tag:theconversation.com,2011:/us/topics/nissan-30948/articlesNissan – The Conversation2024-03-08T13:37:46Ztag:theconversation.com,2011:article/2231622024-03-08T13:37:46Z2024-03-08T13:37:46ZUAW’s Southern strategy: Union revs up drive to get workers employed by foreign automakers to join its ranks<figure><img src="https://images.theconversation.com/files/580189/original/file-20240306-16-zhfgjh.jpg?ixlib=rb-1.1.0&rect=135%2C63%2C5068%2C2506&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A UAW supporter in 2017 outside a Nissan plant in Canton, Miss., ahead of a vote the union lost.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Nissan-Union/90212afb1edb40979e133f3d7931592a/photo?Query=mississippi%20uaw&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=91&currentItemNo=18">AP Photo/Rogelio V. Solis</a></span></figcaption></figure><p>Persuading Southern autoworkers to join a union remains one of the U.S. labor movement’s most enduring challenges, despite persistent efforts by the United Auto Workers union to organize this workforce.</p>
<p>To be sure, the UAW does have members employed by Ford and General Motors at facilities in <a href="https://apnews.com/article/general-motors-strike-united-auto-workers-uaw-f16005a7b20a6f1772947957854d1017">Kentucky, Texas, Missouri and Mississippi</a>.</p>
<p>However, the <a href="https://www.reuters.com/article/us-volkswagen-uaw-idUSKBN0TN2DE20151205/">UAW has tried and largely failed</a> to <a href="https://www.nytimes.com/2019/06/14/business/economy/volkswagen-chattanooga-uaw-union.html">organize workers</a> at foreign-owned companies, including Volkswagen and Nissan in Southern states, where about <a href="https://www.cnn.com/2023/09/20/business/uaw-jobs-south-auto/index.html">30% of all U.S. automotive jobs are located</a>.</p>
<p>But after the UAW pulled off its <a href="https://theconversation.com/united-auto-workers-union-hails-strike-ending-deals-with-automakers-that-would-raise-top-assembly-plant-hourly-pay-to-more-than-40-as-record-contracts-216432">most successful strike in a generation</a> against Detroit’s Big Three automakers, through which it won higher pay and better benefits for its members in 2023, the union is trying again to win over Southern autoworkers.</p>
<p>The UAW has <a href="https://uaw.org/uaw-announces-40-million-commitment-to-organizing-auto-and-battery-workers-over-next-two-years/">pledged to spend US$40 million through 2026</a> to expand its ranks to include more auto and electric battery workers, <a href="https://www.nytimes.com/2024/03/02/business/economy/uaw-auto-workers-union.html">including many employed in the South</a>, where the industry is <a href="https://uaw.org/we-are-the-majority-workers-at-mercedes-benzs-largest-us-plant-announce-majority-support-for-movement-to-join-uaw/">quickly gaining ground</a>.</p>
<p>Based on my five decades of experience as a <a href="https://scua.uoregon.edu/agents/people/33456">union organizer and labor historian</a>, I anticipate that, recent momentum aside, the UAW will face stiff resistance from Toyota, Volkswagen, Mercedes-Benz and the other big foreign automakers that operate in the South. The <a href="https://www.thenation.com/article/economy/uaw-chattanooga-union-drive/">pushback is also coming from Southern politicians</a>, many of whom have expressed concern that UAW success would undermine the region’s carefully crafted approach to economic development. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="The back of a worker wearing a UAW t-shirt indicating employment in Brandon, Mississippi." src="https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/580185/original/file-20240306-20-vztbm6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A sign of things to come?</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/AutoWorkersStrikeMississippi/f5cb369d2cd245a99b3081ff2af50396/photo?Query=uaw%20alabama&mediaType=photo&sortBy=&dateRange=Anytime&totalCount=21&digitizationType=Digitized&currentItemNo=0&vs=true">AP Photo/Rogelio V. Solis</a></span>
</figcaption>
</figure>
<h2>Lauding the ‘perfect three-legged stool’</h2>
<p>After the region’s formerly robust <a href="https://doi.org/10.5744/florida/9780813037950.003.0010">textile industry imploded</a> in the 1980s and 1990s because of an influx of cheap imports, Southern business and political leaders revived the region’s manufacturing base by successfully recruiting foreign automakers. </p>
<p>The strategy of those leaders reflects what the <a href="https://www.bcatoday.org/the-united-auto-workers-labor-union-must-not-do-to-alabama/">Business Council of Alabama</a> has described as the “perfect three-legged stool for economic development.” It consists of “an eager and trainable workforce with a work ethic unparalleled anywhere in the nation,” accompanied by a “low-cost and business-friendly economic climate, and the lack of labor union activity and participation.”</p>
<p>The prospect of a low-wage and reliable workforce has <a href="https://www.cnbc.com/2022/08/14/automakers-investing-in-the-south-as-evs-change-the-auto-industry.html">lured the likes of Nissan, BMW</a>, Mercedes-Benz, Kia, Honda, Volkswagen and Hyundai to the South in recent decades.</p>
<p>Although many of those companies <a href="https://www.reuters.com/business/autos-transportation/volkswagen-ig-metall-agree-wage-deal-2021-04-13/">negotiate constructively</a> with unions on their home turf, the lack of union membership and the protections that go with it have proved a draw for them in the United States.</p>
<p>As journalist <a href="https://www.latimes.com/opinion/la-xpm-2011-may-15-la-oe-meyerson-europeans-20110515-story.html">Harold Meyerson has noted</a>, these foreign automakers embraced the opportunity to “slum” in America and “do things they would never think of doing at home.”</p>
<p>The absence of union representation is a major reason why.</p>
<p>Less than 5% of workers in six Southern states are union members, and only Alabama and Mississippi approach union membership levels above 7%, <a href="https://www.bls.gov/news.release/pdf/union2.pdf">according to the Bureau of Labor Statistics</a>. </p>
<p>That’s below the national average, which <a href="https://theconversation.com/1-in-10-us-workers-belong-to-unions-a-share-thats-stabilized-after-a-steep-decline-221571">slid to 10% in 2023</a>.</p>
<h2>Blaming unions for bad job prospects</h2>
<p>One way automotive employers in the South have blocked unions is by <a href="https://muse.jhu.edu/book/59212/">portraying them as outdated institutions</a> whose bloated contracts and rigid work rules destroy jobs by making domestic auto companies uncompetitive.</p>
<p>Automotive leaders in the South argue the region has developed an alternative labor relations model that <a href="https://www.automotivedive.com/news/is-unionizing-foreign-automakers-next-uaw-strike/698260/">provides management with flexibility</a>, offers wages and benefits superior to what local workers have earned previously and frees employees from any subordination to union directives. </p>
<p>Southern automakers also draw on another powerful resource in resisting the UAW: public intervention by top elected officials.</p>
<p>In 2014, when the UAW attempted to organize a Volkswagen plant in Chattanooga. Bob Corker, Tennessee’s junior U.S. senator and a former mayor of Chattanooga, weighed in as voting commenced.</p>
<p>Corker claimed he had received a pledge from Volkswagen’s management to expand production in Chattanooga <a href="https://newrepublic.com/article/116653/bob-corkers-uaw-intervention-chattanooga-vw-vote-speaks-volume">if workers voted against the union</a>. </p>
<p>Three years later, Mississippi Gov. Phil Bryant similarly urged Nissan workers to reject the UAW. </p>
<p>“If you want to take away your job, if you want to end manufacturing as we know it in Mississippi, just start expanding unions,” <a href="https://www.mpbonline.org/blogs/news/state-leaders-unionizing-nissan-will-not-help-mississippi/">Bryant said in 2017</a>.</p>
<p>A majority of the autoworkers <a href="https://www.nytimes.com/2017/08/05/business/nissan-united-auto-workers-union.html">heeded their conservative leaders’ advice</a> in both cases and <a href="https://www.washingtonpost.com/news/wonk/wp/2014/02/14/united-auto-workers-lose-historic-election-at-chattanooga-volkswagen-plant/">voted against joining the UAW</a>.</p>
<h2>Making dire warnings</h2>
<p>With the UAW ramping up its organizing efforts again, Southern governors are sounding alarms once more.</p>
<p>“The Alabama model for economic success is under attack,” <a href="https://www.madeinalabama.com/2024/01/gov-ivey-unions-want-to-target-one-of-alabamas-crown-jewel-industries-but-im-standing-up-for-alabamians-and-protecting-our-jobs/">warned Alabama Gov. Kay Ivey</a>. </p>
<p>She then asked workers: “Do you want continued opportunity and success the Alabama way? Or do you want out-of-state special interests telling Alabama how to do business?”</p>
<p>Unions “have crippled and distorted the progress and prosperity of industries and cities in other states,” <a href="https://governor.sc.gov/news/2024-01/2024-state-state-address-governor-henry-mcmaster">South Carolina Gov. Henry McMaster</a> declared in his Jan. 24, 2024, State of the State address. He then issued an ominous call: “We will fight” the UAW’s labor organizers “all the way to the gates of hell. And we will win.” </p>
<p>The UAW counters that union membership means workers will get predictable raises, <a href="https://uaw.org/join/#toggle-id-14">better benefits and improved workplace policies</a>.</p>
<h2>Changing context</h2>
<p>Although these arguments from anti-union politicians haven’t changed much over the years, the context certainly has.</p>
<p>The <a href="https://www.npr.org/2023/11/12/1211602392/uaw-auto-strike-deals-ratified-big-three-shawn-fain">UAW’s big wins on pay and benefits</a> resulting from its 2023 strike against General Motors, Ford and Stellantis have increased its clout and credibility. </p>
<p>Many automakers with a U.S. workforce not covered by the UAW – including Volkswagen, Honda, Hyundai and other foreign transplants – responded by raising pay at their Southern plants. The union justifiably describes those raises as a “<a href="https://www.cnn.com/2023/11/14/cars/uaw-labor-toyota-honda-hyundai/index.html">UAW bump</a>.”</p>
<p>The UAW will presumably cite these pay hikes in its outreach to <a href="https://theconversation.com/next-on-the-united-auto-workers-to-do-list-adding-more-members-who-currently-work-at-nonunion-factories-to-its-ranks-217064">workers at Tesla</a> and other nonunion companies involved in electric vehicle and battery production in which the industry is investing heavily. </p>
<p>“Nonunion autoworkers are being left behind,” <a href="https://uaw.org/join/">the UAW’s recruiting website</a> warns. “Are you ready to stand up and win your fair share?”</p>
<p>The pitch continues: “It’s time for nonunion autoworkers to join the UAW and win economic justice at Toyota, Honda, Hyundai, Tesla, Nissan, BMW, Mercedes-Benz, Subaru, Volkswagen, Mazda, Rivian, Lucid, Volvo and beyond.”</p>
<p>Some Southern autoworkers, meanwhile, have been <a href="https://uaw.org/wp-content/uploads/2024/02/IMPROVING-WORK-LIFE-BALANCE-AT-VOLKSWAGEN.pdf">expressing concerns over scheduling</a>, safety, two-tier wage systems and workloads that they believe a union could help resolve.</p>
<p>It’s also clear they’ve been emboldened by the gains they have seen UAW members make. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/TXMNbGS2Hy0?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">Southern autoworkers applaud the union-organizing drive underway at a VW factory in Chattanooga, Tennessee.</span></figcaption>
</figure>
<h2>Revving up</h2>
<p>The UAW’s campaign is just starting to rev up.</p>
<p>In accordance with its “<a href="https://uaw.org/join/#toggle-id-6">30-50-70</a>” strategy, the union is announcing the share of workers who have signed union cards in stages. Once it hits 30% at a factory, the UAW will announce publicly that an organizing campaign is underway. At the 50% mark, it will hold a public rally for workers that includes their neighbors and families, as well as <a href="https://www.motortrend.com/news/2024-motortrend-person-of-year-shawn-fain-uaw-president/">UAW President Shawn Fain</a>.</p>
<p>Once it gains support from 70% of a plant’s workers, the UAW says it will seek voluntary recognition by management.</p>
<p>A recent National Labor Relations Board ruling provides unions with additional leverage in this process. If management refuses to recognize the union’s request, the employer would then be required to seek an NLRB representation election.</p>
<p>To win, unions need a majority of those voting. Under the new rule, if management is found to have interfered with workers’ rights during the election process, it could then be <a href="https://www.nlrb.gov/news-outreach/news-story/board-issues-decision-announcing-new-framework-for-union-representation">required to bargain with the union</a>.</p>
<p>So far, the UAW has announced that it has obtained the support of more than half the workers at factories belonging to two of the 13 nonunion automakers it’s targeting: a <a href="https://uaw.org/were-taking-the-lead-over-half-of-volkswagen-workers-in-chattanooga-tennessee-sign-cards-to-join-the-uaw-in-less-than-60-days/">Volkswagen plant in Chattanooga</a>, Tennessee, and a
<a href="https://www.theguardian.com/us-news/2024/jan/10/uaw-union-mercedes-benz-alabama">Mercedes-Benz factory near Tuscaloosa</a>, Alabama. It has also obtained 30% support at a <a href="https://thehill.com/business/4440930-hyundai-workers-alabama-uaw/">Hyundai plant in Alabama</a> and a <a href="https://labornotes.org/2024/03/toyota-workers-critical-engine-plant-launch-uaw-union-drive">Toyota engine factory in Missouri</a>.</p>
