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USE CAPITALIZED MATERIAL ONLY WHEN GIVING TWO LECTURES ON THIS
Why? What is the alternative?
Export v. Direct Investment
Restraints and Incentives
tariffs, quotas, domestic content legislation, subsidies, tax concessions & exchange risk
2000 world-wide foreign direct investment was $1.3 trillion
Over $1 trillion of that was into developed countries
But by 1999 foreign direct investment was 2/3 of all investment in LDCs
60,000 MNCs employing 45 million workers overseas and 50 million in their home operations
Largest recipients in 2000
US, Germany, UK, Belgium
Hide this slide when only giving one class
Largest employers as MNCs – Total employment of MNCs – 5 largest 1999
Walmart
Daimler-Chrysler AG
Siemens AG
General Motors
Ford
Hitachi Ltd
MacDonalds
Hide slide when doing only one class
GROWTH OF FOREIGN COMPANIES INVESTING IN THE US
E.G. DO AMERICANS KNOW RCA AND GE CONSUMER ELECTRONICS BRANDS OWNED BY THOMSON (FRENCH) AND MAGNAVOX OWNED BY PHILIPS (DUTCH)
JAPANESE CAR EXPORTS BANNED BY TAIWAN AND KOREA FOLLOWING ARAB BOYCOTT OF ISRAEL
HONDA SOLVED THIS PROBLEM BY EXPORTING ACCORDS TO BOTH FROM OHIO
Principal difference is that the growth in the earlier period of national markets occurred in regions that had substantial political unity
This no longer the case, no single nation can regulate this process though some international bodies trying
OECD PROMULGATED THE SET OF GUIDELINES 1976
ILO DID SO 1977
Right to bargain and to strike
All of these to be available with no penalties
Non‑labor bases of competition
Taxes
Subsidies
Environmental legislation
Labor bases of competition
Suppression of unionism and depression of wages
Read only when giving to classes on this topic: E.G. INDIAN GOVERNMENT REFUSED TO ALLOW SAILORS ON DOMESTIC SHIP TO EARN MINIMUM PRESCRIBED BY THE ILO AND WHICH THE INTERNATIONAL TRANSPORT FEDERATION AND WORLD WIDE SHIP OPERATORS ORGANIZATION HAD NEGOTIATED
Easing of safety and other regulations
Interdependence of operations in different countries can spread costs of strikes
Doesn't seem to happen
Production switching in dispute situations
LITTLE SCOPE FOR THIS IN SHORT RUN BUT MORE IN LONG RUN
IN LONG RUN THIS INVOLVES THREAT TO CONCENTRATE EXPANSION AND NEW INVESTMENT ELSEWHERE, LITTLE EVIDENCE OF SUCH WHIPSAWING BUT SIGNIFICANT EVIDENCE OF THREATS
Weakens Union power‑ in host countries and investing countries (only when giving two lectures)
IN BRITAIN SOME US COMPANIES REFUSED TO RECOGNISE UNIONS,
E.G. IBM, MARS, KODAK, TEXAS INSTRUMENT
NOT CLEAR THEY ARE WORSE THAN BRITISH FIRMS
IN LDCS MULTINATIONALS HAVE REPUTATIONS AS HIGH PAY EMPLOYERS
Complaints that most modern technology being exported so foreign workers have technological advantage (only when giving 2 lectures)
XEROX BEGAN MOVING ITS COPIER REBUILDING WORK TO MEXICO AS SUCCESSFUL MEANS TO INDUCE UNIONS IN ROCHESTER NY TO COOPERATE IN PRODUCTIVITY ENHANCEMENT PROGRAMS
Corporate IR managers largely coordinate information or act as consultants (only when two lectures)
IN BRITAIN MOST HAVE JOINED EMPLOYERS ASSOCIATIONS
FORD HAS A LONG BRITISH TRADITION OF BARGAINING OUTSIDE THE EMPLOYERS ASSOCIATION BUT IN GERMANY THEY HAVE JOINED
STILL, US FIRMS REMAIN OUTSIDE EMPLOYERS ASSOCIATIONS IN BRITAIN MORE FREQUENTLY THAN DO DOMESTIC OR EUROPEAN FIRMS
Hide this slide when giving only one class
MacDonald’s has largely been able to impose its normal mode of operation across the EU despite difference in IRHRM systems and laws
Including desire to avoid unions which has been largely successful
STILL, MANY FOREIGN FIRMS IN BRITAIN HAVE BEEN LEADERS IN INNOVATIVE AND SUCCESSFUL IRHRM PRACTICES
SOME, LIKE CATERPILLAR IN SCOTLAND, JOINED EMPLOYERS' ASSOCIATIONS BUT PLAYED INNOVATIVE ROLES IN THEM
FOREIGN COMPANIES LED THE REPLACEMENT OF PIECE WORK IN BRITAIN WITH MEASURED DAY WORK
SOME US COMPANIES IN BRITAIN HAD SUCCESS NEGOTIATING FIXED TERM AGREEMENTS WITH NO‑STRIKE COMMITMENTS
OVERALL, FOREIGN OWNED BRITISH COMPANIES SEEM TO HAVE A LOWER STRIKE PROPENSITY THAN DOMESTIC ONES
