LOS PROBLEMAS DE PROBABILIDAD CONDICIONAL POR ASIGNACIÓN Y POR CÁLCULO

The path-breaking approach to industrial relations makes both organizations exceptions in their own corporations. Saturn breaks with many accepted practices in manufacturing management inside GM. Volvo Uddevalla took the Swedish micro-model of production by autonomous teams to its logi- cal conclusion. But whereas Saturn marks a clear break from traditional industrial relations practices in the US, and is exceptional because of that, the plant in Uddevalla is much less of a radical departure from those institu-

tionalized facets of firm governance in Sweden and North-Western Europe

more generally, in part because of the already extensive co-determination rights the unions have had in Volvo for many years. The relevance of the Swedish plant for this debate on firm governance is that it has taken us as far as we have ever been on the road toward work without supervision, where task conception and execution are again linked (many of the other chapters in this book cover this point in much more detail).

In Uddevalla, management as it has become known under the old Fordist structures, has all but disappeared. Self-managed teams deal with all or most of the former plant management functions: pacing, coordination, sequen- cing, parts supply, quality control, etc. Management head count is – hardly a surprise – very low: 16 managers for a workforce of roughly 900. Direct supervision is even lower: one shop manager supervises more than 100 work-

ers. Saturn is, as we will detail in the next section, the only car plant/firm that comes even close to this with a indirect/direct workers ratio of 1:50. Most plants operate at considerably tighter supervision levels of around 1:20. This compares very favorably with other car plants. Most GM operations, for example, have, on average, a supervisor-to-production-employee-ratio of 1:25;1 NUMMI (the GM-Toyota joint venture) operates at 1:182 _{and the}

Japanese US transplants operate at approximately 1:20.

Worker autonomy is also very high in Uddevalla, job content is rich and the structure of the assembly task itself invites workers to permanently challenge and rethink what they are doing and come up with better ways, suited to their individual needs. Coordination of assembly too has, to a large extent, been decentralized to the teams. Management, in short, primarily

brings expertise to the process, and given the workers’ knowledge of their

tasks, even that is highly dependent upon (and probably non-existent with- out) tight collaboration between workers and engineers.

Saturn challenges the conventional management logic too, but from an entirely different angle than Uddevalla. Whereas in Uddevalla the nature of the production technology is such as to throw into question the need for separate management functions, in Saturn the challenge is rooted in an at- tempt to reorganize and redistribute authority on the shopfloor. While the details will follow later, a preview will make this point clear in its general form. Throughout the Saturn Corporation, all elements of firm decision- making involve a consensus process between workers, represented by their local union, and management. This includes among others strategic busi- ness planning around product, process and quality, scheduling, suppliers, retailing – in short all functions that have traditionally been considered the exclusive domain of management. Further, the union has also taken on responsibility for co-managing operations by filling half of the line middle management positions with their own members. In Saturn, the labor union

is defending workers’ interests while jointly governing and co-managing

the business.

In the following sections, we will detail these points for both Uddevalla and Saturn. We will direct our attention to the role of the labor unions, because (a) while we care deeply about the positive contributions demo- cratic labor institutions can make in our industrial organizations, we are concerned about the current state of organized labor in most Western po- litical economies, and (b) because we believe that the unions hold the key to understanding the innovations in both unconventional organizations. We will conclude the two discussions, of Uddevalla first and then of Saturn, with a short section that reiterates the basic elements of the cases in terms

2.1 Volvo Uddevalla: Beauty is its own reward

The plant in Uddevalla is special because it is a ‘Copernican revolution in car assembly’ (Berggren 1990). Rather than having many workers who, in

task cycles of one to two minutes, assemble a minute part of a car, the Volvo 940 that is produced in Uddevalla, is built one at a time by a small team of highly trained craftsmen, who have a knowledge of parts and their operation roughly comparable to a skilled car mechanic. Since the cars are built one at a time in small docks where they do not move during assembly, ultimate customization (and hence a price premium) is easily obtained.

Important to know is that the plant was a highly viable economic operation: productivity was very good and on a steep learning curve, capital costs, as expressed in basic investments and tool changes, were very low, quality and customization (and therefore the price of the Uddevalla cars) was very high,

and the ‘social record’ of the plant, as expressed in, for instance, strains,

stress and illnesses, was among the best in the world.3 _{Moreover, every car}

made in Uddevalla was a sold car. By the time the closure was announced, the plant built predominantly cars on order from the dealerships they had set up contacts with.

