It’s been a bad few months for Toyota, after faulty pedals caused a recall and lower sales and production. The lapses have stoked consumer fears and spurred government scrutiny, all contributing to slumping sales.
Unions have decided to seize the moment surrounding Toyota’s massive safety recall by calling attention to the company’s decision last year to shut down its only unionized plant in March. The closing will become the first time Toyota has shuttered a plant in the United States.
But as unions try to save jobs, they face an uphill battle in a troubled industry with declining union membership. Last week, protesters gathered at the Japanese embassy in Washington to rally against the closing of the Fremont, Calif., plant that employs 4,700 people. United Auto Workers Vice President Bob King and Teamsters President James Hoffa delivered a letter for Japanese Prime Minister Yukio Hatoyama, calling for a meeting with political officials and Toyota representatives about the closing.
The world’s largest automaker announced last year it was closing the plant after General Motors pulled out of the joint venture as part of its bankruptcy reorganization (UAW has a share in GM). The Fremont plant is the only remaining auto plant west of Texas, and public officials say the move will affect as many as 40,000 jobs in California amid a state budget crisis.
Toyota’s shrewd moves comes as overall auto sales have declined, which has caused foreign and domestic automakers to shrink production and shed jobs. The decision to close the only unionized factory is no coincidence.
Toyota has searched out rural locations where people are hungry for jobs, making it easier to keep costs down. By offering jobs in Southern areas that pay relatively higher salaries in their locale and keeping it comparable to unionized worker rates, the company stifles worker incentives to join despite efforts by the UAW.
Compared to the Big Three companies, Toyota’s payroll is significantly lower. Toyota workers have fewer benefits. Ford, GM and Chrysler have generous retiree benefits and pensions, though those funds have been criticized for stretching their pockets and contributing to the companies’ collective decline.
Still, the concessions were won by UAW in previous generations and helped create an industry that was the highest-paying job in manufacturing during the latter 20th century. UAW was able to protect their members wages and benefits as GM spiraled toward bankruptcy. But now they also face challenges to increase their membership with a contracting workforce.
At its peak, the UAW had 1.5 million members in 1979 as titans of the U.S. labor movement. But it had only 430,000 members in 2008, reflecting the overall trend in the decline of union memberships.
The Wall Street Journal details the decrease in union membership in private sectors and says the trend will lessen their clout and influence.
Labor experts said the union-membership losses would have a long-term impact on unions and their finances, because unions wouldn’t automatically regain members once the job market rebounded. In many cases, new jobs will be created at nonunion employers or plants.
As membership dwindles, workers will most likely face lower pay and scant benefits. A 2008 study by the National Labor Committee says Toyota’s labor practices will have ripple effects on other auto industries in a race to the bottom:
Meanwhile the Big Three’s falling sales and market share have forced the American companies to adopt, and their workers to accept, two-tier wage and temporary worker schemes eerily similar to those used for years by Toyota – just to compete.
Toyota’s decision to shutdown the Fremont plant has puzzled some since it plans on opening up another factory in Mississippi. Given the sensitivities of the U.S. auto industry and California budget crisis, it won’t help to assuage the public or the company’s employees. It’s ironic that Toyota workers in Japan are able to unionize, though it’s mostly management-friendly. But no Japanese automaker in the United States has allowed unions.
Toyota was once regarded highly for offering lifetime employment and job security. It should remember that its ascent to become the world’s biggest automaker was propelled by workers. It shouldn’t turn its back on them now.