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Thread: BMW makes 'end run' to avoid Boeing-esque NLRB problems

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    Default BMW makes 'end run' to avoid Boeing-esque NLRB problems

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    (snip)By all accounts, BMW's parts distribution warehouse in Ontario was one of the jewels of the company's system.

    Supplying dealer service departments throughout Southern California, Arizona and Nevada, it received gold medals from BMW for its efficiency and employed several of the top-ranked workers in the country. In the roughly 40 years its workers had been represented by the Teamsters union, there had never been a labor stoppage.

    Times being what they are, when a Teamsters committee came to the plant in early June to open negotiations over a new contract to start Sept. 1, they thought they might be asked to accept minuscule wage increases and maybe some givebacks on health coverage.

    They were stunned by what they heard instead: As of Aug. 31, the plant would be outsourced to an unidentified third-party logistics company and all but three of its 71 employees laid off.

    The union contract will be terminated. Some of the employees might be offered jobs with the new operator, but there are no guarantees. And no one expects the new bosses will match the existing $25 hourly scale or the health benefits provided now.

    The average seniority of employees at Ontario is about 20 years; five have spent 30 years or more at Ontario or its predecessor warehouse in Carson. Of the employees to be laid off (according to a notice BMW sent the union), 27 are age 50 or older. The word that came most often to the lips of workers and their families I've talked to is "devastated."(snip)

    (snip)"BMW says for the record that it's "very much aware of its legal obligations and corporate responsibilities." The company will negotiate with the Teamsters over severance but won't discuss that or other transitional issues in public. It notes that it still employs 10,000 people in California, including those at two vehicle technology centers and Newbury Park-based BMW DesignworksUSA, and says that number might grow in the future.

    The company doesn't concede that it's outsourcing the Ontario plant to save money on wages. It says it brought in outside logistic contractors at Ontario and four of its other five parts depots nationwide because it prefers to focus on its "core expertise" of engineering and making cars. Of course, nonunion workforces generally receive lower pay and benefits than union — that's the power of collective bargaining — so the math is hardly a secret.

    If there are operational efficiencies to be gained from the outsourcing, as BMW contends, the firm presumably expects them to translate into higher profits, but it won't be sharing the money with the warehouse workers. Among the most likely beneficiaries are its shareholders — maybe via another dividend boost on top of the $950-million raise the company gave them out of its $4.7-billion profit last year.

    BMW's defenders will point out that the company has a perfect legal right to outsource any jobs it wishes. Fair enough. Yet by the same token, American taxpayers had a perfect legal right to tell BMW to drop dead when the firm's credit arm asked the Federal Reserve for a low-interest $3.6-billion loan during the 2008 financial crisis. BMW got the money then because U.S. policymakers saw a larger issue at stake: saving the economy from going over a cliff. Just as there's a larger issue involved at Ontario, which is saving the American middle class from going over the same cliff.

    The Ontario union, Teamsters Local 495, got Sen. Barbara Boxer (D-Calif.) and Reps. Joe Baca (D-Rialto) and Loretta Sanchez (D-Garden Grove) to write painfully polite letters to Jim O'Donnell, chairman of BMW North America, asking him to reconsider. When I say that's the least they could do, I'm talking literally — it's the very least. How about hauling him before a televised hearing and having him balance out a $3.6-billion taxpayer loan with the firing of 70 American workers? The company surely wouldn't characterize its federal loan as charity, but neither is maintaining its parts distribution workers on a living wage."(snip)


    The take-away from this decision by BMW was that they have 'learned' a great deal from the recent NLRB ruling re Boeing attempting to open a new non-union aircraft production facility in Charleston. That ruling basically created a new legal 'doctrine' that the addition of non-union jobs for the purpose of eliminating 'union' labor strikes as a future production risk factor is illegal. So BMW simply side-stepped the ruling by outsourcing the entire Ontario California parts supply operation. In other words, Boeing was adding non-union US jobs with no direct and immediate elimination of 'union' US jobs ... whereas BMW will be eliminating 'union' US jobs and de-facto replacing them with non-union jobs via a subcontractor ( at even lower pay rates and even fewer employee benefits than BMW would typically pay / provide its own non-union US workers in 'right to work' states ).

    Thus the 'Unintended Consequences' theory is again proven true re the recent NLRB ruling ! If this 'domestic outsourcing' withstands legal challenges, expect it to become widespread in a big hurry !!!

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    Default Re: BMW makes 'end run' to avoid Boeing-esque NLRB problems

    Quote Originally Posted by Melonie View Post
    That ruling basically created a new legal 'doctrine' that the addition of non-union jobs for the purpose of eliminating 'union' labor strikes as a future production risk factor is illegal.
    Why does the NLRB not want this? I'm just curious.

