European Works Council at GeneralMotors Europe: bargaining efficiency inregime competition?Josep Banyuls, Thomas Haipeter and László Neumann

ABSTRACT

The European Works Council (EWC) at General Motors Europe is frequently citedas one of the few examples of an efficient body of employee representation at aEuropean level within a multinational company. Despite the increasing threat ofsocial dumping in the enlarged Europe, the EWC was able to agree with managementthe terms of compulsory European minimum standards for defensive employmentand competitiveness pacts, thereby restricting the effects of coercive comparisonsbetween factories located in different countries. In this article, we focus on thisexperience and illuminate the tensions of ‘micro-corporatism’ caught between inter-national solidarity and regime competition.

INTRODUCTION

The ongoing process of economic globalisation, the market orientation of EuropeanUnion (EU) policies and the adoption of new management practices by multinationalcompanies constitute pressures that are changing the structures of industrial relationsregulation models. Firms’ freedom to be located in different countries has raised thepossibility that national industrial relations models are also a competitive factor andnot only a regulatory framework for improving social conditions. This process hasgenerated more interest in firms’ internationalisation and has shown the weakness ofEU social policies in protecting against negative consequences for labour conditions.Nevertheless, and opposing this trend, some structures have emerged at a Europeanlevel aimed at counterbalancing the negative effects of a more global economy. One ofthe results of the emerging pressures on the development of industrial relations withina European dimension is the European Works Council (EWC) directive passed in1994 (Directive 94/45/CE, with further developments in two subsequent directives(97/74/CE and 2007/14/CE). The directive defines the objective and the scope of thisinstitution, which, for the moment at least, is limited to the supply of information by

❒ Josep Banyuls is a Lecturer in Labour Economics and Employment Policy at Valencia University(Spain); Thomas Haipeter is a researcher at the Work and Qualification Institute (IAQ) at Duisburg-EssenUniversity (Germany); László Neumann is a researcher at the Institute for Social Policy and Labour(Hungary). Correspondence should be addressed to Josep Banyuls, Universitat de València, Departamentd’Economia Aplicada, Avda dels Tarongers s/n, 46022 València, Spain; email: Josep.Banyuls@uv.es

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managerial staff to the workers’ representatives of the different countries where themultinational firm has factories, and the establishment of a consultations’ protocolbetween both parts.

The competences that European directives have given EWCs are limited, althoughthis could lay the foundations for later developments between the actors of industrialrelations. However, further developments towards European collective bargaining atthe firm level, as normally understood, have not taken place. ‘The great majority ofthe EWCs cover employee consultation and information only’ (Marginson andSisson, 1998: 506), or, ‘on company level, the potential of EWCs remains largelyunfulfilled’ (Sisson and Marginson, 2002: 213), are sentences that clearly show thelimits of the current scope of EWCs.

In this article, we focus on the EWC at General Motors Europe (GM-EWC). Thisis a case in which an EWC has surpassed mere information exchange, and whichtherefore can be taken as a reference for the current revision of the EWC directiveas discussed between the European Commission and social partners (EWC News4/2007). It can be regarded as one of the few cases of an EWC being involved innegotiating and decision making at European level (Marginson et al., 2004). The caseis noteworthy, as the cohesion of unions has avoided regime competition betweenthem and has made agreements with management possible, ‘arranging’ restructuringprocesses and limiting coercive comparisons between factories. The main interest ofthe GM case lies in its step forward in decision and agreement making at a Europeanlevel, especially as it has not been supported by stronger rules—such as a moreambitious EWC directive—and its relative success rests upon certain exceptionalconditions. These conditions are also responsible for the fragility of the EWC’ssuccessful bargaining, which has always had to balance internal solidarity and inter-national regime competition.

As will be illustrated, the dynamics of the GM-EWC can be explained by changesin both GM management strategy, which reinforced the cohesion of unions andresponses to key challenges that enhanced the ‘inner life’ of the GM-EWC. Theseresponses have reinforced trust between union members, strengthened their long-termlearning processes, and also established particular working rules. This example allowsus to develop some general considerations on the limits and potentialities of thepresent EWC directive as a cornerstone of a new European industrial relations model.

The contents of the present article are grounded on a broader research project1 inwhich the motor industry was analysed in several European countries. Qualitativedata were collected, involving semi-structured interviews with EWC employee repre-sentatives and trade union experts in four different countries during the spring andsummer of 2006. Interviews were held with two trade union experts and three EWCmembers (including the EWC chairperson) from different plants in Germany, withtwo EWC members in Hungary and Poland, and with one GM-EWC member, severalGM works council members, and a European Committee union expert in Spain. Thearticle begins by reflecting upon the limits and potentialities of EWCs. It then intro-duces the main recent changes in the GM management, which will help us to explainsome aspects of the GM-EWC evolution. This is followed by an analysis of theGM-EWC’s ‘inner life’ and a short conclusion.

1 The GM-EWC research was carried out in the context of the EU-financed project ‘Dynamics of NationalEmployment Models’ coordinated by the Work and Qualifications Institute at the University of Duisburg-Essen.

