Let American Workers Work

Fixing Detroit—and jump-starting U.S. manufacturing—is possible, if companies adopt "high-involvement" management practices

By James O'Toole

As General Motors (GM), Ford Motor (F) and Chrysler once again look for a handout at the Federal trough, they now seem willing to accept a bailout loaded with such contingencies as executive salary caps and iron-clad promises to build fuel-efficient vehicles. Equally important, the United Auto Workers' union says its is prepared to make significant concessions in terms of current salaries and benefits and downsizing retiree health and pension packages. But, while all that is necessary, it falls far short of ensuring the long-term viability of the domestic auto industry—and manufacturing jobs for Americans in the future.

In order once again to have a robust auto industry in Detroit, leaders of the Big Three and the UAW must set aside their antediluvian labor relations and adopt the "high involvement" management practices needed to make U.S. manufactured products competitive in world markets. There is now overwhelming evidence (briefly summarized below) that American workers—when properly deployed and rewarded—can successfully compete against even lower-wage workers in Asia. Those practices need to be adopted in Detroit, and now.

Exhibit One:

Currently, American workers make quality cars—and profitably—in U.S.-based plants owned by Toyota (TM), Honda (HMC) and Nissan (NSANY). These workers are not unionized and do not enjoy the same retirement benefits as their peers in Detroit. While that difference gives Japanese manufactures a decided cost advantage over their American-owned rivals, it does not account for the much higher labor productivity and quality standards found in the U.S.-based Japanese plants than in Detroit. As Toyota executives testify, their workers are more motivated and productive than their peers in Detroit because they participate in high-involvement working environments.

What this means is that production tasks in Japanese-managed plants are organized in ways that allow—and encourage—workers to add value to the manufacturing process by way of their ideas and initiative. Instead of Detroit's adversarial "us vs. them" labor relations, workers and management in the Japanese-owned plants see themselves as part of the same team, and both enjoy the fruits of their joint successes. As a consequence, workers in the Japanese-owned plants not only are more productive than their oversupervised and rule-constricted counterparts in Detroit, they actually have greater job security because the cars they make are more price-competitive with cars made abroad. Adding in bonuses, and adjusting for fewer involuntary layoffs, they also may actually bring home a larger total income over the course of their careers.

Exhibit Two:

The productive potential of high-involvement practices was demonstrated to the UAW and to General Motors in a series of experiments beginning in the early 1970s, first at auto-parts supplier Harman Industries, then at GM's Tarrytown (N.Y.) assembly plant and, most dramatically, in the '80s at GM's joint-venture with Nissan in Fremont, Calif. Ford's dramatic comeback from near bankruptcy in the mid-'80s was due, in large part, to an unprecedented period of labor-management cooperation in which tens of thousands of jobs were saved when the UAW set aside traditional work-restrictive practices in exchange for employee profit-sharing and worker self-management in small teams. For the first time since the death of Henry Ford, the company had the best-selling car in America, and it made unprecedented profits.