of Alabama strongly supports Alabama’s right-to-work status for its benefits to economic growth, industrial recruitment and job creation,” said BCA President and CEO William J. Canary. “Over the last two decades, many businesses that were located in heavily unionized states have moved their operations to Alabama, choosing to locate their facilities in the right-to-work Alabama due to the ability to compete in the global marketplace.”
In addition to Mercedes, Alabama welcomed other major automobile companies like Honda (in Lincoln) and Hyundai (in Montgomery), as well as numerous automotive suppliers. Today, vehicles and parts are the number one export category in Alabama. In fact, in 2013, the value of vehicles and parts exported from Alabama’s auto plants was approximately $7.1 billion. But Alabama’s pro-business attitude has attracted much more than the automobile industry. The state also boasts major global companies like Airbus (in Mobile), Austal (in Mobile) and ArcelorMittal (in Calvert, formerly known as ThyssenKrupp). What helped Alabama attract these major companies, noted Secretary of Commerce Greg Canfield, is Alabama’s pro-business philosophy. “One of Alabama’s key strengths in economic development is its status as a right-to-work state,” he said. “This makes Alabama more attractive to companies evaluating where to invest capital in a new operation or to expand an existing one.”
While these industries are creating much-needed jobs all across the state, they have also attracted the attention of unions. The International Association of Machinists is hoping to unionize Airbus. For years, the UAW has attempted to unionize Mercedes and Honda—and those efforts are ongoing. UAW is going after a variety of auto suppliers as well, such as LEAR RENOSOL in Selma. The fear among many is that if major plants in Alabama begin unionizing, the state would no longer be an attractive location for manufacturing. “If economic development is going to continue in Alabama and companies continue to build and expand here, it’s vital that the state remain union free and a strong right-to-work state,” said Scroggins. “Alabama fights tooth and nail with states across the region for projects, and other states like South Carolina actively promote their non-union workforce as a significant selling point. If all of a sudden Alabama’s marquee manufacturing plants become unionized, that’s going to make it a lot tougher to recruit companies or even to get current plants to expand. But even beyond being able to compete, Alabama has many small communities where manufacturing jobs are vital. That has really been the lifeline for rural communities. It will not be good if our factories begin unionizing and companies start deciding Alabama is no longer a good environment to manufacture products. It’s a make or break issue for this state.”
In addition to competing with other states to bring jobs to Alabama, another serious fear is unionization would encourage companies to send their manufacturing—thus, their jobs—to Mexico. Already Mexico has been turning out record numbers of vehicles, proving it can match the skill and productivity of U.S. workers—and at a fraction of the wage. By the end of 2015, Mexico is expected to overtake Japan and Canada and become the U.S.’s top source for imported cars. “A risking facing all states is Mexico,” said Scroggins said. “Workers in Mexico already roughly make in a day what U.S. workers typically earn in one hour. Kia has decided to build a new $1 billion plant in Mexico in lieu of expanding its plant in LaGrange, Georgia. Honda and Mazda have plants there. Nissan and Daimler are spending $1.6 billion on a new joint venture in Mexico. Mexico now builds one out of five cars in North America, up from one in 20 in 1994. The last thing we need to do is start unionizing and giving companies more excuses to put capital in Mexico and not Alabama.”
While the UAW has yet to unionize Alabama’s marquee factories, they have successfully organized five Mercedes suppliers: Inteva (in Cottondale), a Johnson Controls plant in Cottondale, JCIM (a Johnson Controls plant in McCalla), ZF Industries (in Tuscaloosa) and the Faurecia plant in Cottondale. More recently, workers at Golden Dragon’s plant in Wilcox County narrowly voted to unionize (by a vote of 75 to 74) despite Governor Robert Bentley’s pleas to reject unionization. Governor Bentley wrote a letter to workers noting that voting for a union “could have a possible negative impact on your community by discouraging other companies from locating there” and encouraged instead that employees give the company an opportunity to work with them regarding their concerns.
NLRB’S EFFORTS TO ENCOURAGE UNIONIZATION
Making the potential for more unionization even greater are recent policy changes by the National Labor Relations Board (NLRB). Recently, the NLRB voted to allow unions access to the company email addresses of a company’s employees, as well as another policy change that speeds up the unionization process. This new rule, known as the “Ambush Election Rule” shortens the amount of time between a union filing a representation petition and an election taking place. Currently, the average time between is around 38 days, but the rule will dramatically shorten that time. “The NLRB is basically assisting unions,” said Jim Cooper, owner of Cooper Construction Company. “This is an unprecedented effort by the NLRB requiring business owners hand over information about their employees to unions so they can send propaganda to them to help destroy your business, as well as shortening the time before elections, making it harder for employers to speak out during unionizing campaigns.”