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EWCs: FIRST STEP TOWARDS EUROPEAN COLLECTIVEAGREEMENTS OR MERELY INFORMATION EXCHANGE?

Assessments of the limits and potentialities of EWCs are rather heterogeneous andnumerous. Among the diversity of topics discussed, we want to highlight two par-ticular features that are significant for the analysis of the GM-EWC case. One is thequestion about whether EWCs constitute a cornerstone of a new European industrialrelations model. There are two extreme points of view. The optimistic position arguesthat EWCs are the beginning of the ‘Europeanisation’ of industrial relations and asign of progress towards collective bargaining at a European level. Besides the diver-sity that the EWC directive allows, a core of common elements and standard practicesemerge in many areas (Carley and Hall, 2000), which could constitute a first steptowards a more general structure of European industrial relations.

On the other hand, the pessimists suggest that there will be little progress beyond amere exchange of information, and, even though there may be a formal exchange ofinformation, central management may still evade their responsibilities to inform andconsult. This is related to the reduced scope of action and the limited competencesthat the European directive has given EWCs by default, and the fact that evolutiontowards institutions that can develop collective negotiations or bargaining facesmany obstacles (Rehfeldt, 1999). Social dialogue is restricted to the mere exchangeof information, though formal consultation rights are also ensured.

The second question concerns the capacity of EWCs to counterbalance the negativeeffects of capital movements and to protect workers’ rights in internationalcompetition. In the context of global capitalism, multinationals use regime competi-tion, that is, threats of transferring production between factories or carrying outforeign investments, as an effective instrument of pressure against their respectivenational unions (Martinez-Lucio and Weston, 1994). Many multinational enterprisesuse internal benchmarking, coercive comparisons, or comparative control in search ofrationalisation and the adoption of flexible work practices.

As has been mentioned (Coller, 1996; Ferner and Edwards, 1995; Mueller, 1996;Mueller and Purcell, 1992), internalisation of competition as an indirect mode ofhierarchical control is an increasingly common solution in large multinational organ-isations, whereby sub-units are forced to compete for orders and investment, and,ultimately, for jobs. By devising different indices for comparison, the headquartersput both local managers and workers’ representatives under pressure to increaseproductivity. The aim is for all sub-units to achieve the ‘best-practice’ levels ofhigh-performing plants as a condition of preserving the facility and/or granting newinvestment.

This pressure could be countered by coordinated union action at company levelthrough EWCs. EWCs’ micro-corporatism is considered a means of resolving thistension and an opportunity for the renewal of trade unions and innovative forms ofsolidarity among workers (Taylor and Mathers, 2002). However, there is alwaystension between the national bargaining level and the activity of international firms,and coordinated union action does not necessarily take place. In this sense, some ofthe critics of the current EWC regulatory framework stress the necessity of increasingthe competences of EWCs and reinforcing the relevance of an international dimensionfor collective bargaining (Arrowsmith and Marginson, 2006).

Furthermore, other critical positions emphasise the way in which EWCs may actas an instrument for international labour regime competition (Hancké, 2000). The

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tension that always arises between national interest and international solidarity(Wills, 2001) often results in unions seeking to increase, or at least maintain, produc-tion levels at their own plants and in undercutting and other forms of foul play againstother European unions. Moreover, there are many differences between countries andbetween unions in Europe. Those usually highlighted, among others, are culturaland attitudinal differences, diverse union representation strategies and union–management relationships, as well as different wage levels or domination of EWCs byhome country delegates (ibid.; see also Timming, 2007; Vitols, 2003; Voss, 2006).EWCs are therefore affected by the diversity of industrial relations models inside theEU (Whittal et al., 2007).

The 2004 enlargement of the EU spurred a special line of debate on these aspects ofEWCs, both because it introduced an unprecedented dimension to the diversity ofnational industrial relations models, and because it highlighted the issue of socialdumping (Meardi, 2002). Now, this transnational employee representation bodycovering both high- and low-wage countries has to cope with the extraordinary threatof relocation. Growing regime competition was initially expected to lead to an over-stretching of EWCs. However, against these pessimistic expectations, empiricalresearch carried out on EWCs enlarged by members from the new European MemberStates has not in fact verified the expectation that East–West rivalries predominantlywould result in internal problems of mistrust. Expectations and attitudes of tradeunionists and works councillors in the East were not found to differ substantially fromtheir Western counterparts, and shared positions were underpinned by similar ex-perience of the threat of relocation in the new Member States towards even lowerwage countries (Meardi, 2004; Voss, 2006). As will be seen in the following sections,the GM-EWC case clearly reflects these discussions.

