Non-Union Production Climbs

Arguably the heart-and-soul of the labor movement in the 20th century, the automotive industry in the U.S. and Canada, has been losing membership for years as overseas-based manufacturers increase their presence in the North American market, mostly without using organized workforces.

Another result of the lack of success the United Auto Workers and Canadian Auto Workers unions have had in organizing the so-called transplant operations is that vehicles made without the “Union Stamp” are increasingly rolling off the assembly lines of U.S. and Canadian factories.

Vehicle production by non-union plants has been rising steadily since Japan's Honda Motor Co. Ltd. started to build cars in Ohio in 1982. The ratio of car and truck production by non-union plants vis-a-vis union facilities in the U.S. and Canada has risen from practically nothing 20 years ago to a ratio of nearly one-in-five.

Projections by Ward's based on future production capacity show that the share of non-union output will rise to 26% within five years. But the actual share of production when all is said and done likely will be higher because non-union plants on average tend to utilize their production capacity better than union plants.

There were other non-union facilities prior to Honda's start — which was followed the next year with Nissan trucks built in Tennessee — but production by those plants was well below 100,000 units in 1982. Most added capacity since then has been by foreign-based manufacturers that had no previous ties with the UAW.

Production by non-union plants hit a high in 2000 of 2.704 million units, and notched a second highest count in 2001 of 2.644 million. Because overall industry production fell much further in 2001 than just the non-union output, non-union share actually increased to a record 19.0% from 17.3% the year before.

Furthermore, through the first seven months of 2002 that percentage has reached 19.6%, and non-union output could hit 3 million units this year.

With new capacity coming from Honda, Nissan Motor Co. Ltd. and Toyota Motor Corp. at existing facilities, and new plants coming in 2003 and 2005 from Nissan and Hyundai Motor Co. Ltd., respectively, production by non-union shops will top 4 million within five years, as long as the North American market does not go into a long-term nosedive. The outlook assumes plants currently not unionized will remain that way and that new plants coming on line by Nissan and Hyundai will not be organized at their Job One dates.

By country, Canada output is 21.1% non-union so far in 2002, and the U.S. is at 19.3%. Both numbers will continue to grow, but the percentage in the U.S. eventually will be higher than Canada's because the majority of new capacity is coming in the deep South.

The East South Central region — including Alabama, Kentucky, Mississippi and Tennessee — will account for more than half of the non-union production by 2006, based on straight-time capacity. Ironically, East North Central states — bastion of the U.S. Big Three — until this year accounted for most non-union output. That's because Honda's biggest manufacturing operations are in the farmlands of Ohio.