A Series of Setbacks for Labor, Employers

When Northwest Airlines turned to its workers in the early 1990s for suggestions on how to cut $100 million in annual operating costs, employees such as co-pilot T. Dean Smith were upbeat.

Workers who had been frustrated by the company’s wasteful practices, Smith explained, finally got their long-sought chance to speak up. The result: Northwest executives “surpassed their $100-million goal, and everyone felt good about that,” Smith said. The new management “made everyone feel that we were all in on this together.”

Today that labor-management romance at Northwest is long over, a fact made clear by the 15-day pilots strike that just ended. And the rocky labor relations at Northwest--which resumed its first cargo flights Monday but faces further contract negotiations with five other unions--are hardly an isolated matter.

In one case after another, unionized companies that embarked on innovative labor-management cooperation programs in the last two decades have seen their relations turn sour. These setbacks, many labor experts say, could damage efforts to spread cooperative workplace practices that give employees more of a voice in their jobs.

What’s more, these experts say, the trend jeopardizes an approach to industrial relations that can boost companies’ productivity: tapping the know-how of ordinary workers.

“We’re entering a recession in terms of labor-management cooperation, and if we’re going to remain competitive globally, it’s exactly the wrong way to go,” said Edward Cohen-Rosenthal, a labor relations specialist at Cornell University.

The companies that embarked on labor-management initiatives only to be jarred recently by labor tensions include US West Inc. Just three years ago, it teamed up with the Communications Workers of America to establish a trailblazing employee training and education program. Now it’s trying to bounce back from a nasty two-week strike last month by the same union.

United Parcel Service of America Inc. in 1995 trumpeted a “team concept” program to increase employees’ role in decision-making. But UPS wound up scrapping the initiative early this year after battling over it with the Teamsters union, which waged a high-profile 15-day strike against the company last summer.

Even General Motors Corp.’s Saturn plant in Tennessee, once regarded as “the poster boy of the right way to do it, is falling on tough times” in labor relations, said Edward E. Lawler III, a USC management professor and executive director of the school’s Center for Effective Organizations.

When Northwest faced collapse five years ago, company executives crafted a partnership with their unions and gained $886 million in wage concessions.

In the early 1990s, along with its “$100 million in 100 days” cost-cutting initiative, Northwest gave middle managers and union employees greater authority to make decisions at lower levels of the organization.

But Smith, the pilot, said that as it became increasingly apparent over the years that the only suggestions management wanted to hear were about ways to cut costs, the cooperative efforts deteriorated and both morale and customer service sank.

Meanwhile, Northwest, after being ranked No. 1 among the nation’s seven biggest airlines in on-time arrivals every year from 1990 through 1995, fell to sixth last year.

Northwest spokesman Jeff Smith conceded that “folks just not being happy in their jobs” played a role in the declining performance, but that many other factors were involved. He also said the company remains committed to labor-management cooperation and that “the most successful programs have stayed very active.”

Some advocates of labor-management cooperation argue that for every failure there are many more success stories. The communications workers union, for example, calls its recent negotiations with US West an “aberration” in a year that has featured mainly peaceful contract talks and continued commitment to labor-management cooperation at other major companies.

Experts also say that at least in the nonunion sector of the economy, various “employee involvement” and “team” programs continue to spread, though perhaps at a slower pace.

According to USC’s Center for Effective Organizations, the percentage of Fortune 1,000 companies with union-management cooperation programs rose from 30% in 1987 to 35% in 1990. But in polls taken in 1993 and ‘96, the center found that the percentage of companies with such programs remained stuck at 35%.

Labor experts blame the loss of momentum in the growth of labor-management programs, and the increased labor tensions, partly on the strong economy. They explain that some executives, because of their companies’ success, are less likely to seek advice from their union counterparts. Unions, meanwhile, feel their members deserve better pay increases now that companies are doing better.

Probably even more damaging to union-management cooperation are the cost pressures imposed by global business competition. Many companies have moved production overseas, eliminating American jobs and undermining the morale needed to foster workers’ participation in cooperative programs.

While some labor-management cooperation programs are spurred by hard times, others go awry when companies are squeezed by tough competition or a weak economy.

That has been the case at GM’s Saturn plant in Tennessee.

The Saturn experiment was hatched in the mid-1980s when GM and the United Auto Workers were being hammered by more efficient Japanese auto makers.

Workers accepted a lower base wage rate, flexible work rules, elimination of seniority rights in exchange for a no-layoff pledge, bonus potential and a voice in decision-making.

But this year, when Saturn responded to slumping sales by cutting overtime and bonuses, some UAW leaders and workers declared that the partnership was nearing an end.

Saturn executives and UAW leaders agreed last week to keep the unique contract in place, but many observers still see trouble.

“The relationship at Saturn is being tested,” said Thomas A. Kochan, an industrial relations expert at the Massachusetts Institute of Technology. At Saturn and elsewhere, he said, “the question is whether the parties can adapt over time. They need to realize that they’re in this partnership for the long run.”