Peter Wad

While global production of light motor vehicles (LV) is estimated to increase around 18 percent from around 55 million units in 2002 to 65 million in 2010, the Asia-Pacific region is forecast to increase LV production by nearly 25 percent in this period implying that 45 percent of total growth 2002-2010 will stem from the Asia-Pacific area.1 Within the AP-region auto production growth is unequally distributed, with China accounting for a third of global growth and 75 percent of Asia-Pacific growth. The Association of South East Asian Nations-4 (ASEAN-4)countries (Indonesia, Malaysia, Philippines, and Thailand) will also have growth; Thailand is forecast to nearly double production (90 percent), while Indonesia (40 percent), the Philippines (33 percent), and Malaysia (24 percent) will have more modest growth rates.

 

Welders in an automobile factory in Bangkok, Thailand
Photo: J Maillard © International Labour Organisation

Many of these growth forecasts will depend on the evolution of the ASEAN free trade area (AFTA) for automotive products to begin in 20052 - with Malaysia being the laggard3 and the auto industry among the most problematic and protected industries in the region. Yet, even Thailand with a neo-liberal approach to auto manufacturing, e.g. having abandoned restrictions on foreign direct investments (FDI) and local content requirement on component/part imports, is creating a lot of non-tariff obstacles to the free flow of auto parts into Thailand protecting its domestic (and Thai) auto supplier firms against competition from abroad.4 The implementation of the auto-AFTA will probably be a negotiated political process requiring a kind of balanced and fair trade among the parties in order to succeed. However, automobile workers’ organisations have so far been excluded from participating in the power politics of the ASEAN-4.

What is the present situation of the auto workers’ unions in the ASEAN-4? Have the unions been able to accomplish some of their objectives in the recent past? And what are their concerns regarding the future? To answer such questions this paper relies especially on the author’s own research on Malaysian auto industry and trade unions, and on material produced through the two International Metalworkers Federation’s (IMF) Asia-Pacific Auto Conferences in Bangkok in October 2002 and 2003, with the author participating as an observer in the first one.5 Finally, additional or corrective evidence was reported during the Centre for Education and Communication (CEC)/AMRC Conference in 2003. The paper proceeds by looking at union organisations and institutions of collective bargaining in the automotive industry. Then, a few significant industrial disputes are highlighted, followed by an outline of present problems facing autoworkers’ unions and how they strategise in order to pursue their objectives. The paper concludes by aiming to answer the questions posed above.

Trade unions and collective bargaining
The trade unions in the auto industries of the ASEAN-4 are working in a union-hostile environment with restrictive labour legislation or state practices on the one hand and more or less anti-union oriented employers on the other. Most unions are constituted at the enterprise level as enterprise or in-house unions undertaking enterprise-based collective bargaining and agreements (CBA). Only in Malaysia did a centralised industrial relations system evolve in the 1970s, and although centralised CBAs disappeared during the 1980s the industrial union with jurisdiction in Peninsular Malaysia prevailed. Facing fallouts among assembly companies due not least to the state-sponsored national automobile projects (Proton, Perodua etc.) the union again expanded its membership organising the automobile supplier sector. Moreover, the industrial union has taken on the chairmanship of the IMF-Malaysia Council and is the driver behind an initiative to form a federation of auto unions in Malaysia. In the other three countries autoworkers’ unions have formed federations or alliances. In none of the four countries have auto firms formed an employers’ association, and employers prefer to tackle problems with unions in bilateral negotiations and/or co-ordinate their activities informally through personal networks or in federations of manufacturers. Employers’ national associations only provide labour market services to their company members and do not act as collective bargaining units.

Indonesia: The East Asian financial crisis 1997-98 severely affected both the automotive industry and the economies and political structures influencing this industry although the impact varied from country to country. Indonesia underwent tremendous changes with the fall of the Soeharto regime in 1998. The Metal Workers Union of Indonesia (SPMI) was established in 1999 and became the Federation of Metal Workers Union of Indonesia (FSPMI) in 2001, composed of five metal workers’ unions comprising 188 plant level unions/branches in 2003. One of these affiliates is the Automotive, Machine, and Components Workers Union (AMCWU) with 16,757 members in 57 plant level unions/branches, with 10,064 employees in the auto industry. The AMCWU has expanded since 2002 when it was reported to have 45 plant unions/branches with 15,855 members (FSPMI IMF-report, Bangkok 2002).

