European Works Council at General Motors Europe: bargaining efficiency in regime competition

Industrial Relations Journal 39:6, 532–547 ISSN 0019-8692

European Works Council at General Motors Europe: bargaining efficiency in regime competition? Josep Banyuls, Thomas Haipeter and László Neumann ABSTRACT The European Works Council (EWC) at General Motors Europe is frequently cited as one of the few examples of an efficient body of employee representation at a European level within a multinational company. Despite the increasing threat of social dumping in the enlarged Europe, the EWC was able to agree with management the terms of compulsory European minimum standards for defensive employment and competitiveness pacts, thereby restricting the effects of coercive comparisons between factories located in different countries. In this article, we focus on this experience and illuminate the tensions of ‘micro-corporatism’ caught between international solidarity and regime competition.

INTRODUCTION The ongoing process of economic globalisation, the market orientation of European Union (EU) policies and the adoption of new management practices by multinational companies constitute pressures that are changing the structures of industrial relations regulation models. Firms’ freedom to be located in different countries has raised the possibility that national industrial relations models are also a competitive factor and not only a regulatory framework for improving social conditions. This process has generated more interest in firms’ internationalisation and has shown the weakness of EU social policies in protecting against negative consequences for labour conditions. Nevertheless, and opposing this trend, some structures have emerged at a European level aimed at counterbalancing the negative effects of a more global economy. One of the results of the emerging pressures on the development of industrial relations within a European dimension is the European Works Council (EWC) directive passed in 1994 (Directive 94/45/CE, with further developments in two subsequent directives (97/74/CE and 2007/14/CE). The directive defines the objective and the scope of this institution, which, for the moment at least, is limited to the supply of information by ❒ Josep Banyuls is a Lecturer in Labour Economics and Employment Policy at Valencia University (Spain); Thomas Haipeter is a researcher at the Work and Qualification Institute (IAQ) at Duisburg-Essen University (Germany); László Neumann is a researcher at the Institute for Social Policy and Labour (Hungary). Correspondence should be addressed to Josep Banyuls, Universitat de València, Departament d’Economia Aplicada, Avda dels Tarongers s/n, 46022 València, Spain; email: [email protected]

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managerial staff to the workers’ representatives of the different countries where the multinational firm has factories, and the establishment of a consultations’ protocol between both parts. The competences that European directives have given EWCs are limited, although this could lay the foundations for later developments between the actors of industrial relations. However, further developments towards European collective bargaining at the firm level, as normally understood, have not taken place. ‘The great majority of the EWCs cover employee consultation and information only’ (Marginson and Sisson, 1998: 506), or, ‘on company level, the potential of EWCs remains largely unfulfilled’ (Sisson and Marginson, 2002: 213), are sentences that clearly show the limits of the current scope of EWCs. In this article, we focus on the EWC at General Motors Europe (GM-EWC). This is a case in which an EWC has surpassed mere information exchange, and which therefore can be taken as a reference for the current revision of the EWC directive as discussed between the European Commission and social partners (EWC News 4/2007). It can be regarded as one of the few cases of an EWC being involved in negotiating and decision making at European level (Marginson et al., 2004). The case is noteworthy, as the cohesion of unions has avoided regime competition between them and has made agreements with management possible, ‘arranging’ restructuring processes and limiting coercive comparisons between factories. The main interest of the GM case lies in its step forward in decision and agreement making at a European level, especially as it has not been supported by stronger rules—such as a more ambitious EWC directive—and its relative success rests upon certain exceptional conditions. These conditions are also responsible for the fragility of the EWC’s successful bargaining, which has always had to balance internal solidarity and international regime competition. As will be illustrated, the dynamics of the GM-EWC can be explained by changes in both GM management strategy, which reinforced the cohesion of unions and responses to key challenges that enhanced the ‘inner life’ of the GM-EWC. These responses have reinforced trust between union members, strengthened their long-term learning processes, and also established particular working rules. This example allows us to develop some general considerations on the limits and potentialities of the present EWC directive as a cornerstone of a new European industrial relations model. The contents of the present article are grounded on a broader research project1 in which the motor industry was analysed in several European countries. Qualitative data were collected, involving semi-structured interviews with EWC employee representatives and trade union experts in four different countries during the spring and summer of 2006. Interviews were held with two trade union experts and three EWC members (including the EWC chairperson) from different plants in Germany, with two EWC members in Hungary and Poland, and with one GM-EWC member, several GM works council members, and a European Committee union expert in Spain. The article begins by reflecting upon the limits and potentialities of EWCs. It then introduces the main recent changes in the GM management, which will help us to explain some aspects of the GM-EWC evolution. This is followed by an analysis of the GM-EWC’s ‘inner life’ and a short conclusion. 1 The GM-EWC research was carried out in the context of the EU-financed project ‘Dynamics of National Employment Models’ coordinated by the Work and Qualifications Institute at the University of DuisburgEssen.