<p>I believe that the stakes are high for all workers, not just those in the auto industry.</p>
<p>As <a href="https://www.politico.com/news/2023/09/05/unions-south-labor-organizing-ussw-seiu-00114085">D. Taylor, the president of Unite Here</a>, a union that represents workers in a wide range of occupations, recently observed: “If you change the South, you change America.”</p><img src="https://counter.theconversation.com/content/223162/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>I was briefly a UAW local union member in the 1970s.</span></em></p>Despite intermittent efforts over the past three decades, the UAW union has been unable to organize employees of foreign-based automakers in states such as Alabama and Tennessee.Bob Bussel, Professor Emeritus of History and Labor Education, University of OregonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1995552023-02-09T12:35:51Z2023-02-09T12:35:51ZRenault-Nissan: why electric vehicles will be key to the future of the embattled auto alliance<p>When Carlos Ghosn was escorted off his private jet after landing at Tokyo’s Haneda airport in November 2018 and promptly arrested for alleged financial misconduct, simmering tensions between carmakers Renault and Nissan over his plans to create a single, cohesive company <a href="https://www.reuters.com/article/nissan-ghosn-timeline-idCNL8N29C3S4">became all too public</a>. </p>
<p>The two companies, along with Mitsubishi, had forged an alliance in 1999 after Renault rescued Nissan from bankruptcy. This inauspicious start led to an imbalance in the alliance – Renault held 43% of Nissan versus the Japanese company’s 15% stake in its partner. After dealing with the effects on the companies of Ghosn’s arrest, as well as <a href="https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/amid-disruption-automotive-suppliers-must-reimagine-their-footprints">COVID-created supply chain disruption</a> and shifting global demand towards electric vehicles (EVs), <a href="https://www.nissan-global.com/EN/COMPANY/ALLIANCE/">a recent realignment of the alliance</a> signals an attempt to reset both companies’ fortunes.</p>
<p>Ghosn had been instrumental in the alliance as “le cost cutter” from French automaker Renault. He was a pivotal figure in the corporate rescue of Nissan, first as chief operating officer in June 1999, then as chief executive officer from 2001. Ghosn was synonymous with the <a href="https://uk.nissannews.com/en-GB/releases/release-11606-nissan-unveils-revival-plan">Nissan revival plan</a>. But for Nissan the rescue and subsequent alliance came with strings that led all the way to the French government (which holds 15% of Renault shares).</p>
<p>Unsurprisingly then, Ghosn’s 2018 arrest lead to years of managerial stagnation as attempts were made to resolve the imbalance in the partnership. Without Ghosn – dubbed “<a href="https://www.bbc.co.uk/news/extra/Bi5xGc7SIj/the_fall_of_the_god_of_cars">the god of cars</a>” in some parts of the media – the accumulating challenges that faced the group took on a new urgency and the value of both businesses fell by <a href="https://www.bbc.co.uk/news/extra/Bi5xGc7SIj/the_fall_of_the_god_of_cars#:%7E:text=wiped%20from%20the%20market%20value%20of%20both%20companies">almost 40%</a> between 2018 and 2020.</p>
<p>After the pandemic and subsequent disruptions to both supply and demand, both businesses have <a href="https://europe.autonews.com/automakers/timeline-renault-nissan-alliance-boom-bottom">continued to struggle</a>. While Ghosn’s hope for a single, cohesive company has not been realised, protracted negotiations have resulted in a “rebalanced” alliance. This time it has to work. As Renault-Nissan faces a new era of electric vehicles for carmakers, it is now or never.</p>
<h2>Electrifying the alliance</h2>
<p>While the new alliance covers multiple issues and locations, the most important single item is the <a href="https://europe.autonews.com/automakers/nissan-buy-15-renault-ev-unit-alliance-deal">15% share of Renault’s Ampere electric vehicle business</a> taken by Nissan.</p>
<p>Even before the departure of Ghosn, there were some worrying signs of trouble ahead for these car companies, especially concerning Europe’s burgeoning EV market. Under the leadership of Andy Palmer, Nissan had pioneered the development and production of family-sized battery electric cars, launching the Leaf in Europe in 2011.</p>
<figure class="align-center ">
<img alt="silver gray NISSAN LEAF is a compact C-segment electric car . New car on a sunny autumn day" src="https://images.theconversation.com/files/509032/original/file-20230208-25-33dgxx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509032/original/file-20230208-25-33dgxx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509032/original/file-20230208-25-33dgxx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509032/original/file-20230208-25-33dgxx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509032/original/file-20230208-25-33dgxx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=501&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509032/original/file-20230208-25-33dgxx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=501&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509032/original/file-20230208-25-33dgxx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=501&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A silver Nissan Leaf electric car.</span>
<span class="attribution"><span class="source">ginger_polina_bublik / Shutterstock</span></span>
</figcaption>
</figure>
<p>Alongside Renault’s Zoe EV, the Leaf (and the E-NV200 electric van) dominated Europe’s early EV market. By January 2015 it had been the market leader for four years – <a href="https://www.greencarcongress.com/2015/01/20150119-leaf.html">accounting for</a> 14,658 sales out of a total of 56,393 in 2014. This meant the alliance held 46% of the total electric car market in Europe.</p>
<p>When Palmer departed Nissan in 2014, the emphasis on leading the electric car market seemed to wane. By March 2018, the Leaf and Zoe were still leading in terms of European market share, but competition was intensifying with new models from Tesla (Model S, Model X), BMW (the i3), Hyundai (Ionic Electric) and others gaining ground.</p>
<figure class="align-center ">
<img alt="Electric car Tesla Model S P85 fast speed drive on the road at sunset. Back view. Moscow." src="https://images.theconversation.com/files/509034/original/file-20230208-23-h3413g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/509034/original/file-20230208-23-h3413g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/509034/original/file-20230208-23-h3413g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/509034/original/file-20230208-23-h3413g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/509034/original/file-20230208-23-h3413g.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/509034/original/file-20230208-23-h3413g.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/509034/original/file-20230208-23-h3413g.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An electric car Tesla Model S.</span>
<span class="attribution"><span class="source">Ivan Kurmyshov / Shutterstock</span></span>
</figcaption>
</figure>
<p>And as the electric car market <a href="https://publications.jrc.ec.europa.eu/repository/handle/JRC112745">pivoted from niche to mainstream</a>, Nissan and Renault failed to capitalise on their early advantage. By November 2022, around <a href="https://insideevs.com/news/629798/europe-plugin-car-sales-november2022/">one in four new cars sold</a> in Europe were plug-in electric with year-on-year market growth of 26%. At this time Renault had fallen to ninth place in the electric car sales rankings (selling 5,321 of its Megane E-Tech cars). Neither Nissan nor Renault has a model in the top ten bestselling electric cars for the year to date.</p>
<p>Crucially, the continued market success of Tesla (with the Model Y and Model 3) has been mirrored by Renault’s main legacy competitors in Europe – Fiat (the 500) and VW (ID-3 and ID4) have been particularly successful. It was apparent by the time negotiations started on the new alliance that Renault in particular was no longer in a position of strength.</p>
<p>Now the alliance has to catch up. In 2018, there were about 60 plug-in and fuel cell models available in Europe. <a href="https://www.transportenvironment.org/wp-content/uploads/2021/07/2019_07_TE_electric_cars_report_final.pdf">By 2025 there could be 333</a>. Of 172 new battery electric models expected to be on the market by 2025, only 13 are from Renault-Nissan, compared to around 50 from VW Group. Investment in battery manufacturing is also growing, such that there could be 35 gigafactories producing the electric car power sources in Europe by 2035, from <a href="https://sifted.eu/articles/european-gigafactory-batteries-startups">single digits at the end of 2022</a>.</p>
<h2>A bold plan</h2>
<p>The alliance has some hope, but more importantly, some bold plans. Manufacturing will be easier and cheaper due to shared parts and designs between vehicle types. For starters, the Nissan Ariya battery electric SUV is based on the <a href="https://www.renaultgroup.com/en/news-on-air/news/the-cmf-ev-platform-advances-the-new-generation-of-electric-vehicles/">common module family electric vehicle (CMF-EV) platform</a>, as is the Renault Megane E-Tech. An electric replacement for the Nissan Micra and a new Renault 5 will have 80% of their parts in common.</p>
<p>By 2028 Nissan plans to introduce <a href="https://chargedevs.com/newswire/nissan-unveils-prototype-production-facility-for-solid-state-batteries/">solid-state batteries</a>. But, by then, the global electric car market could see demand for 30 million cars per year. This may leave Renault-Nissan overwhelmed by faster legacy competitors in their respective domestic markets – as well as an ever-growing list of new entrants around the world.</p>
<p>The hope is that the new arrangements will unleash “strategic” creativity, allowing managerial freedom while retaining the cost advantages of shared volume. The risks are that technology may develop in another direction from Nissan-Renault’s current plans. But the alliance may also fail to execute such a complex restructuring in time to take advantage of this new auto world.</p>
<p>The alliance is a political as well as corporate arrangement. If it fails, it could show that Ghosn was right in the end about the need to turn the alliance into a single car company.</p><img src="https://counter.theconversation.com/content/199555/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Wells does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>After years of turmoil, Renault and Nissan hope to rebalance their partnership to take on Europe’s booming electric car market.Peter Wells, Professor of Business and Sustainability, Cardiff UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1734632021-12-10T16:32:25Z2021-12-10T16:32:25ZWhy Nissan is probably the most serious threat to Tesla out of the traditional automakers<figure><img src="https://images.theconversation.com/files/436943/original/file-20211210-68670-ve1moz.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Getting into gear</span> <span class="attribution"><a class="source" href="https://www.alamy.com/ukraine-kyiv-20-april-2021-blue-nissan-leaf-car-moving-on-the-street-editorial-image425031447.html?pv=1&stamp=2&imageid=177179B2-A2DF-49A9-992E-E97F63E55AB1&p=184237&n=0&orientation=0&pn=1&searchtype=0&IsFromSearch=1&srch=foo%3dbar%26st%3d0%26pn%3d1%26ps%3d100%26sortby%3d2%26resultview%3dsortbyPopular%26npgs%3d0%26qt%3dnissan%2520leaf%25202021%26qt_raw%3dnissan%2520leaf%25202021%26lic%3d3%26mr%3d0%26pr%3d0%26ot%3d0%26creative%3d%26ag%3d0%26hc%3d0%26pc%3d%26blackwhite%3d%26cutout%3d%26tbar%3d1%26et%3d0x000000000000000000000%26vp%3d0%26loc%3d0%26imgt%3d0%26dtfr%3d%26dtto%3d%26size%3d0xFF%26archive%3d1%26groupid%3d%26pseudoid%3d196110%26a%3d%26cdid%3d%26cdsrt%3d%26name%3d%26qn%3d%26apalib%3d%26apalic%3d%26lightbox%3d%26gname%3d%26gtype%3d%26xstx%3d0%26simid%3d%26saveQry%3d%26editorial%3d%26nu%3d%26t%3d%26edoptin%3d%26customgeoip%3dGB%26cap%3d1%26cbstore%3d1%26vd%3d0%26lb%3d%26fi%3d2%26edrf%3d0%26ispremium%3d1%26flip%3d0%26pl%3d">iurii Vlasenko</a></span></figcaption></figure><p>Nissan <a href="https://www.thetimes.co.uk/article/nissan-to-invest-billions-in-sunderland-plant-to-drive-electric-car-revolution-j70j95fmn">recently announced</a> a new £13 billion investment to help transition its business to being focused around electric vehicles (EVs). The investment is centred around its Sunderland plant in the north east of England, which already makes the popular Nissan Leaf, and a plan to build 23 new electric models by 2030. </p>
<p>But Nissan, like most traditional automakers, has a long way to go if it wants to catch Tesla. Elon Musk’s company <a href="https://autobala.com/these-are-the-top-10-best-selling-evs-in-the-world/220082/">is easily</a> the biggest seller of EVs in the world, with the Model 3 and Model Y shifting around <a href="https://ir.tesla.com/press-release/tesla-q3-2021-vehicle-production-deliveries">230,000 vehicles</a> per quarter between them worldwide. China’s SAIC is in second place thanks to its Wuling Hingguang Mini, which is the best selling EV in China. After that come Volkswagen, BYD and Hyundai. </p>
<p>So why are many of the traditional players that have built their businesses on internal combustion engines so far behind Musk, and can Nissan buck the trend?</p>
<h2>Why some have struggled</h2>
<p>Tesla created the first serial production EV with lithium-ion batteries in 2008 with the launch of the Roadster sports car. It has gone on to evolve a suite of vehicles whose range, performance and efficiency are arguably the best in the business – as reflected by <a href="https://www.bbc.co.uk/news/business-58993848">the company’s impressive</a> growth and profitability.</p>