RECENT TRENDS AT GM: EUROPEAN INTERNATIONALISATION ANDREGIME COMPETITION

In addition to the quantitative expansion of GM in Europe2, there are three importantqualitative aspects of GM internationalisation. A first aspect was the implementationof organisational changes through concession bargaining. From the mid-1980s, GMcorporate headquarters exerted pressure for radical organisational changes (includinghigh-involvement teamworking, continuous shift production, etc.). Instead of linkingnew investments to market developments only, investment decisions were used toachieve change in the established workplace regime. For instance, in 1990, Britishunions were forced to make far-reaching concessions on workplace reform—flexibility and productivity improvements being a prerequisite for the new investmentin engine production at Ellesmere Port. Gradually, it became a worldwide policy of

2 The arrival of GM in Europe occurred with the acquisition of Vauxhall in England (1925) and Adam OpelAG in Germany (1929). As a subsidiary of the parent company GM, the stock company Opel was relativelyautonomous in developing cars and organising production for the German and European markets. Afterthe 1980s, a further step towards internationalisation took place. It included events like the opening of GMplants in Zaragoza (Spain), Eisenach (Eastern Germany), Azambuja (Portugal) and an engine plant inAspern (Austria). GM also acquired Saab. In 1990, the company agreed to a joint venture in Hungary(Szentgotthárd), in 1998 a production plant in Poland (Gliwice) was inaugurated, in 2000 an alliance withFiat was agreed and in 2002 a joint venture in central Russia was negotiated. A final important step towardsinternationalisation has been the introduction of Chevrolet as a fourth GM brand in Europe, at themoment mainly produced for European markets at the Daewoo plants in Korea.

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GM that every new plant should incorporate previous company experience with leanproduction at other plants (for details, see Mueller, 1996).

A second novelty was the implementation of decision making at a European level.Since 1960, GM has been unifying the product range and organising most of theactivities (such as purchasing or distribution) on a continental scale. Finally, in 1986,General Motors Europe (GME) was founded in Switzerland (Zürich) as the newEuropean headquarters of GM. This new organisational model introduced aEuropean management level to manage the European sub-units of GM, overarchingthe different subsidiary companies and locations. During GME’s initial years, theEuropean decision-making level did not interfere significantly in the development ofthe subsidiaries. Nevertheless, the situation changed fundamentally in the first half ofthe 1990s. From then onwards, the new level of European management sought togain more influence.

More recently, the US headquarters pushed the international integration of thecompany organisation further. Since 2003, the European subsidiaries, Opel, Vauxhalland Saab were integrated in GM Europe as a regional unit, coexisting with the otherregional units: GM North America, GM Latin America/Africa/Mid-East and GMAsia-Pacific. The new regional units were still to operate rather independently fromeach other. This situation changed just one year later, in 2004, when the US head-quarters tried to implement globalised business structures concerning development,manufacturing and marketing. Regional units were integrated in global processesmanaged by the headquarters with the goal of increasing economies of scale andexploiting cost advantages wherever they could be found.

The third qualitative aspect of global integration efforts at GM is the platformstrategy. Platforms are combinations of components that are built into differentmodels and brands. The various models consist of different designs and combinationsof parts that are built on the same platforms. The combination of components in theform of platforms ensures at least three advantages for the company. First, theplatforms increase the scale economies concerning the platform components both forGM and for its suppliers. Second, platforms enhance production flexibility within thecompany because they allow the shift of production of all models built on a platformbetween the plants that operate with analogous technical endowments. This parallelproduction system, third, makes locations more comparable concerning costs, profit-ability, quality and work organisation standards. It thereby enables the developmentof benchmarking systems concerning production organisation and the developmentof cost competition and coercive comparisons between the plants.

There are two platforms in operation at present. Rüsselsheim and the Saab locationin Trollhättan (Sweden) form the Epsilon platform, producing vehicles aimed at theupper-middle-class market, such as the Opel Vectra. Bochum is part of the Deltaplatform (producing the Astra), together with locations in Antwerp (Belgium), Elles-mere Port (UK), and also, in the near future, Gliwice (Poland) and Trollhättan.Bochum and Gliwice are also manufacturing the Zafira model based on the Deltaplatform. GM has standardised decision-making procedures regarding allocation ofproduction in the form of internal tendering. The headquarters invites tenders forproduction of a model built on a certain platform. The plant management can decideto bid for the tender or not. If they do so, they have to complete standardisedapplication forms and return them to the headquarters. The acceptance of a tender isno guarantee that the respective model will be produced there during the wholeproduct cycle. In the event of fluctuations in demand and of excess capacities during

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the product cycle, or of volatility of exchange rates, production can be shifted betweenthe platform locations. In this respect, competition between locations is a continuousprocess throughout the product cycle.

THE DEVELOPMENT OF GME EUROPEAN WORKS COUNCIL

The GM-EWC, which is known as GME European Employee Forum, was foundedin 1996 using the option of negotiating a voluntary agreement between works coun-cils, unions and management according to Article 13 of the Directive, thus avoidingthe standardised process defined in Article 6 of the Directive (which came into forcefor agreements negotiated from 1997 onwards). The German works council memberswere the strongest—but not the dominating—national group within the EWC. TheEWC was originally composed of 24 members: six from Germany, four from the UK,three from Belgium, two from France, two from Austria, one from Portugal, threefrom Spain and three from Sweden. From 2000 onwards, Poland and Hungary wereaffiliated as full members, with one member from each country. Following theGerman pattern of works council, the EWC was organised as an employee-sidecommittee, and not as a joint committee together with members of management.