Malaysia faced political turmoil at the highest level of government during the financial crisis, but the old guard won the power battle and tightened its grip on the country with the application of controversial currency and capital control measures in September 1998 and finally won the parliamentary election in 1999. Rudiments of social corporatist political involvement of unions appeared during the 1997 - 1998 crisis but vanished with recovery followed by a new split in the top ranks of the labour centre, the Malaysian Trades Union Congress (MTUC). The industrial union (NUTEAIW), organising non-national auto assemblers and suppliers, represents around 7,700 employees in more than 40 companies (March 2002). Today it is a ‘pragmatic’ union while it was more ‘radical’ in the 1970s and 1980s when it left the MTUC and worked closely with grassroots movements. The union is struggling to unionise upcoming assembly plants, and it has been able to organise the ‘national’ truck and bus project (AMM) but the employer refused to recognise the union and the case is now pending in the Industrial Court. The union also tried to unionise Honda’s new factory but it lost the battle and could see an enterprise union emerging with the support of management. The normal working week in Honda’s new plant is 48 hours which is four hours more than the normal working week and a serious drawback in automotive employment conditions!

Enterprise unions count around 13,600 members in national and non-national sectors of the Malaysian auto industry, or 64 percent of total union members, down from 70 percent in 2000 (author’s calculations based on Department of Trade Union Affairs (DTUA) 2001 and 2003). The Proton Union and the Perodua Manufacturing Union are big unions with around 5,500 and 2,400 members respectively in 2002. The Perodua Union was split up when the engine plant was incorporated as a separate company for tax reasons and the management insisted that a new Perodua Engine Union be established. Although the Perodua union protested and the DTUA agreed to a common union for the two companies, the management appealed and won in the High Court, after which the Ministry did not appeal. With the start-up of the new Proton factory in ‘Proton City’ the Proton Union also faces a potential split into two unions based on corporate boundaries. The industrial union and the two biggest in-house unions in the national sector are now negotiating the formation of a federation of autoworkers’ unions aiming to give auto unions and their members a united and public voice in relation to the upcoming auto-AFTA and the automobile policy pursued by the Malaysian government. Union density in the motor vehicle industry was estimated at 34 percent in 1997, up to 40 percent in 1999, down to 39 percent in 2000 when union membership counted 15,726 out of 40,679 employees, and up again to 47 percent in 2002 with 21,300 members out of 45,000 employees (author’s calculation based on DOS 2003 excluding firms below 30 employees, various DTUA/MHR annual reports).

The Philippines was less severely hit by the 1997 financial crisis, yet nearly 7,000 employees lost their jobs in the auto industry from 1997-1999. Only 10 percent of the 290 companies are unionised, and 10 percent of the 50,000 employees of the auto industry are union members (AIWA 2002, 2003). The Auto Industry Workers Alliance (AIWA) claims to be the only independent national organisation for autoworkers with members in auto assembly and auto supplier firms (AIWA IMF report, Bangkok 2002). The AIWA was founded in 2000 by non-affiliated union leaders and it became registered with the Department of Labour and Employment (DOLE) in 2002. The same year, AIWA reported that the alliance had 2,170 members including members in nine core assembly companies: Mitsubishi Motors Workers Union-Philippines (837), Mitsubishi Motors Philippines Corp. Salaried Union (150), Mitsubishi Motors Philippines Corp. Supervisor Association (170), Isuzu Philippines Corp. Workers Union (260), Toyota Motor Philippines Supervisors Union (300), Toyota Motor Philippines Corp. Labour Union6 (200), Nissan Independent Workers Union (123), Nissan Motors Philippines Supervisor Union (130). The AIWA includes several non-worker unions with large memberships, and the Mitsubishi Motor Corp (MMC) Philippines forms the largest group in the AIWA, holding its presidency. However, the president of the legitimate, but unrecognised union of Toyota rank and file workers, the Toyota Motor Philippine Corporation Workers Association (TMPCWA), declares that it is not part of AIWA, because the AIWA is a loose network of yellow unions among other Japanese controlled companies in the Philippines (CEC/AMRC Conference 2003). In fact, the TMPCWA has been engaged in a struggle with Toyota for union recognition since 2000 (see section on industrial disputes). Finally, the Lakas ng Nanggagawang Nagkakaisa sa Honda - Ind. (400 members) belongs to another federation, the Organized Labor Associations in Line Industries and Agriculture (OLALIA). None of the Philippine auto workers’ unions are affiliated to the IMF(metal).