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EWCs: FIRST STEP TOWARDS EUROPEAN COLLECTIVE AGREEMENTS OR MERELY INFORMATION EXCHANGE? Assessments of the limits and potentialities of EWCs are rather heterogeneous and numerous. Among the diversity of topics discussed, we want to highlight two particular features that are significant for the analysis of the GM-EWC case. One is the question about whether EWCs constitute a cornerstone of a new European industrial relations model. There are two extreme points of view. The optimistic position argues that EWCs are the beginning of the ‘Europeanisation’ of industrial relations and a sign of progress towards collective bargaining at a European level. Besides the diversity that the EWC directive allows, a core of common elements and standard practices emerge in many areas (Carley and Hall, 2000), which could constitute a first step towards a more general structure of European industrial relations. On the other hand, the pessimists suggest that there will be little progress beyond a mere exchange of information, and, even though there may be a formal exchange of information, central management may still evade their responsibilities to inform and consult. This is related to the reduced scope of action and the limited competences that the European directive has given EWCs by default, and the fact that evolution towards institutions that can develop collective negotiations or bargaining faces many obstacles (Rehfeldt, 1999). Social dialogue is restricted to the mere exchange of information, though formal consultation rights are also ensured. The second question concerns the capacity of EWCs to counterbalance the negative effects of capital movements and to protect workers’ rights in international competition. In the context of global capitalism, multinationals use regime competition, that is, threats of transferring production between factories or carrying out foreign investments, as an effective instrument of pressure against their respective national unions (Martinez-Lucio and Weston, 1994). Many multinational enterprises use internal benchmarking, coercive comparisons, or comparative control in search of rationalisation and the adoption of flexible work practices. As has been mentioned (Coller, 1996; Ferner and Edwards, 1995; Mueller, 1996; Mueller and Purcell, 1992), internalisation of competition as an indirect mode of hierarchical control is an increasingly common solution in large multinational organisations, whereby sub-units are forced to compete for orders and investment, and, ultimately, for jobs. By devising different indices for comparison, the headquarters put both local managers and workers’ representatives under pressure to increase productivity. The aim is for all sub-units to achieve the ‘best-practice’ levels of high-performing plants as a condition of preserving the facility and/or granting new investment. This pressure could be countered by coordinated union action at company level through EWCs. EWCs’ micro-corporatism is considered a means of resolving this tension and an opportunity for the renewal of trade unions and innovative forms of solidarity among workers (Taylor and Mathers, 2002). However, there is always tension between the national bargaining level and the activity of international firms, and coordinated union action does not necessarily take place. In this sense, some of the critics of the current EWC regulatory framework stress the necessity of increasing the competences of EWCs and reinforcing the relevance of an international dimension for collective bargaining (Arrowsmith and Marginson, 2006). Furthermore, other critical positions emphasise the way in which EWCs may act as an instrument for international labour regime competition (Hancké, 2000). The © 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008

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tension that always arises between national interest and international solidarity (Wills, 2001) often results in unions seeking to increase, or at least maintain, production levels at their own plants and in undercutting and other forms of foul play against other European unions. Moreover, there are many differences between countries and between unions in Europe. Those usually highlighted, among others, are cultural and attitudinal differences, diverse union representation strategies and union– management relationships, as well as different wage levels or domination of EWCs by home country delegates (ibid.; see also Timming, 2007; Vitols, 2003; Voss, 2006). EWCs are therefore affected by the diversity of industrial relations models inside the EU (Whittal et al., 2007). The 2004 enlargement of the EU spurred a special line of debate on these aspects of EWCs, both because it introduced an unprecedented dimension to the diversity of national industrial relations models, and because it highlighted the issue of social dumping (Meardi, 2002). Now, this transnational employee representation body covering both high- and low-wage countries has to cope with the extraordinary threat of relocation. Growing regime competition was initially expected to lead to an overstretching of EWCs. However, against these pessimistic expectations, empirical research carried out on EWCs enlarged by members from the new European Member States has not in fact verified the expectation that East–West rivalries predominantly would result in internal problems of mistrust. Expectations and attitudes of trade unionists and works councillors in the East were not found to differ substantially from their Western counterparts, and shared positions were underpinned by similar experience of the threat of relocation in the new Member States towards even lower wage countries (Meardi, 2004; Voss, 2006). As will be seen in the following sections, the GM-EWC case clearly reflects these discussions.

