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Yellow dogs in new guises
Honda and UAW Clash
Over New Factory Jobs
Residency Rules Exclude
Most Union Members;
Indignant in Indiana
By NEAL E. BOUDETTE
Wall Street Journal
October 10, 2007
ANDERSON, Ind. -- When Honda Motor Co. announced last year that it was
building a new plant amid the farms of southeastern Indiana, Hoosiers
cheered. Then Honda announced in August that only people living in 20 of the
state's 92 counties could apply for jobs -- a move that excluded most of the
state's thousands of unionized laid-off auto workers.
Foreign car companies have added U.S. plants and created new jobs -- but
they've kept workers with UAW memberships out of their factories.
Honda's unusual hiring restriction highlights an often overlooked aspect of
the United Auto Workers union's declining power. While Detroit's big auto
makers and their unionized suppliers have been slashing jobs, wages and
benefits, foreign car companies have added U.S. plants and created thousands
of new automotive jobs. Yet they have effectively kept auto workers with UAW
membership cards out of their factories, hampering the union from gaining
any foothold where the jobs are.
Of the 33 auto, engine and transmission plants in the U.S. that are wholly
owned by foreign companies, none have been organized by the UAW, despite
repeated attempts. Mainly, foreign auto makers have located plants in
Southern states where the UAW has little presence and where right-to-work
laws limit union power. When they have ventured into Northern states such as
Indiana and Ohio, they have mostly chosen rural locations far from any
unionized plants and UAW halls. The moves now are helping the foreign-owned
plants begin to lower wage scales.
In the case of Honda's latest plant, in Greensburg, Ind., the company
received $140 million in tax breaks and other incentives, at least $50
million of it in statewide funds. But the company wasn't required to
consider all state residents for jobs.
Margaret Ward is one of the people excluded. The UAW member spent 10 years
assembling car components in Anderson, just outside the Honda hiring zone.
Along with about 1,500 other people, she lost her job early this year when a
former General Motors Corp. lighting factory closed, the last of three
auto-related factories to close in Anderson. After spending six months on
unemployment assistance, she's working at a battery plant. "I don't feel
like this is fair to anybody in this area, to anybody in the state," she
says.
Under the National Labor Relations Act, companies cannot discriminate
against workers because of affiliation with a union. They are, however,
allowed to restrict hiring to certain geographical areas if they have a
legitimate business reason for doing so, a spokeswoman for the National
Labor Relations Board said. UAW officials are gathering information in hopes
of filing official complaints with the NLRB or possibly the Equal Employment
Opportunity Commission.
Honda spokesman David Iida said the Greensburg hiring policy is not intended
to prevent union members from applying. The auto maker just wants workers to
live within an hour's drive of the plant so they can get to work on time
even in bad weather, he said. The area does include a UAW-organized plant in
Indianapolis and one organized by the International Union of Electrical
Workers in Connersville, both of which closed and together idled about 1,500
people. Honda won't accept applicants from outside the hiring zone who would
be willing to move into it, Mr. Iida said, because that could slow down
Honda's "aggressive launch schedule" to start production in late 2008.
Many UAW members don't believe Honda's rationale, noting thousands of
workers from shuttered or downsized plants in Muncie, Fort Wayne and Kokomo
are excluded along with those who worked in Anderson. "I've probably had 100
people ask me what's going on down there because they can't apply for jobs,"
said Ollie Dixon, a city councilman in Anderson and vice president of UAW
Local 663. "I think it's directly related to the union. They don't want
people who are going to go in there and support the union."
Some states have required that companies benefiting from government
incentives spread the rewards broadly. Indiana didn't. A spokeswoman for
Indiana Gov. Mitch Daniels said that Honda, as a private company, is free to
define its hiring process as it wishes. The first-term Republican, known for
dissolving the unions representing state employees after his election,
didn't discuss the hiring policy with Honda while negotiating to bring the
plant to Greensburg, the spokeswoman said; he was just pleased to have jobs
come to Indiana.
Greensburg Mayor Frank Manus says he also was initially unaware of Honda's
plan. But in a telephone interview, he said he believed a desire to keep its
plant nonunion was "certainly a factor" in the company's decision to
restrict its hiring.
Honda plans to hire 2,000 production workers in Greensburg, where basic
wages will start at just under $15 hourly and rise to $18 over the next
three years. In Big Three assembly plants, UAW workers get about $26 an
hour. Until recently, nonunionized plants owned by foreign auto makers have
paid close to that -- about $24 an hour -- which helped damp worker interest
in unions.
As eroding membership and contract concessions hurt the UAW's ability to
keep up a wage standard, foreign makers have begun lowering what they offer.
In Greensburg and elsewhere, wages are pegged to the average of all
manufacturing jobs in the areas, not just auto plants.