Thailand saw a shift in auto policy in early 1990 opening up to transnational corporations (TNC), abandoning local content requirements in 2000. These moves boosted TNC investment before the crisis, and FDIs are again picking up, with one unionist claiming that there are 30,000 regular jobs and 300,000 contract workers employed in the Thai automobile industry. Moreover, a democratic breakthrough came in 1997 in connection with the financial crisis, yet again followed by a setback – a government headed by a businessman. The Federation of Thailand Automobile Workers’ Union (TAW) was established in 1997 by five enterprise unions including both assembly companies (Siam Nissan, and Hino) and auto suppliers (NHK Spring, Siam Part, and Denso Thailand) (TAW pamphlet 2002). It dates back to 1992 when four autoworker unions (Hino, Denso, NHK, and Toyota) formed an association. After 1997 Nissan workers unions stopped collaborating with the TAW unions, preferring to work in solitude based on their own federation of Nissan-related unions. In 2002, TAW had 24 enterprise unions with a total of 15,672 members, among which are affiliated companies of Toyota, Mitsubishi Motor, Isuzu, Hino, Kawasaki, and Honda. The Ford-Mazda Auto Alliance Thailand (AAT) company was not affiliated in 2002. The stated objectives of the TAW are to protect the benefit of trade unions’ and workers’ rights, and to promote good co-operation between trade unions and between workers and employers (TAW pamphlet 2002). The TAW federation claimed to have more than 20,000 members in late 2003.

Summing up, the Malaysian automobile workers unions are the strongest and best organised in terms of union density and level of union centralisation, with the Thai unions taking the second position. In all four countries the automobile industry seems to be better unionised than other industries. Collective bargaining takes place at enterprise level.

Significant industrial disputes in the auto industry
Industrial disputes are endemic to the globalisation of the auto industry but in Southeast Asia they seldom become known internationally. What happened in significant industrial disputes involving automobile workers since the financial crisis?

Thailand: At AAT, established before the financial crisis erupted in 1997, a union was formed around 2000/2001 soon after an industrial dispute arose. It escalated into a wider conflict when management dismissed the union leadership, but Thai unionists informed unionists at Ford, Mazda, and the IMF(metal) and with concerted pressure the dispute was settled through negotiations. Industrial relations at AAT improved quite a lot after this confrontation.

Indonesia: At Honda Prospect Motor Indonesia, negotiations for wage improvements deadlocked in 2002. The union staged a strike, and the management retaliated with a lockout of 208 workers (IMF Bangkok Conference, 2002; Metal World No. 1, 2003). A few months later 160 workers were retrenched. The union claims that it was a legal strike and that dismissed workers should be reinstated. This claim was followed by arbitration. Again Honda management took the conflict to the Jakarta Administration Court (High Court) where it stalled. A meeting between IMF(metal) and Honda HQ made the management of Honda Indonesia promise to reinstate workers and restart negotiations, but nothing happened. The conflict turned violent when police and former Honda employees met outside the factory in the early days of the strike. Honda management seems determined to get rid of the union by recognising a union with 40 members and employing contract workers through an employment agency. Honda HQ has also been bombarded with E-mails after the IMF began a campaign, but so far nothing has changed the mind of the Honda HQ or its subsidiary. The Honda HQ and the Honda workers union in Japan insist that the dispute must be settled locally, making IMF remark that investment decisions, product choice etc. are not left to local decision-making in a TNC!

Malaysia: In the Ford-controlled Associated Motor Industries (Malaysia) (AMI), wild-cat action took place in May 2002 after four workers were suspended for not wearing safety glasses, and a domestic inquiry was called to decide whether they should be dismissed. The following day 40-45 workers took medical leave and management selected 11 for suspension. When the workers left the factory gate the next day the NUTEAIW organised a ‘briefing gathering’ looking like a picket as a message to management. Picketing continued in following days (interview with general secretary of NUTEAIW, May 2002). In the end the dispute was mediated by the Ministry of Human Resources and the case was settled without any dismissals.

Philippines: At the MMC Philippines two strikes erupted during the 1997 - 1998 financial crisis (Kuruvilla et al. 2000). A one-day strike in 1997 took place when a new union leadership resisted management’s attempt to rationalise activities and turn production into big volume assembly. Management did not negotiate the redeployment of workers as was normal practice and was determined to suspend workers who refused relocation. The strike ended with mediation by the Labour Department. A 13-day strike erupted in 1998 in reaction to retrenchments, but the company persisted in reducing the workforce (Kuruvilla et al). The financial crisis thus weakened the union considerably.

