Manufacturing revival relies on non-union workforce

January 18, 2013

For all intents and purposes, the continuing revival of the U.S. manufacturing industry has been credited to the willingness of companies to embrace lean enterprise as a part of their core workplace strategy.

This has led to a number of high-profile wins for the industry, with U.S. manufacturers seemingly confident that the domestic economy will continue to be supported by some major players over the next few years. As expected, economists and business analysts have spent time looking for trends within the sector, and with U.S. companies hiring over 500,000 new workers since the end of 2009, it would be reasonable to assume that the production line has once again become the backbone of domestic manufacturing.

However, according to a recent article in The Washington Post, some companies have demonstrated a commitment to quality management in manufacturing by drawing a discreet veil over some traditional hiring procedures. Manufacturing workers in the “post-recession” era have found that belonging to a union is no guarantee of job security, and federal data suggests that all of the much-vaunted job gains have all been in a non-union workforce, with companies in 2012 employing 4 percent less union members than in 2010.

Manufacturers that have been forced to reduce their workforce have mainly been ones that had a strong union presence. In 1977, the total number of non-union members working at U.S. manufacturers was 12.5 million, a figure that is exactly the same in 2012. In the same time period, unionized employment reportedly dropped by nearly 80 percent, with some economists contending that non-union workers are more likely to accept a lower wage for doing the same job as a union member.

Research conducted by the Heritage Foundation has shown that unionized companies invest 15 to 25 percent less in capital or research and development than their non-unionized competitors, with unions actually managing to raise labor costs as a direct consequence. One in ten manufacturing workers now belongs to, or is represented by a union, a significant drop from 30 years ago when the number was one in three.

This shift in company investment policy has allowed U.S. manufacturers to compete in the global marketplace and is considered to be a significant reason why companies such as Apple and General Electric have been keen to increase their domestic investments.

“Unions have not been able to sell themselves as a”value proposition” in the manufacturing sector,” said James Sherk, a senior policy analyst at the Heritage Foundation. “Unionized firms are not getting the investment. Where investors see the opportunity is non-unionized firms.”