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The
social and labour impact of globalization in the manufacture of transport equipmentGeneva, 8 - 12 May 2000
International Labour Office Geneva
Copyright ©2000 International Labour Organization (ILO)
Cover photographs: ILO/J. Maillard
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1. The overall setting of the transport equipment manufacturing industry
1.3. The case of the automotive industry
1.7.1.1. Motor vehicles
1.7.1.2. Supply side
1.7.1.3. Comparison with total manufacturing employment
1.7.1.4. Aircraft manufacturing
2. The motor vehicle manufacturing sector
2.2. The geographical spread of motor vehicle manufacturing
2.3. An overview of recent literature on the automotive industry
2.4. Think global, act regional
3. Global systems integrators: The supplier industry reinvents itself
3.1. From auto parts to full-service suppliers
3.2. Increasing employment, but lower wages
3.6. The maquiladora industry in Mexico
3.7. Ford's supplier network and Saarlouis industrial park: A case study
5. Emerging social and labour issues
5.1. Teamwork – A response to globalization?
5.2. OSH issues: The right-sizing of benchmarking
5.3. Early retirement or hidden unemployment?
5.4. Vocational training or a continuous learning environment?
6. Opportunities for improving dialogue between the social partners
6.2. From outsourcing to modular production: The Canadian experience
7. Summary and suggested points for discussion
Table 1.1(b). Motor vehicles (3843) as part of total manufacturing (%)
Table 1.1(c). Shipbuilding (3841) as part of total manufacturing (%)
Table 1.1(d). Railroad equipment (3842) as part of total manufacturing (%)
Table 1.1(e). Motorcycles and bicycles (3844) as part of total manufacturing (%)
Table 1.1(f). Aircraft (3845) as part of total manufacturing (%)
Table 1.2. Total production in the TEM sector (in million US$)
Table 1.3. Total production in the TEM sector (in millions of national currency)
Table 1.4(a). Value of TEM exports (in million US$)
Table 1.4(b). Value of TEM exports (in thousand US$)
Table 1.4(c). Value of TEM exports (in millions of national currency)
Table 1.5(a). Value of TEM imports (industrialized countries) (in million US$)
Table 1.5(b). Value of TEM imports (developing countries) (in thousand US$)
Table 1.5(c). Value of TEM imports (in millions of national currency)
Table 1.6. Total TEM employment (number of employees)
Table 1.7. Female employees as percentage of total TEM workforce
Table 1.8. Hourly compensation costs for production workers in TEM (in US$)
Table 1.9. Total value added in the TEM sector (in million US$)
Table 1.11. Hours of work (weekly)
Table 2.3. Automobile production by company and worldwide share by country, 1996
Table 2.4. Fortune Global 500 companies (motor vehicles and parts) ranked by employment, 1998
Table 2.5. Global production of super sports cars, 1997-98
Table 2.6. Joint ventures in India’s auto industry
Table 3.1. The major global suppliers, ranked by employment
Table 3.2. Frequency of deliveries by suppliers to automobile companies
Table 3.4. Average gross wages of various parts suppliers as an index of final assemblers
Table 3.5. Average gross wages in auto assemblers/suppliers as compared to Germany
Table 3.6. Percentage share of outsourced parts in final vehicle, 1996
Table 3.7. Full-service suppliers in Saarlouis
Table 3.8. CarsDirect.com faces Web competition: On-line car order services, 1999
Table 4.1. Shipbuilding workforce, 1975/98 (number of employees, % change)
Table 4.2. Ship completions, 1998 (number of ships and market share)
Table 4.3. New ships ordered, by type and country where they are being built
Table 4.4. Main countries ordering new ships, by type
Table 4.5 Ship scrapping by country, 1996-98 (million deadweight tonnes – dwt)
Table 5.1. State of employee relations at various automobile plants with respect to teamwork
Table 6.1. Agreements securing production location and employment: Comparative analysis
Table 6.2. Agreements securing employment and production in General Motors Europe
Table 6.3. Agreements securing employment and production in Renault
Table 6.4. Basic data for European Works Councils (EWCs) in the automotive industry
Box 1.1. The transport equipment manufacturing (TEM) sector at a glance
Box 2.1. Changing lanes: Volvo might be out of automobiles, but it is not out of transport equipment
Box 2.2. Growth engines rev up in Asia
Box 2.3. Social dialogue and the Asian financial crisis: Adjustment in the Thai auto industry
Box 3.1. The Lear Corporation – From the inside out …
