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Unions Factor into the Profitability & Competitiveness of Enterprise

While unionized workers typically earn more than their non-union counterparts, some may argue that good labor-management relationships are more important to a company's bottom line.

July 2011
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Professor John Logan, director of Labor and Employment Studies for San Francisco State University, also believes that labor costs are no doubt an important factor in a location decision. However, whatever labor circumstances a company might have, its ability to develop a good labor-management relationship is more predictive of its profitability than strictly a union versus non-union decision point. It is true that "[unionized] workers often earn higher wages and enjoy better benefits than their non-union counterparts," he says. "However, workplaces with cooperative relationships between unions and management often enjoy the benefits of lower turnover [and] better trained and more productive work forces, so they can be just as profitable as their non-union competitors."

Marc Furman, an attorney and chair of the Labor and Employment Group of the Philadelphia-based law firm Cohen Seglias Pallas Greenhall & Furman PC, says that many manufacturers have chosen traditionally non-union locations with the belief that the local work force can be trained to do the work needed. However, he notes that some construction-related companies may seek out a unionized work force if they manufacture construction products that are typically installed by union trades people. "They seek the `union label' in order to have easier sailing with union installation companies," he says. But, "all things being equal, manufacturing companies clearly favor non-union labor pools."

For example, foreign automakers Volkswagen, Toyota, BMW, and many others have chosen to locate in Southeast states where unionization is not an issue. "The Southeast is the fastest-growing region in the country and the least unionized," posits Joseph M.A. Ledlie, president of The Ledlie Group, an Atlanta, Ga.-based public relations firm. "That's important. An overwhelming number of foreign auto manufacturers have chosen to locate in the least unionized U.S. region. Some of these companies come from heavily unionized nations.Union companies are abandoning unions."

Public Unions and the Way Ahead
Unions aren't going away, but they are certainly on the downtrend for private companies. Depending on a firm's business model and what its labor demands are, public unions could influence its ability to hire workers for certain disciplines. Public unions - those for federal, state, and local government entities - now account for the majority share of all union members. In fact, "2009 was the first year in U.S. history that public-sector union members outnumbered their private-sector counterparts," says Professor Logan. "The same was true in 2010. Private-sector union members remain important in certain industries and certain parts of the country, but their numbers have been in decline for several decades."

"Unions are desperate - they are spending millions per year in the political arena alone attempting to influence both legislation and regulation that would make it easier for them to force employees into unions," says Phillip B. Wilson, president and general counsel at the Labor Relations Institute, a consulting firm that helps companies avoid unionization, located in Broken Arrow, Okla. "They are also engaging in corporate campaigns, which are costly both in real dollars and in the public relations sphere, and which can have a detrimental long-term impact on the viability of a business."

For example, just this past April, the National Labor Relations Board (NLRB) accused Boeing of setting up a nonunion production line in right-to-work South Carolina to retaliate against unionized workers in Washington State for striking. The NLRB would like to force Boeing to make all of its new Dreamliner jets in Washington, rather than make 30 percent of them at its new production line in Charleston. The plant is completed, 1,000 workers have been hired, and production is set to begin. Michael Luttig, Boeing's general counsel, told the NLRB, "Boeing has every right under both federal law and its collective bargaining agreement to build additional U.S. production capacity outside of the Puget Sound region." A Boeing spokesperson further stated that none of the S.C. jobs come at the expense of Washington State jobs and not a single union member has been adversely affected.

The final outcome of this latest chapter in the union versus non-union work force debate will undoubtedly be significant for U.S. labor and the ability of the companies they work for to compete in today's global market.

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