Despite the generally positive record, the plant closed in May 1993. What happened? Part of the explanation, we will argue, is indeed what others in

this volume suggest: Volvo’s tremendous cash-flow problems and the belt-

tightening operation by Renault, combined with the sudden turnaround by Volvo corporate management with regards to their smaller innovative plants in Kalmar and Uddevalla. Volvo management thought that the rationalization which was necessitated by the squeeze on the European car market, could best be found in a concentration of productive capacity in the larger plants in Sweden and Belgium.4

Yet, while this explanation provides us with the structural background

parameters, it does not allow us to appreciate the full story. Our treatment of the Uddevalla closure starts where the other stories come to an end,

and tries to explain why the counterfactual ‘What if the unions had put up a fight to keep Uddevalla open?’ never occurred. Given the power of the

unions in the Volvo firm as a whole, it is very likely that this would have created such a different configuration that Volvo would have been forced to re-evaluate its decision and simply look for other ways out of the crisis. In this counterfactual world the story might have been very different and

Uddevalla’s closure may not have been as over determined as it is now. A

different outcome was therefore possible and the key is to understand why that did not happen. Part of the answer is obviously to be found in the events surrounding the closure decision that others in this volume are considerably better-placed than we are to deal with; part, however, is also hidden in the role of the union in the Uddevalla project group in the mid-1980s.

Metall project members, both from the Gothenburg union district and from the Stockholm central leadership, played an important role in the discussions that led toward Uddevalla. Initially their demands were rather conventional but, once they found their momentum, the union people in the project group pushed the project considerably into new areas.

However, while Metall people played such an important role, other is- sues, at that point seemingly marginal to the project, were left untouched in the development process. The most important one of these, if judged by the final outcome, was the influence of the project group on corporate decisions. Throughout, there was no discussion of what cars to build in Uddevalla – originally the low-end 240 as well as the high-end 940 were to be built there; then that changed and, eventually only the most expensive model was built in Uddevalla. Similarly, there were no contacts with project groups that were working on a new Volvo car, the currently marketed 850, and existing models were never re-engineered to match the learning and

production process at the Uddevalla plant. Also, from a reconstruction of

the development process, it appears that strategic linkages between the Uddevalla union reps and the Volvo corporate board union reps (but this seems to be true to some extent for management as well), were virtually

non-existent. All of this suggests that the Uddevalla project group – and

the unionists in it – acted in an autonomous manner, detached from their parent organizations.5

Why did the union leave these and other strategic issues untouched? From interviews with the people involved, two sets of answers emerge, and both help us understand at least in part what happened. The first one is the

‘official Metall story’. According to this view of things, any involvement

with other issues was simply not deemed necessary at that time. The group concentrated on how to make a car, because, once in operation, it believed, production would be intrinsically so flexible that any changes in the de- mand mix would be easy to meet. The other issues were, in this view, not a problem and if strategic issues became important, the co-determination law framework would provide the union with the resources it needed. The issues were never discussed, in other words, because they were no issues.

But unions do not always do what they say they do. That is the starting point of the second argument, which digs somewhat deeper, puts the first plausible but limited point in larger perspective, and complements it: internal union politics blocked the active participation of the local Uddevalla people into these other, non-traditional areas. In order to understand this, a short review into the structure of Swedish unions is necessary.

Swedish unions operate at three levels of the economy simultaneously: the national economy, the industrial branch and the individual firm/plant. (In the case of large corporations such as Volvo, there is a fourth level, the corporate,

inter-plant level.) Territorially, the unions have so-called ‘groups’, regional

union bodies (districts), that consist of the plant/firm-level unions within

one region, the so-called ‘workplace clubs’. (Kjellberg 1983 and 1992)

Inside the Gothenburg Metall union district – the regional union body that organizes the workers in the main Torslanda plant (ca. 10,000 work- ers) and the small Uddevalla plant (ca. 1,000 workers) – there have always been two large camps with regards to Uddevalla. One side supported the project be-cause they were convinced about the necessity for the union to play an active role in shaping companies and work in Sweden. The other group, mainly consisting of more traditional unionists, were very good at the conventional type of union work, and therefore did not appreciate nor like the Uddevalla-type ventures into new fields, or understood what the union role would be in this new production and management system. This latter group was embodied in the Torslanda local president, who attempted to restrain the local union people involved in the Uddevalla project group several times, wanted to impose the 20 minute ceiling on the task cycle as the official union line, was unable to envision a car factory without lines, and denied the union people the authority to discuss other, wider-ranging strategic issues.