<p>It makes sense that if you have been making EVs for the last decade, you’re probably more successful at making them now. You will have vastly more data in terms of how drivers use your vehicles, what goes wrong with them, and how to best manage suppliers of motors and batteries. </p>
<p>Nissan has certainly served its time, having debuted the Leaf in 2011, which is one of the best selling EVs of all time, having sold <a href="https://insideevs.com/news/443096/500000th-nissan-leaf-produced-sunderland-uk/">half a million</a> units over a decade. But if there has been a lesson in this sector, it’s that being successful at making vehicles with internal combustion engines does not guarantee success at making EVs. </p>
<p>An example is General Motors (GM). GM was there all the way back in the late 1990s with its ground-breaking EV1. These little cars, loved by their owners, showed how an all-electric future could look. But GM went on to crush the EV1s en-masse, saying <a href="https://www.nextpit.com/tbt-general-motors-ev1-controversy-and-crushed-innovation">they were</a> insufficiently popular, though conspiracy theorists have questioned whether it was ever serious about taking them to mass market. In the process, EV1s became the star of their <a href="https://www.imdb.com/title/tt0489037/">own documentary</a>. </p>
<p>GM tried again to crack EVs with its Volt in 2010, which was also popular until being killed in 2018 (the demise was blamed on an ageing production facility). It also launched the Bolt in 2017, which was designed to be a relatively cheap, long range EV. But while it achieves this, it has been plagued with battery issues. The knowledge that Bolt packs can catch fire has become so pervasive that car parks in the US <a href="https://insideevs.com/news/543282/parking-lots-ban-chevy-bolts/">have reportedly</a> been banning them from entering. </p>
<p><a href="https://www.electrive.com/2021/09/21/gm-declares-bolt-battery-problems-solved/">GM says</a> it now has a solution, and has recalled tens of thousands of Bolts to have their battery packs replaced. But as a result, production of new Bolts <a href="https://techcrunch.com/2021/12/02/gm-delays-production-of-new-chevy-bolt-evs-until-end-of-january/">is currently suspended</a> until late January. GM also promises some 20 new EV models by 2023, but recently came in <a href="https://electrek.co/2021/11/18/gm-promised-20-new-evs-by-2023-they-brought-zero-to-the-la-auto-show/">for criticism</a> after displaying no EVs at the 2021 LA Auto Show (whose theme was electrification). Given that President Biden <a href="https://www.bloomberg.com/news/articles/2021-11-24/biden-s-praise-for-gm-overlooks-tesla-s-actual-ev-leadership-kwdh01el">recently credited GM</a> with leading the industry in EV manufacture, this surely raises eyebrows. </p>
<p>Toyota was also a key player in moving the industry to greener vehicles with its hybrid cars of the late 1990s, but is now also playing catch up. It has only just, in December 2021, released its first volume production EV, <a href="https://www.toyota.co.uk/electric/bZ">the bZ</a>, after going much further than others with developing hydrogen-powered vehicles. Toyota’s hydrogen-powered Mirai failed to gain market share in the way that EVs with batteries have, <a href="https://newsroom.toyota.eu/toyotas-first-half-year-sales-growth-maintains-record-market-66-share/">selling just 316</a> in Europe in the first half of 2021. Toyota is <a href="https://electrek.co/2021/12/02/toyota-partners-byd-affordable-electric-car/">reportedly also</a> teaming up with China’s BYD to launch a US$30,000 EV in 2022. </p>
<p>Meanwhile, Volkswagen is the legacy automaker seen as most likely to catch up with Tesla’s EV production rate – <a href="https://www.ft.com/content/7e32dfb1-2282-40fa-9b10-181c01272ba3">potentially by 2024</a>. The German giant <a href="https://www.ft.com/content/398513ce-fc3e-4901-9670-382151acbb9c">is spending</a> some €35 billion (£29 billion) on the sector. But Volkswagen acknowledges that it takes them three times as long as Tesla to make its flagship EVs, making the gap in capabilities painfully apparent. It aims to narrow the gap to double in 2022. </p>
<h2>Nissan’s advantage</h2>
<p>If we have learnt anything from Tesla and also <a href="https://theconversation.com/china-is-on-course-to-build-the-best-cars-in-the-world-167661">Chinese EV entrants</a> such as NIO, BYD and XPeng, it’s that bespoke electric chassis make better electric cars. For example, Tesla’s Model 3 rival, the Polestar 2, was originally meant to be a petrol <a href="https://www.motorauthority.com/news/1122902_6-things-you-need-to-know-about-polestar">Volvo S40</a>, but adapting an internal combustion engine vehicle to be electric just doesn’t work as well. You end up with cars with <a href="https://cleantechnica.com/2021/12/08/what-is-the-key-difference-between-the-polestar-2-and-the-tesla-model-3-efficiency/">less range on the battery</a> and often less space inside. </p>
<p>Fortunately for Nissan and its alliance partner Renault, they already have such a bespoke EV platform. Known as <a href="https://www.renaultgroup.com/en/news-on-air/news/the-cmf-ev-platform-advances-the-new-generation-of-electric-vehicles/">CMF-EV</a>, it allows the group to share a number of components across different EVs and maximise the efficiency of manufacturing them.</p>
<p>From observing Tesla, the second vital factor to producing EVs at scale (and profitably) is to make your battery packs as <a href="https://electrek.co/2017/05/08/tesla-battery-director-gigafactory-supply-chain/">close to</a> the final assembly factory as possible, reducing transport cost and time. Again, Nissan ticks this box. Its Sunderland plant, which not only produces the Leaf but will also produce its successor, is situated very close to the <a href="https://www.theguardian.com/business/2021/oct/25/uk-battery-gigafactory-electric-car-sunderland-envision-nissan">Envision battery “gigafactory”</a> that supplies it. Chinese-owned Envision plans to produce 38GWh of batteries a year – enough to power 500,000 new cars, which would put Nissan on par with Tesla’s factories in the US and China.</p>
<p>So with its years of EV knowledge, efficient battery supply chains and bespoke EV platform, Nissan could very well be the legacy automaker that ends up being able to compete with the new kids on the block. But if it fails to capitalise on its advantages to reinvent itself as an EV-first company, we have seen from numerous other companies that being an early runner is certainly not enough on its own.</p><img src="https://counter.theconversation.com/content/173463/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Stacey receives funding from ERDF. </span></em></p>Elon Musk’s dedicated EV maker is miles ahead, but Nissan has several advantages over its legacy rivals.Tom Stacey, Senior Lecturer in Operations and Supply Chain Management, Anglia Ruskin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1641002021-07-08T10:35:53Z2021-07-08T10:35:53ZThe UK car industry is speeding towards electric vehicles – but still relies too heavily on imports<p>The road ahead is suddenly looking much clearer for British car making. Two companies, Nissan and Vauxhall owner Stellantis, have <a href="https://www.bbc.co.uk/news/business-57726818">announced major investments</a> in UK factories, mostly geared to electric vehicles. </p>
<p><a href="https://www.sunderland.gov.uk/article/19177/Nissan-unveils-EV36Zero-a-1bn-Electric-Vehicle-EV-Hub-to-accelerate-the-journey-to-carbon-neutrality">Nissan’s news</a> includes spending £1 billion on creating a new fully electric vehicle at their plant in Sunderland. Around half of this money will go on battery production, with ambitious plans to <a href="https://www.reuters.com/business/retail-consumer/nissan-bets-big-uk-with-ev-battery-plant-new-crossover-2021-07-01/">match</a> the levels of Tesla’s battery plant in the US – estimated to be able to produce batteries to power around <a href="https://insideevs.com/news/482499/tesla-production-sites-assignment-capacity-january-2021/">600,000 cars a year</a>.</p>
<p>Nissan and their partners are so confident of their ability to produce huge numbers of battery packs that government ministers are already <a href="https://questions-statements.parliament.uk/written-statements/detail/2021-07-01/hcws137">celebrating</a> the development. </p>
<p>This is simply because the key to producing lots of electric vehicles is producing lots of batteries to put in them. Until now, this has been an area where the <a href="https://uk.motor1.com/news/453225/uk-envision-aesc-investigate-gigafactory-feasibility-sunderland/">UK has lagged</a> behind countries such as the US, China and South Korea – where there are more electric vehicles produced. </p>
<p>It is clear further capacity was desperately needed in the UK. Lithium battery packs are big, expensive and complex to transport internationally due to <a href="https://unece.org/fileadmin/DAM/trans/danger/publi/manual/Rev.6/1520832_E_ST_SG_AC.10_11_Rev6_WEB_-With_corrections_from_Corr.1.pdf">international regulations</a>. It makes good business sense to make them as close to the car plant as possible. </p>
<p>It also makes sense for any car manufacturer to make as much of their vehicles in one place as they can (and since Brexit, a political necessity, given <a href="https://www.politico.eu/article/10-key-details-uk-eu-brexit-trade-deal/">rules</a> over how much of an electric car must be made in the UK). But the sophistication of modern cars makes this difficult. Gone are the days when most vehicles were put together with little more than metal, plastic mouldings and some wiring. </p>
<p>Modern cars – and electric vehicles in particular – feature a wide range of electronic components, such as touch screens, cameras, microprocessors and sensors. Tesla’s computer, fitted to every car they have made since 2019, is <a href="https://cleantechnica.com/2019/06/15/teslas-new-hw3-self-driving-computer-its-a-beast-cleantechnica-deep-dive/">more like a games console</a> in terms of its computing power than something you’d traditionally find in a car.</p>
<h2>Driving forwards</h2>
<p>This use of high-tech components in cars, means they are increasingly reliant on <a href="https://www.mordorintelligence.com/industry-reports/semiconductor-foundry-market">semiconductor producers</a>, which are mostly located in China, Japan, South Korea and Taiwan. Every one of the car’s computer chips, screens and cameras relies on semiconductors as their core component to function.</p>
<p>When these chip makers have difficulty supplying the volumes needed (as they have had in <a href="https://www.theguardian.com/business/2021/mar/21/global-shortage-in-computer-chips-reaches-crisis-point">2020 and 2021</a> car manufacturers find that they are having to temporarily cease production in order to deal with the lack of parts. Both BMW and Tesla have <a href="https://www.explica.co/the-part-of-the-seats-that-manufacturers-such-as-tesla-or-bmw-have-stopped-putting-to-avoid-raising-the-price-of-their-cars.html">had to remove</a> some of the lesser-used parts from their cars to keep production lines moving. </p>
<figure class="align-center ">
<img alt="Sunderland city sign, with 'Home to Nissan' sign below." src="https://images.theconversation.com/files/410154/original/file-20210707-19-i2sbk1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/410154/original/file-20210707-19-i2sbk1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=305&fit=crop&dpr=1 600w, https://images.theconversation.com/files/410154/original/file-20210707-19-i2sbk1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=305&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/410154/original/file-20210707-19-i2sbk1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=305&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/410154/original/file-20210707-19-i2sbk1.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=383&fit=crop&dpr=1 754w, https://images.theconversation.com/files/410154/original/file-20210707-19-i2sbk1.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=383&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/410154/original/file-20210707-19-i2sbk1.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=383&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Electric power house?</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/gateshead-united-kingdom-february-26th-2019-1323965762">Shutterstock/Anthony McLaughlin</a></span>
</figcaption>
</figure>
<p>The lower the volumes a car maker can order from its suppliers, and the further away it is, the greater the effect. This puts the UK in a precarious position because, although they can make a lot of the car’s components locally, including the all-important batteries, there are parts they need to seek elsewhere. </p>
<p>As more and more tech finds its way into the cars, if UK manufacturing wants to stay competitive and resilient to fluctuations in the supply chain, it will need to find a way to deal with its reliance on the countries that supply these parts.<br>
