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Co-opetition Key to Labor-Management Ties

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Co-opetition Key to Labor-Management Ties

Source:Chieh-Ying Chiu

Taiwan’s largest automobile manufacturing company, Kuozui Motors, features high employee satisfaction and low turnover. It might be hard to picture workers donning headbands and staging angry protests 30 years ago, but management was open to discussions, laying a foundation of trust that endures to this day.

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Co-opetition Key to Labor-Management Ties

By Echo Chu
From CommonWealth Magazine (vol. 616 )

“We wore blue arm bands during labor-management negotiations,” says Wang Chien-chiu, president of the Kuozui Motors Automobile Industry Labor Association, as he searches a storage cabinet  for the two-tone armband he wore 30 years ago when he led union members in protest. Explaining the dual colors, he says that when negotiations came down to the wire, everyone turned them to the red side as a warning.

Kuozui Motors has always engaged in management-labor negotiations, but the last time anyone donned bandanas and protested was a long, long time ago.

Founded in 1984, Kuozui Motors is Taiwan’s largest automobile manufacturer, employing around 3,000 workers. Last year, Kuozui produced 148,000 Toyota brand automobiles. Kuozui accounted for an approximately NT$1.395 billion return on investment for Hotai Motors, which holds a 30-percent stake in Kuozui, in the first three quarters of 2016, a clear indication of the company’s profitability.

Kuozui Motors is known for being generous to its staff. To wit, it handed out year-end bonuses of at least five months’ salary to employees this year. No wonder only 0.2 percent of the staff left after the New Year, and a decade of employment barely amounts to “seniority” at the company. Wang’s son also works at Kuozui, and his grandson, who is preparing to hit the workforce for the first time, says his goal is “to work at Kuozui.”

Gold Rings,  Good Faith

It is quite typical for a father and son to work together at Kuozui Motors. And it is hard to imagine that, 30 years ago, the company initiated a work stoppage over a year-end bonus controversy, causing a stalemate lasting over a week.

“When I asked the company president if he had talked with the union, he was dumbstruck,” recalls former Minister of Labor Pan Shih-wei, who was then serving as chief officer of the ROC United Federation of Mechanical Industry Labor. Pan still vividly recalls how, after a week-long impasse between Kuozui’s management and labor representatives, he had a three-hour discussion with the Japanese company president, Kikuta Masaru.

According to Pan, friction over year-end bonuses was only a surface issue. What the labor association was especially upset about was that, over the two years since the trade union’s establishment, staff members’ voices were still being brushed aside by the organizers at each supervisory board meeting, preventing their concerns from being communicated “upstairs.” “Many enterprises forget to discuss anything with workers, thinking they know best. The problem is that if staff members do not participate, they still won’t see eye-to-eye with you no matter how well you do things,” says Pan on the situation at the time.

President Kikuta invited labor union representatives to the negotiation table. Apart from providing a new overview of the year-end bonus system, he guaranteed that clear lines of communication would be established. Wang Chien-chiu recalls how Kikuta thumped his chest and promised, “This is a real man’s answer; I promise you that we’ll get to the bottom of this!” To show his good faith, he gave each staff member a gold ring weighing 11.25 grams, and established the date as the Kuozui Management-Labor Relations Remembrance Day.

“We clearly felt the Japanese company president’s sincerity,” says Wang. In the end, the employees took off their armbands, and year-end bonuses were given out in accordance with the original plan.

“The union should serve as a communications bridge between the top and the bottom,” says Kuozui Motors vice president Yung-yu Lin, who experienced the days of protest as the second supervisor of the union’s board. He holds up a large sheet of A3-sized paper with graphics on the front illustrating the state of the auto industry and Kuozui’s financial situation, and a hand-drawn cartoon on the back depicting how a baseball team works together, so as to depict Kuozui’s achievements in recent years of entering the international arena and winning orders from the Middle East.

Monthly Meetings

Each attendee at the bi-annual large-scale company status meeting gets a copy of this simply rendered prospectus. Lin’s view is that the 2,300 union members, who are mostly basic entry-level employees, do not necessarily have a good grasp of financial reports and international trends. Accordingly, management should communicate with clear, transparent information.

In addition, Kuozui’s company president, two vice presidents, two associate vice presidents, and five labor union representatives get together for a monthly labor-management meeting.

However, the Japanese-run enterprise mandates that only  employees at the section chief level and under can take part in the union, while for its part, the union worries that its lack of operational knowledge equips it only for receiving messages, leaving it ill-equipped to offer its own views. Consequently, it has long offered business management courses for officers, to help them better understand such things as how productivity is measured, human engineering, and wage structures. As part of his daily routine, Wang checks exchange rates and looks over industry news, so as to not allow the labor union to become a mere rubber stamp body.

“They also regularly visit the home Toyota plant in Japan for exchanges,” says Pan. He recalls vividly one time when union members, just back from a trip to Japan and impressed by their Japanese counterparts’ production efficiency, exhorted colleagues to step up their game.

Sticking Together, Finding Common Ground

Trust earned gradually over time has sustained Kuozui through difficult times.

When the 2008 financial crisis decimated the auto industry, it left Kuozui with just one-third its normal volume of orders, as well as facing losses for the first time in its history, to the tune of NT$2.2 billion.

During its most trying hour, Kuozui called a management-labor meeting to ask production line workers to take time off. “I told them, we must share in the good, and take equal responsibility for the bad,” Lin recalls. Rather than get worked up in protest, labor representatives quietly discussed tangible strategies for making it through the difficult times.

“We stress mutual trust. The company believes that the union represents the voice of the workers, and we presume that the company will never give us false information,” says Wang. Without any significant opposition, everyone agreed to work together to get the company through the difficult period.

That year, Kuozui Motors did not lay off a single full-fledged employee. Front-line manufacturing workers maintained a “three on, four off” rhythm, working on the production line in the morning, and straightening up the work environment in the afternoon, taking a total of 39 days off until the excess production capacity had been taken up. Of those 39 days, the company paid 20 days of wages, and everyone tried their best to use up all of their special leave time.

Despite suffering losses that year, Kuozui nevertheless gave out year-end bonuses. Thanks to excellent manpower allotment, once orders had returned to normal levels and stabilized, production was able to quickly get back up to speed. The year after the financial crisis, as well as every year since then, the company has seen continuous growth.

Management’s willingness to communicate with staff is critical; it can help workers engage in reflection and work together to ensure that everybody wins.

“I always say we’re all in the same boat,” offers Lin. The trials and tribulations of the financial crisis impressed on him further that, despite the appearance of being antagonistic, both union and management have a stake in the company’s sustained success.

“When the company just exists, if the union only puts in a 30-percent effort, it might prevent having to take to the streets in protest,” relates Wang. And when the company is profitable, the union should have even more of a crisis mentality in order to act as a counterforce keeping management in check.”

For instance, monthly payments by Kuozui union members into a workers’ fund have now reached over NT$20 million. Enough to pay their wages for five days in the event of a labor dispute, it is a potentially powerful bargaining chip in the union’s hands when negotiating with management.

Lin reveals that Kuozui Motors set in place a method last year for paying out annual bonuses. The union would like to see the company put a little more money in investments when it is making money, and not lean on the workers during lean times.

Pan believes that a simultaneously competitive and cooperative labor relationship is the key to Kuozui Motors’ sustained operation as well as maintaining competitiveness. “Management’s willingness to communicate with staff is critical; it can help workers engage in reflection and work together to ensure that everybody wins.”

Translated from the Chinese by David Toman


 

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