The reasons why the local union people were, in the end, able to push through their program, is a fine illustration of the role of surprises and con- tingencies in the development of Uddevalla. Whereas the Torslanda Metall president was easily among the most important and powerful people in the union not only in Gothenburg but in all of Sweden, one of the Metall people

in the project group was his ‘political party counterpart’, the chair of the SAP clubs in the Volvo concern (the Social-Democratic Party). He could and

did use this position as an independent power basis in the struggle over the direction of Uddevalla and managed to prevail at least in terms of setting

the signposts for the union’s participation in the project.6

As long as Volvo’s company results were good – and they were very good in the mid-1980s – the ‘defeat’ over Uddevalla was acceptable to even the

hardest-nosed opponents of the project, in union as well as management circles. But when the situation soured, the old animosities resurfaced. The moment the general over capacity crisis in the European automobile indus- try hit Volvo, however, the initial coziness was over and the real problems emerged. In 1988, a rift between different management factions had already become clear. Official unemployment in Sweden is currently some 9%- factoring in those workers who are currently in training programs, more or less the average of unemployment in Europe and a straightforward disaster in a country that has known unemployment rates of 2–3% for most of the last thirty years.

Renault-Volvo alliance in the mid-1980s. In the summer of 1992, a French consultant wrote, in a report to his government (Renault is, as of the day of this writing, still a Régie) that the deal with Volvo was bad for Renault and that Uddevalla was an especially troubling cost factor in the alliance.7

Volvo also posted, in the same period that this report was made public, its

second year of big losses, and the company’s situation kept getting worse:

by the second half of 1992, Volvo was losing something of the order of 10,000 Swedish Kronor (at that time around $2,500) on every car it sold. In the alliance with Volvo, Renault footed that bill.8

Renault thus forces Volvo to shrink. For a number of reasons, the Volvo plants outside Sweden are immune to calls for capacity reduction. The plant

in Born, NL is a joint venture between Volvo, Mitsubishi and the Dutch state, and the Ghent plant in Belgium is not only the corporation’s flagship in

terms of productivity and quality, but also too important in strategic terms, located in the heart of the EEC.9 _{Sweden is therefore the place where it will}

all happen. And here the old tension between the Uddevalla and the Torslanda local reappears. Neither of the two wants to lose their own members. Yet

the Torslanda union is by far the biggest local in Volvo, and this position gives it the power to prevail over the smaller locals in the Volvo concern, especially over Uddevalla, which is technically in the same union district as

Torslanda. A defensive coalition of Metall unionists in the Torslanda local,

unhappy with Uddevalla anyway, who want to safeguard jobs in the plant

in Gothenburg, and ‘traditionalists’ in management, who did not see the

need for Uddevalla, emerged. The decision was made, and even a series of provocative opinion pieces from industrial sociologists and other experts

in one of Sweden’s leading newspapers, Dagens Nyheter, in the spring of

1993 on the plant closing was unable to change Volvo’s mind. ‘Dissident’

consultants, who offered their services to the union in case an alternative plan was drawn, were politely told that their services were not appreciated because the Volvo union agreed with the decision, and it was not up to the central union to meddle in local affairs anyway.10 _{The national union, the}

local, and management simply refused to discuss the issue in public, arguing that it was an internal Volvo affair.

Volvo’s crisis thus resuscitated long-standing divisions within both man-

agement and labor unions, and sealed Uddevalla’s fate. What mattered was not the plant’s performance – which management later admitted was not the

primary reason for the closure – but the way it was never able to muster the

political support it needed. And the reason it could never muster the support

is in large part connected to its exceptional nature; that is one of the central causes for the tension between the locals in Torslanda and in Uddevalla. Both locals have vastly different ideas of what unions in the 1990s ought to look like, which explains why Uddevalla never had a broad political basis