News & Politics

CORPORATE FOCUS: Threat of Plant Closure Keeps Unions in Check

Want to mandate payment of a living wage to all workers? Get ready to face the threat of plant closures and job shifting. Corporate control of the tax, trade and investment rules which enhance capital mobility, gives corporations enormous leverage over the political process.
The election season makes it patently clear how Big Business is able to transform its financial resources into political power via campaign contributions.

But an even more fundamental source of business power is corporations' control over investment decisions, and the tax, trade and investment rules which enhance capital mobility. The ability to shift production to different locations, or threaten to shift production, gives corporations enormous leverage over the political process and over workers.

Want to adopt serious environmental standards to stem the corporate poisoning of the air, water and land? Get ready to face the threat of plant closures and job shifting. Want to force companies to bear a reasonable share of the tax burden? Be prepared to face company moves to lower tax havens. Want to mandate payment of a living wage to all workers? Plan to hear how business will be forced to move to Mexico or China.

Nowhere is the raw power connected to corporate mobility more apparent than in labor management relations, as Kate Bronfenbrenner, director of labor education research at Cornell's School of Industrial and Labor Relations, makes clear in a new paper, "Uneasy Terrain."

When faced with union organizing campaigns, employers routinely threaten to close their plant and move elsewhere. Understandably, these threats intimidate workers -- a union won't do you any good if you don't have a job -- and they are tremendously successful at defeating union organizing drives.

In the most comprehensive survey ever of U.S. union organizing campaigns, Bronfenbrenner found that "the majority of employers consistently, pervasively and extremely effectively tell workers either directly or indirectly that if they ask for too much, or don't give concessions, or try to organize, strike or fight for good jobs with good benefits, the company will close, move out of state or move across the border, just as so many other plants have done before."

In union organizing drives in the United States in 1998 and 1998, she found, more than half of all employers threatened to close all or part of the facility if workers voted to join a union.

But the situation is even worse than that figure suggests, because for some types employers it is difficult to make credible threats to move -- hotels and hospitals, for example, are to a considerable extent tied to place.

In mobile industries -- manufacturing and other companies that can credibly threaten to shift production -- the plant closing threat rate was 68 percent. In all manufacturing, it was 71 percent. In food processing, it was 71 percent.

These numbers mark a worrisome upturn from a previous Bronfenbrenner survey, undertaken for the Labor Secretariat of the Commission for Labor Cooperation and published in 1997. Bronfenbrenner's data from 1993-1995 showed a threat rate of 64 percent among manufacturers, 21 percent among food processors.

(That earlier study, prepared for a commission created by one of the NAFTA side agreements, was suppressed by the Clinton administration. Eventually liberated, it provided some of the key evidence leading to the defeat of fast track.)

Employers deliver the threats directly (after posting pictures of shut down facilities, supervisors asked workers at a Mitsubishi plant in Tennessee, "Is your family ready to move to Mexico?") or more indirectly. For multinationals, Bronfenbrenner told us, there is a pervasive "silent threat. ... The map on the wall" showing the locations of a company around the world is an ongoing reminder that the company can easily do business elsewhere.

Employers know the threats work, Bronfenbrenner says. Anti-union training materials emphasize that "fear is the most effective tool," she explains.

And the evidence backs up the commonsense insight that threats to close effectively intimidate workers.

"Union election win rates were significantly lower in units where plant closing threats occurred (38 percent) than in units without plant closing threats (51 percent)," Bronfenbrenner found. "Win rates were especially low (24 percent) in those campaigns where employers made specific threats to move to another country. Win rates were also significantly lower in mobile industries where the threat of closure was more credible."

Unions can overcome plant-closing threats, Bronfenbrenner says, by running aggressive campaigns that involve rank-and-file union members as organizers and actively involve and energize the workers who are being organized. But the challenge is immense, especially given the array of other anti-union tactics, including firing of union supporters, that corporations regularly employ.

Dealing with the problem of plant-closing threats, at least in the union organizing context, will require two major reforms, Bronfenbrenner concludes. First, labor law must more clearly delineate such threats as illegal, and impose big enough penalties to deter employers from making them. Second, trade, investment and tax policy must be changed to limit corporate mobility, and to block employers from shifting operations to avoid unionization.

That's not just a pro-union agenda. It is a basic pro-democracy one.

Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor. They are co-authors of Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage Press, 1999).
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