RECENT TRENDS AT GM: EUROPEAN INTERNATIONALISATION AND REGIME COMPETITION In addition to the quantitative expansion of GM in Europe2, there are three important qualitative aspects of GM internationalisation. A first aspect was the implementation of organisational changes through concession bargaining. From the mid-1980s, GM corporate headquarters exerted pressure for radical organisational changes (including high-involvement teamworking, continuous shift production, etc.). Instead of linking new investments to market developments only, investment decisions were used to achieve change in the established workplace regime. For instance, in 1990, British unions were forced to make far-reaching concessions on workplace reform— flexibility and productivity improvements being a prerequisite for the new investment in engine production at Ellesmere Port. Gradually, it became a worldwide policy of 2 The arrival of GM in Europe occurred with the acquisition of Vauxhall in England (1925) and Adam Opel AG in Germany (1929). As a subsidiary of the parent company GM, the stock company Opel was relatively autonomous in developing cars and organising production for the German and European markets. After the 1980s, a further step towards internationalisation took place. It included events like the opening of GM plants in Zaragoza (Spain), Eisenach (Eastern Germany), Azambuja (Portugal) and an engine plant in Aspern (Austria). GM also acquired Saab. In 1990, the company agreed to a joint venture in Hungary (Szentgotthárd), in 1998 a production plant in Poland (Gliwice) was inaugurated, in 2000 an alliance with Fiat was agreed and in 2002 a joint venture in central Russia was negotiated. A final important step towards internationalisation has been the introduction of Chevrolet as a fourth GM brand in Europe, at the moment mainly produced for European markets at the Daewoo plants in Korea.

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GM that every new plant should incorporate previous company experience with lean production at other plants (for details, see Mueller, 1996). A second novelty was the implementation of decision making at a European level. Since 1960, GM has been unifying the product range and organising most of the activities (such as purchasing or distribution) on a continental scale. Finally, in 1986, General Motors Europe (GME) was founded in Switzerland (Zürich) as the new European headquarters of GM. This new organisational model introduced a European management level to manage the European sub-units of GM, overarching the different subsidiary companies and locations. During GME’s initial years, the European decision-making level did not interfere significantly in the development of the subsidiaries. Nevertheless, the situation changed fundamentally in the first half of the 1990s. From then onwards, the new level of European management sought to gain more influence. More recently, the US headquarters pushed the international integration of the company organisation further. Since 2003, the European subsidiaries, Opel, Vauxhall and Saab were integrated in GM Europe as a regional unit, coexisting with the other regional units: GM North America, GM Latin America/Africa/Mid-East and GM Asia-Pacific. The new regional units were still to operate rather independently from each other. This situation changed just one year later, in 2004, when the US headquarters tried to implement globalised business structures concerning development, manufacturing and marketing. Regional units were integrated in global processes managed by the headquarters with the goal of increasing economies of scale and exploiting cost advantages wherever they could be found. The third qualitative aspect of global integration efforts at GM is the platform strategy. Platforms are combinations of components that are built into different models and brands. The various models consist of different designs and combinations of parts that are built on the same platforms. The combination of components in the form of platforms ensures at least three advantages for the company. First, the platforms increase the scale economies concerning the platform components both for GM and for its suppliers. Second, platforms enhance production flexibility within the company because they allow the shift of production of all models built on a platform between the plants that operate with analogous technical endowments. This parallel production system, third, makes locations more comparable concerning costs, profitability, quality and work organisation standards. It thereby enables the development of benchmarking systems concerning production organisation and the development of cost competition and coercive comparisons between the plants. There are two platforms in operation at present. Rüsselsheim and the Saab location in Trollhättan (Sweden) form the Epsilon platform, producing vehicles aimed at the upper-middle-class market, such as the Opel Vectra. Bochum is part of the Delta platform (producing the Astra), together with locations in Antwerp (Belgium), Ellesmere Port (UK), and also, in the near future, Gliwice (Poland) and Trollhättan. Bochum and Gliwice are also manufacturing the Zafira model based on the Delta platform. GM has standardised decision-making procedures regarding allocation of production in the form of internal tendering. The headquarters invites tenders for production of a model built on a certain platform. The plant management can decide to bid for the tender or not. If they do so, they have to complete standardised application forms and return them to the headquarters. The acceptance of a tender is no guarantee that the respective model will be produced there during the whole product cycle. In the event of fluctuations in demand and of excess capacities during © 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008