So while the UK government is understandably keen to celebrate recent investment in car manufacturing, it needs to be mindful that the journey from here is not guaranteed to be smooth. One vital component for the future will be securing positive relationships with semiconductor, display screen and camera manufacturers abroad. Only then will the UK be able to move up a gear and become an automotive manufacturing powerhouse.</p><img src="https://counter.theconversation.com/content/164100/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Tom Stacey does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Supplies of batteries and semi-conductors can put the brakes on ambitious developments.Tom Stacey, Senior Lecturer in Operations and Supply Chain Management, Anglia Ruskin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1599492021-05-02T16:22:03Z2021-05-02T16:22:03ZFrance’s elite schools and their alumni networks: a flaw in the governance of French companies<figure><img src="https://images.theconversation.com/files/397545/original/file-20210428-25-1f90pc4.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C1024%2C683&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Students at Ecole Polytechnique. Their alumni network is one of the most powerful and may lead some to the top of a large French company. </span> <span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Les_élèves_de_l%27Ecole_polytechnique_(26855463710).jpg">J. Barande/École Polytechnique</a>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>As everyone knows, connections matter, particularly so in the access to top management positions. The power of alumni networks, first and foremost those of Polytechnique and ENA, is well documented in the literature regarding the French elites. Rigorously selected and lavishly trained to serve the country’s public interest, these graduates often occupy the <a href="https://www.cairn-int.info/article-E_SOPR_021_0035--becoming-a-cac40-french-ceo.htm">upper-management layers of large French companies</a>. </p>
<p>The French state’s involvement in nearly every aspect of the economy is an obvious facilitator. It creates gateways allowing those who so wish to cash in on their experience in the higher administration, often punctuated with a stint in a ministerial cabinet, by directly vaulting into the higher echelons of a company before aiming for the CEO seat. In the United States, the term <a href="https://www.opensecrets.org/revolving/">“revolving door”</a> refers to a similar process in which powerful individuals cycle between the public and private sectors, making use of their connections and influence on both sides.</p>
<h2>A commanding share of CEO positions</h2>
<p>The result is an over-representation of Polytechnique and ENA alumni at the head of large French companies. No less than 13 CEOs of CAC 40 companies come from these two schools. By contrast, only <a href="https://www.forbes.com/sites/kimberlywhitler/2019/09/07/a-new-study-on-fortune-100-ceos-what-undergraduate-institutions-did-they-attend/?sh=1d8f577c3308">11 CEOs of America’s top 100 listed companies</a> were educated at an Ivy League university. One of the rare examples is Amazon’s Jeff Bezos, who graduated from Princeton. Regardless of their reputation, <a href="https://www.theguardian.com/world/2013/may/14/france-power-elitism-peter-gumbel">Oxford and Cambridge come nowhere close</a> to matching the dominance of their French counterparts. Given that most directors are also CEOs, boards often include members who share the same education as the CEO and who therefore belong to his network.</p>
<p>At first glance, one might think that this concentration of brainpower is a strength for the company. But wait a second, is the team with the best players always the best team? In sport, we know that this is not true. Real Madrid proved in 2004 that a team of star players comprising David Beckham and Zinedine Zidane among others can end the season without winning any trophies. Over and above individual talent, it is critical to achieve an optimal balance between different sets of skills. The strength of a team is not just the sum of each member’s strength.</p>
<h2>Some adverse effects on the firm’s governance</h2>
<p>By analyzing the <a href="https://doi.org/10.1016/j.jfineco.2016.01.013">performance of co-investments in venture capital</a>, researchers at Harvard have uncovered another fascinating result. While managers with a degree from a top university are associated with a higher investment performance, when both co-managers are alumni of the same highly prestigious university, investment performance is significantly worse. The study does not elaborate on the reasons for this disappointing outcome; however, it is likely that the lack of critical assessment of someone who is a mirror of oneself must play a key role.</p>
<p>Similarly, one can expect that the presence of directors with the same profile as the CEO by virtue of sharing the same education is associated with detrimental consequences for the company. The insidious threat is that the board of directors does not push the CEO hard enough to question the merits of his strategy. The risk is then that the company takes the wrong turn and finds itself in a dead end.</p>
<p>The failures of well-established companies can be traced down to blunders that might have been avoided if the board of directors had been more critical of the CEO’s decisions. As it happens, the biggest losses suffered by French companies come from firms whose board of directors comprised members of the CEO’s alumni network.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/397305/original/file-20210427-19-tbfx3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/397305/original/file-20210427-19-tbfx3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/397305/original/file-20210427-19-tbfx3b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/397305/original/file-20210427-19-tbfx3b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/397305/original/file-20210427-19-tbfx3b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/397305/original/file-20210427-19-tbfx3b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/397305/original/file-20210427-19-tbfx3b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Directors who come from the same school as their manager seem to be less able to control the latter.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/successful-group-business-people-working-on-144231154">Shutterstock</a></span>
</figcaption>
</figure>
<p>Among them, Vivendi stands out with a loss of 23.3 billion euros in 2002. The company was then <a href="https://www.theguardian.com/media/2002/jul/01/citynews.vivendi1">headed by Jean-Marie Messier</a> whose background features degrees from Polytechnique and ENA. The trouble is that Vivendi’s board of directors also comprised three alumni of Polytechnique and four alumni of ENA, also members of the prestigious Inspection of Finances like Messier himself. It is therefore quite plausible that the directors’ affinity with the brightest of their kind did not help them to detect burning issues early enough and find solutions before it was too late.</p>
<h2>Unfavorable consequences for the company</h2>
<p>When some directors have close ties with the CEO, the ability of the board to hold the CEO to account is effectively hampered. This fact is accepted in the AFEP-MEDEF governance code to define director independence, with respect to financial or family ties. However, social ties, such as those that stem from belonging the same alumni network, are utterly ignored. Yet, these connections affect just as much the ability of the board of directors to control the CEO.</p>
<p>In the absence of adequate oversight, the CEO may choose to quietly run the business <a href="https://www.journals.uchicago.edu/doi/abs/10.1086/376950">without exerting too much effort</a> or <a href="https://doi.org/10.1016/j.jfineco.2016.08.002">taking too much risk</a>. This seemingly over-the-top statement has been convincingly demonstrated in the context of US companies. An obvious consequence is the lower performance of these companies.</p>
<p>In the long run, this leads to a loss of competitiveness. An early warning indicator is the company’s greater sensitivity to economic fluctuations. <a href="https://www.cairn.info/revue-d-economie-politique-2021-2.htm">Our analysis</a> shows more specifically that companies whose boards of directors are connected to the CEO exhibit stock returns that are highly correlated with market returns. When the state of the economy is poor, the stock market drops, and the value of these companies drops even more.</p>
<p>Academic studies also show that when the CEO is entrenched, in other words when he does not have to fear losing his job, the company tends to invest less in research and development, whose outcome is highly uncertain. It tends therefore to be less innovative. The results we obtain point to the same conclusion, which suggests that social networks in the boardroom contribute to managerial entrenchment.</p>
<p>Two other consequences arise from this situation. The first is that the company tends to be less transparent. It discloses less useful information. Jean-Marie Messier even famously claimed that “Vivendi is doing better than well” just before announcing shattering losses. Investors have thus every reason to be wary and to require a higher risk premium to hold the company’s shares. We demonstrate <a href="https://www.cairn-int.info/journal-accounting-auditing-control-2021-1-page-111.htm">in a recently published paper</a> that the educational ties between directors and the CEO result in a higher cost of equity. In addition, the company’s growth rate is much lower.</p>
<h2>Aggravating factors and potential remedies</h2>
<p>All these problems are exacerbated by the concentration of powers in the hands of the CEO, such as when the latter combines the role of chairman of the board with that of CEO. A typical example is that of Carlos Ghosn, whose contentious decisions were never seriously questioned by Renault directors <a href="https://www.theguardian.com/business/2019/apr/03/carlos-ghosn-former-nissan-chairman-getting-ready-tell-truth-twitter">until after his spectacular downfall</a>.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/397312/original/file-20210427-17-12shyvd.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/397312/original/file-20210427-17-12shyvd.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/397312/original/file-20210427-17-12shyvd.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/397312/original/file-20210427-17-12shyvd.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/397312/original/file-20210427-17-12shyvd.jpeg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/397312/original/file-20210427-17-12shyvd.jpeg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/397312/original/file-20210427-17-12shyvd.jpeg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Carlos Ghosn, an alumnus of Ecole Polytechnique, then CEO of Renault-Nissan, back to his Alma Mater and talking with current students.</span>
<span class="attribution"><a class="source" href="https://commons.wikimedia.org/wiki/File:Conf%C3%A9rence_de_Carlos_Ghosn_(X_1974),Pr%C3%A9sident-Directeur_G%C3%A9n%C3%A9ral_de_l%E2%80%99alliance_Renault-Nissan_%C3%A0_l%27Ecole_polytechnique_(18739078575).jpg">Wikimedia</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>Several external governance mechanisms can, however, mitigate the weakness of board control. Large shareholders have the means and incentives to make themselves heard. They can also threaten to sell their shares, which would be a scathing rejection of the CEO’s policy. Monitoring by financial analysts can also prevent connected directors from being too complacent. By expounding the company’s strategy and highlighting its financial implications, analysts decrease the prospect of a dysfunctional board. The detrimental effects of CEO-board ties are thus considerably alleviated.</p>
<p>Other factors may also play a beneficial role. Further internationalization of French companies is expected to bring about a greater diversity of executive profiles, which should reduce the influence of old boys’ networks. Large companies like Axa and Air France-KLM are now run by CEOs (Thomas Buberl and Ben Smith) who have completed their education and gained most of their experience overseas. The increasing <a href="https://theconversation.com/conseils-dadministration-plus-de-femmes-mais-toujours-aussi-peu-de-jeunes-140452">proportion of female directors</a> following the Copé-Zimmermann act is another factor expected to lead to better governance. We know, for instance, that the presence of female directors decreases the incidence of fraud. </p>
<p>Greater competition, with the opening-up of national and hitherto protected markets, such as that of rail transportation and electricity supply, may require different skills, which would thus undermine the appeal of former senior civil servants. On the other hand, <a href="https://www.theguardian.com/world/2021/apr/08/macron-close-france-elite-finishing-school-ena-elite-presidents">President Macron’s recent decision to close ENA</a>, his very alma mater, may not curb the tendency of France’s most elite graduates to maintain close ties with one another and make decisions with their own interests in mind.</p><img src="https://counter.theconversation.com/content/159949/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Les auteurs ne travaillent pas, ne conseillent pas, ne possèdent pas de parts, ne reçoivent pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'ont déclaré aucune autre affiliation que leur organisme de recherche.</span></em></p>When the directors of a company are graduates of the same school as the executive, their ability to hold the executive accountable for his or her decisions becomes compromised.Pascal Nguyen, Professeur de finance, Université de MontpellierCédric Van Appelghem, Maître de conférences en sciences de gestion - Chercheur au LITEM, Université d’Evry – Université Paris-SaclayLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1539282021-01-26T15:03:49Z2021-01-26T15:03:49ZNissan staying in UK is great news after Brexit, but car industry’s future is still very unclear<p>When the UK voted for Brexit, there were no positives for the UK car industry. The prospect of a <a href="https://www.smmt.co.uk/2020/09/only-weeks-left-to-save-eu-and-uk-auto-sectors-from-e110-billion-no-deal-brexit-disaster/">10% tariff</a> on car production that involves parts and sub-assemblies moving in and out of the UK was untenable. </p>