Box 3.2. The top 20 suppliers of Ford Germany
Box 4.1. Identifiable hazards associated with ship breaking; relevant ILO standards
Box 4.2. Hazardous work: A recent eyewitness account from Bangladesh
Box 5.1. Health and safety gains at DaimlerChrysler
Box 6.1. Excerpts from the neutrality letter signed by DaimlerChrysler with the UAW
Box 6.2. Neutrality letters signed by Big Three parts suppliers with the CAW
Box 6.3. IMF Magna Internet Action Group launched
Box 6.4. The Volkswagen European group works council
Box 6.5. Ford’s EWC agreement defines information and consultation and lays down language rule
Figures
Figure 1.1. Distribution of production in the TEM sector (selected countries)
Figure 1.2. Distribution of exports in the TEM sector (selected countries)
Figure 1.3. Percentage share of TEM in total manufacturing exports (selected countries)
Figure 1.4. Distribution of imports in the TEM sector (selected countries)
Figure 1.5. Composition of the workforce in the sector (selected countries)
Figure 1.6. Composition of the female workforce in the TEM sector (selected countries)
Figure 1.7. Comparative statistics of employment (selected countries)
Figure 1.8. Weekly hours of work in the TEM sector (selected countries)
Figure 2.1. World automobile production, 1999 (share by region)
Figure 2.2. World automobile production, 1960 and 1999 (share by country)
Figure 2.3. World automobile production, 1999 (ranked by country)
Figure 2.4. A car “made in USA” (origin of components/inputs)
Figure 2.5. Consolidation of the automobile industry, 1998-99
Figure 2.6. Automobile manufacturers, 1998 (share of world market)
Figure 2.7. Price v. sales volume, 1997 (average price (US$000))
Figure 2.8. Leading truck and bus manufacturers, 1998
Figure 2.10. Evolution in vehicle sales by region, 1960-2015
Figure 2.11. Evolution in vehicle production by region, 1960-2015
Figure 2.12. Global links among major multinationals in the motor vehicle sector, 1998-99
Figure 3.1. United States: Employment in motor vehicle assembly and supplier industries, 1979-98
Figure 3.3. Origin of supplies purchased by Ford for production in Europe
Figure 4.1. Consolidation of military aircraft manufacturers, United States and United Kingdom
Figure 4.2. Global ranking of major aircraft manufacturers
Figure 5.1. Map of possible types of employee relationships with respect to teamwork
At its 273rd Session (November 1998) the Governing Body of the International Labour Office decided to convene a Tripartite Meeting on the Social and Labour Impact of Globalization in the Manufacture of Transport Equipment. At its 274th Session in March 1999 it decided to invite the governments of the following 18 countries to designate participants: Austria, Brazil, Canada, Chile, China, France, India, Japan, Republic of Korea, Malaysia, Mexico, Norway, Romania, Russian Federation, South Africa, Spain, Switzerland, United States. In the event that one or more of them does not accept the invitation an alternate from the same region will be invited from the reserve list which was established at the same time: Bangladesh, Democratic Republic of the Congo, Dominican Republic, El Salvador, Finland, Honduras, Italy, Lebanon, Panama, Portugal, Syrian Arab Republic, Thailand, United Kingdom, Venezuela. The Governing Body also decided that 18 Employer and 18 Worker participants should also attend the Meeting; these will be selected on the basis of nominations by the Employers’ and Workers’ groups of the Governing Body, but they will not necessarily come from the same countries as the Government participants.
The Meeting is part of the ILO’s Sectoral Activities Programme, the purpose of which is to facilitate the exchange of information between constituents on labour and social developments relevant to particular economic sectors, complemented by practically oriented research on topical sectoral issues. This objective has traditionally been pursued by holding international tripartite sectoral meetings for the exchange of ideas and experience with a view to: fostering a broader understanding of sector-specific issues and problems; developing an international tripartite consensus on sectoral concerns and providing guidance for national and international policies and measures to deal with related issues and problems; promoting the harmonization of all ILO activities of a sectoral character and acting as a focal point between the Office and its constituents; and providing technical advice, practical assistance and support to the latter to facilitate the application of international labour standards.