Overall, the charge of multinational indifference to local attitudes and practices does not seem to be supported
Although some problems do arise from the unique U.S. casualness about layoffs
Some MNC changes are successful and called innovations while others are perceived as ignorance
Difference may relate as much to the way the change is introduced as to the content of the change itself
MNCs often see themselves as damned if they do or if they don't, especially in LDCs
Accused of exploitation of low‑priced labor if they follow local conditions
Accused of ignorance and interference if they don't
The Union Response – Limitations
Union leaders reject idea of delegating decision‑making authority to international federations
Amount of authority a national union can give up depends on how much control it has over work group behavior
e.g. in Britain very little
Where national confederations exert strong control over affiliates, the nationals may not be able to cede authority to multinational union organizations
e.g. Sweden or France
Some problems also arise from inter‑union conflicts
e.g. the most important ITS, the IMF, hampered in Europe by its exclusion of French and Italian Communist‑led metal unions
Other problems involve differences in wage structures
LDC and MDC wage structures correspond poorly
Fringes and legally mandated social insurance differ widely and the latter is usually a problem addressed to national governments
General nature of attempted activities
Mostly through ITS
Simultaneous strikes throughout the domain of a multinational
Attempts to obtain common expiration dates in company plants
SYMPATHY STRIKES NOT WIDELY USED, IN PART DUE TO LEGAL DIFFICULTIES
Inter-union exchange of information on the global financial and industrial‑relations positions of the company
a particularly common approach by ITS
Providing information on world‑wide operations has been the most important tactic
Some ITS have established computerized data bases with such information
ATTEMPTS TO CREATE PERMANENT INDUSTRY‑WIDE OR COMPANY‑WIDE ORGANIZATIONS
IMF has encouraged cooperative efforts and coordinated bargaining‑ including creation of company councils and refusals to do transferred work
1987 IMF PROTESTED GENERAL MOTORS PLANNED RESTRUCTURING EUROPEAN OPERATIONS FEARING LOSS OF JOBS
1997 IUE invited observers from IMF and unions in Brazil, Canada, Chile and Mexico to observe negotiations with GE
IMF had done so since 1991
ICEM‑ Chemical Federation‑ has been active with refusals to do struck work, organization of boycotts, and coordinated bargaining
1999 ICEM called together unions in seven countries dealing with Continental
Called on company to settle strike in Charlotte plant and to reinstate 1400 "permanently replaced" workers, calling replacement a violation of international law
1999 ICEM called together tire and rubber unions representing Goodyear employees in 16 countries
Set up permanent steering committee and will maintain data base and cooperate in organizing non-union facilities
A Primary goal
OTHER BOYCOTTS RELATING TO US LABOR DISPUTES INVOLVED THOSE CALLED BY THE TEXTILE ITS RELATING TO THE FARAH AND JP STEVENS DISPUTES AND THE ONE CALLED BY THE AGRICULTURAL ITS OF CALIFORNIA GRAPES RELATING TO THE UFW CAMPAIGN
Only ITS engaged in genuine multinational collective bargaining is the ITF
Signs agreements with both individual ship operators and with the International Shipping Federation
SHIPOWNERS SIGNING ITF COLLECTIVE AGREEMENTS NOT ONLY AGREE TO MEET CONDITIONS BUT ALSO TO PAY FEES AND MAKE   ANNUAL CONTRIBUTIONS OF OVER $200 PER SAILOR
SHIPS WITHOUT ITF AGREEMENTS CAN RUN INTO TROUBLE LEAVING A VARIETY OF PORTS AROUND THE WORLD, ESPECIALLY FLAG OF CONVENIENCE SHIPS
2000 US workers at Imerys (French based multinational ceramics and construction materials co) joined with Belgian unions and ICEM to launch an international organizing campaign
In US Paper, Allied-Industrial, Chemical and Energy Workers trying to organize the company in Alabama and Georgia