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    Default Re: BMW makes 'end run' to avoid Boeing-esque NLRB problems

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    (snip)"In April, the NRLB filed a complaint against Boeing's decision to build an assembly plant for the new 787 Dreamliner in North Charleston, S.C., alleging that the move amounted to retaliation for union strikes at its Seattle-area manufacturing hub. Republicans, lead by Sens. Lindsey Graham (R-SC) and the GOP South Carolina delegation, have decried the legal action as a political move by the Obama administration in favor of union supporters over job-creating private business decisions.

    "The disastrous consequences that the effort to penalize Boeing will have on the economy of South Carolina, and the collateral damage that this unprecedented action will have on other right-to-work states, warrants scrutiny," Issa said in his opening statement.

    If successful, Soloman's complaint could force Boeing to pull out of the state of South Carolina or at the very least build an additional assembly line in Washington state as a remedy.

    During Friday's hearing, Soloman said he regrets the fear the dispute has caused South Carolina workers about the viability of their jobs and several times reminded lawmakers that his calls for a return to Seattle is a standard beginning negotiation stance, implying that the NLRB and Boeing would likely reach a settlement that would avoid displacing South Carolina workers.

    "These are difficult economic times, and I truly regret the anxiety this case has caused them and their families," Soloman said during prepared testimony before the panel. "The issuance of the complaint was not intended to harm the workers of South Carolina but rather to protect the rights of workers."

    The case has become an early flashpoint in the 2012 campaign with Republicans charging the Obama administration with penalizing a major U.S. aerospace company and creating more incentives for U.S. companies to relocate or send jobs overseas when the No. 1 priority in the country should be creating jobs and recharging the flagging economy.

    South Carolina Gov. Nikki Haley (R) lambasted Obama and the NLRB during the hearing. She and 15 other governors wrote Soloman on Thursday in an attempt to convince him to dismiss the complaint, which they said hamstrings governors who are trying to create jobs.

    "I never thought the President and his appointees at the NRLB would be the greatest opponents we have" in trying to attract jobs to South Carolina, she said. "All you are doing is incentivizing these companies to go overseas. ... It's an attack on states that continue to have a pro-business environment. ..."

    Graham has vowed to block Soloman's nomination in the Senate, and Issa has implied that the complaint was simply an attempt to rally Obama's big labor base. (snip)

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    Default Re: BMW makes 'end run' to avoid Boeing-esque NLRB problems

    Why is "the Obama administration in favor of union supporters over job-creating private business decisions." ? I mean, I'm assuming it's not "to protect the rights of workers."

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    Default Re: BMW makes 'end run' to avoid Boeing-esque NLRB problems

    Quote Originally Posted by Zinaida View Post
    Why is "the Obama administration in favor of union supporters over job-creating private business decisions." ? I mean, I'm assuming it's not "to protect the rights of workers."
    The Obama administration is very much dependent on union votes. Everything it can do for organized labor it will do for organized labor. The administration does not care it its labor pleasing acts help or hurt the economy. For the next 18 months, everything is about winning the 2012 election and nothing more.

    Z

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    Default Re: BMW makes 'end run' to avoid Boeing-esque NLRB problems

    ^^^ trying to keep the content at least 50% economic, the big dollar issue with this NLRB ruling was that an employer could now face huge fines and potential prosecution if it creates new non-union jobs in a 'right to work' state if an argument can be made that said new non-union jobs are strategically intended to replace existing union jobs a different state. The specific issue with Boeing was that senior management had cited avoidance of potential union strike related production delays at the existing unionized Redmond Washinton plant as one of the major attributes of its new non-union production facility in Charleston.

    BMW obviously avoided all such arguments by involving a 3rd party i.e. a subcontracting company. Thus the BMW union job elimination is outright, since BMW is not adding any non-union jobs itself to 'replace' the work done by it's existing union employees.

    As to the economics of union workers and Obama / democrats, many would point out that there is a long standing quid-pro-quo arrangement where x% of every union worker's union dues winds up being contributed to Democrat politicians by union leaders ... which those democrat politicians are then 'obligated' to 'repay' with 'interest' when (re)elected ... even if that 'repayment' is arguably bad for small businesses, non-union workers or the economy in general. BMW's new strategy still allows them to claim they are a union company ... but a union company with fewer union workers ... whose former work product is now being subcontracted to a different and non-unionized company. Thus BMW still expects 'repayment' from democratic politicians, while saving hugely on labor and benefit costs at the same time via subcontracting.

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