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the product cycle, or of volatility of exchange rates, production can be shifted between the platform locations. In this respect, competition between locations is a continuous process throughout the product cycle. THE DEVELOPMENT OF GME EUROPEAN WORKS COUNCIL The GM-EWC, which is known as GME European Employee Forum, was founded in 1996 using the option of negotiating a voluntary agreement between works councils, unions and management according to Article 13 of the Directive, thus avoiding the standardised process defined in Article 6 of the Directive (which came into force for agreements negotiated from 1997 onwards). The German works council members were the strongest—but not the dominating—national group within the EWC. The EWC was originally composed of 24 members: six from Germany, four from the UK, three from Belgium, two from France, two from Austria, one from Portugal, three from Spain and three from Sweden. From 2000 onwards, Poland and Hungary were affiliated as full members, with one member from each country. Following the German pattern of works council, the EWC was organised as an employee-side committee, and not as a joint committee together with members of management. A first benefit of the new institution experienced by works councils was the improvement of information on industrial relations structures, wage standards, working conditions and current conflicts with the management at other European locations. Information exchange had at least two important functions for the further development of the institution. First, it helped to develop an understanding of the differences between the members of the EWC concerning their experiences, their understanding of problems and their attitudes towards the functions and goals of a works council. These differences are related to the respective national and industrial relations identities of EWC members, stemming from different experiences in different national industrial relations systems (Timming and Veersma, 2007). Understanding the differences proved to be a first step in overcoming them, at least to a certain degree. Second, this mutual understanding of differences was the basis for establishing new forms of social exchange. Gradually, trustful relationships between the members of the works councils were able to evolve. Trust was a necessary precondition for developing common European positions and goals. These common positions and goals based on trust can be regarded as an important element of a common European identity for the EWC (Timming and Veersma, 2007). Nevertheless, it also became clear that trust was challenged again and again, that national identities seeking national competitive advantages within the company always remained present in the EWC and that, therefore, trust had to be renewed continuously by communication and negotiation. The common perception of problems and goals within the EWC was facilitated by the company’s restructuring programmes, the integration of platform production, the systematisation of benchmarking and competition between factories. These experiences favoured the impression that sites in different countries were confronted with quite similar problems and challenges, and that the response to these challenges could benefit from a coordinated and common strategy within the EWC. Moreover, the growing importance of the European management level regarding national-level company decision making (especially concerning the German Opel management) made it less attractive for the German members to play the national card (which in © 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008

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fact is precisely what they did immediately after the founding of the EWC) by cooperating with the national management in regime competition. Instead, it was recognised within the EWC that building the capacity to influence strategic company decision making was becoming increasingly dependent on establishing influence on European-level management. In fact, the findings of the GME example provide a clear test of the hypothesis that the European integration of production structures, and the existence of a European management level establish important preconditions for the development of EWCs as a relevant political actor within multinational companies (e.g. Marginson et al., 2004). Moreover, we should bear in mind that the systematisation of regime competition, as was seen at GME, will probably function as a main driver of national interest fragmentation within EWCs, especially if managements try to individualise negotiations with national locations, as was the case at GME. Therefore, the possible advantages of cooperation are always in competition with the possible advantages of individual and self-seeking strategies that try to gain a competitive edge over the company’s other production sites. The development of the GM-EWC can be described as a process of cooperative strategy building based on common experiences of problems, and leading to at least the first contours of a European identity of the EWC, but this process was characterised by a steady conflict between cooperation and more individual strategies based on regime competition. Therefore, the process was not unidirectional. It can only be understood in terms of the experiences members had in their interaction with management. In the course of these interactions, the EWC developed from a committee that solely exchanged information among its members and management into a committee that was recognised as an actor in negotiations with management. Consequently, the development of internal cooperation structures and of external negotiation efficiency could be considered as a twin process, marked by the following steps. The initial point of development was the exchange of information within the EWC. The exchange was carried out for the first time in 1998 during the negotiations on a local pact for employment and competitiveness, an instrument that spread through the German economy during the 1990s. Here, for the first time, members of the council had the experience of being confronted individually with the same challenges—the pressure of management on wages and labour standards—and doing the same things, especially negotiating local agreements with management that dealt with material concessions and employment security.3 That same year, the European management tier tried to implement a company-wide system of benchmarking by using the Template study. This marked the first conflict between workers’ representatives and management with an important contribution made by the EWC. First, German works councils tried to impede the project individually. Although this attempt was quite successful (a legal proceeding was won), the works councils decided to discuss this issue at a European level. When the management declined to participate in the meeting, the EWC held an internal meeting financed by its members’ unions and rejected the Template study. This was the first common position that members developed against management (also see Eller-Braatz and Klebe, 1998). The pattern of separate local negotiations was abandoned for the first time during the course of the joint venture of GM and Fiat in 2000. In fact, this is considered the

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For more details on these practices in Germany and in other countries, see Haipeter and Banyuls (2007).