<p>Without a trade deal with the EU, Nissan <a href="https://www.bbc.co.uk/news/business-52900528">warned that</a> its Sunderland plant in north-east England would be “unsustainable”. It would have to withdraw from the UK in the same way <a href="https://theconversation.com/honda-closure-brexit-is-tipping-the-uks-car-industry-over-the-edge-112112">as Honda</a>, whose plant in Swindon is shutting down permanently <a href="https://www.bbc.co.uk/news/uk-england-wiltshire-55550229">in July</a>. </p>
<p>Nissan employs 6,000 people directly in Sunderland, and thousands more through the local supply chain. Its warning was reinforced by the fact that the company’s annual Sunderland investment <a href="https://www.am-online.com/news/manufacturer/2021/01/22/nissan-gb-commits-to-plant-sunderland-in-light-of-brexit-deal">had dropped</a> 71% since the 2016 vote. And besides Honda, other manufacturers <a href="https://www.independent.co.uk/news/business/news/ford-no-deal-brexit-uk-car-manufacturing-investment-steven-armstrong-a8851356.html">such as Ford</a>, which makes engines in the UK, had also threatened to pull out in the event of no deal.</p>
<p>Realistically, <a href="https://ec.europa.eu/info/relations-united-kingdom/eu-uk-trade-and-cooperation-agreement_en">a trade deal</a> was essential to secure UK car manufacturing – even if it meant the compromises that have <a href="https://www.theguardian.com/politics/2021/jan/18/fishing-trucks-protest-at-westminster-against-brexit-red-tape">drawn fish lorries</a> to Whitehall, protesting that their industry has literally been sold down the river. The question is, where does UK automotive go from here?</p>
<h2>Business not as usual</h2>
<p>The UK is a mid-ranking car manufacturer, with Tata/Jaguar Land Rover <a href="https://www.statista.com/statistics/298778/car-production-by-brand-in-the-united-kingdom/">the biggest producer</a> and other substantial players including BMW/Mini, Toyota, Stellantis/Vauxhall and of course Nissan. In 2019, <a href="https://www.smmt.co.uk/vehicle-data/manufacturing/#:%7E:text=Manufacturing%20Data%20%E2%80%93%20Cars%2C%20Commercial%20Vehicles,%E2%80%93%2081%25%20of%20total%20production.">1.3 million cars</a> were produced, with eight out of ten exported and over half of those to the EU. Over the same period, Germany manufactured 5 million cars and France 1.4 million, while <a href="https://www.statista.com/statistics/584968/leading-car-manufacturing-countries-worldwide/">world leaders</a> China and the US produced 26 million and 11 million respectively. These figures have fluctuated in 2020 due to the pandemic.</p>
<p>The new trading arrangements are worse for the UK industry than before. An <a href="https://www.ft.com/content/30c58758-e91e-11e9-a240-3b065ef5fc55">estimated £15 billion</a> will be incurred by the UK as a whole through added bureaucracy, while for car makers, 45% of the value of any car exported from the UK to EU or vice versa must have been derived there. This “country of origin” rule affects companies like Nissan and Toyota, whose UK assembly plants source key high-value components from Japan and other non-European countries. </p>
<p>Nonetheless, the industry now knows the rules of the game. Nissan’s general decision to back Sunderland is less significant than <a href="https://www.bbc.com/news/business-55757930">moving production</a> there from Japan for its 62kWh battery packs for cars like the Leaf. This both removes shipping costs from Japan, and satisfies the EU country of origin rules.</p>
<p>Yet this may reflect Nissan’s individual situation more than any coming investment boom for the UK industry. Nissan is suffering from the fallout from the Carlos Ghosn era, when he controlled the Renault/Nissan/Mitsubishi Alliance. Since Ghosn was sacked by Nissan in late 2018 over financial misconduct charges (which he denies) and then <a href="https://www.bbc.co.uk/news/business-50952335">fled justice</a> in Japan to his native Lebanon, <a href="https://www.ft.com/content/8e09fb16-353a-11ea-a6d3-9a26f8c3cba4">the alliance</a> has <a href="https://www.wsj.com/articles/without-carlos-ghosn-the-nissan-renault-alliance-has-started-to-crack-11577292916#:%7E:text=Renault%20owns%2043.4%25%20of%20Nissan,and%20former%20executives%20said%20Mr.">looked fractured</a>.</p>
<p>Whereas the partners would previously have collaborated, it appears that they are now doing a lot more independently – hence Nissan needing a battery facility of its own in Europe.</p>
<p>In 2020, Renault <a href="https://www.euractiv.com/section/electric-cars/news/macron-demands-carmakers-turn-to-made-in-france-for-e8bn-virus-aid/">received French government money</a> as part of an overall €8 billion (£7.1 billion) financial injection to the industry to enable lower emissions and electric vehicles. President Emmanuel Macron openly stated that he expects car manufacturing operations to be re-localised to France, arguing that no French car model should be manufactured abroad. This may have a bearing on <a href="https://www.ft.com/content/8e2aaf0a-3868-450b-8582-dbd09587277c">reports in 2020</a> that the manufacturing of several Renault SUVs might be moved to Sunderland. </p>
<p>For its part, Mitsubishi <a href="https://www.thisismoney.co.uk/money/cars/article-8568159/Mitsubishi-retreat-UK-European-markets.html">announced in 2020</a> that it was pulling out of the UK, leaving 103 dealerships and its customers in limbo. This was not because of Brexit but because of internal corporate difficulties. </p>
<h2>Combustible row</h2>
<p>Nissan’s new enthusiasm for the UK is not shared by all car manufacturers. Stellantis, the newly merged Fiat Chrysler and Peugeot, which makes Vauxhalls in the UK, <a href="https://www.telegraph.co.uk/business/2021/01/19/brexit-engine-ban-have-changed-rules-vauxhall-boss-warns/">has been</a> delaying an investment decision over its Ellesmere Port plant in north-west England. This is due to Brexit and <a href="https://www.intelligenttransport.com/transport-news/111719/uk-to-ban-sales-of-petrol-and-diesel-cars-by-2030-in-zero-emissions-bid/#:%7E:text=The%20UK%20will%20become%20the,on%20traditional%20fuels%20by%202030">the UK government’s requirement</a> that no new petrol or diesel cars will be sold by 2030 and hybrids be phased out by 2035. </p>
<p>Stellantis, which also has a plant in Luton near London, is expected to reach an investment decision in the next couple of weeks. With France’s Peugeot part of the newly merged group, it raises questions about whether Vauxhall could even be drawn into Macron’s French re-localisation drive. </p>
<p>Stellantis’ position reflects wider industry reservations about the 2030/35 bans, since it is obvious that many other markets will not be able to move towards electrification. Japan <a href="https://www.mfat.govt.nz/en/trade/mfat-market-reports/market-reports-asia/japan-strategic-hydrogen-roadmap-30-october-2020/#:%7E:text=Japan's%20Hydrogen%20Roadmap%20has%20an,fuel%20cell%20buses%20by%202030.">is committed</a> to a hydrogen-based society, while less developed economies have infrastructure problems with electricity supply that make a roll-out of electric cars impossible. With companies like Jaguar Land Rover making so many cars for export, the need to offer different cars to different markets will complicate business models. </p>
<p>In the UK, we wait to see whether the government in a post–COVID world can supply the infrastructure and also the workforce to make its 2030 target viable. It <a href="https://www.bbc.co.uk/news/science-environment-54981425">initially estimated</a> £4 billion infrastructure costs, but critics insist it will be much more. The industry has a legacy expertise developed over 100 years in the internal combustion engine. The radical shift towards electric will impact everyone from manufacturers to showrooms. </p>
<p>In sum, the future of UK car-making looks much more solid than before the EU trade deal. Nissan’s proposed investment is probably the best news for some time. But the decision looks very specific to the company’s situation. Whether rivals will see things the same way is unclear. </p>
<p>One irony is that the industry’s attractiveness to further investment will depend on how aligned the government’s electrification objectives are with the EU. Since the EU is the UK’s main export market for cars, if it takes a different path with electric cars, investors are less likely to choose the UK in future.</p><img src="https://counter.theconversation.com/content/153928/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jim Saker is affiliated with the Institute of the Motor Industry.</span></em></p>The Japanese car maker is not the whole industry – and there’s also much disquiet about government’s ambitious plans for electric vehicles.Jim Saker, Emeritus Professor, Centre for Automotive Management, Loughborough UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1442542020-08-24T12:19:45Z2020-08-24T12:19:45ZThe labor-busting law firms and consultants that keep Google, Amazon and other workplaces union-free<figure><img src="https://images.theconversation.com/files/354118/original/file-20200821-20-11nqvca.jpg?ixlib=rb-1.1.0&rect=21%2C48%2C2013%2C1141&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Rite Aid hired anti-union consultants to try to prevent workers from successfully organizing. </span> <span class="attribution"><a class="source" href="https://www.flickr.com/photos/labor2008/3292916718/">Amy Niehouse/Flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span></figcaption></figure><p>American companies have been very successful at preventing their workers from organizing into unions in recent decades, one of the reasons unionization in the private sector <a href="https://data.bls.gov/pdq/SurveyOutputServlet">is at a record low</a>. </p>
<p>What you may not realize is that a handful of little-known law and consulting firms do much of the dirty work that keeps companies and other organizations union-free.</p>
<p>IKEA, for example, turned to Ogletree Deakins, one of the largest law firms that specialize in so-called union avoidance activities, to <a href="https://www.businessinsider.com/ikea-accused-of-anti-union-tactics-2018-10">help it crush unionization efforts</a> in Stoughton, Massachusetts, in 2016. Google <a href="https://www.nytimes.com/2019/11/20/technology/Google-union-consultant.html">hired IRI Consultants</a>, a firm known for its anti-union activities, for advice on how to deal with growing worker unrest. And just this summer, two liberal-leaning organizations – the <a href="https://scholars.org">Scholars Strategy Network</a> and ACLU Kansas – <a href="https://thebaffler.com/working-stiff/the-new-face-of-union-busting-kelly">recruited the services of Ogletree</a> when their employees tried to form unions. </p>
<p><a href="https://www.doi.org/10.13169/workorgalaboglob.13.2.0057?seq=1">I’ve been studying</a> these firms for two decades and <a href="https://www.jwj.org/wp-content/uploads/2014/03/JohnLogan12_2006UnionAvoidance.pdf">have chronicled the key roles</a> they have played in undermining an American worker’s federally protected right to organize. Their tactics, abetted by <a href="https://www.brookings.edu/articles/workers-rights-labor-standards-and-global-trade/">weak labor laws</a>, have turned what should be a worker-driven process into essentially a choice being made by companies. </p>
<h2>Avoiding unions 101</h2>
<p>A <a href="https://doi.org/10.1016/S0742-6186(06)15007-6">lack of effective federal reporting requirements</a> means there isn’t a lot of data on this union-busting industry. We do know that a lot of companies are using it. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/354141/original/file-20200821-24-igubon.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="An old brochure from the Labor Relations Institute offered clients a money-back guarantee that it could successfully prevent employees from forming a union." src="https://images.theconversation.com/files/354141/original/file-20200821-24-igubon.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/354141/original/file-20200821-24-igubon.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=544&fit=crop&dpr=1 600w, https://images.theconversation.com/files/354141/original/file-20200821-24-igubon.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=544&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/354141/original/file-20200821-24-igubon.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=544&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/354141/original/file-20200821-24-igubon.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=684&fit=crop&dpr=1 754w, https://images.theconversation.com/files/354141/original/file-20200821-24-igubon.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=684&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/354141/original/file-20200821-24-igubon.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=684&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The Labor Relations Institute offered clients a money-back guarantee that it could successfully prevent employees from forming a union in a brochure from the 2000s.</span>
<span class="attribution"><span class="source">John Logan</span></span>
</figcaption>
</figure>
<p>According to a Cornell labor expert, about 75% of all U.S. employers <a href="https://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=1037&context=reports">have engaged the services of a consultant or law firm</a> to stymie efforts by workers to organize – and are spending an <a href="https://www.epi.org/publication/unlawful-employer-opposition-to-union-election-campaigns/">estimated US$340 million a year</a> to do so. </p>
