European Foundation for the Improvement of Living and Working Conditions

European Foundation for the Improvement of Living and Working Conditions EWC case studies The DaimlerChrysler Group Company profile The EWC EWC process EWC meetings Outcomes and impacts Conclusions EWC case studies are available in electronic format only. Wyattville Road, Loughlinstown, Dublin 18, Ireland. - Tel: (+353 1) 204 31 00 - Fax: 282 42 09 / 282 64 56 email: postmaster@eurofound.eu.int - website: www.eurofound.eu.int

Company profile Daimler Benz, which came into being in 1926 following the merger of Benz & Cie and Daimler-Motoren-Gesellschaft, went through two more waves of transnational expansion in the 1950s and 1970s and subsequently developed into a global group. Daimler Benz then pursued a strategy of diversification from the 1980s, turning the enterprise into a broadly diversified high-tech group. The mid-1990s saw a fundamental reorientation that changed the company into a global automobile manufacturer. At the end of 1998 Daimler Benz merged with the Chrysler Corporation. In 2000 2001 DaimlerChrysler AG emerged from the acquisition of shares in Mitsubishi Motors (34%) and Hyundai Motor Company (10%) and the selling of areas that did not belong to the automotive sector, leading to the final focus of the core business automobiles. In 2001 the turnover of the DaimlerChrysler Group was approximately EUR 150 billion, with about 370,000 employees. The group as a whole is divided into the following five business areas: Mercedes-Benz passenger cars and Smart (about 102,000 employees and EUR 48 billion turnover) with production centres in Germany, the USA, Brazil, South Africa and others. Chrysler Group (about 104,000 employees and a turnover of EUR 63 billion) with production centres in the USA, Canada, Mexico and others. Commercial vehicles (about 69,000 employees and a turnover of EUR 28 billion) with production centres in Germany, the USA, Mexico, Argentina, Brazil and others. Services (about 10,000 employees and a turnover of EUR 16 billion). Other activities (about 7,000 employees and a turnover of EUR 2 billion). The organisation of the passenger car sector is largely multi-regional. Essentially the three triad markets are served by different brands and three independently operating company divisions: Mercedes-Benz for Europe, Chrysler for America and Mitsubishi for the Asian-Pacific area. Mercedes-Benz pursues a predominantly global export strategy with worldwide distribution structures but only exceptionally foreign production centres. Building cooperation opportunities and synergy effects among the three previously independent companies, Mercedes- Benz, Chrysler and Mitsubishi is underway but still in its initial stages. A global structure albeit limited exists in the form of development and purchasing partnerships. The EWC Already in the early 1990s a so-called European distribution committee (europäischer Vertriebsarbeitskreis) was established: a body of employee representatives of European distribution centres that was informal but recognised by group management and constituted a first transnational employee representation structure at the then Daimler-Benz Group. After a European Works Council (EWC) was established in 1996, the European distribution committee was integrated, as it were, as an EWC committee. The corresponding agreement that was concluded between the German works council and group management in July 1996 resulted from a common interest in using the simplified negotiation procedure for the conclusion of a voluntary agreement according to Article 13 of the EWC Directive. 1

EWC case studies According to the agreement, the EWC objective is to inform and consult the employees of Daimler-Benz Group in the European Union and the European Economic Area (EU and EEA). The Europe-wide exchange of information and opinions between group management and employees is to contribute to integration by promoting mutual understanding and willingness to cooperate. Economic and social aspects form a joint basis for a future-oriented corporate policy. Information sharing and consultation take place in two forms: within the EWC itself and (as laid down in the agreement) by passing on the common minutes of EWC meetings to the managements of the companies that are not represented in the EWC; those managements are requested to inform and consult their employees de-centrally on this basis. Until May 2002 the EWC was composed of 30 employee representatives. All German members (20) of the group level works council were included and graduated in line with employee numbers a total of 10 representatives from the foreign companies. A protocol note added to the agreement has since laid down the following distribution formula: 13 German representatives plus two guests (from the non-automotive area) and 12 representatives of subsidiaries from other countries, i.e. four from Spain, three from France, two from Italy and one apiece from Great Britain, the Netherlands and Belgium. The status and importance of the EWC have to be assessed in the overall context of transnational industrial relations that developed also at a global level in the course of the Daimler Chrysler merger. Reacting to the merger of Daimler and Chrysler, global, trans-regional labour relations developed relatively fast at the highest level. As an immediate reaction to the merger a transatlantic working group was built, composed of German employee representatives (works council leaders and the German metalworker union IG Metall) and North American employee representatives, United Auto Workers (UAW) and Canadian Auto Workers (CAW), which has now been incorporated into other structures. One UAW representative belongs to the supervisory board at DaimlerChrysler headquarters in Germany. At the supervisory board level there exists also a so-called Labor Committee, which is composed of employee representatives in the supervisory board and other UAW and CAW delegates. Moreover, in June 1998 an international working group was founded, comprising Brazilian and South African representatives besides European and North American delegates. Meanwhile this working group has been incorporated into the global works council, the so-called World Employee Committee (WEC), which was founded in the middle of 2002. In the opinion of the German employee representatives and management, the WEC is more important than the EWC, as far as information and consultation on strategically significant questions are concerned: Things are happening on the transatlantic scale. While there have been no negotiations and agreements in the framework of the EWC yet, the WEC agreed on a code of conduct concerning social responsibility with central group management shortly after it had been established. The EWC only dealt with this issue in the second place and the agreement did not lead to extensive discussions in the EWC. 2