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turning point of the GM-EWC by the unions (EMF, 2005). Although about 14,000 GME employees were affected by the plan to outsource production through the joint-venture companies, the headquarters failed to inform the EWC in due time. Therefore, for the first time, the EWC organised protests and staged short strikes through the local trade unions at different sites in Europe. And also for the first time, the EWC initiated negotiations with management, leading to the first European framework agreement that was declared legally binding by both parties, the EWC and European-level management (a position that is not self-evident, since in the European Directive the EWC is not considered as a negotiation body able to negotiate binding agreements). The agreement stipulated that all workers transferred to the new subsidiary companies were to be treated like Opel workers, that they were to be represented by the same works councils as previously and that earlier investment decisions had to be honoured (Herber and Schäfer-Klug, 2002). The EWC’s next important step towards external negotiation efficiency was the Luton conflict at the end of 2000, when European management informed the EWC that it planned to cut 6,000 jobs in Europe and close the Luton plant in the UK, which produced the Vectra model (for details, see Herber and Schäfer-Klug, 2002). Although the British trade unions immediately initiated strikes, hoping that the other European locations would show solidarity, the EWC decided not to go on extended strikes across Europe, but instead to couple negotiations on a restructuring plan with an employee actions day across Europe. This decision—debated within the EWC but finally agreed on by the members—was based on the assessment that excess capacity identified by GM management constituted a real and serious problem for the company. Finally, a second framework agreement was negotiated between management and the EWC. This contained provisions to avoid dismissals for economic reasons, the transfer of personnel to another GM site close to Luton, and the preservation of wages working conditions and representation structures. In autumn 2001, the European management announced the Olympia restructuring programme. Again, the European management informed the EWC, and, finally, accepted negotiations with the EWC. To a large extent, negotiations were eased by the fact that EWC members shared management’s assumptions concerning crisis and excess capacities. ‘It was clear to us that we could not produce more cars than we could sell on the market’, as one of the works council members said. In this conflict, for the first time, EWC members developed a concept that served as a leitmotiv in further conflicts: the equal sharing of burdens or ‘to share the pain’, as a works council member said. Thereby, the EWC succeeded in distributing the reduction of capacities across the European production sites of GM and in upholding the ban on dismissals for economic reasons. In return, the EWC agreed to capacity reductions and measures to enhance productivity and flexibility that were to be negotiated locally. Restructuring plans were even more ambitious in autumn 2004, when GM presented its restructuring programme for Europe. As in 2001, the EWC was informed first and then negotiated a framework agreement before local negotiations took place. The agreement, signed in December 2004, reiterated all the relevant points stipulated in the Olympia agreement concerning the protection of employment and of production sites. Moreover, the EWC was able to agree on a catalogue of indicators to be taken into account in coercive comparisons between locations. On the one hand, the sites should be made comparable; that is, manufacturing costs have to be compared controlling the different levels of vertical integration. On the other hand, the social effects of dismissals or plant closures have to be taken into account. Finally, the © 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008

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agreement envisaged further discussion of the so-called ‘manufacturing footprints’ principle—a policy developed by the headquarters, according to which manufacturing should be located close to the market, and production and sales numbers should be comparable. In recent times, restructuring programmes at GM have gone hand in hand with the newly constructed platforms and competition between the production sites of a platform. Thereby, restructuring has been combined with European and globally integrated production structures, and management has developed the strategy giving regime competition a new quality. The first ‘beauty contest’ (as coercive comparison action is colloquially called by EWC members) was staged between Rüsselsheim and Trollättan for the production of the Epsilon platform with the Vectra and the Saab models from 2008 onwards. In October 2004, the EWC reached the agreement that neither of the two competitors was to fall short of their respective collective bargaining agreements. This has become an important and general coordination rule within the EWC. The second ‘beauty contest’ was organised between the production sites of the Delta platform. These were Bochum, Antwerp and Ellesmere Port, which had been producing the Astra up till then, and Gliwice and Trollhättan, which were additional competitors in the tender for the new Delta platform, starting production in 2010. To improve international coordination between locations, a work group within the EWC was made up by plant representatives, trade unionists of the five Delta locations and a coordinator of the European Metalworking Federation. This work group developed a ‘European Promise of Solidarity’ in the form of binding rules for local representatives. These rules consist of the following points: the development of European minimum standards, encompassing information and consultation between members, a capacity index and the development of criteria for a fair capacity utilisation, the negotiation of a European framework agreement for the Delta locations, and mutual training and support. Even before the decision on the Delta platform, both solidarity within the EWC and its negotiating efficiency with management faced severe challenges. In spring 2006, management decided to reduce the capacities of the Delta platform, eliminating the third shift at one of the Delta plants. Cost comparisons were made based on the principles outlined above that showed Antwerp to be the most competitive and Ellesmere Port the least competitive plant, with Bochum in between. The Delta working group succeeded in making an agreement that impeded dismissals for economic reasons. However, it could not impede the cancellation of the third shift in Ellesmere Port (which represented a loss of 950 jobs), and, to date, it has not succeeded in negotiating a framework agreement for the Delta plants, because European management still rejects the idea. On the contrary, in June 2006, management made the announcement that it was going to close the Azambuja plant in Portugal, where the Combo model was produced, and shift production to the Spanish Zaragoza plant. The EWC rejected the plan and developed alternatives together with an action programme that was supported by employee representatives at all European GM locations. The action programme consisted of strikes and information events across the European plants. The programme lasted more than three weeks. Finally, the management expressed its willingness to negotiate the issue with the EWC. Nevertheless, despite the fact that the action programme was very successful, the bargaining power of the employee representatives was not sufficient to provide a fundamental challenge to the management © 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008