Union Network International (UNI) federation of 900 unions from 150 countries
Largely focused at the moment (2005) on trying to organize Walmart
Claim Walmart is leading the “race to the bottom”
Walt Disney, Murdoch’s News Corporation and IKEA have been identified as future targets
2000 IG Metall signed agreement with Faber-Castell (one of world’s leading producers of writing and drawing instruments) to respect minimum social standards in all its operations in Germany and overseas
Standards referenced are the ILO Core labor standards
October 2004 British Union (GMB) and American Union (UNITE-HERE) signed agreement to organize workers in the casino and gaming industry
Will share information and pool resources and staff
Both will target anti-union companies and try to keep them out of communities
1995 US UNITED MINE WORKERS HELPED WORK WITH COLOMBIAN MINE WORKERS UNION AT MINE OWNED 50% BY EXXON AND EXPORTING TO THE USA
1997 LONGSHOREMEN FROM AROUND WORLD INCLUDING US WEST COAST HELD BRIEF STRIKES AND BANS AND BOYCOTTS IN SUPPORT OF BRITISH DOCKERS MADE REDUNDANT.
(only when giving two classes) 2000 When National Grid (British) bought New England Electric (US), US union (Utility Workers Union of America) wanted to be free to organize all new acquisitions and subsidiaries
National Grid balked but after the union met with its British unions and pressure was applied, National Grid agreed to recognize the union based on card checks and to remain neutral in organizing campaigns to organize customer service, technical and field workers in the US
May 1999 SEIU entered formal alliance with Mexican Telephone Workers Union to organize janitors and service workers
Exception
COCA-COLA NEGOTIATED AGREEMENT WITH INTERNATIONAL UNION OF FOOD AND ALLIED WORKERS OVER THE STATUS OF COMPANY'S GUATAMALAN BOTTLING SUBSIDIARY BUT THIS DID NOT LEAD TO LASTING RELATIONSHIP
LATE 1980S FRENCH COMPANIES (SOME NATIONALIZED) BSN, BULL GROUP, THOMSON HAVE TAKEN LEAD IN ESTABLISHING FORMAL EU-WIDE LABOR-MANAGEMENT CONSULTATION WITH EUROPEAN TRADE UNION SECRETARIATS
Government responses
Attempts to get more information from multinationals
1980s European Parliament adopted Vredeling Directive
Pushed most heavily by IGMetall
Requires multinationals to provide variety of information on global operations including
Plans for closures and layoffs
New technology and product lines
Watered down considerably with strict secrecy requirements
Information largely limited to that available to stock holders
Financial situation & marketing strategies
INFORMATION GIVEN TO APPROPRIATE UNIONS
UNIONS ALSO GIVEN RIGHT TO CONSULT DIRECTLY WITH PARENT COMPANY ON CERTAIN ISSUES AFFECTING JOBS
FAILURE TO PROVIDE ANY OF THIS WOULD ALLOW THE UNION TO GO TO COURT IN ANY EU COUNTRY
1994 European Works Council Directive
Requires European Works Councils in companies of 1000 employees with at least 150 in each of two EU states
Not as powerful as German Works Councils but entitled to information and consultation
Over 150 US owned multi-nationals have complied and set up such councils including Ingersoll Rand, GM, IBM, and Citibank
June 2001 European union issued guidelines (to begin to come into force in 2004) strengthening the obligation of European companies to “inform and consult” worker representatives about company strategy
To begin to come into force in 2004
Reduces size of covered companies, by 2008 all companies with 50 or more employees will be covered
British and Irish had fought this initiative for several years
Directive includes consultation on any significant decision involving restructuring or changes in work organization
(only if giving 2 classes) Companies can protect confidential information but must demonstrate that the release of this information would be harmful
EU has attempted to adopt uniform minimum standards on worker participation and equal opportunity but these require unanimity and British have refused to participate
Limited opposition by European companies
But US multinationals lobbied in a big way
US Chamber of Commerce, too, as well as some British firms