Case Study Union and Auto Parts Essay Example For Students

Case Study Union and Auto Parts Essay The purpose of this problem is to familiarize students with the negotiation of a labor contract The problem is strictly a hypothetical one and does not pertain to any actually management or union. It is designed to test in a practical way the students understanding of the issues of collective bargaining studied during the semester and the strategy of the bargaining process. The following constitutes the case on Which demands Will be based and Which provides the framework for the negotiations. Read it very carefully to size up the situation. Base your emends only on the facts given here. Representatives of the Auto Products Corporation of Indianapolis. Indiana, and Local 5000, United Metal Workers of America, are in the process of negotiating their collective bargaining contract. The negotiation covers the Indianapolis plant* Auto Products also owns a plant in Little Rock, Arkansas, but the southern plant is not organized and is not a part of the current negotiations. The current contract, which covers only the Indianapolis plant, was negotiated for a 3-year period. The time of the negotiation is the present, and, accordingly, the parties re conditioned by current economic trends, patterns to collective bargaining, and labor relations law. The Indianapolis plant has been in business for 60 years and has steadily expanded, At present, 1,409 production and maintenance employees are in the bargaining unit of the plan. The financial structure of the firm has been relatively good. Here are some financial data from the Indianapolis plant for the fiscal year preceding these negotiations: Net Sales $200,825,900 Material Costs Direct Labor Costs (includes fringe benefits, payroll taxes, and reflects layoffs in previous fiscal year) other variable costs Fixed costs Total Expenses Income Before Taxes 30, 175, COO Net Income After Taxes (Federal, State, County, Municipal) 14,200,000 In the past, the practice has been to distribute about AS percent of net profits in dividends and to hold 35 percent as retained earnings. Last year the company borrowed 56. 3 million from Hosier National Bank. The rate of interest on the loan was 6. 9 percent. The proceeds of the loans were used to expand the Little Rock plant. The loan is scheduled for liquidation in 10 years. The company manufactures a variety of auto accessories. These include auto heaters, oil pumps, fan belts, rear- IEEE mirrors, and piston rings, and in the last year the company has also started production of auto air conditioners, About 65 percent of its sales are to the basic auto companies (General Motors, Ford, Toyota and Honda), 25 percent to auto- repair facilities, and the rest to government agencies. The plant operates on a two-shift basis. A $. 25 per hour premium is paid to employees who work the second shift. The employees of the company were unionized in 1949. In August of that year, the union was victorious in an NELL election. As a result of the election, certification was awarded, on August 17, 1949, to Local 5000, since which mime Local SHOO represented the production and maintenance workers Of the company. The first collective bargaining agreement between the company and Local 5000 was signed on November 14, 1949. Only one contract strike has taken place since the union came into the picture. It occurred in 1959; the issues were the unions demands for a union shop, increased wages, and six paid holidays. The strike lasted 6 weeks. When it terminated, the union had obtained for its members a 5. 04 hourly wage increase (the union had demanded $. 07) retroactive to the day of the strike, and four paid holidays. The union failed in its attempt to obtain any arrangement requiring membership in the union as a condition of employment, Also, the current contract does not include a check off. At the time of these negotiations, all except 100 workers in the bargaining unit are in the union, The average hourly earnings tort the production workers in the Indianapolis plant are $15. 09. Tooth I ,409 bargaining unit employees, there are 1 skilled maintenance employees (electricians, plumbers, carpenters, mechanics, and tool and die makers), and their average hourly earnings are The existing contract contains an escalator (COLA) clause providing for the adjustment of wages in accordance with changes in the consumer price index. There is no cap on the amount of the increase. It provides for a $. 03 increase in wages for each 0. 4-point increase in the CAP The escalator arrangement is reviewed on a semiannual basis The current hourly rates include the increases generated from the escalator clause and the annual improvement factor _ During the term of the 3-year contract, workers received a $. 75 increase in wages including a $. 40 from the operation of the escalator clause and 5. 30 from the operation Of the annual improvement factor (a . 15 increase on the anniversary date of the contract in each of the past 2 years). The Little Rock plant was built 5 years ago. It started With a modest-sized labor force, but during the past 3 years the southern plant has expanded sharply. And it now employs about 1,500 production and maintenance workers. Efforts to organize the southern plant have so far been unsuccessful. The union lost an NELL election last year by 300 votes. Of the 1 employees, 1,300 cast ballots, with 800 voting against the union and 500 voting for it. The average wage in the Little Rock plant is $10. 