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plan or to avoid the closure of the plant. Only socially acceptable dismissals and the conversion of the GM plant into an industry park (supported by GM because of the potential for new jobs) could be agreed on. The decision on the Delta platform in April 2007 was also a controversial one, and gave further evidence of the ambiguous situation of the EWC as a body, which, on the one hand, had successfully gained negotiation capacities, and, on the other, was embedded in a complex process of regime competition and restructuring. The EWC managed to agree with management that none of the five bidding plants listed above were to be closed as a result of the decision. Nevertheless, the EWC was not able to avoid the management rejecting one of the plants, the Antwerp site, for the production of the new generation of the Delta platform. Because all the Western production GM plants were very close in performance, measured by cost or productivity figures, the decision hinged, according to Carl-Peter Foster, President of GM Europe, on other aspects, such as capacity planning, brand and market considerations, and ongoing restructuring activities. The only things the EWC was able to do in this respect was to support a strike at the Antwerp plant, to organise a European action day on 3 May that year, and to negotiate with European management for at least some compensation for the Antwerp site in the form of another product. Although this was done successfully, it does not appear to have ensured the long-term survival of the site. INTEGRATION PROBLEMS AND ASSESSMENT OF CHANGES IN GM EUROPE EWC The development of internal solidarity between the members and external efficiency vis-à-vis management was accompanied by internal tensions within the EWC that were focused on conflicts of national interests. Internal tensions arose for the first time in the course of the 1998 local pact for safeguarding workplaces. In the local pact, the German works council was able to establish the production capacity of 275,000 units for the Rüsselsheim plant for the duration of the agreement. This agreement was harshly criticised by the British members of the EWC because if sales decreased, risks for the other Vectra plants would increase. This was exactly what happened throughout the two subsequent years, leading to the above-mentioned closure of the Luton plant. Because of this outcome, members promised each other not to make agreements of this kind again without previous consultation within the EWC. Nevertheless, other problems of international solidarity occurred later on. One of them emerged in the course of the Rüsselheim–Trollhättan ‘beauty contest’ (see also Bartmann, 2005). There was irritation between representatives from the two sites because of different national styles of industrial relations. On the one hand, the German works council at Rüsselsheim tried to protect the core workforce by defensive pacts for employment and competitiveness, increasing the price of dismissals, which was regarded critically by the Swedish members as unfair because the advantages that were negotiated for the German plant were based on material concessions for the workers. On the other hand, the Swedish trade unions sought to mobilise national state aid for the promotion of infrastructure and negotiations with the GM management, which was criticised by the German members for being a one-sided advantage for Sweden. Ultimately, these mutual disagreements were minimised by the fact that no local negotiations took place prior to the negotiation of the European framework agreement in October 2004. The EWC agreed on the rule that in national © 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008

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negotiations, existing collective bargaining agreements for the plants (whether fixed on national, branch, regional or plant level) had to be followed as a bottom line for concessions. A third conflict of international solidarity owing to opposing national interests was with regard to GM investments in Poland, where GM wanted to purchase a production plant near Warsaw. The investments made in the Gliwice plant, together with the expansion of production in Russia and Ukraine and the strengthening of its East Asian sites, were assessed by the EWC as a new orientation of GM towards the East and away from the traditional European locations. In this context, the EWC tried to develop a statement to indicate disapproval of these plans and to defend the traditional locations. However, this statement was opposed by the Polish members, who argued that they could not reject investments in Poland because of the high unemployment rate in the Gliwice region and the difficult situation of Solidarnosc (Jagodzinski et al., 2006).4 Several meetings took place within the Delta work group to solve the conflict and to find a way to make a common EWC statement. In the eyes of the German EWC members interviewed, the situation was on a razor’s edge, and the prospects for the EWC splitting up were quite strong. Finally, however, the Polish colleagues agreed on the EWC statement, not least because at the same time, GM decided to shift the small-scale Aguila production from Poland to the Suzuki plant in Hungary (it was a joint-venture production). According to the Hungarian interviewee, the employee representatives at the Szentgotthárd plant were in a very similar situation to that of the Polish counterparts. However, their behaviour was not a source of open conflict, as the ongoing restructuring had no actual impact on the GM plant in Hungary. The role of the EWC within the Hungarian company was highlighted by the conflict of June 2006, when GM was to close the Azambuja plant in Portugal. Then, an extraordinary EWC meeting devised a European action plan, including the so-called Euro-strike. The workers in Hungary demonstrated their solidarity by taking part in an assembly convened by the works council. The president of the works council informed the company director that it would be a European solidarity action. The director allowed the workers’ assembly to be held during working hours as if it were the most natural thing in the world. Theoretically, if a trade union calls a strike, the company does not pay wages. Staging a real strike was out of the question, as employee representatives were well aware of the lack of employees’ support, as in the Polish case. As a whole, the evaluation of the effect of the EWC is very positive in Hungary. According to the employee representative, ‘solidarity, which we miss so much, is what we can learn from the EWC’. He also appreciated the efforts of German EWC members, who started to deal with Europe as a whole from 2004 onward and took the lead in protesting when headquarters announced the closure of the Portuguese plant (Jagodzinski et al., 2006). To sum up, the solutions to conflicts among EWC members resulting from different national or local interests by means of open discussions have to some extent posed a challenge to the integration of the EWC, but have also acted as a very important source of integration and of building a European identity within the GM-EWC. At times, the EWC was threatened, but it was not paralysed by internal tensions. Nor 4 At the Polish plants there is a fragmented union structure with many small company trade unions competing to poach the Solidarnosc members. In this situation, the incumbent union, Solidarnosc, feared its defeat in the following elections by the other unions with their horizon focused on the plant only and on Polish interests.