A first benefit of the new institution experienced by works councils was theimprovement of information on industrial relations structures, wage standards,working conditions and current conflicts with the management at other Europeanlocations. Information exchange had at least two important functions for the furtherdevelopment of the institution. First, it helped to develop an understanding of thedifferences between the members of the EWC concerning their experiences, theirunderstanding of problems and their attitudes towards the functions and goals of aworks council. These differences are related to the respective national and industrialrelations identities of EWC members, stemming from different experiences in differ-ent national industrial relations systems (Timming and Veersma, 2007). Understand-ing the differences proved to be a first step in overcoming them, at least to a certaindegree.

Second, this mutual understanding of differences was the basis for establishing newforms of social exchange. Gradually, trustful relationships between the membersof the works councils were able to evolve. Trust was a necessary precondition fordeveloping common European positions and goals. These common positions andgoals based on trust can be regarded as an important element of a common Europeanidentity for the EWC (Timming and Veersma, 2007). Nevertheless, it also becameclear that trust was challenged again and again, that national identities seekingnational competitive advantages within the company always remained present in theEWC and that, therefore, trust had to be renewed continuously by communicationand negotiation.

The common perception of problems and goals within the EWC was facilitated bythe company’s restructuring programmes, the integration of platform production, thesystematisation of benchmarking and competition between factories. These experi-ences favoured the impression that sites in different countries were confronted withquite similar problems and challenges, and that the response to these challenges couldbenefit from a coordinated and common strategy within the EWC. Moreover, thegrowing importance of the European management level regarding national-levelcompany decision making (especially concerning the German Opel management)made it less attractive for the German members to play the national card (which in

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fact is precisely what they did immediately after the founding of the EWC) bycooperating with the national management in regime competition. Instead, it wasrecognised within the EWC that building the capacity to influence strategic companydecision making was becoming increasingly dependent on establishing influence onEuropean-level management.

In fact, the findings of the GME example provide a clear test of the hypothesis thatthe European integration of production structures, and the existence of a Europeanmanagement level establish important preconditions for the development of EWCs asa relevant political actor within multinational companies (e.g. Marginson et al., 2004).Moreover, we should bear in mind that the systematisation of regime competition,as was seen at GME, will probably function as a main driver of national interestfragmentation within EWCs, especially if managements try to individualise negotia-tions with national locations, as was the case at GME. Therefore, the possible advan-tages of cooperation are always in competition with the possible advantages ofindividual and self-seeking strategies that try to gain a competitive edge over thecompany’s other production sites.

The development of the GM-EWC can be described as a process of cooperativestrategy building based on common experiences of problems, and leading to at leastthe first contours of a European identity of the EWC, but this process was charac-terised by a steady conflict between cooperation and more individual strategies basedon regime competition. Therefore, the process was not unidirectional. It can only beunderstood in terms of the experiences members had in their interaction withmanagement. In the course of these interactions, the EWC developed from a com-mittee that solely exchanged information among its members and management into acommittee that was recognised as an actor in negotiations with management. Conse-quently, the development of internal cooperation structures and of external negotia-tion efficiency could be considered as a twin process, marked by the following steps.

The initial point of development was the exchange of information within the EWC.The exchange was carried out for the first time in 1998 during the negotiations on alocal pact for employment and competitiveness, an instrument that spread throughthe German economy during the 1990s. Here, for the first time, members of thecouncil had the experience of being confronted individually with the samechallenges—the pressure of management on wages and labour standards—and doingthe same things, especially negotiating local agreements with management that dealtwith material concessions and employment security.3 That same year, the Europeanmanagement tier tried to implement a company-wide system of benchmarking byusing the Template study. This marked the first conflict between workers’ represen-tatives and management with an important contribution made by the EWC. First,German works councils tried to impede the project individually. Although thisattempt was quite successful (a legal proceeding was won), the works councils decidedto discuss this issue at a European level. When the management declined to partici-pate in the meeting, the EWC held an internal meeting financed by its members’unions and rejected the Template study. This was the first common position thatmembers developed against management (also see Eller-Braatz and Klebe, 1998).

The pattern of separate local negotiations was abandoned for the first time duringthe course of the joint venture of GM and Fiat in 2000. In fact, this is considered the

3 For more details on these practices in Germany and in other countries, see Haipeter and Banyuls (2007).

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turning point of the GM-EWC by the unions (EMF, 2005). Although about 14,000GME employees were affected by the plan to outsource production through thejoint-venture companies, the headquarters failed to inform the EWC in due time.Therefore, for the first time, the EWC organised protests and staged short strikesthrough the local trade unions at different sites in Europe. And also for the first time,the EWC initiated negotiations with management, leading to the first Europeanframework agreement that was declared legally binding by both parties, the EWC andEuropean-level management (a position that is not self-evident, since in the EuropeanDirective the EWC is not considered as a negotiation body able to negotiate bindingagreements). The agreement stipulated that all workers transferred to the new sub-sidiary companies were to be treated like Opel workers, that they were to be repre-sented by the same works councils as previously and that earlier investment decisionshad to be honoured (Herber and Schäfer-Klug, 2002).