This is the first meeting to be held on transport equipment manufacturing since the Governing Body reorganized the system of meetings in 1996. The sector was previously dealt with under the Metal Trades Committee (the last meeting of which was the thirteenth Session in 1994 [1]). A meeting on the other subsector of the industry, mechanical and electrical engineering was already held in October 1998. [2]
This report will look at recent developments in the rapidly changing world of transport equipment manufacturing. It will focus on conditions of work and life, employment, industrial relations and revised training needs in the light of the new skills required by flexible production systems. Consumer demand, international competition, over-capacity, environmental concerns and pressure to increase the return on shareholders’ investments are all forcing companies to reorganize work in order to cut costs and improve performance. Increasingly, more and more responsibility is being placed on suppliers, as companies outsource the manufacture of up to 70 per cent of the components they need in final assembly. Mergers, acquisitions, strategic alliances and common platforms are the industry buzz-words as company directors are urged to “think global, but act locally” in the struggle for market share and brand names. Nevertheless, despite the appearance of emerging markets, the vast majority of production is still highly concentrated in a few member countries of the Organization for Economic Co-operation and Development (OECD).
This background report has been organized along the following lines. Chapter 1 presents a definition of the sector and of globalization, followed by overall data on employment, production, imports and exports, wages, value added and research and development. Chapter 2 looks at the motor vehicle industry, which includes motor vehicles and bodies (ISIC[3] 341 and 342); Chapter 3 examines the supplier industry (defined as manufacture of parts and accessories, ISIC 343); and Chapter 4 covers the rest of the transport equipment manufacturing industry (as defined by ISIC 35 to include ships, locomotives, aircraft and motorcycles and bicycles). Chapter 5 considers various efforts to give a voice to workers in the global economy, ranging from collective bargaining, teamwork and employment pacts to European Works Councils, while Chapter 6 focuses on certain issues related to occupational safety and health and early retirement. A summary and draft points for discussion are contained in Chapter 7.
This report is published under the authority of the International Labour Office and was prepared by Paul Bailey of the Sectoral Activities Department. The data was collected by Pallavi Rai, of the Institut des Hautes Etudes Internationales, using inputs from a variety of sources. Based on an analysis thereof, she prepared the relevant figures and tables, drawing on other research as well. Auret van Heerden contributed the section on export processing zones and Duncan Campbell the box on the Asian financial crisis. Robert Stryk prepared a case study [4] of Germany, the findings of which have been used throughout this report. The report benefited from discussions with Larry Kohler, Gijsbert van Liemt, Peter Jansen, Anne Posthuma and Peter Auer, as well as from a preparatory seminar which was held in São Paulo on flexibility in the Brazilian automotive industry. [5]
[1] ILO: Recent developments in the metal trades, Report I, Metal Trades Committee, Thirteenth Session, Geneva, 1994 (Geneva, 1993); Consequences of structural adjustment for employment, training, further training and retraining in the metal trades, Report II (Geneva, 1993) and Note on the Proceedings (Geneva, doc. IC/MT/13/1994/17).
[2] ILO: Impact of flexible labour market arrangements in the machinery, electrical and electronic industries (Geneva, 1998), and Note on the Proceedings (Geneva, doc. IC/MT/13/1994/171999).
[3] International Standard Industrial Classification of all Economic Activities, Third Revision (New York, United Nations, 1990).
[4] Robert Stryk: The impact of globalization on the German transport equipment manufacturing sector, Sectoral Activities Programme Working Paper (ILO, forthcoming).
[5] Joint ILO-Ministry of Labour and Employment Seminar on Effects of Internal Flexibility on Employment, Productivity and Working Conditions in the Auto Industry (Efeitos da Flexibilização Interna Sobre o Emprego, Produtividade e Condições de Trabalho no Setor Automotivo), 7-8 Oct. 1999, São Paulo, Brazil.
