Skill Formation Strategies. A Comparison of Two MNCs’ Overseas Factories in Central Eastern Europe

Abstract:

This paper studies skill formation strategies of two automotive OEMs in Slovakia: Volkswagen and Hyundai. One of the most important challenges of each factory is how to secure skilled workers and achieve a similar level of performances as the mother factories located in the home country. Comparing Volkswagen and Hyundai, this paper examines (a) the recruitment and training policies for skilled workers (company-internal programs and cooperation with vocational schools), and (b) the long-term personnel development approaches (career paths) of this group (vertical/hierarchy careers, and horizontal careers).
The paper shows considerable differences between both factories. In order to explain these differences, it focuses on two core factors. The first factor is labor relations in the home countries of the companies and their impact on the status of skilled work. Volkswagen is characterized by highly cooperative labor relations and high status of skilled workers in the company. Hyundai, by contrast, has a long history of antagonistic labor relations which led the management to a strategy avoiding the reliance on skilled blue-collar work. The second factor is the level of centralization of competences in the company. We show how the decentralization of for the product launch processes supports investments in skill formation in Volkswagen plants, while the centralization of responsibilities for product launches in Hyundai’s Korean headquarters reduces the need to invest in skill formation abroad.
The paper is based on case studies at Volkswagen Bratislava and Hyundai Zilina. The case studies included interviews with management representatives, trade unionists and workers in both locations, as well as the analysis of company documents.