<p>Three of the biggest law firms that do this work are <a href="https://www.littler.com">Littler Mendelson</a>, <a href="https://ogletree.com">Ogletree</a> and <a href="https://www.jacksonlewis.com">Jackson Lewis</a>, which have grown from <a href="https://www.doi.org/10.13169/workorgalaboglob.13.2.0057">regional operations</a> into <a href="https://doi.org/10.1177/1095796019893336">global union avoidance behemoths</a>. Consultants such as IRI and the <a href="https://lrionline.com">Labor Relations Institute</a> have also developed a reputation for union avoidance expertise in recent decades. IRI even <a href="https://cdn.theconversation.com/static_files/files/1180/Logan-IUR.pdf?1598029329">used to offer a “money-back guarantee”</a> if its efforts weren’t succesful.</p>
<p>Here’s a closer look at the main services they offer clients, which occupy the gray areas of labor law.</p>
<h2>Monitoring unrest in the workplace</h2>
<p>One major reason companies hire these firms is to conduct union vulnerability audits, intended to analyze a workforce to see which departments, locations or demographic groups are most likely to organize. </p>
<p>The tactic has been around since at least the mid-20th century. Management professor Sanford Jacoby documented how <a href="https://doi.org/10.2307/3115660">Sears Roebuck used vulnerability audits</a> to beat back unionization as early as the 1940s, while labor historian Nelson Lichtenstein showed how Walmart <a href="https://www.minnesotalawreview.org/wp-content/uploads/2012/01/Lichtenstein_FinalPDF.pdf">has used similar tactics</a> to remain union-free since the 1960s.</p>
<p>Today’s audits, however, <a href="https://www.littler.com/practice-areas/robotics-artificial-intelligence-ai-and-automation">are more sophisticated</a> and data-driven. Anti-union monitoring software can help management <a href="https://onezero.medium.com/companies-are-using-employee-survey-data-to-predict-and-squash-union-organizing-a7e28a8c2158">squash organizing</a> before it starts, while heat maps that collect data from a wide variety of sources reveal granular detail about where the biggest risks are. <a href="https://www.businessinsider.com/whole-foods-tracks-unionization-risk-with-heat-map-2020-1">Amazon recently used heat maps</a> to show which of its Whole Foods grocery stories and <a href="https://www.vox.com/recode/2020/6/29/21303643/amazon-coronavirus-warehouse-workers-protest-jeff-bezos-chris-smalls-boycott-pandemic">distribution warehouses</a> were most at risk of unionization.</p>
<figure class="align-center ">
<img alt="A banner that read 'Vote no' was added to billboards that read 'keep 1 team' near a Nissan plant in Smyrna, Tenn." src="https://images.theconversation.com/files/353964/original/file-20200820-14-dlvh5t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/353964/original/file-20200820-14-dlvh5t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/353964/original/file-20200820-14-dlvh5t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/353964/original/file-20200820-14-dlvh5t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/353964/original/file-20200820-14-dlvh5t.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/353964/original/file-20200820-14-dlvh5t.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/353964/original/file-20200820-14-dlvh5t.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Nissan used billboards to convey its anti-union message during a unionization drive in 1989.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Watchf-ASSOCIATED-PRESS-I-TN-USA-APHST46-FOOTNOTE/bffd484e790d47869a8608cdc17aabf2/1/0">AP Photo/Mark Humphrey</a></span>
</figcaption>
</figure>
<h2>Union inoculation</h2>
<p>The anti-union firms <a href="https://www.jacksonlewis.com/sites/default/files/media/pnc/1/media.1511.pdf">advise companies</a> to treat unions like a “virus” and to “inoculate” employees with messaging about the purported consequences of organizing early and often. </p>
<p>And to that end, another important service these firms provide is supplying companies with anti-union materials, which <a href="http://www.doi.org/10.1057%2F9781137319067_2">can be anything</a> from managerial training and websites targeting employees to “vote no” buttons and anti-union billboards – strategically located on the way to work. </p>
<p>[<em><a href="https://theconversation.com/us/newsletters/the-daily-3?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=experts">Expertise in your inbox. Sign up for The Conversation’s newsletter and get expert takes on today’s news, every day.</a></em>]</p>
<p>For example, <a href="https://www.nytimes.com/2017/08/02/business/economy/nissan-united-auto-workers-mississippi.html">Nissan</a>, <a href="https://www.reuters.com/article/us-autos-uaw-election-analysis/thirteen-billboards-one-paint-shop-worker-helped-defeat-union-at-vw-plant-in-chattanooga-idUSBREA1L13220140222">Volkswagen</a> and <a href="https://www.al.com/business/2013/08/anti-union_billboards_put_up_n.html">other carmakers</a> have used billboards as part of their campaigns to prevent unionizing at plants in the U.S. And last year, Delta Airlines put up posters <a href="https://www.vox.com/the-goods/2019/5/10/18564745/delta-anti-union-video-game-poster">advising employees</a> that buying a video game console would be a better way to spend money than on union dues. Rite Aid, as part of an effort to stop workers at a warehouse in Lancaster, California, from organizing beginning in 2006, hired <a href="https://www.oliverbell.com/who-we-are/about-oliver">Oliver J. Bell & Associates</a> to provide its managers with training resources, according to a <a href="http://www.teamsters952.org/riteaid_report(1).pdf">report by labor rights organization Jobs with Justice</a>. </p>
<h2>Captivating workers</h2>
<p>A third technique is what union avoidance consultants call <a href="https://www.jstor.org/stable/40342475?seq=1">direct explainer activity</a>, such as conducting mandatory anti-union staff meetings.</p>
<p>Workers who experience them describe these “captive” meetings as a <a href="https://www.jstor.org/stable/40342475?seq=1">form of legalized intimidation</a>, which is one reason <a href="https://cllpj.law.illinois.edu/archive/vol_29/">many other democratic countries</a>, such as Germany and Japan, restrict them. </p>
<p>Law firms generally avoid engaging in activities that involve direct contact with employees because, technically, it must be disclosed under the <a href="https://www.dol.gov/olms/regs/statutes/lmrda-act.htm">Labor-Management Reporting and Disclosure Act of 1959</a>. This has created an opening for other types of consultants to specialize in this kind of persuasion. Weak enforcement means that reporting is patchy, even among consultants who talk to employees.</p>
<p>As the pandemic and concerns of benefits and safety <a href="https://www.nytimes.com/2020/04/28/business/coronavirus-unions-layoffs.html">has prompted</a> <a href="https://news.bloomberglaw.com/daily-labor-report/nonprofit-workers-turn-to-unions-during-pandemic-uncertainty">more workers to try to organize</a>, firms have continued to <a href="https://truthout.org/articles/union-busting-during-a-pandemic-could-prove-lethal-to-workers/">conduct these meetings</a>. HCA Healthcare <a href="https://theintercept.com/2020/05/06/coronavirus-hca-healthcare-nurse-union-busting/">reportedly hired consultants</a> to run meetings at a hospital in Asheville, North Carolina, as part of its recent campaign to prevent 1,600 nurses from forming a union. </p>
<p>Using these and other tactics, consultants claim overwhelming success rates in preventing unionization, <a href="https://www.nytimes.com/1991/03/03/business/tougher-tactics-to-keep-out-unions.html">often 95% or higher</a>. While it’s impossible to empirically verify these claims, <a href="https://www.palgrave.com/gp/book/9780230303348">most labor relations researchers believe</a> they are highly effective.</p><img src="https://counter.theconversation.com/content/144254/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Logan does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Unionization is at a record low in part thanks to the tactics these firms use on behalf of companies and other organizations.John Logan, Professor and Director of Labor and Employment Studies, San Francisco State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1264062019-11-07T12:16:38Z2019-11-07T12:16:38ZInequality is higher in some states like New York and Louisiana because of corporate welfare<figure><img src="https://images.theconversation.com/files/300474/original/file-20191106-12521-1n5z88i.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">New York's offer of incentives to Amazon to open a headquarters in the state faced significant opposition.</span> <span class="attribution"><span class="source">AP Photo/Karen Matthews</span></span></figcaption></figure><p>Income inequality <a href="https://markets.businessinsider.com/news/stocks/income-inequality-reached-highest-level-ever-recorded-in-2018-2019-9-1028559996">made</a> <a href="https://www.washingtonpost.com/business/2019/09/26/income-inequality-america-highest-its-been-since-census-started-tracking-it-data-show/">big</a> <a href="https://www.axios.com/income-inequality-united-states-record-c78b1ff4-4b71-4a88-a890-db20ff8222f3.html">headlines</a> in 2019, after the <a href="https://www.census.gov/programs-surveys/acs/news/data-releases/2018/release.html#par_textimage_copy">U.S. Census Bureau</a> released data showing that the gap between the richest and poorest Americans is at its <a href="https://www.npr.org/2019/09/26/764654623/u-s-income-inequality-worsens-widening-to-a-new-gap">highest level in at least half a century</a>. </p>
<p>Less reported was the <a href="https://data.census.gov/cedsci/table?hidePreview=true&q=B19083%3A%20GINI%20INDEX%20OF%20INCOME%20INEQUALITY&table=B19083&tid=ACSDT1Y2018.B19083&lastDisplayedRow=155&g=0100000US.04000.001&tp=true">significant variation among the states</a>. New York and California had the highest inequality in 2018, while Utah and Alaska had the lowest. In addition, states as diverse as Alabama, Texas and New Hampshire experienced large increases from the prior year.</p>
<p>Why are some states more or less equal than others? </p>
<p>It usually comes down to policies. States with <a href="https://scholars.org/contribution/how-states-can-fight-growing-economic-inequality">more generous welfare programs</a> and <a href="http://csivc.csi.cuny.edu/Thomas.Volscho/files/volscho1.pdf">higher minimum wages</a> often have lower inequality, while those with <a href="https://doi.org/10.1177/1532440018760198">weaker unions</a> and <a href="https://www.nytimes.com/2019/07/20/opinion/sunday/inequality-taxes.html">lower taxes on the rich</a> have higher levels.</p>
<p>My <a href="https://jmjansa.files.wordpress.com/2019/11/chasing-disparity-sppq-final-version-w-cover.pdf">research suggests</a> there’s another, less-noticed reason behind the disparities: corporate welfare. </p>
<p><iframe id="MuXS1" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/MuXS1/6/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Incentivizing inequality</h2>
<p>States offer economic development incentives to businesses in order to encourage their investment and expansion in the state.</p>
<p>Famously, <a href="https://www.nytimes.com/2018/01/18/technology/amazon-finalists-headquarters.html">hundreds of states and cities offered</a> Amazon property and income tax credits, bonds, grants, reimbursements and infrastructure assistance in their efforts to convince the Internet giant to open a “second” headquarters in one of their cities. One of the finalists even offered to provide Amazon with <a href="https://www.cnbc.com/2018/11/14/atlanta-offered-amazon-the-chance-at-its-own-train-car-for-hq2.html">a private train car</a>. New York and Virginia won the sweepstakes with a combined <a href="https://www.nytimes.com/2018/11/13/business/economy/amazon-hq2-va-long-island-city-incentives.html">US$2 billion in incentives</a> – although Amazon dropped New York after it met political resistance.</p>
<p>But the amount of incentives states offer can vary significantly. For example, New Hampshire spent just $9.9 million on incentives, or 75 cents for every state resident, per year from 1999 to 2014, while Louisiana paid out an average of $1.2 billion a year, or $267 per capita.</p>
<p>I wanted to know if how much a state spends on corporate incentives affects its level of income inequality. So I analyzed incentive spending using <a href="https://www.goodjobsfirst.org">Good Jobs First</a> data and income inequality as measured by the <a href="https://data.census.gov/cedsci/table?hidePreview=true&q=B19083%3A%20GINI%20INDEX%20OF%20INCOME%20INEQUALITY&table=B19083&tid=ACSDT1Y2018.B19083&lastDisplayedRow=155&g=0100000US.04000.001&tp=true">Gini coefficient</a> from 1999 to 2014. </p>
<p>The Gini coefficient measures inequality by assigning a decimal number that can range from 0, which represents perfect equality, to 1, meaning perfect inequality. New York had a Gini of 0.513 in 2018, while Utah’s was 0.426. A change in the Gini coefficient of as little as 0.01 means the top 10% of households earned $1,500 to $2,400 more per year, depending on the state. </p>
<p>I found that when states spend more on incentives, their level of inequality tends to spike within a year or so. This holds true even when controlling for other economic and demographic factors and other public policies.</p>
<p>The data showed that, on average, for every $180 per citizen that a state spends on incentives, the Gini coefficient increases by 0.004. In other words, $600 to $1,000 more winds up in the pockets of people from wealthy households.</p>
