Look Who's Pushing Productivity

Labor is embracing partnerships to keep companies competitive

David W. Groetsch has brought in plenty of consultants over the years to his 500-worker unit of Aluminum Co. of America, which makes equipment for the packaging industry. As the division president, he has tried all the trends, from quality to teams. But the union as consultant? That was a new one. The International Association of Machinists (IAM), which represents 170 of his workers at a Denver plant, came knocking in 1994, asking to help create a high-performance work system.

Groetsch agreed to give it a whirl. He sent three managers from Denver to join local IAM leaders in a weeklong course at the union's school in Maryland. There, they learned how to set up a labor-management partnership and spur productivity--and in the process protect jobs. Then, as any consultant would do, the IAM sent experts--free of charge--to Denver to help union leaders and managers from manufacturing to marketing create team systems and joint decision-making councils. Relations on the shop floor have already improved, says Groetsch, although he doesn't yet have hard data on efficiency gains. "If someone from Andersen Consulting had said: `We can improve product delivery, customer satisfaction, and profitability--hire me,' I would have yawned," says Groetsch. "But when the union walked in and said all that, it got my attention."

The IAM is at the forefront of a revolutionary change in the way unions view cooperation with management. After decades of suspicion and hostility toward company-sponsored teams, some unions now are actively embracing partnerships with employers, even pushing the trend (table, page 75). The goal: to protect workers' jobs and pay by making their employers more competitive. Unions also want to win employees more say over their work and how their companies are run. "The days of 1950s-style table-banging aren't gone yet, but that's the easy way for union leaders," says Laborers' President Arthur A. Coia, whose union is active in such ventures. "It's a lot harder to ask: `What does the employer need to stay competitive' with union wages, and then help them to achieve it."

WAGE WARS. Labor's new attitude marks a shift experts have been urging for years. By developing expertise in new work systems, unions have a chance to make themselves valuable to employers battling today's intense global and domestic competition. Partnerships also could help to dilute the antagonism many executives feel toward unions. In Las Vegas, for instance, the Hotel Employees & Restaurant Employees Union has forged cooperative relations with once hostile big hotels by wiping out cumbersome work rules. Managers now have flexibility to schedule extra room cleanings when many customers show up at once, for example. "They typify what the labor leaders of tomorrow will be," says Arthur M. Goldberg, the head of Hilton Hotels Corp.'s gaming unit, which owns three Vegas casinos. "They'll tell us some of our problems before we even realize them and work to solve them."

Still, even the most willing unions continue to battle over traditional issues such as wages. Consider the United Steelworkers (USW), which has an extensive partnership with Wheeling-Pittsburgh Steel Corp. that includes a board seat. Despite the ties, it has been on strike since October over pensions. "It's perfectly logical for labor and management to cooperate to enlarge the pie and fight over how to split it up," says former Labor Secretary Ray Marshall, who is the USW's representative on USX Corp.'s board.

The USW made the first national push for partnerships in 1993, when it demanded that major steelmakers designate a union board seat and set up management/union councils at all levels of the company. Steelmakers were suspicious, and USX vowed not to give up a board seat. In the end, all but Allegheny Teledyne Inc. gave in. Last year, the union won similar pacts in aluminum and is pursuing the idea wherever it can. "This is the model we want for the whole union," says Roy Murray, the USW's collective bargaining director.

Today, cooperation in steel is advancing but far from complete. After years of enmity, some managers aren't keen to share decision-making. Others don't feel the need if business is thriving. At USX's Fairfield (Ala.) plant, the unit making tubular steel faces stiff competition, so managers nurture the partnership, hoping to spur efficiency and quality gains. But on the flat-rolled side, where demand is strong, managers are less committed, union officials say. USX declined to comment.

THE PAYOFF. The IAM has opted for a soft-sell approach, marketing itself as a resource for employers. Three experts at its school in Hollywood, Md., scour the country for IAM locals and companies willing to sign on to high-performance training. Interested parties, such as those at the Alcoa plant, take a weeklong course at the school, where plant manager and local union officers study side by side, learning everything from the history of high-performance systems to new accounting methods to measure them.

The Laborers takes a different tack, supplying skilled workers to companies as they need them. Several years ago, it set up a foundation jointly with contractors to provide bid specifications on construction projects nationwide. The foundation, staffed equally by union and industry officials, also offers to supply trained union workers. Contractors pay union wages for those workers but use the service only when they wish; even nonunion companies are eligible. This is a huge shift for construction unions, which typically consider nonunion contractors the enemy. The payoff: The union gets more jobs for its members even if it can't win election battles against nonunion contractors.

The program has paid off for contractors, too. Radian International, an environmental cleanup joint venture between Dow Chemical and Hartford Steam Boiler Inspection & Insurance, was having a difficult time finding workers with the extensive training required for a new contract to clean up lead on an Environmental Protection Agency Superfund site in Missouri. They finally hired through the Laborers' foundation. "We can't always find qualified people in this field, so the union acts like a temp service," says Timothy J. Mains, a Radian lawyer.

AFL-CIO President John J. Sweeney is prodding unions into more aggressive recruitment, triggering clashes with employers. Labor's new stance on cooperation will not change that. But employers might feel better knowing that competitiveness is also on labor's agenda.

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