Philippines: At Toyota Motor Philippines Corporation (TMPC) a severe industrial dispute broke out in early 2001 and is still ongoing. The dispute began when the TMPC refused to start collective bargaining with the TMPC Workers Association (TMPCWA) representing rank-and-file employees at TMPC’s two plants in the Philippines. Actually, the dispute was the latest outcome of a decade long struggle by TMPC workers to organise an independent union and obtain recognition by the authorities and the management. Toyota started production in the country in 1988 adding a second plant in 1996. In 1992 workers registered the first union, the Toyota Motor Philippines Corporation Labour Union (TMPCLU). The company challenged the registration and finally the Supreme Court ruled in favour of Toyota arguing that the union had included both supervisors and rank-and-file and hence deviated from Philippine labour law. Meanwhile, the union president had been promoted. A second attempt to unionise followed with the registration of the Toyota Motor Philippines Corporation Employees and Workers Union (TMPCEWU), but management persuaded some members to cancel registration. To avoid a prolonged legal dispute the leaders registered a new union, the TMPCWA, in 1998. In 2000 a certification election was held at the company, and 503 workers of 948 were in favour of the union. However, the company claimed that an additional 120 employees were eligible to vote, and 105 of these voted against separately, which if successful would have made the 503 votes less than the 50 percent legal requirement. Their votes were quashed by the labour arbiter who recognised the TMPCWA as the proper rank-and-file union of the company. Toyota appealed the verdict and used the appeal to reject starting collective bargaining. When Toyota lost this appeal, the union filed another request for collective bargaining, but again Toyota refused using a new legal excuse. In January 2001, the union gave notice to strike to the DOLE to force the company to accept collective negotiations. When the DOLE surprisingly called a hearing to clarify the case in February 2001 both parties mobilised employees in order to prove that they represented the majority of the employees. When the union wanted to prove its case by bringing 300 members to the court, management refused to approve their leave applications, but they left anyway. On return after the court hearing the company accused the absentees of staging an illegal strike on 21 – 23 February and asked them to show why they should not be dismissed. When the court finally recognised the union as the representative union and agent for collective bargaining with management on 16 March, Toyota dismissed 227 workers and six union officers. During the following days there were 291 new terminations and 30 suspensions. The union declared a strike on 28 March by 900 workers that paralysed Toyota for two weeks. The union contends that after Toyota and 10 other Japanese companies threatened to disinvest from the Philippines, the DOLE took charge of the dispute, called off the strike on 10 March, and ordered the company to reinstate workers at least on the payroll if not in practice. DOLE passed on the case to the National Labour Relations Commission (NLRC), a very corrupt state agency according to union opinion. Four months later, the NLRC declared the two strikes illegal and upheld the 233 dismissals. The lower level NLRC decision was appealed to the national NLRC which upheld the ruling. Again the union and the company appealed to the Court of Appeal and Toyota furthermore filed criminal charges against 25 union members and officers for intimidation of employees during the picketing. In March 2002 the Metropolitan Trial Court ordered the arrest of the 25 but they were bailed out temporarily. In February 2003 the Court of Appeal confirmed the verdicts and even nullified the severance payment awards. Toyota management then offered severance pay if the employees cancelled their union membership, and hence, withdrew from the dispute. In October 2003, 156 employees of the 233 were still holding out. At that time the union appealed to the Supreme Court and the warrants on 18 of the 25 were recalled.

In sum, the key automobile TNCs in the ASEAN-4 countries have more or less successfully applied union busting tactics, irrespective of Western or Japanese roots, and also of their global corporate viability (Toyota, Honda), problems (Ford), or decline (Mitsubishi). Autoworkers’ unions have only in two instances won or at least not lost the case (AAT Thailand and AMI Malaysia), and both cases involved Ford and interventions by IMF(metal). The Mitsubishi case in the Philippines is blurred, while the Honda case in Indonesia and the Toyota case in the Philippines are ongoing uphill struggles in urgent need of increased international support. The Japanese controlled auto TNCs (Toyota and Honda) have so far resisted international solidarity activity, including work undertaken by the IMF(metal).

Union problems, objectives, and strategies 2002-2003
During the 2002 IMF Asian Autoworkers Union Conference in Bangkok union representatives described the current outlook for their company, the biggest challenge facing the union, and the priorities of union goals. Only businesses in Toyota (Thailand), Suzuki (Indonesia), Ford (Malaysia), and Honda (Thailand, Indonesia, and Malaysia) were interpreted as promising, while in other companies unionists assess the situation as uncertain (MMC Indonesia and Philippines; HMC and Proton Malaysia) or bleak (Toyota Philippines). This picture is more or less in line with the global outlook for the TNCs, with Toyota and Honda on the rise and MMC in decline.

