Worldwide union campaign accuses Continental of contravening international labour standards

The International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM) has organised a global campaign against Germany's leading tyre producer, Continental, over a long-running strike at the company's General Tire plant at Charlotte (North Carolina, USA). The unions accuse Continental of contravening ILO standards and the OECD guidelines for multinational companies by permanently replacing striking employees at Charlotte with new recruits. In May 1999, representatives of the strikers' trade union, USWA, came to Germany to protest at the Continental annual shareholders' meeting. The Continental executive board, however, declared that the conflict is a local matter which can be resolved only at local level.

The German tyre producer and automobile supplier Continental AG, which has production plants in more than 15 countries and a worldwide workforce of about 62,300 employees, is currently the target of a global trade union campaign organised by the International Federation of Chemical, Energy, Mine and General Workers' Unions (ICEM), which accuses the company of contravening ILO standards and the OECD guidelines for multinational companies. ICEM is supporting its affiliate, the United Steelworkers of America (USWA) trade union, whose members have been on strike since September 1998 at the US subsidiary Continental General Tire's plant in Charlotte (North Carolina).

The Charlotte conflict

According to USWA, after Continental's acquisition of General Tire in 1987, industrial relations at Charlotte could be more or less characterised as a story of "concession bargaining". Since the company was nearly bankrupt at that time, the unions accepted various wage and benefit concessions in the following years. The workers at Charlotte saw their last general wage increase in 1989 and their last pension increase in 1992. The most recent collective agreements in 1995 contained major employee concessions, including a further three-year freeze in wages and labour costs which, according to trade union estimations, might be equivalent to at least USD 90 million.

When the most recent round of negotiations commenced on 16 August 1998, the company again demanded extensive contract concessions, state the unions, despite the fact that the earlier sacrifices of Charlotte workers had helped the Continental subsidiary post record operating earnings of USD 71 million the previous year. In addition, USWA accused the company management of impairing the bargaining process by using "unfair labour practices", such as:

  • holding back information necessary for meaningful negotiations;
  • providing bargaining representatives who lacked sufficient authority to take decisions on the matters under negotiation;
  • using discriminatory anti-union practices, such as hiring private security forces to monitor employees' activities; and
  • announcing the possible hiring of permanent replacement employees for any workers who went on strike.

Furthermore, USWA criticised Continental for allegedly:

  • failing to afford "dignity and respect" to the Charlotte workers, who in the past had given significant wage concessions to promote a turnaround in the company's performance;
  • paying substandard wages, which are far below industry standards;
  • providing "substandard company pensions";
  • having an "abusive incentive system";
  • using unacceptable contracting out practices which transform "good union jobs to low-paid, untrained workers employed by greedy contractors, thus weakening our union and undermining basic industry standards"; and
  • failing to offer anything in return for "demanding concessions in such areas as four-shift work schedules, mandatory overtime, day-at-a-time vacation, health insurance, drug testing and seniority".

After a strike ballot showed that the overwhelming majority of the company's trade union members were ready to support industrial action (the vote was 1,063 to 24), on 20 September 1998 all 1,450 members of USWA Local 850 went on strike. According to Continental management, however, the company was able to keep up production at reduced capacity by utilising supervisory personnel, contract workers, corporate headquarters personnel and "temporary replacement" workers. On 5 November, the company announced that it would begin "permanently replacing those employees who had not returned to their jobs by 17 November 1998." The company has since replaced more than 850 employees, who will have no right to return to work after the strike, but instead "will go on a preferential recall list for consideration for future openings."

With the strike continuing, negotiations restarted in December 1998 involving a federal mediator but the parties were not able to find a compromise over a new collective agreement. USWA claimed that Continental was still not ready to pay the Charlotte workers the "going rate" among leading employers of US tyre workers, even though the plant is now profitable. From the end of April 1999, however, there have been no further negotiations and the whole conflict is blocked.

Global trade union campaign against Continental

Since the beginning of 1999, the striking workers at Charlotte have received various types of support from trade unions representing Continental employees all over the world. The International Trade Secretariat ICEM started regularly informing its affiliates about recent developments at Charlotte and prepared a global campaign against Continental. In February 1999, a US delegation of "locked out" strikers conducted a "European solidarity tour" including meetings with union workers from Continental facilities in Scotland, France, Belgium, Turkey and the Czech Republic. Officials of USWA also met with representatives from the German Mining, Chemical and Energy Union (IG Bergbau, Chemie, Energie, IG BCE) which represents the workers at Continental headquarters.

On 10 March 1999, trade union leaders from 16 countries demonstrated their solidarity with the striking Charlotte workers outside a Continental dealer in Akron, Ohio, while representatives of UK ICEM affiliates demonstrated at a trade exhibition for the tyre industry in London. On 23 April 1998, in a joint statement six Continental AG Unions demanded that the company "immediately cease the employment of strike-breakers at the Charlotte plant and to reinstate the 1,450 employees of Continental General Tire that it has unlawfully and immorally" permanently replaced, "in violation of international labour standards". Furthermore, the unions called on Continental to:

  • "return immediately to the bargaining table and to negotiate a reasonable and just contract with the USWA";
  • "sever its relationship with Vance Security, a private security squad notorious for recruiting guards and provocateurs from the international mercenary community"; and
  • "adhere to the highest possible labour standards wherever it does business, including respecting the right of workers to join trade unions without employer interference, the right of workers to engage in collective bargaining, and the right of workers to strike without losing their jobs".

The joint statement was signed by the German IG BCE, the French Fédération Chimie Energie CFDT, the Turkish Lastik-Is, the Czech OS Chemie, the Slovakian Trade Union of Chemistry and USWA.

