PR CENTRAL: Finance


LEVI'S AND ITS LABOR UNIONS

Levi Strauss & Co. believes that its labor unions can be its allies, and is putting in place a communications program to make it happen.

Two years ago, when Levi Strauss & Co. failed to make Robert Levering and Milton Moskowitz’s list of The 100 Best Companies to Work for in America, the authors felt obliged to devote an entire chapter to Why Levi Strauss Didn’t Make It. Levi’s, after all, was a company known for its liberal employee practices, its devotion to the notion of the company as family.

Levering and Moskowitz acknowledge this reputation, and the company’s enviable record of community involvement, but recounte a visit to a Levi’s plant in El Paso, Texas.

"In our tour of the plant, we were struck by the minute segmentation of operations. Six different sewing machine operators, each doing one simple task, were needed to sew a pocket on to the pants. And most operators did the same task, hour after hour, day after day, year after year."

While employees cited a number of positive aspects about working for Levi’s, including a tuition reimbursement program, English as a second language class (most of the employees were Hispanic women), help in becoming naturalized citizens, and a Hispanic mentoring program, the authors concluded that "employees found it difficult to differentiate work at Levi’s from work at other sewing plants."

If Levering and Moskowitz were to revist Levi’s today, they would find the company’s plants changed. The problems they identified in their essay on the company had already been recognized by management, and an effort was under way to address them. That effort, however, required the cooperation of labor unions representing the company’s hourly workers, and in characteristic Levi’s fashion, the company wanted to be sure the union was on board before moving forward.

Again typically for the San Francisco-based apparel company, this meant not simply letting the union know what management had in mind and hoping for agreement. Rather, Levi wanted to bring the union into partnership with management and give its leaders a role in the decision-making process.

Levi’s, which has never felt constrained by traditional business philosophies, was convinced that labor unions, if they believed that management was genuinely prepared confrontational modes of the past, could become an ally in change. Not only would they not be an obstacle, they might actually be a help.
It was an idea that had been argued forcefully a couple of years earlier by labor lawyer Barry Bluestone, in his book Negotiating the Future. Said Bluestone: "Instead of simply treating workers better, management must be willing to share decision-making authority with them. Instead of workers’ input being limited to the factory floor or the outer office, labor must be brought into the inner circle where strategic decisions are made. Instead of trying to jettison their unions, management must be willing to welcome them as a constructive force in what we call an Enterprise Compact."

At the time Negotiating the Future was published, Levi’s was already struggling to shape such a Compact.

John Onoda, Levi’s chief communications officer, describes two reasons for the new approach: the first was philosophical; the second practical.

"Philosophically, this was an important part of the process we are dedicated to of strengthening our relationships with all the constituencies upon which we depend for our ability to do business," Onoda says. "We believe we will be more successful if we can find ways to work together will all our partners, including employees, suppliers, and the communities in which we operate. The labor unions are no exception."

On a more practical front, the company was anxious to implement new ways of working, reorganizing employees into teams of about 15 people, working together to produce a garment more rapidly than under the more traditional system, in which each step of the production process was compartmentalized, isolated from the others. The company also believed it was important to change its compensation structure, rewarding employees for quality as well as speed, a decision that would likely lead to lower incentive payments for some workers.

The company had worked successfully with the Amalgamated Clothing & Textile Workers Union and the United Garment Workers Union on a variety of intitaitves, including the company’s global sourcing guidelines (see RM, Vol. I Issue 1), its health and safety program and the introduction of new manufacturing and compensation systems.

Management and the union began discussions about a collaborative agreement in 1986, and internal task forces were formed in 1993 to come up with recommendations for the new partnership. In late 1993 the two sides sat down to evaluate each other’s vision for the partnership, and in June of 1994 an agreement was reached.

Under the agreement, Levi’s will allow the ACTWU, which represents about a third of the company’s 18,000 workers at 30 American plants, to sign up thousands more and to become a partner in management decisions that directly impact employees. A strategic steering committee, formed in August and including both company and union representatives, will be in charge of implementing the partnership.

"Our business is changing every day, and we face strong competition in all parts of the globe," says Bob Rockey, president of Levi Strauss North America. "Our continued survival and success depends on collaboration with our unions, not confrontation. We want to develop and implement joint initiatives to enhance customer service and make our facilities more flexible, cost-effective and competitive. We can better achieve these goals if we work together."
What Rockey did not say, but both parties acknowledge to have been the case, is that the traditional labor-management relationship has been an obstacle to progress. The labor movement, wedded to vestigial notions about seniority and strict job descriptions, has often been inflexible, while management has tended to view labor simplistically as an enemy of change.

