June 22, 2011

State of Alabama
Press Release: Alabama Department of Commerce

Hyundai Confounds UAW With Good Factory Jobs

The United Auto Workers is trying to hold its first successful organizing drive at a foreign-car factory in the U.S. To succeed, the union has to convince people like Rocky Long.

“I don’t see any problems here. I don’t see how they could help me out,” said Long, who’s worked at the Hyundai Motor Co.  assembly plant in Montgomery, Alabama, for five years. Of the union representatives who came to his home this year, he said, “I really didn’t give them the time of the day.”

UAW President Bob King has pledged to organize a foreign automaker this year to expand its bargaining power beyond the U.S. companies it has negotiated with for seven decades. While Detroit is mostly retooling old plants, overseas car companies are building and expanding U.S. factories. The union is seeking to revive membership ranks that declined 75 percent to 376,612 last year from its peak of 1.5 million.

Standing in his way are rising sales and added investments at Hyundai’s Alabama complex and sites such as affiliate Kia Motor Corp.’s factory in Georgia. Already, King and his organizers are learning that workers at foreign-owned assembly plants, most of which are in the U.S. South, may not be easy to persuade.

“The UAW has to convince workers that they need a union when in fact without a union they got what they consider to be one of the best jobs they’ve ever had: a good manufacturing job with a company that’s expanding,” Gary Chaison, a professor of industrial relations at Clark University in Worcester, Massachusetts, said in an interview.

Michele Martin, a UAW spokeswoman, didn’t respond to requests for comment or to interview union supporters in Alabama. King hasn’t said which automaker he’s trying to organize.

Hyundai Costs

Hyundai’s lower wages and benefits have given it hourly labor costs of about $44 to $48 an hour, compared to $52 an hour at Toyota Motor Corp.'s U.S. plants and about $58 an hour at the U.S. factories of General Motors Co.,  Ford Motor Co., and Chrysler Group LLC, according to Sean McAlinden, chief economist with the Center for Automotive Research in Ann Arbor, Michigan.

While Hyundai officials declined to speak about specific pay, workers said the hourly rate is generous for the area.

Montgomery’s median household income in 2009 was $42,346, about $9,000 less than the national median and $6,400 less than in Michigan, according to the U.S. Census 2009 American Community Survey.

Wanda Carter, a Hyundai hourly worker, said she doesn’t see a need for a union at the Alabama plant.

“Hyundai does the best they can do to work with the Hyundai employees,” said Carter, who declined to give her age.

Volkswagen Plant

She wasn’t alone. Workers at another potential UAW target, Volkswagen AG's new plant in Chattanooga, Tennessee, said they were excited just to have a job in the auto industry. There isn’t any talk of forming a union, said Terry Young, a line worker.

“You don’t want to look a gift horse in the mouth,” said Young, 34.

The position is much safer than his previous job as a welder at construction sites and the pay is “great” for the area, he said.

“This is one of the good jobs,” Young said. “I love it.”

King has said the union has set aside $60 million from its strike fund to organize the U.S. workers of an Asian or European automaker this year. He’s said the campaign will aim to put public pressure on the companies and accuse them of violating workers’ human rights if they try to block organizing efforts.

‘Human-Rights Violator’

“If a company makes the bad business decision to engage in anti-union activity, suppress the rights of freedom of speech and assembly, we will launch a global campaign to brand that company a human-rights violator,” King said in a Jan. 12 speech in Detroit. “We do not want to fight, but we will not run from a fight.”

Hyundai’s lower costs allow it to price the Sonata sedan built in Alabama starting at $19,395, compared to Toyota Camry that starts at $19,820 and a Chevrolet Malibu that starts at $21,975. Hyundai’s U.S. sales rose 24 percent last year, more than twice the industrywide gain of 11 percent, and its U.S. market share rose to 4.6 percent from 2.7 percent in 2005.

“Hyundai is a rising star,” Harley Shaiken, a labor professor at the University of California at Berkeley, said earlier this year. “It’s a company that’s got something to lose if it is embroiled in a PR issue.”

About 25,000 people applied for jobs at the factory before it opened, said Robert Burns, a Hyundai spokesman. It employs 2,500, including 2,100 hourly workers. The turnover rate is about 4 percent, he said.

Hyundai Production

The plant is running almost around the clock on two, 10- hour shifts five days a week, plus some Saturdays, and is expected to produce 330,000 cars this year, 10 percent more than the planned capacity, Burns said.

Ashley Frye, the plant’s vice president of production, meets each month with employees and that has contributed to a good relationship between management and hourly workers, he said. The factory also provides a comfortable and safe environment, he said, noting the facility’s air-conditioning and low rate of injured employees.

“We maintain an atmosphere of civility,” he said. “As an example, use of salty language, we don’t allow that here.”

Wednesday is steak day in the employee cafeteria and the annual employee appreciation day this year included a performance by “Morris Day and the Time.”

Part of the challenge the UAW faces in organizing labor in the South is cultural, said James Hornsby, business manager of the International Brotherhood of Electrical Workers Local 443 in Montgomery.

‘South Is Tough’

“The South is tough,” he said. Some of it could be “the Southern mentality that I can stand on my own, I don’t need anybody’s help.”

Hornsby, president of the AFL-CIO’s regional council that includes Montgomery, said the key for his union has been educating workers about the benefits of organized labor.

“The really hard part is that these car plants know what they’re doing,” he said. “They come in and pay the best wage in town. That’s to convince all of their employees that they don’t need representation.”

Long, with a growing family at home, said he feels lucky to have landed a job at the Hyundai plant and is thinking about buying a house next year.

“This is probably one of the best jobs in the area -- pay- wise, benefits,” Long said. “You can’t go anywhere with a Hyundai shirt on without somebody saying, ‘‘Hey, are y’all hiring?’ Everybody is trying to get a foot in the door.”

To contact the reporters on this story: Tim Higgins in Southfield, Michigan at thiggins21@bloomberg.net; Keith Naughton in Southfield, Michigan at knaughton3@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net

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