Modern Capitalism Has Opened a Major New Front for Strike Actions: Logistics

Kim Moody January 24, 2018

A strike in a key warehouse or supplier could close production up and down a supply chain. (Getty)

This post first appeared at The Con­ver­sa­tion.

The decline of trade unions across the devel­oped nations is noth­ing new. In the Unit­ed States, the pro­por­tion of work­ers in unions fell from a high of 35% in 1954, most­ly in the pri­vate sec­tor, to 11% in 2016 with near­ly half in the pub­lic sec­tor. Union den­si­ty in the UK fell from a high of 55% in 1979 to 25% in 2016.

Despite the recent revival of the left in both coun­tries, the days when unions had the pow­er to demand major con­ces­sions and win still seem far away. Part­ly thanks to tough labor laws and employ­er aggres­sion, their role has become much more about con­sul­ta­tion than domination.

Now, how­ev­er, a come­back looks pos­si­ble – and not only because of the polit­i­cal cli­mate. Changes in the cor­po­rate land­scape since the Reagan/​Thatcher era point to big oppor­tu­ni­ties for orga­nized labor. The ques­tion is whether unions will try to take advantage.

Why the decline?

In the Unit­ed States, the fall of labor began at the end of World War II as major man­u­fac­tur­ers moved pro­duc­tion facil­i­ties to the non-union South to reduce costs and escape big con­cen­tra­tions of union­ized work­ers like those around Detroit, Gary, Los Ange­les and Chicago.

Between 1947 and 1972, Dixie’s con­tri­bu­tion to Amer­i­can man­u­fac­tur­ing val­ue-added near-dou­bled to almost a quar­ter of the total. The big indus­tri­al unions saw mem­ber­ship peak by the ear­ly 1970s, nev­er to grow again. The UK would fol­low this trend thanks to the decline of its man­u­fac­tur­ing base and Mar­garet Thatcher’s deter­mi­na­tion to smash union pow­er in the 1980s.

Anoth­er key trend was a wave of merg­ers and acqui­si­tions in the 1960s, launched by cash-rich cor­po­ra­tions ben­e­fit­ing from strong eco­nom­ic growth. This deal­mak­ing grew from about 1,200 a year in 1963 in the US, for exam­ple, to a high of 6,000 in 1969, though it was preva­lent in many coun­tries. This pro­duced the rise of con­glom­er­ates – firms offer­ing a wide vari­ety of often unre­lat­ed goods and services.

The unions had been pri­mar­i­ly in cor­po­ra­tions defined by a sin­gle major prod­uct line like cars or steel. Being part of a much big­ger whole reduced work­ers’ poten­tial to do dam­age through indus­tri­al action. This in turn made unions less attrac­tive and fur­ther squeezed mem­ber­ship numbers.

Many more union jobs were destroyed by the steep reces­sion of 1979 – 82, and then inten­si­fy­ing com­pe­ti­tion from glob­al­iza­tion by the mid-1980s. Many West­ern cor­po­ra­tions took a page from their Japan­ese com­peti­tors’ play­book and intro­duced lean pro­duc­tion: pro­duc­ing more with few­er work­ers; more out­sourc­ing; and just-in-time deliv­ery of parts, cut­ting inven­to­ries to a minimum.

Lean pro­duc­tion helped com­pa­nies recov­er their prof­itabil­i­ty, but the increase in glob­al com­pe­ti­tion led to anoth­er huge wave of merg­ers: from 4,239 val­ued at $206 bil­lion (£152 bil­lion) in 1990 to 11,169 val­ued at $3.4 tril­lion in 2000. After 2001 they lev­elled off to about 7,000 a year, still well above pre-1990s lev­els. Euro­pean com­pa­nies fol­lowed a very sim­i­lar trend, with the UK account­ing for the largest share.

But this time cap­i­tal aban­doned con­glom­er­a­tion to redi­rect pro­duc­tion along focused prod­uct lines. It cre­at­ed cor­po­ra­tions much like those orga­nized by the indus­tri­al unions in the 1930s. In addi­tion, this time they involved mas­sive amounts of fixed cap­i­tal and costs that made them vul­ner­a­ble to labor actions.