On 18 May 1999, USWA and ICEM wrote two letters, one to the International Labour Organisation (ILO) and one to the US Department of State arguing that Continental's permanent replacements of striking workers contravenes ILO Conventions as well as the guidelines for multinational enterprises annexed to the Organisation for Economic Cooperation and Development (OECD) Declaration on international investment and multinational enterprises, guaranteeing the "freedom of association", the "right of trade union representation" and "fair labour practices". It was claimed that practically all of these principles are undermined by the company's behaviour. Although the American labour courts has made no final decisions as to whether Continental's hiring of permanent replacement workers is legal under US legislation, the unions also called on the US government to ensure better legal protection against "permanent lock-outs".

In June 1999, ICEM launched a global cyber campaign against Continental on the Internet which provides Web users with permanently updates information on the strike and enables them to send electronic messages to top Continental management in Charlotte and at the company's world headquarters in Hannover, Germany. Supporters can also download handbills for distribution at dealers which market Continental's tyres. Finally, the ICEM "global cyber campaign" is also addressing the public media in order to put pressure on the company by giving it a "bad press".

Solidarity and protests in Germany

USWA has always claimed that Continental's top management at its German headquarters is responsible for the Charlotte conflict. It has also accused the company of handling the conflict in a way which, both legally and politically, it could never do in Germany. On 18 May 1999, USWA and IG BCE held a joint press conference in Hannover where the German union demonstrated its solidarity with its American colleagues. The IG BCE Hannover regional secretary and Continental supervisory board member, Dirk Sumpf, urged the company to develop the same "partnership" relations with USWA as it maintained with the German union. According to Mr Sumpf, "it's not a matter of what is possible under American law. It's a matter of what makes sense." The head of IG BCE's international department, Manfred Warda, added that it was now "mainly the company's responsibility to show ways of constructively resolving a conflict whose continuation cannot be in the company's own interests". Since Continental's relations with the German union operated on the basis of "cooperatively and fairly reconciling interests", according to Mr Warda it would "be desirable to use these experiences so as to also make an innovative contribution in the USA to the improvement of employee-employer relations". In that regard, "respect for ILO standards and for the OECD guidelines for multinational enterprises is a plausible minimum demand."

On 1 June 1999, USWA attended Continental's annual shareholders' meeting in Hannover. During the meeting, some representatives of USWA including the executive vice-president of its rubber and plastic industry conference, John Sellers, had the opportunity to speak to about 3,500 shareholders. While protesting against the hiring of permanent replacement workers at Charlotte, the American trade unionist also tried to convince the shareholders of the possible negative effect for the company performance in terms of productivity, product quality and possible financial burdens which could hit the company if the unions gained positive judgments from the American labour courts. USWA asked the shareholders not to exonerate the Continental management board until the company has adopted a corporate code of conduct based on ILO Conventions.

The Continental management board itself sharply rejected the accusations of the trade unions. In a press release Continental called the conflict a "local matter, that can be settled only by the American company at that location". During the annual shareholders' meeting the chair of the executive board of Continental AG, Hubertus von Grünberg, declared that "we obstruct in our plants neither the employees' freedom to organise in unions, nor the activities of the employees' representatives, nor the right to engage in collective bargaining. We also endeavour to avoid any kind of industrial action. In the interest of our corporation and of its shareholders, we must, however, be allowed - in the United States as well - to want to survive in the face of any industrial action imposed upon us in accordance with the respective national laws."

In a further statement, the board member responsible for Continental General Tire, Bernd Frangenberg, blamed USWA as being responsible for the whole conflict. Mr Frangenberg called on the union to come back to the bargaining table and to give up its international campaign against the company. An overwhelming majority of 99.97% of the shareholders supported the Continental executive board and rejected the trade union's counter-motion.

Although the trade unions never had a real chance of influencing the shareholder decisions, they successfully used the general meeting as an opportunity to inform the German and international public about the conflict at Charlotte, and thereby received a relatively broad audience, at least in the German media. After the meeting, the unions declared that they would continue their international campaign against Continental until the company "ready to negotiate in a good faith". ICEM announced an "international week of action" from 21-28 June, which should involve Continental plants all over the world as well as Continental retailers and leading buyers of Continental tyres.

Commentary

From a German point of view, a nine-month strike is rather an exceptional matter and it is somewhat astonishing that a leading German company is involved in it. Although the collective bargaining parties in the German chemicals industry have the image of having a particularly close "social partnership", Continental AG - to a certain extent - has always played a special role within the sector's branch-level bargaining (DE9706216F) with somewhat more conflictual industrial relations than in other companies.

The conflict at the Continental plant at Charlotte, however, has raised questions of principle with regard to the role and responsibility of multinational companies. ILO Conventions and the OECD guidelines could be seen as a good basis for the behaviour of such companies, even where they are not legally binding in a strict sense or ratified by national governments. In the age of globalisation it is no longer sufficient to call a far-reaching conflict like that at Charlotte just "a local matter". On the contrary, the unions were able to put the struggle on a global footing as well as to appeal to the responsibility of the - increasingly "internationalised" - shareholders. The fact that the shareholders simply rejected such a responsibility is arguably just another expression of the well-known "short-termism" in the perspective of shareholders. The future of the conflict, however, will show if they were well advised - even in terms of their own economic interests - to handle it as they did.

Finally, the Continental case also demonstrates the limits of concession bargaining. Considering the difficult economic situation of Continental General Tire, the employees were ready to renounce increases in wages and other benefits for a long time. Since Charlotte is now showing strong profits, it might be asked who can object to the employees asking for a fair share in this development? (Thorsten Schulten, Institute for Economic and Social Research (WSI))

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