The DaimlerChrysler Group EWC process Two factors above all explain the development, operation and action potential of the EWC: the first is the group structure in Europe with a dominant German production centre (only 6% of the employees in the European area work outside Germany) and the correspondingly weak emphasis on production centres in the other European countries (only 2% production and predominantly distribution). This structure is reflected in the composition of the EWC, which has a numerically strong German delegation that considers the EWC s importance to be limited, because of the group structure. The second factor is the formative role of industrial relations at the group s headquarters. At the German management level of the DaimlerChrysler Group, there are extensive and well established industrial relations in a way that is not unusual for large German enterprises. The works council operates extremely professionally. The company works council is supported professionally by its own staff of seven academic employees. This secretariat also coordinates and administers EWC activities on the employee side. The actual centre of power is represented by the chairman of the company works council, both within the employee side and vis-à-vis group management. He not only has the chairmanship of the largest DaimlerChrysler works (Sindelfingen, Germany) with 45,000 employees and serves as deputy chairman of the supervisory board, but he also heads all other important bodies of employee representation at group level works councils (Konzernbetriebsrat), EWC and WEC. The works council leadership interacts with group management on the basis of cooperative and participatory industrial relations. By way of co-management, the works council management often introduces employee interests into dialogues and debates with group management by presenting its own corporate policy concepts. It aims to seekcompromise solutions at the very least, reconciling economic and social interests. At the same time, the works council leadership fulfils regulatory and implementation functions by defending and putting through the compromises negotiated with group management vis-à-vis works councils, ombudsmen and employees. In view of these structural and political preconditions of workplace industrial relations at central group headquarters, the German works councils consider the EWC as a body of solidarity and interest representation for the non-german EWC members whose resources are far more limited. In particular the EWC serves as a platform for the exchange of information and the communication of problems. However, up to now the EWC itself has been excluded from the process of problem solving and conflict. When it comes to cross-border issues, the German works council leadership with its extensive resources is considered more effective. In the view of the German works council leadership, correspondingly, the establishment of the EWC has resulted in an expansion of its own scope of representation and responsibility into other European locations. EWC meetings The EWC (like the WEC) meets once a year at the group headquarters (Stuttgart); the meeting is scheduled to make possible reports referring to the financial year as a whole. Group management is regularly represented by the CEO and the HR director. On the employee side, this one-day meeting is accompanied (before and after) by one-day preparation and evaluation meetings. The agenda is suggested by the four members of the EWC select committee and agreed in conjunction with group management. Group management provides identical information in all information and participation committees. That means the contents of the information given to the EWC correspond to the information made available to the German participating bodies and the WEC. 3

EWC case studies One representative of the EADS EWC regularly participates with guest status in the EWC meetings. In so doing, the group connections between DaimlerChrysler and EADS are taken into account. The contents of the information usually include highly aggregated economic data of the DaimlerChrysler Group. This information about strategic transnational developments and issues of the group as a whole are in accordance with the EWC agreement; however, the employee representatives in the EWC feel that they are often too unspecific for the European distribution centres and even for the European commercial vehicle division. Between the annual meetings communication between corporate management and the EWC takes place via the EWC select committee and thus represents the relevant channel of continual interaction. The select committee is composed of the EWC chairman, another German delegate, and a Spanish and French delegate. At the national level of foreign subsidiaries, such as in Italy, information meetings take place before and after EWC meetings between the EWC employee representative(s) and management. Costs The meetings are held in German and interpreted, where necessary, into the languages of EWC members. The ensuing costs of the EWC, the select committee and other committees are carried by group management. The costs of travel and overnight stays as well as compensation for the loss of earnings of EWC members are born by the companies that send the delegates. According to the agreement, one committee composed of a maximum of six members can be set up at the level of company divisions, in conjunction with group management. In the event of extraordinary circumstances with considerable cross-border effects on the employees, an ad hoc committee can be set up. These resources and options have not been used yet. The EWC and the EWC select committee have the right to use expert support of their own choice in the framework of their work, with group management only carrying the cost of one expert. Traditionally the EWC uses this option by regularly including a (trades union) expert. There are funds for languages courses, but they have not yet been used. At individual national subsidiaries, such as in Italy, the EWC members are allowed a limited amount of paid time off for their EWC work. The EWC members have access to IT facilities; however (also because of language barriers) those are rarely if ever used for a continual (informal) exchange of information between EWC members. Information, consultation, negotiation The interaction between central management and employee representatives in the EWC remains on the level of information and (limited) consultation. The form and content of information sessions follow the conditions of the agreement; they are a regulated, mostly well adjusted matter of routine. Negotiations have not yet been conducted, nor are they currently deemed necessary by the EWC employee representatives. The relatively high wage, and social and work security standards at the group might explain why no EU labour policy regulations have been used to start up negotiations on potential agreements. Issues or agenda items that might have resulted from possible dramatic developments within the group (extensive works closures, relocations) in the European context have not emerged, due to the overall stable and prospering economic development of the group. Correspondingly, extraordinary EWC meetings have not yet taken place. A project that was recently initiated by the employee representatives, namely a comparison of wage and income conditions in Europe, proved difficult in practice and has been abandoned. 4

