‘Boss-napping’ – a futile symbol of old-style unionism

This week saw a French labour union take two managers at a Goodyear plant in Amiens hostage as a negotiation “tactic”. When the police arrived to free them, union leaders angrily complied but then set huge tyres ablaze and defaced the plant’s signage so it read “Badyear”.

News reports recount a spate of such “boss-nappings” in recent years, especially in 2009 during the deepest part of the recession. Is it any wonder that global supply chain network designs eschew investments in production capacity under these conditions?

Where to put a factory

Last year, our extensive manufacturing footprints study collected loads of primary data on plans for new capacity investments by country. The top choice – surprising no one – was China. Close behind was the United States, which is by no means a low-cost labour location.

Countries in Europe that made the list included lower-cost locations like Poland, the Czech Republic and Hungary, but also notoriously expensive and labour-friendly Germany. The location decision drivers turn out to have more to do with flexibility and value for money than just low cost.

Notably, though, France was cited by only eight respondents out of the total base of 323, as likely to see capacity investments in the next three years.

I am no believer in chasing cheap labour around the world and think wise supply chain strategists should look for the right mix of human skill and capital equipment deployed regionally to provide an ideal balance of scale-driven cost containment and agility for service. But everything about traditional trade unionism works against these goals, and no amount of court rulings or government regulation can change the economic reality of this fact.

For a truly sobering sanity check on what results from extortion-based labour relations, consider Detroit. I was there recently and made a point of cruising around the city for a few hours to see its hollowed-out physical infrastructure.

Where the world once saw industrial might, today the effect is more like the backdrop for a post-apocalyptic Hollywood thriller. I blame the United Auto Workers. The Motor City still has some of the best brains in the world, and longstanding residents General Motors and Ford have certainly seen their fortunes pick up of late, but most US plant capacity is now in the south.

The lesson is that capital is far more mobile than are people’s homes, and no amount of tough talk can change that.

Study, don’t strike

The sad, and perhaps ironic, thing is that unions could easily come at this problem in a different way. Old-school unionism is all about getting a bigger slice of the pie by threatening to ruin it for everybody with a strike. The dynamics of traditional unions are fundamentally political, rather than economic, and emphasise jobs more than money. As such, they generally see productivity as a bad thing since, other things being equal, it means fewer jobs.

Having once done a masters’ thesis on the topic of unions and productivity in construction, I found that the much higher wages in building trades were comfortably offset by higher output per hour arising from more systematic training and skill certification.

The value of unions in this case was not in collective bargaining so much as in talent management, which for employers meant predictability and thus better overall project results. Why, with so much technology change in modern manufacturing, can’t unions embrace this challenge now?

They can and they should. France is a big economy with some of the most advanced technology in the world. Its central location in the largest single consumer market on earth should make it a natural location for new investment, and yet most multinational companies are choosing to look elsewhere.

If French unions could address the need to keep workers schooled up on all the latest trends in manufacturing, they might well keep people employed for the long run.

I know it might be unpleasant to the Gallic ear, but right next door in Germany that’s exactly what is happening. Tactics designed to resist change are never going to overcome tactics intended to embrace change.