The EWC’s next important step towards external negotiation efficiency wasthe Luton conflict at the end of 2000, when European management informed theEWC that it planned to cut 6,000 jobs in Europe and close the Luton plant in the UK,which produced the Vectra model (for details, see Herber and Schäfer-Klug, 2002).Although the British trade unions immediately initiated strikes, hoping that the otherEuropean locations would show solidarity, the EWC decided not to go on extendedstrikes across Europe, but instead to couple negotiations on a restructuring plan withan employee actions day across Europe. This decision—debated within the EWC butfinally agreed on by the members—was based on the assessment that excess capacityidentified by GM management constituted a real and serious problem for thecompany. Finally, a second framework agreement was negotiated between manage-ment and the EWC. This contained provisions to avoid dismissals for economicreasons, the transfer of personnel to another GM site close to Luton, and the pres-ervation of wages working conditions and representation structures.

In autumn 2001, the European management announced the Olympia restructuringprogramme. Again, the European management informed the EWC, and, finally,accepted negotiations with the EWC. To a large extent, negotiations were eased by thefact that EWC members shared management’s assumptions concerning crisis andexcess capacities. ‘It was clear to us that we could not produce more cars than wecould sell on the market’, as one of the works council members said. In this conflict,for the first time, EWC members developed a concept that served as a leitmotiv infurther conflicts: the equal sharing of burdens or ‘to share the pain’, as a works councilmember said. Thereby, the EWC succeeded in distributing the reduction of capacitiesacross the European production sites of GM and in upholding the ban on dismissalsfor economic reasons. In return, the EWC agreed to capacity reductions and measuresto enhance productivity and flexibility that were to be negotiated locally.

Restructuring plans were even more ambitious in autumn 2004, when GM pre-sented its restructuring programme for Europe. As in 2001, the EWC was informedfirst and then negotiated a framework agreement before local negotiations took place.The agreement, signed in December 2004, reiterated all the relevant points stipulatedin the Olympia agreement concerning the protection of employment and of produc-tion sites. Moreover, the EWC was able to agree on a catalogue of indicators to betaken into account in coercive comparisons between locations. On the one hand, thesites should be made comparable; that is, manufacturing costs have to be comparedcontrolling the different levels of vertical integration. On the other hand, the socialeffects of dismissals or plant closures have to be taken into account. Finally, the

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agreement envisaged further discussion of the so-called ‘manufacturing footprints’principle—a policy developed by the headquarters, according to which manufactur-ing should be located close to the market, and production and sales numbers shouldbe comparable.

In recent times, restructuring programmes at GM have gone hand in hand withthe newly constructed platforms and competition between the production sites of aplatform. Thereby, restructuring has been combined with European and globallyintegrated production structures, and management has developed the strategy givingregime competition a new quality. The first ‘beauty contest’ (as coercive comparisonaction is colloquially called by EWC members) was staged between Rüsselsheim andTrollättan for the production of the Epsilon platform with the Vectra and the Saabmodels from 2008 onwards. In October 2004, the EWC reached the agreement thatneither of the two competitors was to fall short of their respective collective bargain-ing agreements. This has become an important and general coordination rule withinthe EWC.

The second ‘beauty contest’ was organised between the production sites of theDelta platform. These were Bochum, Antwerp and Ellesmere Port, which had beenproducing the Astra up till then, and Gliwice and Trollhättan, which were additionalcompetitors in the tender for the new Delta platform, starting production in 2010. Toimprove international coordination between locations, a work group within the EWCwas made up by plant representatives, trade unionists of the five Delta locations anda coordinator of the European Metalworking Federation. This work group developeda ‘European Promise of Solidarity’ in the form of binding rules for localrepresentatives. These rules consist of the following points: the development of Euro-pean minimum standards, encompassing information and consultation betweenmembers, a capacity index and the development of criteria for a fair capacity utilisa-tion, the negotiation of a European framework agreement for the Delta locations, andmutual training and support.

Even before the decision on the Delta platform, both solidarity within the EWC andits negotiating efficiency with management faced severe challenges. In spring 2006,management decided to reduce the capacities of the Delta platform, eliminating thethird shift at one of the Delta plants. Cost comparisons were made based on theprinciples outlined above that showed Antwerp to be the most competitive andEllesmere Port the least competitive plant, with Bochum in between. The Deltaworking group succeeded in making an agreement that impeded dismissals for eco-nomic reasons. However, it could not impede the cancellation of the third shift inEllesmere Port (which represented a loss of 950 jobs), and, to date, it has not suc-ceeded in negotiating a framework agreement for the Delta plants, because Europeanmanagement still rejects the idea.

On the contrary, in June 2006, management made the announcement that it wasgoing to close the Azambuja plant in Portugal, where the Combo model was pro-duced, and shift production to the Spanish Zaragoza plant. The EWC rejected theplan and developed alternatives together with an action programme that was sup-ported by employee representatives at all European GM locations. The action pro-gramme consisted of strikes and information events across the European plants. Theprogramme lasted more than three weeks. Finally, the management expressed itswillingness to negotiate the issue with the EWC. Nevertheless, despite the fact that theaction programme was very successful, the bargaining power of the employee repre-sentatives was not sufficient to provide a fundamental challenge to the management

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plan or to avoid the closure of the plant. Only socially acceptable dismissals and theconversion of the GM plant into an industry park (supported by GM because of thepotential for new jobs) could be agreed on.