80 per hour. Currently, 450 employees in the Indianapolis plant are on layoff. It is no secret that one reason for this has been the increase of output in the Little Rock plant. Another reason was the decrease in sales at the Indianapolis plant. In Little Rock, essentially the same products are made as in Indianapolis. Of the 450 on layoff, reduction in sales caused by the state to the automobile industry accounts for 300, and the remainder is attributable to the southern situation. There is talk in the plant that some laid-off employees will never be recalled to work. Of the 450 laid-off employees, AS have exhausted heir benefits under the Indiana unemployment Compensation Act. Animal Testing (586 words) EssaySupervisors have complained to the management that employees should be laid off without regard to seniority when the layoff is for a short period to time. The existing contract provides tort super seniority tort stewards and other union officials. This provision protects the stewards and union officials only from layoffs. There are 45 stewards in the plant. Last year, stewards spent, on average, about 10 hours each week on grievance work, for which they were paid by the company. There are no limitations on stewards tort grievance work. Supervisors have complained that some stewards are goofing off, using union business as a pretext not to work. All the stewards deny this. In fact, the stewards claim that it is the unreasonable attitude of supervisors that provokes grievances and complaints. Also, the stewards claim that there cannot be a true measure of their mime on the basis of the number of written grievances (a total of 450 grievances, including the production of standard complaints, were filed during the last 3 years), since a good share Of their time is spent discussing grievances With employees and supervisors before a written grievance is filed. There is no record to show how many Of these oral discussions ended problems Without written grievances being filed. Last year, because Of an unexpected order from the government, the plant worked Saturday and Sunday overtime for a period oft weekends. Under the existing contract, the company has the right to require overtime. About 200 employees did not want to work overtime but did so only because the company threatened to fire them if they refused. These 200 employees have been raising a lot of trouble in the union about this overtime affair. Also, the company has the right to select the employees to work overtime. Some employees have claimed that supervisors are not fair, giving their friends the opportunity to earn the extra money and discriminating against the older employees. For many years, by custom, each skilled draftsperson has worked only within his or her trade. Five months ago, the company required a mechanic to do a job normally performed y a plumber, The employee and union filed a grievance, and the case went all the way to arbitration. The arbitrator sustained the position of the union on the basis of the past practice principle. Some maintenance people have been affected by the current layoff, with 25 laid off. They charge that the company has been subcontracting out skilled work that could be done by them. Last year, for example, the company subcontracted out electrical work while three electricians were on layoff. The subcontract job lasted 6 days. Under the current contract, there is no restriction on the compass right to subcontract. The present contract, as stated, was negotiated for a 3-year period. Both sides have indicated that in the future they may want to move away from this long- term arrangement for a variety Of reasons. However, there is no assurance of whether this attitude indicates the parties sincere position or is merely an expression of a possible bargaining position. Technological change has been a problem in the company for several years. About 250 workers have been permanently separated because of it. Union and management meetings to deal with the problem during the past several years have proved fruitless, Previous concussions have centered on the rate of change, the problem of income for the displaced employees, and the training of employees for the jobs created by the new technology. All indications are that the next wave of automation will cost about 390 bargaining unit jobs. The 250 employees who have been permanently separated are in addition to the 450 employees who are currently on layoff because of the southern situation and the drop in sales. There has been considerable controversy over the problem of temporary transfers. Under the existing contract, the company many not transfer an employee to a job not in his or her job classification. There are also problems regarding other working rules. These now include a IS- minute rest period every 4 hours; a stipulation that no supervisor may perform bargaining unit work regardless of circumstances; paid lunch periods of minute duration; and paid Wash-up time for 10 minutes before quitting time. The company contends that these working rules are costing it a lot of money. Whenever this issue has been brought up in the past, the union has refused any change. Company records show that 60 percent Of the workers have seniority up o 10 years; 30 percent, been 10 and 20 years; and 10 percent, more than 20 years. About 20 percent Of the bargaining unit are women, and 15 percent are blacks. Some black employees have complained that they have not been given equal opportunity to get better jobs. Of the 175 skilled employees in the skilled trades, only eight are black. They have threatened to file complaints against both the company and the union under Title VII of the Civil Rights Act and Taft. Hartley. They have retained an attorney for this purpose. Two final issues appear to be involved in the current bargaining. First, a number of employees have told the union leadership that it is high time that at least one union representative was offered a seat on the nine-person company board of directors. These workers, who are particularly vocal ones as it happens, feel that his matter deserves considerable priority. Second, the companys president tends to favor the imposition of a two-tier wage system, whereby all workers hired after the new labor agreement is signed would receive pay rates well below those of the current employees. He has publicly declared that two-tittering could well be the salvation of this company.