Creating lean industrial relations: general motors in Silao, Mexico

Abstract

Research demonstrates that firms tailor their ‘lean production’ systems to take advantage of local cultural, industrial and labour relations environments to enhance productivity and at specific worksites. This article analyses the human resource policies practised by General Motors (GM) and their suppliers in Silao, Mexico to identify two local innovations to the automaker's lean production system. First, GM achieved the labour stability necessary to implement lean production by meticulously selecting workers and by embracing a local labour union eager to work with the firm. Secondly, GM and its local suppliers co-ordinated a single industrial relations regime, dividing the local labour force between them and maintaining a pay hierarchy among the plants. Doing so increased their collective efficiency by matching each of the factory's production processes with a capable segment of the labour market while stifling wage inflation by reducing competition among them.

Keywords:

• Lean production
• Industrial relations
• Auto industry
• Auto parts
• General Motors
• Mexico

Acknowledgement

The research for this article was made possible by a grant from the Social Science Research Council Program on the Corporation as a Social Institution and additional support from the University of Wisconsin-Madison Center for International Business Education and Research (CIBER) and Center for World Affairs & the Global Economy (WAGE). The author is grateful to Gay Seidman for her comments and advice throughout the writing process, as well as to Jonathan Zeitlin, Erik Olin Wright, Josh Whitford, Matt Vidal, Susie Mannon and the participants of the Economic Sociology Workshop at the University of Wisconsin-Madison for helpful feedback on an earlier incarnation of the article. All remaining errors are the author's.

Notes

The role of the Mexican auto industry in economic development and the emphasis it has received from policy-makers is documented widely. For a concise summary of the phased shift from import substitution industrialization policies to integration with the North American auto industry, see Ramirez de la O (1998). For a detailed analysis of the changing geography of production to northern regions of the country that accompanied greater production of engines and finished autos for export to the USA, see Micheli (1994).

The government's policies were not without dissent from unions which saw dramatic declines in both their members' standard of livings and their own influence within the government. For a thorough discussion of the mechanisms by which the government exploited rivalries between the major unions to gain widespread concessions, see Murillo (2001).

For an opposing view, that the capacity of the government to gain needed concessions from unions to reverse economic policy course demonstrates the strength of the corporatist system, see Zapata (1995).

SITIMM is made up of thirty sections, each one representing the workers of a particular employer.

This figure is skewed by the fact that, at the time this research was conducted, the plant had only been operating a little over a year, was still hiring and had a disproportionate share of the workforce at the low end of the pay scale. Upon entering the plant, workers earn a little less than $US48 a week. This rises incrementally so that, after c. three months, they are earning more than $US66 dollars a week, with salaries for technicians peaking at $US96 a week after eighteen months.

All the wage figures are approximations based on the exchange rate at time of writing of 10 Pesos to the US dollar.