The decision on the Delta platform in April 2007 was also a controversial one, andgave further evidence of the ambiguous situation of the EWC as a body, which, onthe one hand, had successfully gained negotiation capacities, and, on the other, wasembedded in a complex process of regime competition and restructuring. The EWCmanaged to agree with management that none of the five bidding plants listed abovewere to be closed as a result of the decision. Nevertheless, the EWC was not able toavoid the management rejecting one of the plants, the Antwerp site, for the produc-tion of the new generation of the Delta platform. Because all the Western productionGM plants were very close in performance, measured by cost or productivity figures,the decision hinged, according to Carl-Peter Foster, President of GM Europe, onother aspects, such as capacity planning, brand and market considerations, andongoing restructuring activities. The only things the EWC was able to do in thisrespect was to support a strike at the Antwerp plant, to organise a European actionday on 3 May that year, and to negotiate with European management for at leastsome compensation for the Antwerp site in the form of another product. Althoughthis was done successfully, it does not appear to have ensured the long-term survivalof the site.

INTEGRATION PROBLEMS AND ASSESSMENT OF CHANGESIN GM EUROPE EWC

The development of internal solidarity between the members and external efficiencyvis-à-vis management was accompanied by internal tensions within the EWC thatwere focused on conflicts of national interests. Internal tensions arose for the first timein the course of the 1998 local pact for safeguarding workplaces. In the local pact, theGerman works council was able to establish the production capacity of 275,000 unitsfor the Rüsselsheim plant for the duration of the agreement. This agreement washarshly criticised by the British members of the EWC because if sales decreased, risksfor the other Vectra plants would increase. This was exactly what happened through-out the two subsequent years, leading to the above-mentioned closure of the Lutonplant. Because of this outcome, members promised each other not to make agree-ments of this kind again without previous consultation within the EWC.

Nevertheless, other problems of international solidarity occurred later on. One ofthem emerged in the course of the Rüsselheim–Trollhättan ‘beauty contest’ (see alsoBartmann, 2005). There was irritation between representatives from the two sitesbecause of different national styles of industrial relations. On the one hand, theGerman works council at Rüsselsheim tried to protect the core workforce by defen-sive pacts for employment and competitiveness, increasing the price of dismissals,which was regarded critically by the Swedish members as unfair because the advan-tages that were negotiated for the German plant were based on material concessionsfor the workers. On the other hand, the Swedish trade unions sought to mobilisenational state aid for the promotion of infrastructure and negotiations with the GMmanagement, which was criticised by the German members for being a one-sidedadvantage for Sweden. Ultimately, these mutual disagreements were minimised by thefact that no local negotiations took place prior to the negotiation of the Europeanframework agreement in October 2004. The EWC agreed on the rule that in national

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negotiations, existing collective bargaining agreements for the plants (whether fixedon national, branch, regional or plant level) had to be followed as a bottom line forconcessions.

A third conflict of international solidarity owing to opposing national interests waswith regard to GM investments in Poland, where GM wanted to purchase a produc-tion plant near Warsaw. The investments made in the Gliwice plant, together with theexpansion of production in Russia and Ukraine and the strengthening of its EastAsian sites, were assessed by the EWC as a new orientation of GM towards the Eastand away from the traditional European locations. In this context, the EWC tried todevelop a statement to indicate disapproval of these plans and to defend the tradi-tional locations. However, this statement was opposed by the Polish members, whoargued that they could not reject investments in Poland because of the highunemployment rate in the Gliwice region and the difficult situation of Solidarnosc(Jagodzinski et al., 2006).4 Several meetings took place within the Delta work groupto solve the conflict and to find a way to make a common EWC statement. In the eyesof the German EWC members interviewed, the situation was on a razor’s edge, andthe prospects for the EWC splitting up were quite strong. Finally, however, the Polishcolleagues agreed on the EWC statement, not least because at the same time, GMdecided to shift the small-scale Aguila production from Poland to the Suzuki plant inHungary (it was a joint-venture production).

According to the Hungarian interviewee, the employee representatives at theSzentgotthárd plant were in a very similar situation to that of the Polish counterparts.However, their behaviour was not a source of open conflict, as the ongoing restruc-turing had no actual impact on the GM plant in Hungary. The role of the EWC withinthe Hungarian company was highlighted by the conflict of June 2006, when GMwas to close the Azambuja plant in Portugal. Then, an extraordinary EWC meetingdevised a European action plan, including the so-called Euro-strike. The workers inHungary demonstrated their solidarity by taking part in an assembly convened by theworks council. The president of the works council informed the company director thatit would be a European solidarity action. The director allowed the workers’ assemblyto be held during working hours as if it were the most natural thing in the world.Theoretically, if a trade union calls a strike, the company does not pay wages. Staginga real strike was out of the question, as employee representatives were well aware ofthe lack of employees’ support, as in the Polish case. As a whole, the evaluation of theeffect of the EWC is very positive in Hungary. According to the employee represen-tative, ‘solidarity, which we miss so much, is what we can learn from the EWC’. Healso appreciated the efforts of German EWC members, who started to deal withEurope as a whole from 2004 onward and took the lead in protesting when head-quarters announced the closure of the Portuguese plant (Jagodzinski et al., 2006).