Based on the differences in company outlooks, jobs were perceived as insecure in most plants. The subcontract/outsourcing problem was felt in well-performing Toyota (Thailand) as well as in less well performing MMC (Indonesia) and average performing Daihatsu/Perodua (Malaysia). Job reduction was a problem in Toyota (Philippines) and MMC (Philippines). Management-union problems were acute in several workplaces like Nissan (Thailand), Honda (Indonesia), Hino (Thailand), Daihatsu/Perodua (Malaysia) or unions felt that wages and working conditions were under pressure, for example in Proton (Malaysia), GM (Thailand), Hino (Thailand) and Nissan (Thailand). Toyota unions did not report industrial relations problems as such, but management-labour conflicts do exist as indicated by the Toyota Philippines dispute (see above).



Docker driving a vehicle in Cebu harbour, Philippines
Photo: P Lissac © International Labour Organisation

Union goals related to problems like job insecurity, hiring of temporary workers, use of unorganised workers, and disputes with management. The Suzuki Indonesia union wanted to strengthen the union, while making the government protect regular workers was a priority of the MMC Indonesia union. At Nissan (Thailand), Honda (Thailand), and GM (Thailand) unions aimed at improving industrial relations, and at Honda (Indonesia) the union wanted to be recognised by management considering that an industrial conflict was running high in 2002 after the strike and dismissal of 300-400 employees including union leaders. One enterprise union (Proton Malaysia) expressed a wish to become more active outside the company and the MMC union in the Philippines wanted to strengthen the autoworkers’ union alliance.

In sum, the voices of auto unions in 2002 reflected ongoing changes in the industry in the ASEAN-4 and the challenges posed by company strategies to shift from regular to irregular employment on the one hand and on the other to weaken or avoid unions and collective bargaining whenever possible.
The second IMF(metal) Asia-Pacific auto conference in 2003 emphasised again the attack on employment and working conditions but added as a priority strengthening union work through increased centralisation of unions by forming industrial unions or federations.

Conclusion
Autoworkers’ unions are not very powerful in ASEAN-4 considering the political and legal obstacles to unionism in general and many TNC and local employers’ anti-union stand. Yet, they are probably stronger than most unions compared to the average level of union density and organisation in the region. Facing a huge financial crisis and industrial restructuring with downsizing, outsourcing, employing temporary workers, rationalisations etc. the unions have often been able to undertake collective bargaining at a bilateral, enterprise level, setting a minimum standard of ‘no retreat’ in collective agreements (in local currencies and conditions) during crises and improved conditions during periods of growth. They have often achieved a higher than average income level in a protected industry. But auto TNCs in the region try again and again to lower standards as seen recently at Honda and Proton in Malaysia, and even fight unions to the point of destruction as seen in Honda (Indonesia) and Toyota (Philippines). With regional and international support some conflicts can be won or at least not lost, and the concerns about union weaknesses and attempts to form more encompassing and stronger union networks, federations, or industrial unions in the specific countries will certainly improve the ‘union case’. However, it will take much more local inter-union mediation and collaboration together with regional and global co-operation and support to strengthen the autoworkers’ unions in the ASEAN-4. But these goals are a matter of urgency with the upcoming auto AFTA in 2005.

References
Department of Statistics (DOS) (2003) Monthly Manufacturing Statistics Malaysia. Kuala Lumpur: DOS.
Department of Trade Union Affairs/Ministry of Human Resources (DTUA/MHR) (various years) Annual Report. Kuala Lumpur: MHR
International Metalworkers Federation (IMFmetal) various reports, newsletter.
Kuruvilla et al. (2000) Globalization and Industrial Relations in the Philippines. Bangkok: ILO/ROAP.

Notes
1 Autofacts, Quarterly Forecast Update, 2003 Q4.
2 This free trade is conditional on at least 40 percent ASEAN local content.
3 The former Prime Minister of Malaysia, Mahathir Mohamad, announced before his departure that Malaysia would accept the AFTA in 2004, but then introduced excise duties on auto imports from other ASEAN countries in order to protect the domestic auto industry. At present it is unknown whether this policy still stands.
4 President of the Malaysian Automotive Association, NUTEAIW-workshop 13 October 2003, PJ, Malaysia.
5 The Danish Social Science Research Council (SSF) has provided financial support for the fieldwork of this paper between 2001 and 2003. I am also very grateful to all involved trade union officers and union employees for sharing information and time with me. The usual disclaimers prevail.
6 A union by this name does not exist due to a Supreme Court decision in 1997 (see section on the TMPC dispute).

This essay is an edited version of a paper presented at a Conference ‘Automobile Workers in Globalising Asia’ organised by Centre for Education and Communication and Asia Monitor Resource Centre in New Delhi, 30 November – 1 December 2003