Union Victory at Virginia IKEA Plant: Resistance Grows Against Race-to-Bottom Wages

Ikea workers in Danville, Va., aren’t taking Thomas Friedman’s advice. Last week, after a three-year struggle, they chose by a 221-69 vote to unionize Ikea’s first manufacturing plant in the United States. Their move defies conventional wisdom that a competitive future requires a lower-wage, less unionized America. And Ikea’s choices — to build a factory in the old capital of the Confederacy, to deploy America’s best union busters, and ultimately to rein them in — illuminate dynamics that get ignored in debates over outsourcing. Ikea’s example shows how easily European companies can embrace American-style union busting. And it shows a path for workers to fight back.

“Sweden’s Mexico”?

The post-NAFTA era has been marked by elite consensus, articulated for a decade by New York Times columnist Thomas Friedman, that a country’s competitiveness depends on holding down labor costs in order to compete for increasingly mobile capital. By that measure, the opening of an Ikea plant in Virginia rather than Europe would seem a sign of progress. (Technically, the employer at the plant is Swedwood, a wholly owned subsidiary of Ikea.)

The state of Virginia and the city of Danville, home to declining textile and tobacco industries, showered the company with a combined $12 million in incentives. But it’s doubtful that tax cuts were Danville’s greatest draw. It’s a low-income, significantly segregated city, in a “Right to Work” state, in a country whose labor costs and organizing rights pale in comparison to Sweden’s. As Americans, “we demand nothing” from companies, says CUNY history professor Judith Stein, “and in fact locals say ‘Don’t worry, you won’t have to deal with the union.’” In April, the Los Angeles Times reported that Danville workers faced starting wages less than half those of their Swedish counterparts and less than half their vacation time.

During its successful campaign to organize the Danville workers, the International Association of Machinists (IAM), through its Machinists News Network, produced a web video called “Same Rules, Same Respect.” It charged that “when on American soil, IKEA is playing by a very different set of rules than when at home.” In the video, IAM Woodworking Division director Bill Street says, “We’ve become Sweden’s Mexico.” (The Daily Show chose a similar description for the situation.) There are many ways to hear that statement — as a particularistic appeal to nationalism or chauvinism, or as a comment on the universalism of companies’ pursuit of profit. Stein disputes the Mexico comparison, noting that the products produced in Danville will be sold in America, not shipped back to Sweden. (The analogy also disregards the fraught history of migration, border regulation and violence between the United States and its southern neighbor.)

Stein says there are significant reasons other than labor costs that foreign companies have placed more production in the United States since the 1970s, including proximity to where their products will be sold and — in the past — avoidance of tariffs. However, she says avoiding labor costs and labor militancy explain these companies’ preference for the American South. Street says that foreign-owned companies represent a growing share of the industry in the United States. Echoing Stein, he says that Ikea’s choice to locate in the United States fits the company’s business model of doing production closer to its distribution. But he adds that in the United States, it became clear that Ikea “didn’t have to bring the social contract with them” from Sweden.