To sum up, the solutions to conflicts among EWC members resulting from differentnational or local interests by means of open discussions have to some extent posed achallenge to the integration of the EWC, but have also acted as a very importantsource of integration and of building a European identity within the GM-EWC. Attimes, the EWC was threatened, but it was not paralysed by internal tensions. Nor

4 At the Polish plants there is a fragmented union structure with many small company trade unionscompeting to poach the Solidarnosc members. In this situation, the incumbent union, Solidarnosc, fearedits defeat in the following elections by the other unions with their horizon focused on the plant only and onPolish interests.

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were conflicts suppressed by a majority within the EWC just to keep the committeecalm. On the contrary, different interests were discussed, and, thanks to learningwithin new institutions, actors adapted their national position to a certain degree tofacilitate international understanding and cooperation. As a result, today nationaldefensive pacts for employment and competitiveness are debated first within the EWCregarding their acceptability for the other members. An important point that seems tohave encouraged institutional learning is the relatively balanced composition of theEWC. As a Spanish EWC member pointed out, although the chairperson is fromGermany, and the Germans have more members in the EWC than any other membercountry, they are far from dominating the EWC quantitatively. The GM-EWC ismore than just an ‘international extension of a national system of workplace repre-sentation’, as Streeck (1999) has characterised the EWC institution. GM is not aGerman but a US company with European headquarters outside Germany. Althoughthere is a close relationship between German management and employee representa-tives, it is not sufficient to dominate industrial relations in the much more encom-passing GM group.

Another important point for the development of international cooperation andcontours of a European identity (mentioned by a European actor in one of ourinterviews) is the relationship between employee representatives and employees(which is a third dimension, along with relationships between EWC members andbetween the EWC and the management). In the conflict on investments in EasternEurope, the argument of the Polish members was simply that they would not be ableto legitimise a critical attitude towards investments vis-à-vis their employees. Hungar-ians also sympathised with this argument, although it was not strongly emphasisedduring the European action day. In other countries, the experience is also that foremployees, ‘bread and butter’ matters are much more important than Europeansolidarity matters. In addition, EWC members always find it difficult to argue thatEuropean solidarity might be a precondition for the preservation of national labourstandards and job security. The works councils have to be careful in ensuring theybring employees with them and convince them of the importance of European-levelregulation. Therefore, in the eyes of the works councils, it is also necessary to havesome phases of consolidation in order to convince the workforce and not to ask toomuch of them. Otherwise, the works councils would be in danger of losing some oftheir policy’s legitimacy, which would mean that it would be harder for them tomobilise the workforce in transnational conflicts with the management.

CONCLUSIONS

What can we learn about the discussion on EWCs from the example of GM Europe?The lessons are somewhat mixed. A first lesson seems to be that the example does notserve as a verification of the arguments of the pessimists. One important argumentagainst the efficiency of EWCs was that they are only weakly regulated supranationalinstitutions of industrial citizenship rights, and that they themselves could be enginesof regime competition (Hancké, 2000; Schulten, 1996; Streeck, 1999). At first sight,the GM-EWC seems to fit into this analysis quite well. The features of intensifiedregime competition are obvious, and the EWC as an institution has not proven to beable to restrict regime competition decisively. On the contrary, it always has to dealwith the consequences of regime competition, both internally in the relationship with

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its members and externally in negotiations with management. Solidarity is alwaysfragile because of the competition between locations and the persistence of nationalinterests within the EWC.

However, this does not mean that the EWC at GM is an engine for the developmentof regime competition. On the contrary, it is the only institution at hand able toinfluence and temper the consequences of regime competition. The central precondi-tion for this role is the fact that the EWC has transcended the limits of simply ex-changing information and providing a forum for consultation, and has instead beenable to establish itself as a bargaining body. This adaptive process was contingent onthe capacity of EWC members to overcome respective national identities at crucialmoments of internal conflict and thereby develop the contours of an—alwaysfragile—European identity. This success has been achieved by the EWC throughcontinuous negotiations and struggles with GM management. Members did not useor exploit the EWC for the sole pursuit of individual national interests. By developing(and learning how to develop) a sense of transnational solidarity, they have recog-nised that transnational solidarity is the only means of defending national interestseffectively in a context of intensified regime competition. In organising transnationalsolidarity, national works councils and unions have a greater range of options andresources in their national negotiations with the management than they had before.

Moreover, transnational solidarity has not proven to be a threat to nationalcollective bargaining agreements and labour standards. First, minimum standardsnegotiated by the EWC have, to date, referred mainly to employee security andrepresentation rights during plant restructuring; European-wide agreements do notcover wage-setting and working hours, for example, which are still negotiated in therespective national arena. Second, the actors in the EWC have explicitly declared themaintenance of national labour standards as a precondition for local agreements.This precondition has also been established in the framework agreements on restruc-turing that the EWC has negotiated with management. Our analysis suggests, there-fore, that the GM-EWC acts as a stabiliser of national labour standards.