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were conflicts suppressed by a majority within the EWC just to keep the committee calm. On the contrary, different interests were discussed, and, thanks to learning within new institutions, actors adapted their national position to a certain degree to facilitate international understanding and cooperation. As a result, today national defensive pacts for employment and competitiveness are debated first within the EWC regarding their acceptability for the other members. An important point that seems to have encouraged institutional learning is the relatively balanced composition of the EWC. As a Spanish EWC member pointed out, although the chairperson is from Germany, and the Germans have more members in the EWC than any other member country, they are far from dominating the EWC quantitatively. The GM-EWC is more than just an ‘international extension of a national system of workplace representation’, as Streeck (1999) has characterised the EWC institution. GM is not a German but a US company with European headquarters outside Germany. Although there is a close relationship between German management and employee representatives, it is not sufficient to dominate industrial relations in the much more encompassing GM group. Another important point for the development of international cooperation and contours of a European identity (mentioned by a European actor in one of our interviews) is the relationship between employee representatives and employees (which is a third dimension, along with relationships between EWC members and between the EWC and the management). In the conflict on investments in Eastern Europe, the argument of the Polish members was simply that they would not be able to legitimise a critical attitude towards investments vis-à-vis their employees. Hungarians also sympathised with this argument, although it was not strongly emphasised during the European action day. In other countries, the experience is also that for employees, ‘bread and butter’ matters are much more important than European solidarity matters. In addition, EWC members always find it difficult to argue that European solidarity might be a precondition for the preservation of national labour standards and job security. The works councils have to be careful in ensuring they bring employees with them and convince them of the importance of European-level regulation. Therefore, in the eyes of the works councils, it is also necessary to have some phases of consolidation in order to convince the workforce and not to ask too much of them. Otherwise, the works councils would be in danger of losing some of their policy’s legitimacy, which would mean that it would be harder for them to mobilise the workforce in transnational conflicts with the management.

CONCLUSIONS What can we learn about the discussion on EWCs from the example of GM Europe? The lessons are somewhat mixed. A first lesson seems to be that the example does not serve as a verification of the arguments of the pessimists. One important argument against the efficiency of EWCs was that they are only weakly regulated supranational institutions of industrial citizenship rights, and that they themselves could be engines of regime competition (Hancké, 2000; Schulten, 1996; Streeck, 1999). At first sight, the GM-EWC seems to fit into this analysis quite well. The features of intensified regime competition are obvious, and the EWC as an institution has not proven to be able to restrict regime competition decisively. On the contrary, it always has to deal with the consequences of regime competition, both internally in the relationship with © 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008

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its members and externally in negotiations with management. Solidarity is always fragile because of the competition between locations and the persistence of national interests within the EWC. However, this does not mean that the EWC at GM is an engine for the development of regime competition. On the contrary, it is the only institution at hand able to influence and temper the consequences of regime competition. The central precondition for this role is the fact that the EWC has transcended the limits of simply exchanging information and providing a forum for consultation, and has instead been able to establish itself as a bargaining body. This adaptive process was contingent on the capacity of EWC members to overcome respective national identities at crucial moments of internal conflict and thereby develop the contours of an—always fragile—European identity. This success has been achieved by the EWC through continuous negotiations and struggles with GM management. Members did not use or exploit the EWC for the sole pursuit of individual national interests. By developing (and learning how to develop) a sense of transnational solidarity, they have recognised that transnational solidarity is the only means of defending national interests effectively in a context of intensified regime competition. In organising transnational solidarity, national works councils and unions have a greater range of options and resources in their national negotiations with the management than they had before. Moreover, transnational solidarity has not proven to be a threat to national collective bargaining agreements and labour standards. First, minimum standards negotiated by the EWC have, to date, referred mainly to employee security and representation rights during plant restructuring; European-wide agreements do not cover wage-setting and working hours, for example, which are still negotiated in the respective national arena. Second, the actors in the EWC have explicitly declared the maintenance of national labour standards as a precondition for local agreements. This precondition has also been established in the framework agreements on restructuring that the EWC has negotiated with management. Our analysis suggests, therefore, that the GM-EWC acts as a stabiliser of national labour standards. The example further shows that workers’ solidarity in regime competition can result in more than what has been labelled fragmented ‘competitive solidarity’ (Streeck, 2000), where the focus is on the creation of local competitive advantages. Looking at the relative success of the GM-EWC, it is worthwhile identifying structural reasons that may explain why this particular EWC was able to succeed where others have not [see e.g. the case of the Corus EWC analysed by Timming and Veersma (2007)]. Certainly, the close relationship between German management and employee representatives is one of the success factors, since the defensive pact for employment and competitiveness negotiated by the works councils and management in Germany provided the historical root for the development of the EWC and also served as an industrial relations model that was then used at European-level in negotiating binding agreements. Quite interestingly, therefore, the contemporary German model of industrial relations (and arguably not the traditional one based on sector collective agreements) may have established the prevailing pattern in the operation of GM-EWC, albeit without the German members establishing themselves as dominant actors in the body. The most important among the other factors of success already mentioned and explained above include: the absence of national dominance within the EWC, the existence of a European production network that enables coercive comparisons among plants, and the existence and functioning of a European management level. © 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008