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<p>In big-dollar terms, $180 per citizen is the equivalent of a state spending $200 million to $2 billion a year on incentives, depending on its population. To put it in context, states frequently give billion-dollar incentive packages to individual companies, such as <a href="https://www.scientificamerican.com/article/nevada-gives-1-3-billion-tax-break-to-electric-car-maker-tesla/">Tesla</a>, <a href="https://www.cnbc.com/id/100315374">Nike</a>, <a href="https://www.oregonlive.com/silicon-forest/2018/12/intels-oregon-tax-breaks-are-among-the-nations-biggest-new-report-finds.html">Intel</a>, <a href="https://news.bloombergtax.com/daily-tax-report-state/boeings-8-7-billion-washington-state-tax-break-under-scrutiny">Boeing</a> and <a href="https://www.goodjobsfirst.org/study-nissans-mississippi-subsidies-top-13-billion">Nissan</a>.</p>
<p>Incentives serve to redistribute funds to the wealthy and reduce resources for broadly redistributive policies over the long run.</p>
<h2>The whole story</h2>
<p>Incentives, of course, do not explain everything. New Hampshire, for example, has growing inequality but doesn’t spend much on incentives.</p>
<p>Yet, looking at incentives can help explain why states that are <a href="https://scholars.org/contribution/how-us-states-are-tackling-inequality-and-what-more-can-be-done">leaders in mitigating inequality</a> through higher minimum wages or welfare spending on the poor, such as New Mexico and New York, are still seeing growing inequality.</p>
<p>So the next time you hear an elected official cite big <a href="https://madison.com/wsj/news/local/govt-and-politics/ap-fact-check-scott-walker-embellishes-return-on-new-milwaukee/article_f00d4074-d403-5944-a00f-902705e8153f.html">returns on investment</a> as their reason for offering a company billions in incentives to open a factory or office, remember they aren’t telling the whole story. Those big returns come at a cost: higher inequality, which in turn can <a href="http://dx.doi.org/10.2139/ssrn.178708">hamper economic growth</a>.</p><img src="https://counter.theconversation.com/content/126406/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Joshua Jansa does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The gap between rich and poor is at record levels in the U.S., yet it varies widely among the states. A political scientist explains why.Joshua Jansa, Assistant Professor of Political Science, Oklahoma State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1117832019-03-19T20:34:03Z2019-03-19T20:34:03ZElectric vehicles as an example of a market failure<figure><img src="https://images.theconversation.com/files/264679/original/file-20190319-60972-94akzm.jpg?ixlib=rb-1.1.0&rect=0%2C33%2C1500%2C992&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A Renault Zoe charging. It's currently one of the top-selling plug-in electric vehicles in Europe, but what would happen if subsidies dried up? </span> <span class="attribution"><a class="source" href="https://fr.wikipedia.org/wiki/Fichier:Renault_Zoe_charging.jpg">Werner Hillebrand-Hansen/Wikipedia</a></span></figcaption></figure><p>Electric vehicle revolution is well under way. Norway ambitiously heads toward having all new cars sold as zero-emission by 2025. China continues to be one of the major drivers of EV boom. The US market experiences strong growth, driven by models from <a href="https://www.myev.com/research/comparisons/best-selling-electric-vehicles">Tesla, Chevrolet and Nissan</a>. The United Kingdom and France have announced they would <a href="https://www.nytimes.com/2017/07/26/world/europe/uk-diesel-petrol-emissions.html">ban new petrol and diesel vehicles sales by 2040</a>.</p>
<p>Electric cars are perceived as a <a href="https://econclassroom.com/market-failure-positive-externalities-of-consumption/">positive externality of consumption</a> on the society. To fight global warming, governments have implemented different policies to stimulate consumer demand.</p>
<p>But just how sustainable is demand for electric vehicles and how long will governments fuel it? There is also the question of hidden costs for stakeholders like the Democratic Republic of Congo, major supplier of cobalt used for EV batteries.</p>
<h2>Norway hits new highs with EV market penetration</h2>
<p>A stellar example of a country that’s fully charged to go electric is Norway. It has the highest number of electric vehicles per person in the world, with close to 300,000 registered units in its EV fleet in 2018. According to the <a href="https://elbil.no/english/norwegian-ev-market/">European Alternative Fuel Observatory</a>, almost 50% of the cars purchased in Norway in 2018 are electric.</p>
<p>What lies behind such impressive result that puts Norway ahead of others? Answer seems clear: change of consumer habits through <a href="https://elbil.no/english/norwegian-ev-policy/">comprehensive incentive package</a> introduced gradually since 1990s. One of the key policies is Norwegian car-taxation system, based on the principle that the more you pollute, the more you pay. Tax for a new car is calculated by combining weight, CO<sub>2</sub> and NO<sub>x</sub> emissions. It is progressive, making big cars with high emissions very expensive. This results in most electric vehicles becoming cheaper compared to similar petrol models.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/260825/original/file-20190225-26184-bk658h.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/260825/original/file-20190225-26184-bk658h.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/260825/original/file-20190225-26184-bk658h.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=396&fit=crop&dpr=1 600w, https://images.theconversation.com/files/260825/original/file-20190225-26184-bk658h.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=396&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/260825/original/file-20190225-26184-bk658h.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=396&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/260825/original/file-20190225-26184-bk658h.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=497&fit=crop&dpr=1 754w, https://images.theconversation.com/files/260825/original/file-20190225-26184-bk658h.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=497&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/260825/original/file-20190225-26184-bk658h.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=497&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Illustration of Norway subsidy scheme, comparison of Volkswagen Golf petrol and electric model.</span>
<span class="attribution"><span class="source">https://elbil.no/english/norwegian-ev-policy/</span></span>
</figcaption>
</figure>
<p>In addition, other incentives are in place such as 25% VAT exemption for new EV purchases, road toll exemption, low annual road tax, free access to municipal parking and ferries, access to bus lanes and good network of public charging stations.</p>
<h2>How long can it last?</h2>
<p>But how long will governments continue incentive schemes and can EV market roll on its own? The main concern with subsidies is they’re addictive – once put in place, they’re difficult to end. Budgets are also tight and incentives of this magnitude put pressure on public finances.</p>
<p>In October 2018, the <a href="https://www.theguardian.com/environment/2018/oct/07/electric-car-prices-to-soar-low-emission-vehicles--subsidies-philip-hammond-budget">UK announced subsidy cuts</a> on electric and hybrid vehicles, making models such as Mitsubishi Outlander PHEV and the Toyota Prius Plug-in no longer eligible for grants. This adds thousands of pounds to the price of these cars, and many are concerned it could <a href="https://www.ft.com/content/760c487a-3a86-11e9-b72b-2c7f526ca5d0">turn customers away from less-polluting vehicles</a>.</p>
<p>China plans to <a href="https://asia.nikkei.com/Economy/China-to-slash-EV-subsidies-30-next-year">terminate EV subsidies by 2020</a>. The phase-out process is already in place, with 30% cuts planned for this year. The rationale is shift toward competitiveness, pushing car producers to find cost reductions of their own, as sales volume grows.</p>
<p>The Trump administration has also signalled a possible end of renewables subsidies in the near future. <a href="https://www.reuters.com/article/us-usa-trump-autos/white-house-seeks-to-end-subsidies-for-electric-cars-renewables-idUSKBN1O22D4">Announcements from the White House</a>, followed by a series of angry tweets from the president, followed General Motors’ announcement that it would end production in five automotive factories in the United States and Canada.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1067494682249318402"}"></div></p>
<p>Although Democrats will certainly fight any such eventuality, it brings uncertainty among US car manufacturers, who continue to lobby for additional incentives.</p>
<h2>Who bears the costs?</h2>
<p>Another question is, who benefits most from subsidies? A <a href="https://www.manhattan-institute.org/html/short-circuit-high-cost-electric-vehicle-subsidies-11241.html">Manhattan Institute report on EVs</a> highlights the fact that more than 50% of EV buyers in the United States lived in households with annual income of at least $100,000, and 20% had yearly incomes over $200,000. The conclusion is that subsides come at the expense of lower-income drivers of gasoline-powered cars who cannot really afford to buy any new vehicle, much less an electric one. It is they who end up paying for highway maintenance costs through fuel taxes.</p>
<p>Also, as more electric vehicles hit the streets, electricity replaces fuel consumption. The <a href="https://www.ft.com/content/fe0ce8fc-6394-11e8-90c2-9563a0613e56">International Energy Agency estimates</a> that by 2030, electricity could displace about 4,8 million barrels of petrol and diesel used per day. This could result in revenue loss of close to $100 billion in fuel taxes, major source of financing infrastructure development. Thus, governments need to find alternative taxation income and someone needs to bear this cost.</p>
<p>And while some nations embrace “going green”, others might get left behind. There is a need for discussion on how the shift from internal-combustion motors to electric vehicles can be inclusive of those who need it most.</p>
<h2>Darker side of the electric car bonanza</h2>
<p>While much of the developed world heads enthusiastically toward vehicles that pollute less, the celebration isn’t universal. The Democratic Republic of Congo supplies <a href="https://www.washingtonpost.com/graphics/business/batteries/congo-cobalt-mining-for-lithium-ion-battery/?tid=a_inl_manual">two-thirds of world’s cobalt</a>, essential for EV batteries. This Central African nation chronically suffers from “natural resource curse”: while “blessed” with richness in minerals, it remains among the <a href="https://eu.usatoday.com/story/money/2018/11/29/poorest-countries-world-2018/38429473/">poorest nations in the world</a>.</p>
<p>In the absence of formal employment, hundreds of thousands of Congolese turn to mining. <a href="https://www.amnesty.org/en/latest/news/2017/09/the-dark-side-of-electric-cars-exploitative-labor-practices/">UNICEF estimates</a> there are more than 40,000 children working in mines on jobs such as underground digging, transportation of heavy loads or washing mined cobalt in rivers.</p>
<p>Many adult and children workers have no modern machinery or even basic protective clothing, and the health consequences can be catastrophic. Cobalt even has disease named after it – <a href="https://www.cbsnews.com/news/the-toll-of-the-cobalt-mining-industry-congo/">cobalt lungs</a>, a form of pneumonia caused by overexposure to cobalt dust that leads to permanent incapacity and in many cases, death.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/262244/original/file-20190305-48444-16ux2q6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/262244/original/file-20190305-48444-16ux2q6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/262244/original/file-20190305-48444-16ux2q6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/262244/original/file-20190305-48444-16ux2q6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/262244/original/file-20190305-48444-16ux2q6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/262244/original/file-20190305-48444-16ux2q6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/262244/original/file-20190305-48444-16ux2q6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/262244/original/file-20190305-48444-16ux2q6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Children working in cobalt mines in the Democratic Republic of Congo.</span>
<span class="attribution"><span class="source">Centre of the American Experiment</span></span>
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</figure>
<p>Years of mining have also taken their toll on <a href="https://www.news24.com/Africa/News/democratic-republic-of-congo-city-poisoned-by-years-of-mining-20160822">Congolese environment</a>. Untreated waste and toxic substances pollute areas near the mines, exacerbating health problems of the locals. In addition, worrying radioactivity levels were reported in some of the mines, as southern Congo has vast deposits of not only cobalt and copper, but also uranium. In <a href="https://www.bloomberg.com/news/articles/2018-11-06/glencore-s-congo-unit-katanga-halts-sales-of-radioactive-cobalt">November 2018, Glencore</a>, one of the world’s leading cobalt producers, temporarily suspended sales of cobalt from its Kamoto mine due to radioactivity detected in supplies.</p>
<h2>The long road ahead</h2>
<p>It may seem that electric cars are on the verge of replacing internal-combustion vehicles. But while their market share is growing, it still represents only 2% of car sales in 2018. Although there is raising awareness on environmental issues, we must remember that people tend to seek to maximise their personal utility. Because of this, electric vehicles can be considered an example of <a href="https://www.investopedia.com/terms/m/marketfailure.asp">market failure</a> – their benefits to society as a whole exceed those to individuals, so they’re undersupplied by a free market. Another example is vaccinations, which may require a shot (briefly painful to one person), but can help provide collective immunity (beneficial for all). Government regulations, subsidies and other methods can help insure that such failures of the free market are compensated for. </p>
