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Automotive Industry Trends Affecting Component Suppliers

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Automotive Industry Trends Affecting Component Suppliers TMTEM/2005 INTERNATIONAL LABOUR ORGANIZATION Sectoral Activities Programme Automotive industry trends affecting component suppliers Report for discussion at the Tripartite Meeting on Employment, Social Dialogue, Rights at Work and Industrial Relations in Transport Equipment Manufacturing Geneva, 2005 INTERNATIONAL LABOUR OFFICE GENEVA Copyright © International Labour Organization 2005 Publications of the International Labour Office enjoy copyright under Protocol 2 of the Universal Copyright Convention. Nevertheless, short excerpts from them may be reproduced without authorization, on condition that the source is indicated. For rights of reproduction or translation, application should be made to the Publications Bureau (Rights and Permissions), International Labour Office, CH-1211 Geneva 22, Switzerland. The International Labour Office welcomes such applications. Libraries, institutions and other users registered in the United Kingdom with the Copyright Licensing Agency, 90 Tottenham Court Road, London W1T 4LP [Fax: (+44) (0)20 7631 5500; email: [email protected]], in the United States with the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923 [Fax: (+1) (978) 750 4470; email: [email protected]] or in other countries with associated Reproduction Rights Organizations, may make photocopies in accordance with the licences issued to them for this purpose. ISBN Print: 92-2-116442-X ISBN Web: 92-2-116443-8 First published 2005 Cover: Volkswagen The designations employed in ILO publications, which are in conformity with United Nations practice, and the presentation of material therein do not imply the expression of any opinion whatsoever on the part of the International Labour Office concerning the legal status of any country, area or territory or of its authorities, or concerning the delimitation of its frontiers. The responsibility for opinions expressed in signed articles, studies and other contributions rests solely with their authors, and publication does not constitute an endorsement by the International Labour Office of the opinions expressed in them. Reference to names of firms and commercial products and processes does not imply their endorsement by the International Labour Office, and any failure to mention a particular firm, commercial product or process is not a sign of disapproval. ILO publications can be obtained through major booksellers or ILO local offices in many countries, or direct from ILO Publications, International Labour Office, CH-1211 Geneva 22, Switzerland. Catalogues or lists of new publications are available free of charge from the above address, or by email: [email protected] Visit our web site: www.ilo.org/publns Printed by the International Labour Office, Geneva, Switzerland Preface At the 286th Session of the Governing Body (March 2003), one of the options proposed to the Committee on Sectoral and Technical Meetings and Related Issues was to hold a tripartite meeting on the evolution of employment and working conditions in the manufacture of automotive components. 1 It was subsequently noted (287th Session, June 2003) that the manufacture of automotive components involved many types of enterprises in different relationships with the manufacturer/assembler of the final product, ranging from subsidiary companies to contractors and subcontractors and SMEs in export processing zones. 2 At its 288th Session (November 2003) the Governing Body decided that a small three day tripartite meeting for the transport equipment manufacturing sector would be held in Geneva early in 2005 and would discuss employment development, social dialogue and rights at work, and industrial relations. 3 It would have a background report prepared by the Office and thematic papers from participants and invited guests as the basis for its discussions. 4 It also decided that the purpose of the meeting be: to exchange views on the above themes; to adopt conclusions that include proposals for action by governments, by employers’ and workers’ organizations at the national level and by the ILO; and to adopt a report on its discussions. (It was subsequently noted that since it would not be possible to submit a draft report for adoption at the meeting due to its short duration, a brief report would be sent to the participants within two weeks of the end of the meeting.) The Director-General proposed that this be a tripartite meeting lasting three working days and comprising representatives from the Governments of all interested member States and ten Employer and Worker representatives selected on the basis of consultations with the respective groups of the Governing Body. A Governing Body representative would chair this meeting. 5 The Meeting is part of the ILO’s Sectoral Activities Programme, one of the purposes of which is to facilitate sectoral social dialogue and the exchange of information between constituents on labour and social developments relevant to particular economic sectors, complemented by practically oriented research on topical sectoral issues. This objective has traditionally been pursued by holding international tripartite sectoral meetings with a view to: fostering a broader understanding of sector-specific issues through social dialogue; developing an international tripartite consensus on sectoral concerns and providing guidance for national and international policies and measures to deal with related issues; promoting the harmonization of all ILO activities of a sectoral character and acting as a focal point between the Office and its constituents; and providing technical advice, practical assistance and support to the latter to facilitate the application of international labour standards. 1 GB.286/STM/1, para. 29. 2 GB.287/7, para. 16. 3 GB.288/13, 19(c). 4 GB.287/7, para. 17. 5 GB.288/STM/1, para. 18. TMTEM05-R-2004-08-0122-1-En.doc/v3 iii This report was prepared by Paul Bailey of the Sectoral Activities Department. The statistical data (using mainly ILO LABORSTA, OECD and UNIDO databases) were compiled and analysed by Ralph Doggett. The list of Tier 1 suppliers in Annex 1 was compiled by Jean-Pierre Singa and the analysis thereof was undertaken by Toby Procter who also contributed large sections of Chapters 2 to 9 of the report together with Peter O’Brien. The European Industrial Relations Observatory (EIRO) contributed information on industrial relations from their recent automotive industry report. Thanks also go Yasuhiko Kamakura and Gijsbert van Liemt. iv TMTEM05-R-2004-08-0122-1-En.doc/v3 Contents Page Preface............................................................................................................................................... iii 1. Recent developments in the motor vehicle sector ................................................................... 1 1.1. Definition of the sector ................................................................................................. 1 1.2. Globalization and international trade in automotive products..................................... 15 1.3. Women’s share of employment .................................................................................... 20 1.4. Motor vehicle production.............................................................................................. 20 1.5. World Commission on the Social Dimension of Globalization................................... 24 2. The automotive industry and the structure of the components sector ..................................... 25 2.1. Estimating levels of employment.................................................................................. 25 2.2. National automotive labour markets............................................................................. 28 2.3. The asymmetric relationship between value added and decision-making in the automotive industry ............................................................................................ 35 2.4. The global market value of the components sector ..................................................... 36 3. New markets and the demand for labour................................................................................. 43 3.1. Global labour cost differentials..................................................................................... 44 3.2. Platforms and tiers ........................................................................................................ 46 3.3. The shift from Western to Central and Eastern Europe................................................ 48 3.4. Can investment incentives keep firms in advanced markets?...................................... 49 3.5. Wages as a component of total costs ............................................................................ 50 3.6. Southerly migration of automotive jobs in North America .......................................... 51 3.7. The emergence of India ................................................................................................ 53 4. The international components trade ........................................................................................ 54 4.1. The influence of production conditions ........................................................................ 54 4.2. Component exports from emerging markets................................................................. 54 4.3. The risks of export trade ............................................................................................... 55 4.4. A move to export processing zones (EPZs)? ...............................................................
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