Sweet & Sour Grapes: The Story of the Machine Tool Industry - page 61


Monopoly

In recent years, a great deal of media attention has been focused on anti- trust concerns relating to a perceived monopoly and its alleged anti- competitive practices. Microsoft Corporation is the defendant in the legal action, a very large and well-known high tech company. This company is responsible for innumerable advances in its field of expertise that has been a great benefit to its many customers, worldwide, and, by their success, to the American economy. The facts that gravitate to the general public make it very difficult to judge the merits of the concerns. Their competitors have been instrumental in the Justice Department’s decisions to pursue the legal action. Obviously, these competitor companies are less successful than they may want to be as a result of the offending company’s successes, right or wrong. They would like to neutralize a growing competitive disadvantage.

Monopoly: Exclusive control by one group of the means of producing a commodity or selling a service.

In an entirely different area, there is a real and long-standing obstacle to fair competition that is not pursued as a legal issue. In fact, it is defended by more than one government agency. While it is obvious, that issue is obscured by the paradigms of another time. Sixty years ago, stormy labor management relationships: required tight controls to maintain order, insure some level of fairness, and to minimize disruption; the job of the National Labor Relations Board (NLRB).

That long-standing obstacle is present in various segments of business today, but it is exemplified prominently in the American auto industry. An organized labor strategy is used whereby labor agreements with the three major auto companies are pattern-bargained. That is to say, a target company is selected based on which has the most to lose at the time of the negotiations and a very demanding set of negotiations ensues. (The three contracts expire at about the same time.) This arrangement is accepted by management and defended by the NLRB. The threat of a crippling work stoppage strike has a very coercive effect, as the competing companies will not be threatened until the first comes to terms.

Once the agreement has been completed, the next two, in a sequence favorable to labor, are negotiated and agreements are reached based on the pattern established in the first. If a work stoppage was necessary, it would have likely only affected the first company, the one with the most to lose.

So now that the pattern agreements are in place, what are the effects? The single largest factor influencing value to the buyers of the products produced, the cost and effectiveness of labor, has been taken out of the local competition equation. By virtue of the cloned agreements, which include direct labor costs per hour, fringe benefit costs, and work rules, this major factor has been neutralized competitively. Doesn’t this breach, at least in spirit, the Justice Department’s mandate to preserve free market principles? Isn’t this a monopoly on the part of organized labor?

What about all three companies’ competitive posture against foreign competitors in the modern global market as well as in the domestic market? Is this comparable to the “single huge population” versus the “small isolated population” problem suggested in the second chapter?

The opportunity for any of the big three companies to use creative methods in their organizations to provide their people the fulfillment of the promises of the reasons we work resulting in a creative and “turnedon, ultra competitive organization” is lost. The major components producing value, the imagination, passion, and courage of the human element, inspiring Yankee ingenuity are missing or impotent in that setting.

In the American auto industry prior to the late 1960s and the serious entry of foreign auto companies into the U.S. market, the neutralization of competitive labor costs had little meaning that would be obvious to the general public. Added labor costs and perpetuated or even increased inefficiency costs associated with new agreements for all three companies would simply be passed on to the consumer. They would not affect competitive positions in the eyes of the consumer.

Today, however, the competition, both global and transplanted, plays by their own set of rules regarding the effectiveness of their workers and the way they are treated.

The rapidly evolving, revolutionary technology, and global business environments have changed the competitive landscape. Are the needs of the modern global business environment obscured by the paradigms of times gone by? Considering both examples, are today’s anti-trust laws current and comprehensive enough? Are they able to scrupulously assess the fairness and benefit aspects for all involved, including that of the general public? Are the individuals in organized labor getting the good deal they think they are?

What about the global free market? Major league hardball must be expected. It will require the most competitive posture possible, including effective, imaginative, and fulfilling use of labor, of all collar colors. The selection of the most effective tools possible and their imaginative and effective use by labor against clever and low labor cost companies and countries are fundamental to survival, success, and any hope of security or prosperity.

In thinking about this problem, it is noteworthy to realize that the many thousands of the Big Three autoworkers are in a closed-shop environment. That is, all must be dues-paying members of the union and follow that culture without recourse. The states involved do not have “right to work” laws. In an open shop, those in “right to work” law states, the labor chemistry could be significantly different. A major part of the work force could opt for a different life’s work atmosphere. It may be one that recognizes the realities of drudgery versus fulfillment and success in an increasingly difficult marketplace, which is the only real job security.

Further, those competing businesses with no workforce affiliation to organized labor would seem to have even greater opportunities for flexibility. They could be quick to respond to creative and aggressive competitive maneuvers or, better yet, to lead, requiring response from competing companies. We don’t have to guess which auto producers in the U.S. today fit which description.