The example further shows that workers’ solidarity in regime competition canresult in more than what has been labelled fragmented ‘competitive solidarity’(Streeck, 2000), where the focus is on the creation of local competitive advantages.Looking at the relative success of the GM-EWC, it is worthwhile identifying struc-tural reasons that may explain why this particular EWC was able to succeed whereothers have not [see e.g. the case of the Corus EWC analysed by Timming andVeersma (2007)]. Certainly, the close relationship between German management andemployee representatives is one of the success factors, since the defensive pact foremployment and competitiveness negotiated by the works councils and managementin Germany provided the historical root for the development of the EWC and alsoserved as an industrial relations model that was then used at European-level innegotiating binding agreements. Quite interestingly, therefore, the contemporaryGerman model of industrial relations (and arguably not the traditional one based onsector collective agreements) may have established the prevailing pattern in the opera-tion of GM-EWC, albeit without the German members establishing themselves asdominant actors in the body.

The most important among the other factors of success already mentioned andexplained above include: the absence of national dominance within the EWC, theexistence of a European production network that enables coercive comparisonsamong plants, and the existence and functioning of a European management level.

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These conditions create common problems and therefore facilitate the development ofshared understandings and common strategies. The unique combination of factors iswhat seems to make the difference. In the Corus case mentioned above, the EWCwas unable to translate an effective national model of industrial relations onto theEuropean level, and the national union–management relationships elevated toEWC level proved to be a serious inhibiting factor. Moreover, the problems andnational understandings remained divergent because there was no European produc-tion network in place; the national locations were operationalised as separate businessunits with little interference from the parent company.

Despite these optimistic results concerning solidarity and identity building, theGM-EWC does not serve as a clear proof that the optimists are right and that EWCslike the one at GM are already cornerstones of a new European corporatism inindustrial relations (e.g. Knutsen, 2004). This is the second lesson to be learnt fromthis case. The reason is not only that the conditions of success in the GM case arehighly specific, but also that the power relationships between management andemployee representatives have changed in the course of regime competition. A well-functioning EWC as at GM, which has been able to establish itself as a negotiationbody, is clearly an instrument of power. However, it does not seem powerful enoughto constitute corporatism. The establishment of a balance of power between interestgroups, which has always been regarded as fundamental for stable corporatistsystems, is clearly not in prospect, and the EWC as an institution is not able to restoreit even through micro-corporatism. Management can take advantage of internalcompetition between locations by enforcing local concessions. Employee representa-tives are on the defensive. EWCs offer them the possibility to ‘share the pain’, but notto overcome regime competition or management’s gain in power.

Moreover, as regards general conclusions, one has to bear in mind that the successof the GM-EWC is higher than average. In a range of case studies of US and UKmultinationals with EWCs, the GM-EWC is the only one that was able to gain thestatus of a negotiating agency (Marginson et al., 2004). The spectrum of differencesbetween EWCs from symbolic to participative structures seems to be enormous(Lecher et al., 2001). Even in the case of a well-functioning EWC, an effectivelong-term restriction of regime competition only seems to be achievable in an envir-onment of harmonised or at least coordinated labour standards in Europe.

However, neither perspective seems to be realistic, given the present immature, orpractically non-existent, state of sector collective bargaining at EU level (Keller,2006), and given the enormous differences between production systems (includingwages, industrial relations, flexibility of working hours, etc.) across countries, whichis an important reason underpinning internationalisation of production andrelocation. The only thing works councils can do about the macro levels of Europeanlabour regulation is to try to influence their unions to strengthen their Europeanprofile and politics concerning both coordination between unions and demandson employers’ associations. This could be another important function of EWCs. Inaddition, so far, the story of the GM-EWC has provided an exemplary model ofpositive cooperation with trade unions both at national and European level, which isanother precondition for a well-functioning EWC.

A last point to be mentioned concerns the limits of European internationalisationof interest representation in a global company. At this moment, the European style ofinternationalisation seems to be losing some of its coherency, for GM’s restructuringefforts have switched to a global dimension concerning both development and

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manufacturing. Development packages are more and more global in style, and thefuture platforms will also be global ones. That is to say, potentially, Europeanproducts can also be built in other areas of the world (and vice versa), and design andmanufacturing competition between locations has become global in character. Fur-thermore, GM is trying to establish some of its brands as global brands sellingidentical products all over the world. Whether this strategy will be successful or not,it is already fostering global competition between locations and brands within thecompany. In this situation, the globalisation of interest representation (possibly in theform of a global works council) seems to be a logical step. In fact, the GM-EWC hasalready responded to this challenge and made concerted efforts to extend its opera-tions geographically. However, such efforts have been hindered by the resistance ofthe US union, UAW, which, to date, has refused to cooperate with the Europeans.Therefore, while a global works council will be needed soon, it is still far from beingrealised.

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