This has been com­pound­ed by what is some­times called the logis­tics rev­o­lu­tion. This refers to a major reor­ga­ni­za­tion of the move­ment of goods that has become nec­es­sary as the just-in-time mod­el has spread through sup­ply chains and the speed of deliv­ery has become intense­ly com­pet­i­tive in the online era.

Enor­mous logis­ti­cal clus­ters of trans­port, ware­hous­es, ICT net­works and inter­modal facil­i­ties have sprung up. They are most­ly in or adja­cent to large urban areas, the biggest includ­ing New York, Chica­go, Rot­ter­dam, Ham­burg and London.

The num­ber of ware­hous­es in the Unit­ed States has grown one and a half times since 1998 to over 17,000 in 2017, for exam­ple. While automa­tion is often a fea­ture, labour still accounts for 65% of aver­age oper­at­ing costs, while the num­ber of ware­house work­ers has grown from 356,800 in June 1990 to 830,700 in June 2017. Total logis­tics employ­ees in Amer­i­ca are around 4 million.

These are the peo­ple on whom today’s indus­tri­al­ly focused cor­po­ra­tions com­plete­ly depend. Real­ly big hubs need upwards of 100,000 work­ers to func­tion. Take Chica­go, with over 150,000 trans­porta­tion and ware­house work­ers in the met­ro­pol­i­tan area. Or FedEx’s new­er Mem­phis clus­ter, which employs 15,000 work­ers direct­ly and 220,000 in relat­ed trans­port and ware­house activities.

In the UK there are clus­ters around Liv­er­pool-Man­ches­ter, the Mid­lands, Glas­gow, and Lon­don. The Lon­don Gate­way port and its 9 mil­lion square foot logis­tics park opened in 2013 and will employ 27,000 work­ers when ful­ly oper­a­tive, extend­ing an east Lon­don clus­ter that also includes Dagen­ham Dock, Tilbury Docks and Lon­don Thamesport.

In addi­tion, major UK freight rail­ways are upgrad­ing to cre­ate a Strate­gic Freight Net­worksim­i­lar to the huge rail cor­ri­dors in the Unit­ed States. Alto­geth­er, the UK logis­tics sec­tor employs 1.7 mil­lion work­ers. Across Europe as a whole, logis­tics invest­ment has grown at two and a half times GDP accord­ing to one estimate.

Oppor­tu­ni­ty knocks

These clus­ters look high­ly vul­ner­a­ble to work­er dis­rup­tion. A strike in a key ware­house or sup­pli­er could close pro­duc­tion up and down a sup­ply chain, poten­tial­ly inflict­ing huge dam­age on a business’s rep­u­ta­tion for reli­a­bil­i­ty among its part­ners. This could put enor­mous pres­sure on employ­ers to grant con­ces­sions or recog­nise a new union with­out the need for the sort of sec­ondary or sym­pa­thy strike action that is ille­gal in many countries.

It is one of the great ironies of mod­ern cap­i­tal­ism that we are now see­ing the mas­sive con­cen­tra­tions of man­u­al work­ers that busi­ness lead­ers once sought to escape. We have not yet seen unions try­ing to take advan­tage of these sit­u­a­tions, part­ly per­haps after decades on the back­foot and part­ly because the likes of ware­house work­ers tend not to be unionised.

Yet I know from my research that both union and busi­ness lead­ers are well aware of the risks inher­ent in the new cor­po­rate sys­tem and giv­ing them seri­ous thought. In an increas­ing­ly angry world, these hubs could become a major flash­point: it will be fas­ci­nat­ing to see whether unions begin try­ing to capitalize.

The Conversation

Kim Moody is a co-founder of Labor Notes. He is the author of numer­ous books about the Amer­i­can labor move­ment, includ­ing On New Ter­rain: How Cap­i­tal Is Reshap­ing the Bat­tle­ground of Class War.
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