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These conditions create common problems and therefore facilitate the development of shared understandings and common strategies. The unique combination of factors is what seems to make the difference. In the Corus case mentioned above, the EWC was unable to translate an effective national model of industrial relations onto the European level, and the national union–management relationships elevated to EWC level proved to be a serious inhibiting factor. Moreover, the problems and national understandings remained divergent because there was no European production network in place; the national locations were operationalised as separate business units with little interference from the parent company. Despite these optimistic results concerning solidarity and identity building, the GM-EWC does not serve as a clear proof that the optimists are right and that EWCs like the one at GM are already cornerstones of a new European corporatism in industrial relations (e.g. Knutsen, 2004). This is the second lesson to be learnt from this case. The reason is not only that the conditions of success in the GM case are highly specific, but also that the power relationships between management and employee representatives have changed in the course of regime competition. A wellfunctioning EWC as at GM, which has been able to establish itself as a negotiation body, is clearly an instrument of power. However, it does not seem powerful enough to constitute corporatism. The establishment of a balance of power between interest groups, which has always been regarded as fundamental for stable corporatist systems, is clearly not in prospect, and the EWC as an institution is not able to restore it even through micro-corporatism. Management can take advantage of internal competition between locations by enforcing local concessions. Employee representatives are on the defensive. EWCs offer them the possibility to ‘share the pain’, but not to overcome regime competition or management’s gain in power. Moreover, as regards general conclusions, one has to bear in mind that the success of the GM-EWC is higher than average. In a range of case studies of US and UK multinationals with EWCs, the GM-EWC is the only one that was able to gain the status of a negotiating agency (Marginson et al., 2004). The spectrum of differences between EWCs from symbolic to participative structures seems to be enormous (Lecher et al., 2001). Even in the case of a well-functioning EWC, an effective long-term restriction of regime competition only seems to be achievable in an environment of harmonised or at least coordinated labour standards in Europe. However, neither perspective seems to be realistic, given the present immature, or practically non-existent, state of sector collective bargaining at EU level (Keller, 2006), and given the enormous differences between production systems (including wages, industrial relations, flexibility of working hours, etc.) across countries, which is an important reason underpinning internationalisation of production and relocation. The only thing works councils can do about the macro levels of European labour regulation is to try to influence their unions to strengthen their European profile and politics concerning both coordination between unions and demands on employers’ associations. This could be another important function of EWCs. In addition, so far, the story of the GM-EWC has provided an exemplary model of positive cooperation with trade unions both at national and European level, which is another precondition for a well-functioning EWC. A last point to be mentioned concerns the limits of European internationalisation of interest representation in a global company. At this moment, the European style of internationalisation seems to be losing some of its coherency, for GM’s restructuring efforts have switched to a global dimension concerning both development and © 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008

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manufacturing. Development packages are more and more global in style, and the future platforms will also be global ones. That is to say, potentially, European products can also be built in other areas of the world (and vice versa), and design and manufacturing competition between locations has become global in character. Furthermore, GM is trying to establish some of its brands as global brands selling identical products all over the world. Whether this strategy will be successful or not, it is already fostering global competition between locations and brands within the company. In this situation, the globalisation of interest representation (possibly in the form of a global works council) seems to be a logical step. In fact, the GM-EWC has already responded to this challenge and made concerted efforts to extend its operations geographically. However, such efforts have been hindered by the resistance of the US union, UAW, which, to date, has refused to cooperate with the Europeans. Therefore, while a global works council will be needed soon, it is still far from being realised.

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© 2008 The Author(s) Journal compilation © Blackwell Publishing Ltd. 2008