Added Canary, “The NLRB has continued its shift from an intended purpose of a fair arbiter of the law to a rubber stamp for labor union interests. The ‘ambush election’ rule denies employees access to critical information needed in deciding whether to join a union and is yet another example of federal agency overreach. Rather than promoting a more stable, consistent and fair process for employers and employees, the NLRB has opted for a policy that creates confusion and promotes a partisan agenda.”
WHY DOES UNIONIZATION MATTER TO CONSTRUCTION AND WHAT CAN WE DO?
While unions are focused on mainly the automotive industry, the potential of increased unionization in Alabama will be felt by other industries, including construction. “The health of the construction industry will be directly impacted by whether or not we’re bringing in new manufacturing or expanding what is already here,” said Cooper. “If we start losing industries that means there’s less to build, expand or retro fit. If the unions begin organizing in any industry, it will affect us all.”
Like many, Cooper believes that if employees at factories targeted by unions had the opportunity to be educated about the risk of unionization they would reject organizing efforts. “The merit shop system represents the free market system at its finest, and I believe that if we could encourage those employees and help equip them with factual information about the benefits of the merit shop, not just for them but for their communities, the decision for them would be easy,” Cooper said. “We can be victorious in protecting what we have going in Alabama if we act. No one wants our state to look like Detroit. But the problem is that so many business owners are stopped from speaking up against unions, so the unions have free reign.”
For Jay Reed, president of ABC of Alabama, the thought of unions possibly preventing merit shop construction workers from gaining work hits too close to home. “The very idea that an employer could be told exactly how he must treat his employees and what he should pay his employees goes against the American dream,” Reed said. “ But instead of getting into the philosophical side of the situation, let’s look at the hard facts. Conservatively, only 10 percent of the contractors in this state are represented by a union. That means that 90 percent of the hard working contractors in our state operate under the free enterprise system. This free enterprise philosophy is the very reason our state is seeing the industrial boom that we’re experiencing. One hit to that free enterprise system could deter thousands of jobs for this state. ABC will not sit idle and allow that one vote to occur. It is our job, even if we move forward alone, to defend the principles of our association.”
ABC of Alabama feels that most workers in Alabama don’t really want unionization, they just don’t have enough information about the risks, and too many times employers are bound by neutrality or other threats by unions to voice any resistance. To help employers educate employees about the positives of the merit shop philosophy, the association’s executive committee and staff are assembling a Merit Shop Council, which will provide resources to company owners, employees and the general public. Statistics show that merit shop employees build safer, train better and pay more than union shop contractors, and ABC of Alabama wants to make sure everyone across Alabama is aware of those facts. “If this is something that you think I take personal, you’re right,” Reed said. “There are certainly a lot of things I do as an association director that are a lot more fun than this. But with my position comes a huge responsibility, and I accept that responsibility to continue to carry the torch for the merit shop.”
Plans are for the council to provide resource kits with educational information to company owners and human resource directors, and, where allowed, employ social media and electronic communications with employees to tout the merit shop message. “The Merit Shop Council would provide employers in various industries across Alabama with a platform to promote the state’s business-friendly policies and highlight the opportunities that are present here for investment and job creation,” Canfield said. “At the same time, the Merit Shop Council would be an avenue for employers to communicate effectively with employees on the topic of union issues and to share their open shop philosophy with them.”
All outreach will be done in a legal manner according to NLRB rules and regulations. “These messages will contain safety data and employee benefits and wages information that confirm merit shop is the way to do business in Alabama,” Reed added. “This is ultimately the association’s goal: to once and for all remind everyone doing business in Alabama that we are currently successful because of our merit shop principles and not union-dictated standards.”
ABC of Alabama is uniting its efforts with the national ABC office, which also offers a variety of resources for employers seeking to continue operating under free enterprise principles. During initial planning efforts, ABC of Alabama leadership realized it wasn’t the only Alabama industry concerned with recent unionization activity. “One thing that became clear to me was that our association isn’t the only one that exists to defend the free enterprise system,” Reed said. “We found immediate friend within the hospitality market, the retail market, manufacturers and small businesses all across the state.”
Phase one of the Merit Shop Council will include developing position papers and rapid response documents for employees and employers interested in learning more about why right-to-work is best, developing educationa programs to formally introduce the right-to-work concept to existing and new industries looking at or residing in Alabama and developing specific tools to be used for employers and employees during organizational attempts. “It’s important to note that once the official council is named, any referenced information included could change at the direction of the council membership.”
It’s anticipated there are potentially two more unionization votes that will be held in the state by June, and ABC of Alabama leadership is increasingly aware it must begin promoting the merit shop philosophy quickly to factory employees. “Our goal and mission here is to not lose one fight,” Reed said. “The time to act is now to ensure backroom tactics and threats don’t overrule hard data and common sense.”
Added Canary, “Existing industries looking to expand and companies looking to locate here must be confident that Alabama will remain a business-friendly state. I continue to believe that free enterprise can best meet the needs of its employees by maintaining an open and direct relationship with them.”