Managing Complexity: European Works Councils of Diversified Tier 1-Suppliers

Abstract:

The European automotive industry and especially the supplier sector has been undergoing a process of a structural change in terms of increasing competition and cost pressure, closures, mergers and acquisitions, relocations, follow- and global-sourcing strategies, higher dependence on OEMs and a tougher vertical restructuring of first, second and third tiers, shorter innovation cycles and a shift from more electrical and electronic parts towards e-driven cars in the near future. These processes were associated with serious challenges for the employees of supplier companies and their representatives at the local, national and European levels. Therefore, plant closures, mass redundancies, pressure on wages, working time and other working conditions were to observe in almost every supplier company.
The paper examines the role of European Works Councils (EWCs) in the automotive supplier industry and the corresponding restructuring processes. It focuses especially on conditions under which EWCs could work as effective bodies or platforms of cross-border interest regulation. On the example of four Tier 1 suppliers (Bosch, Continental, Delphi, GKN), the article provides insights into different management strategies of diversification and (re)localisation of production and R&D activities the EWCs are confronted with.
Focusing on the issues of securing employment, hindering or (if necessary) co-managing mass redundancies, plant closures and/or relocation of production, the paper first demonstrates different roles and functions of EWCs ranging from marginal or inactive bodies up to proactive and powerful platforms of intra-organizational negotiations on the workers’ side and of inter-organizational bargaining with the European and local management. Secondly, the paper aims at explaining this EWC-outcome by referring to four different compounds of influencing factors: (1) configuration and type of company at the European level (multinational, focal, global, transnational), (2) cultural and institutional embeddedness in national environments, mainly of the headquarters, (3) path dependency and the ‘learning curve’ from earlier development and conflict resolution, and (4) the role of individual/charismatic leaders, their personal values and interests.
The paper will argue that, given the legal framework, there is some potential for influencing cross-border restructurings by EWCs at the European level, but due to a high degree of disparate and disperse structures of supplier companies the complexity of intra- and inter-organizational bargaining is rather high, and the qualification of a majority of EWC-members does not hold up with the corresponding challenges.