While their wage levels are not dramatically different, their workforces are largely non-union and their managers believe they can avoid workplace rules based on collective bargaining agreements. Geographically, the automotive industry has been moving south, and the United Auto Workers union has not been successful in tagging along.
As GM announced its cuts, a study from the National Association of Manufacturers (NAM) revealed manufacturing managers’ perception that there is a widespread shortage of skilled workers. Reactions to the report included a suggestion that manufacturers would not have this problem if they kept operations in states with ‘skilled’ unionised workers.
Maybe so. But in the past 15 years, none of my location-selection clients has looked for a union. Even when there was little to no probability that an attempt would be made to organise a workforce, several clients excluded places that had a union history. They did not want to deal with a culture based on collective bargaining rather than shared purpose. To this point, the Wall Street Journal’s report on the NAM study referred to a professor of sociology who studies workforce issues. He noted that “employers complain about a lack of skills, but when you scratch deeper, it’s really an attitudinal issue”.
The NAM study has important suggestions for improving workforce education, training and attitudes about manufacturing work. But it leads to additional considerations. The sample was principally mid-sized companies – but global companies often spend much more than small companies on workforce training and development. Are they also feeling the pain of too few skilled workers? And, when evaluating the perception of workforce capabilities, my clients find significant differences when they compare labour market ‘attitudes’ as well as capabilities. The NAM study does not address regional differences.
Even allowing for outsized incentives, the people factors are frequently what drive a wise location choice. Viewed thus, changes in the deployment of the auto industry in the US confirm that human resources (and the flexibility and wisdom with which they are managed and developed) remain paramount to business success. NAM is right to be concerned.
Daniel Malachuk works with business and government leaders on global direct investment strategies. He has advised many of the world’s leading companies and also served as director of White House Operations.