Jack Sheinkman, president of ACTWU, described the partnership as "a giant step forward for our members and for Levi Strauss. Through partnership, workers will have a strong voice in decisions that matter. Learning to work in this new way is a change we are excited to take on."

The partnership has four dimensions:
At the strategic level, the partnership establishes a way for Levi management and ACTWU to make better strategic decisions together, and allows employees to have a greater voice in decisions made above the plant level that have an impact on their work lives. The company and the union will work together on annual business planning, sourcing, budgeting and other operations issues. There will also be ongoing discussions about customer service issues, cost efficiency and plant performance.

At the plant level, ACTWU plants will form steering committees including representatives of plant and union leaderships. These committees will work to govern the business of the plants, focusing on decisions that affect workers. The committee will also work with management to strengthen the local union, develop a high-performance work environment, create task forces that address community and employee issues, and provide feedback on business plans.

An organizing agreement will provide a better way of handling the organizing issues, by ensuring that employees at non-union facilities have access to all the information they need to determine whether they want to form a local union. In particular, the agreement is designed to eliminate the adversarial approach to organized that had characterized labor-management relations at Levi’s and most other companies. The strategic steeting committee may also select a non-union plant to work together with ACTWU on issues such as facility design or employee training, allowing employees full access to union information as a part of the initiative.
"This does not mean Levi Strauss & Co. is encouraging non-union locations to form ACTWU locals," says the company’s publication for operations employees, Patterns. "It does mean LS&Co. recognizes that unions can be an effective way for employees to participate in making decisions."

Although the partnership does not guarantee employment security, the partnership will create a way for the company and the union jointly to explore all possible alternatives to closing a plant, should the possibility arise.

The long-term goals of the partnership include seeking ways to improve employees’ job security, developing joint initiatives to improve customer service, pursuing joint decision making on matters of mutual concern, empowering employees, and becoming a model of excellence that demonstrates how collaborative partnerships can lead to competitive advantage.

"Although forming the partnership is clearly the right thing to do, implementing this new way of working won’t be easy for either organization," said a company spokesperson. "For some LS & Co. managers, working with the union goes against everything they’ve ever learned about running a successful manufacturing plant. For union leaders, working collaboratively with management is a big change in how they work. But both organizations believe that embracing these new philosophies will help ensure improved plant operations and future competitiveness."

Indeed, there have been a number of technical difficulties. Union leaders were not all prepared to move to the front end of the decision-making curve. Some of them had little familiarity with spreadsheets and financial statements, while even those who did possess basic management skills needed to understand Levi’s long-term strategy and its corporate culture.

Another issue, says Onoda, has been merging two cultures that operate so differently and have such different resources at their disposal. Getting union agreement on external communications, for example, has been complicated by the fact that the does not have a formal communications department, and cannot always respond to questions from Onoda’s staff before deadlines have passed.

"Little things like the fact that the union’s people don’t have fax-modems in their homes make a difference," Onoda says. "There’s just a huge difference in resources."

Having said that, Onoda and most others at the company are impressed with the progress that has been made, and convinced that the opportunities are greater than the challenges. That’s a view that appears to be shared by the union.

"In my opinion, it’s the best thing that could happen to us," says Gloria Silva, ACTWU chief steward at the Harlingen, Tex., which served as a testing ground for the partnership. "As a union leader, I’ve been working better with management and accomplishing a lot more than in the past, when we used to argue over everything."

Clara Flores, the chief steward at the company’s San Antonio facility, echoes that thought: "The more employees know about the business and what it takes to operate a successful plant, the more they’ll be able to contribute to quality, productivity and the overall competitiveness of the plant.... We all want better job security, more employee involvement and a better quality work life. Our plant has already come a long way in improved management/union relations."

Ron Martz, the plant manager in Harlingen, is equally enthused.

"I think our partnership is a major benefit," he says. "We’ve been able to reach consensus on important issues. Employees who belong to ACTWU attend our morning production meetings and they and the coaches jointly take information back to the teams. That way there are fewer misunderstandings. For my part, I’ve received a lot of assistance from the ACTWU and by working with the union I seem to get more done."
If there is considerable optimism on both sides, there are also obstacles. Onoda believes the greatest challenge will be establishing trust on both sides.

"There’s a long history of antagonism, and certainly this agreement is not going to cause everybody to forget the past overnight," he says. "The only way to make this work is for both parties to make sure they communicate honestly, that they listen to what each other has to say.

"In the end, the only way either party is going to prosper is if both parties prosper."

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