Pressure From Chinese Auto Industry Felt Internationally

Dearborn, Mich.

IUE-CWA delegates joined the more than 200 delegates from 25 countries who participated in the 11th International Metalworkers' Federation World Auto Council June 8-10.

China and outsourcing were the buzzwords of the day as trade unionists struggled with how to handle the tremendous capacity being built up in China by both auto assembly and component part manufacturers. By 2007, China is expected to have an excess assembly capacity of 3 million units.

The shift of investment and production to China has squeezed workers and their standard of living in countries as diverse as older industrial nations such as United States and Germany to more recent competitors such as Korea and Mexico.

"Outsourcing doesn't discriminate based on the age of the union, the workers' religion or whether you are in a developed country," noted a Mexican delegate, whose union has lost jobs to China.

Currently, Chinese production does not meet western quality standards, noted Wall Street analyst Stephen Girsky, but plans for exports are clearly seen in the coastal location of the plants.

"We recognize that the denial of workers' rights in China threatens workers in every country," stated President Ron Gettelfinger, who serves as president of the IMF Auto Department. "All of us must now compete against the painfully low wages and abysmal working conditions endured by so many Chinese workers."

IMF President Jurgen Peters, president of the 2.4 million-member German union IG Metall, said he welcomed the recent IMF Executive Committee decision to set up a working group on China to assess the issue in depth and propose action. "I am very much in favor of the IMF really getting to grips with the subject of China and its economic, democratic and trade union development."

The spin-off of component production from North American car companies also has added to the pressure on wages and benefits, as well as decreasing union density.

Panelists wrestled with proposals on how to build unity and strength with the fierce competition among the growing number of suppliers and the deflationary pricing demanded by car manufacturers.

IMF efforts to reach agreements with manufacturers on labor standards that they would follow - and that they would demand their suppliers follow - offered hope to somewhat level the playing field.

"By committing global companies to respect core labor standards at all their plants worldwide - and at the facilities of their suppliers - international framework agreements can strengthen trade unions across production chains," said IMF General Secretary Marcello Malentacchi.

Over the last four years, the IMF has negotiated four framework agreements in the auto industry.

"There is still a lot that remains to be done. But we have got off to a very promising start," said Peters.

Girsky forecast consolidation among suppliers. He predicts that they will be able to drive more cost out of the system as they provide more engineering and design services. "More and more suppliers are driving innovation in the automotive industry," he said.

He noted, however, that by relying on domestic sourcing Japanese transplants in the United States are taking an opposite approach from U.S. manufacturers. Domestic sourcing helps to eliminate the risk of currency fluctuation, logistical problems, material supply issues and potential political unrest, he noted.

"Who is right in their approach may be debated," he said. "But we know who is making a bigger profit now," he added in reference to the success of Japanese auto manufacturers.

IUE-CWA Automotive Conference Board Chairman Jim Clark, who served as a delegate along with Secretary Bob Sutton, said that he hoped to bring IUE-CWA auto workers greater insight into how their struggles are the same ones faced by all auto workers.

"We need a better understanding that these forces are not caused by the workers in other countries, but by governments and corporations."