The DaimlerChrysler Group A first transnational agreement between central management and the employee side on social responsibility was negotiated, as shown above, at the global level of the WEC. The EWC subsequently discussed the topic as well; this, however, was not followed by further negotiations or steps to put the agreement into more concrete terms. Outcomes and impacts Employees On the one hand, the group structure of DaimlerChrysler in Europe the asymmetry between production and distribution centres results in a weak coherence of interests on the employee side. On the other hand the structure and development of the group in Europe (no significant competition between locations, no works closures or relocations) means or meant that no far-reaching transnational problems had to be tackled, which would have given incentives for action and strengthened the strategic significance of the EWC. From the standpoint of the German works councils, the DaimlerChrysler EWC is a body of interest representation for others, namely for the non-german EWC members, whose resources are much more limited. In particular the EWC serves as a platform for information exchange and communication of problems. At the level of problem and conflict solving the EWC does not play a role. When it comes to taking care of location-specific solutions through bilateral cooperation, the German works council leadership, with its strong resources, is regarded as more effective. The operations and practice of the EWC follow the agreement in spirit and in the letter ; the established structures of interaction are stable. A further development of the body beyond the regulated sharing of information has not taken place. A possible revision of the agreement is considered, if at all, only after the revision of the EWC Directive. Management treats the EWC as a European Economic Committee (Europäischer Wirtschaftsausschuss), which is provided with appropriate information by high ranking representatives (the CEO and the personnel director). This global and highly aggregated economic and financial data of the group is relevant; but in view of the European conditions it is often necessarily too unspecific, so that the European added value for the EWC members of the distribution centres, but also of the production centres, is rather limited. Management For management, the EWC serves as a body that is provided with information about the strategic and economic developments of the group as a whole. This is emphasised by the regular attendance of the CEO and the central personnel director. Managers of foreign subsidiaries do not take part in the meetings of the EWC. The handling of information transmission relating to the EWC is part of the institutionalised interaction with the employee side at the level of established bodies such as the Economic Committee (Wirtschaftsausschuss) and group works council. Conclusions The development of the DaimlerChrysler EWC is characterised neither by significant innovations (such as differentiated sub-units, projects, or agreements), nor by particular problems. This is true both with respect to the interactions between employees and management (which are marked essentially by trust in social partner cooperation) and with respect to the interactions of the employee side (no conflicts between locations, or no visible problems resulting from the different national IR cultures). The DaimlerChrysler EWC can be characterised as a parent-dominated EWC that has the function of providing foreign subsidiaries with an information service and, in that sense, has European added value (which it does not have for the German EWC members) in the area of information, communication and coordination. 5

EWC case studies The EWC s current stage of development, which has been stable for a long time, is an almost logical consequence of the group s European structural conditions (the low degree of Europeanisation of the group, great differences between the resources of EWC members and little or no common European agenda). As far as the EWC s potential is concerned, neither the employee side nor management dismiss the negotiating function of the EWC on principle. In the view of the local (Italian) management, there will be a progressive broadening and enhancement of EWC competences, above all in a European context in which the interconnections between the companies of the same group are increasing and where an international sensibility is developing both among the employees and among unions. However, no concrete matters of negotiation can currently be discerned that are relevant to the EWC in its present shape. Therefore an increase of the EWC s strategic significance cannot be expected for the time being. Rather, the EWC is considering a further development of its service function by means of a mentor model, in which the German EWC members are assigned as mentors to non-german EWC members. The extension of the EWC in the direction of central and eastern Europe where there are only small distribution centres, except for one production centre in the commercial vehicle area (EVO-Bus) has not been tackled yet, since these activities are considered to be of minor relevance. July 2003 EF/05/71/EN - 15 6