Indianapolis, about 50 miles northwest of Greensburg, is the only big city
in Honda's hiring zone. It also is the only place in the hiring area where
major UAW locals are located. The rest of the zone is predominantly rural
and has few manufacturing workers. UAW members in Indianapolis are free to
seek jobs in Greensburg, Mr. Iida says. Ms. Ward counters that despite some
layoffs, most UAW members in Indianapolis are employed and don't need Honda
jobs, unlike in Anderson. "We have a lot of people in Anderson who need
jobs, but we can't apply," she says.
Honda's policy in Greensburg is a departure from the way it and other
foreign auto makers have previously staffed plants in the U.S. Several years
ago Honda put a plant in Lincoln, Ala., and took applicants from anywhere.
It ended up hiring workers from 60 of Alabama's 67 counties, according to
the company. The state, which had provided Honda with $158 million in
incentives, required the company to consider workers from across the state.
"We wanted to spread the opportunity across our state and wanted plants to
be able to hire the best people in the state," said Calvin Miller, director
of the Alabama's Talladega County Economic Development Authority.
Korean auto maker Hyundai Motor Co. also opened a plant in Alabama in 2005
and accepted job applications statewide as a condition of Alabama's
incentive plan, said Hyundai spokesman Robert Burns.
When Toyota Motor Corp. put a plant in Indiana, in Princeton in the
southwest corner of the state, anyone from Indiana was allowed to apply for
a job. But in the end Toyota hired almost all of the workers from within 50
miles of the plant, a Toyota spokesman said. At Toyota's new truck plant in
San Antonio, skilled tradesmen were hired from as far away as the Midwest,
the spokesman said, but neither plant has unionized.
African-American leaders also have questioned whether Honda's hiring plan
discriminates against black workers. The population of the 20-county hiring
zone is 80% white, with almost all of the nonwhites living in Marion County,
where Indianapolis is located. In the hiring zone's other 19 counties, the
population is 96% white. "I think it's wrong and unfair," said James
Burgess, president of the Madison County NAACP in Anderson, of Honda's
hiring policy.
A racial-discrimination argument defeated a hiring policy Honda used in the
1980s when it expanded two plants in rural Ohio and gave preference to
applicants who lived within 30 miles of the facilities. That excluded
residents of Columbus, the nearest large city to both plants, with a large
African-American population, while the population within the hiring zone was
overwhelmingly white. Honda settled a complaint by the EEOC by paying 370
black and women workers $6 million and offering them jobs.
In Greensburg, Honda is working hard to encourage minorities to apply for
jobs, said company spokesman Jeffrey Smith. Indianapolis was specifically
included in the hiring zone to open the door to African-American applicants,
he said, and Honda invited black leaders to the groundbreaking and has
advertised in minority newspapers. The Greensburg plant, he added, "will be
a diverse and inclusive workplace."
Honda built its first U.S. auto plant in 1982 in Marysville, Ohio, and
Toyota soon added its first wholly owned plant in Georgetown, Ky. In the
1990s, more foreign auto plants sprang up: BMW AG in Spartanburg, S.C.;
Mercedes-Benz in Vance, Ala.; Nissan Motor Co. in Canton, Miss. Southern
states provided a safe haven from UAW influence that permeates Big Three
auto plants in the Midwest. In right-to-work states, unions can't force
employees to join or pay dues.
By 2005, Honda had five assembly plants in the U.S. and was looking for a
site for a sixth to produce Civic compacts, which were selling briskly
because of the rise in gasoline prices. Indiana doesn't have a right-to-work
law, but was in the running for the new plant because it was located near
Honda's Ohio plants and those of many of its suppliers. The state also had a
new governor with a pro-business mind-set.
Within days of taking office in January 2005, Gov. Daniels used an executive
order to void contracts between the state and several unions representing
25,000 public employees. A few weeks later, he set off to Japan with the
message that Indiana could be a safe, secure location for Toyota and Honda.
In March 2006, Toyota announced a deal to produce Camry sedans in an unused
part of an Indiana plant owned by Fuji Heavy Industries Ltd., which created
1,000 jobs.
That June, the governor was back in Japan but had to cut the trip short to
rush back for Honda's announcement in Greensburg, a town of 10,500 people in
a corner of the state known mainly for pig farms and corn fields.
Residents had sent Honda hundreds of letters, pictures and drawings in hopes
of convincing the automaker to settle there rather than choose a competing
site in Ohio. About 200 people donned red T-shirts and stood in the shape of
Honda's logo for an aerial photo. Officials from Greensburg and the
surrounding counties boasted that the area offered plenty of cheap land,
easy access to Interstate highways and workers with no ties to the UAW.
When Honda announced its choice, Greensburg residents packed a community
center to celebrate the news. "This is probably one of the wildest dreams
I've ever had," Mayor Manus told the crowd.
UAW jobs have been disappearing from cities in east-central and northern
Indiana for several years. Muncie, Indianapolis and several other smaller
cities have had to absorb plant closures; Kokomo and Fort Wayne have seen
major downsizings.
Few places have been hit as hard as Anderson. Years ago, it was the home of
three big GM plants that provided some 22,000 UAW jobs. Life revolved around
factory work. Union teams filled up city bowling and
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