<p>In the case of electric vehicles, however, once government subsidies are phased out, it remains to be seen whether consumers will perceive electric vehicles as economically viable option. A lot will depend on the ability of car manufacturers to cut production costs, and also how much countries have advanced in installing related infrastructure such as charging stations.</p>
<p>In any case, we are in for a long ride and a lot of uncertainties along the way…</p><img src="https://counter.theconversation.com/content/111783/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Jovana Stanisljevic ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>Electric vehicles are taking off, but will demand remain sustainable once governments phase out subsidies? And as the “hidden costs” of the EV revolution emerge, some might get left behind…Jovana Stanisljevic, Professor in International Business, Department People, Organization, Society, Grenoble École de Management (GEM)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1121122019-02-20T15:31:57Z2019-02-20T15:31:57ZHonda closure: Brexit is tipping the UK’s car industry over the edge<figure><img src="https://images.theconversation.com/files/259930/original/file-20190220-148536-8pu3g9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/milton-keynesuknovember-14th2017honda-dealership-logo-keynes-756577318?src=05mo2kZHq71tqng6NE692Q-1-38">Pajor Pawel / Shutterstock.com</a></span></figcaption></figure><p>Britain’s car industry has faced a barrage of bad news in 2019. <a href="https://www.bbc.co.uk/news/business-47287386">Honda</a> is the latest casualty, announcing it will close its Swindon car plant, which employs 3,500 people, in 2021. It follows <a href="https://theconversation.com/uks-post-brexit-trade-with-japan-in-jeopardy-while-uncertainty-persists-111201">notice from Nissan</a> that it is withdrawing investment from its Sunderland plant and the announcement of job cuts by Jaguar Land Rover and Ford. </p>
<p>There are lots of reasons for this retrenchment. Globally, there has been a stall in car sales combined with a glut in production. Then there’s the turn against diesel – once seen as a climate-friendly alternative to petrol. The VW emissions scandal has seen sales of diesel cars plummet. </p>
<p>So there are clearly bigger, longer-term trends at play than Brexit. But, for the UK car industry specifically, there are no positives in Britain leaving the EU. What’s more, the government’s handling of Brexit is making it easy for global car manufacturers to decide to leave the UK.</p>
<h2>How did we get here?</h2>
<p>Japanese cars first came to Britain in the 1970s when demand started to surge. With the domestic car industry unable to increase production and meet this demand, Datsuns (now owned by Nissan) became popular – not least because of their superior build quality. </p>
<p>Japanese car makers went on to establish a position in the market in the UK and across Europe and opened purpose-built plants in the UK, which became some of the most efficient in the world. When Margaret Thatcher was prime minister in the 1980s she <a href="https://www.ft.com/content/8c32704c-344c-11e9-bd3a-8b2a211d90d5">promoted Britain as a gateway to Europe</a>. Honda set up shop in Swindon and Nissan in Sunderland to avoid the 10% tariff on car imports from outside the single market.</p>
<p>Honda’s announcement that it is closing its <a href="https://www.autocar.co.uk/car-news/new-cars/honda-invests-267-million-swindon-production-plant">highly efficient</a> Swindon plant is a fascinating, albeit sad, example of how companies and politicians attempt to rationalise their decision making. Honda has come out and said that Brexit was not the cause of the decision to close the plant in 2022. This has been jumped on by Brexiters attempting to either justify their position on leaving the EU or distance themselves from the ongoing negotiations taking place over the terms of Britain’s exit. But it’s incredibly hard not to see this decision, at this time, as a consequence of Brexit.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1097507582820995072"}"></div></p>
<p>With Theresa May refusing to rule out a no-deal Brexit, it is incredibly difficult not to see it as a major factor pushing Honda to this conclusion. Honda is intent on developing its electric car range and is currently faced with the decision of where to do it. Why not do so at its existing factory? Swindon is based on the M4 corridor, which includes the towns of Reading and Bracknell, an area often <a href="https://www.ft.com/content/2ff60718-d00d-11e5-92a1-c5e23ef99c77">described as Briton’s Silicon Valley</a> – so the technology infrastructure would undoubtedly be available.</p>
<p>But a UK outside of the EU is not an attractive option for future investment, especially as Japan now has its own trade deal with the EU, which includes the phasing out of tariffs on cars over the next eight years. This is a benefit that will not include the UK if there’s a hard Brexit, which is still a possibility. So this uncertainty over the Brexit negotiations makes Honda’s decision totally logical. </p>
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Read more:
<a href="https://theconversation.com/uks-post-brexit-trade-with-japan-in-jeopardy-while-uncertainty-persists-111201">UK's post-Brexit trade with Japan in jeopardy while uncertainty persists</a>
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<p>It is also why Japan’s politicians have pressed for a soft Brexit ever since the referendum result. This has been increasingly vocal as the Brexit date approaches. Shinzo Abe, the Japanese prime minister, <a href="https://asia.nikkei.com/Politics/International-Relations/Abe-tells-May-that-world-does-not-want-no-deal-Brexit">has told Theresa May</a> that the “whole world” wants to avoid a no-deal Brexit in January.</p>
<p>As well as Honda and Nissan, Toyota is the third big Japanese car maker with UK operations. It has not made any Brexit-related announcements yet and this could be linked to the fact that it has concentrated on hybrid technology since launching the Prius in 2000. This means it has been more immune from shifts in environmental thinking and has just launched production of the new Corolla at its Burnaston plant in Derbyshire. Toyota <a href="https://www.derbytelegraph.co.uk/news/business/honda-quits-uk-whats-happening-2559671">has said</a> that decisions are not being made beyond the next five to six years.</p>
<p>So despite attempts to downplay Brexit as the reason for the break up of motor manufacturing in the UK, there is ample evidence that Brexit – and the uncertainty that dogs the UK’s future relations with Europe – is the last straw. Car makers across the world face myriad challenges to stay profitable; they don’t need Brexit to add to their troubles.</p><img src="https://counter.theconversation.com/content/112112/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Prof Jim Saker is a Vice President of the Institute of the Motor Industry.</span></em></p>Globally, the car industry is struggling. But Brexit is pushing manufacturers out of the UK.Jim Saker, Director of the Centre for Automotive Management, School of Business and Economics, Loughborough UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1079802018-12-05T18:51:19Z2018-12-05T18:51:19ZCarlos Ghosn, algorithms and ‘gilets jaunes’: becoming responsible<figure><img src="https://images.theconversation.com/files/249053/original/file-20181205-186067-8ul5pg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Les gilets jaunes Joan Mora</span> </figcaption></figure><p>In May 2016, a <a href="https://www.propublica.org/article/machine-bias-risk-assessments-in-criminal-sentencing">Propublica report</a> showed that an algorithm named COMPAS (“correctional offender management profiling for alternative sanctions”) used by a US court was biased against black prisoners – the program overestimated the probability that blacks would reoffend. Artificial intelligence, chatbots and other algorithms have also been shown to produce <a href="https://www.independent.co.uk/life-style/gadgets-and-tech/news/ai-robots-artificial-intelligence-racism-sexism-prejudice-bias-language-learn-from-humans-a7683161.html">racism, sexism, discrimination and violence toward customers, employees and society at large</a>.</p>
<p>On November 21, 2018, Carlos Ghosn, the mighty leader of the Renault-Nissan alliance, <a href="http://www.asahi.com/ajw/articles/AJ201811200008.html">was arrested on his private jet soon after landing at Tokyo’s Haneda airport</a>. Nissan said that its chairman has been placed under arrest after he allegedly violated Japanese financial law. Nissan explained that “over many years” Ghosn and board director, Greg Kelly, had been under-reporting compensation amounts to the Tokyo Stock Exchange securities report. Nissan added that “numerous other significant acts of misconduct have been uncovered, such as personal use of company assets.” </p>
<p>In November 2018, France discovered how a simple yellow vest could be turned into a powerful symbol. After a decision to increase fuel tax, the first “gilets jaunes” protests emerged. They started on social media before becoming visible on the streets. Everywhere in France, the “gilets jaunes” expressed their anger. Events have since taken a dramatic turn in larger cities, such as Paris.</p>
<p>What do these three events have in common? They all epitomise a pressing concern for our society, namely the extension of responsibility. Beyond the judiciary sphere, we contend that the spatial and temporal extension of responsibility should be a key issue for managers, politicians and activists alike.</p>
<h2>Responsibility as the obligation to repair damages</h2>
<p>In a key text, the French philosopher Paul Ricœur <a href="https://www.jstor.org/stable/pdf/24276317.pdf?casa_token=IabX-sqH0UoAAAAA:6kyzKkfNJvX2lYuC-Fpek18Kh41xsbDEXEYSc7LDahHgMNMaqmlR4DD4IUqyV3LTvAnP6vBtZKn3SE02_qsFCdNC44QQLCxyPiukkdx65PQpajD5c4_g">“Le concept de responsabilité: essai d'analyse sémantique”</a> (“The concept of responsibility: an attempt at semantic analysis”) delves into the question of responsibility. In the French civil law, responsibility is understood as the obligation to repair a damage caused by someone who will be judged guilty of the damage caused. In the French penal law, responsibility is the obligation to face the corresponding punishment. Being responsible thus amounts to submitting oneself to both these obligations. Ricœur investigates the philosophical underpinnings of responsibility through the work of <a href="https://en.wikipedia.org/wiki/Immanuel_Kant">Kant</a>, <a href="https://en.wikipedia.org/wiki/Hans_Jonas">Jonas</a> or <a href="https://en.wikipedia.org/wiki/Emmanuel_Levinas">Lévinas</a> who have explored issues of engagement, duties and alterity. Ricœur also stresses the importance of the imputation process in the setting of a responsibility. This requires imputability, corresponding to what Kant sees both as the attribution of the responsibility and its moral judgement. This is premised on a key assumption (for “imputing”) related to the author of an action, namely their knowledge of the law… <a href="https://www.lepetitjuriste.fr/divers/nemo-censetur-ignorare-lege-nul-nest-cense-ignorer-loi/">“Nul n'est censé ignorer la loi”</a>. In turn, this implies distinguishing between free (based on free will) and natural (beyond free will) causes; “Then only, freedom and imputability coincide” (Ricœur, 1994, p. 34).</p>
<p>Ricœur notes that contemporary philosophical debates have slightly transformed the notion of responsibility. They have raised questions related to the “ascription” of a responsibility and most of all, questioned the continuities between natural and free causes. Distinguishing between the “he/she”, “they” or “it” in the making of responsibility is more and more difficult. As suggested by Ricœur, “we need to go through the confrontation of causalities and attempt a phenomenology of their interweaving” (1994, p. 39).</p>
<p>Extending these philosophical issues, the stress on the possibility (in the French civil law) of “fault” introduces a new scenario. One can be responsible, but not guilty (this is the famous <a href="https://fr.wikipedia.org/wiki/Georgina_Dufoix">“responsible but not guilty”</a> pronounced by Georgina Dufoix in the 1990s). As such, the subjective link between an action and its author requires a systematic discussion. One could know or not, be aware or not… Alterity and the problem of solidarity with others (in particular vulnerable people) also enter the equation.</p>
<h2>Understanding the scope of responsibility</h2>
<p>Importantly, responsibility is about time and space. On that point, Ricœur notes a major shift in the judiciary interpretation of responsibility: </p>
<blockquote>
<p>“An unlimited extension of the scope of responsibility, the future vulnerability of a man and its environment becoming the main focal point of a responsible concern. By scope, we mean the extension, both spatial and temporal, given to the notion of effects of our actions.” (1994, p. 44). </p>
</blockquote>
<p>Surely, in a world made of digital infrastructures, small and big organisations, collective and artificial intelligence, the perspective opened by Ricœur is fascinating. It goes well beyond corporate social responsibility (CSR) and most questions related to “traditional” business ethics. The scope of acts is more than ever extended in the past and the future; imputing responsibility is both highly retrospective and prospective. The ways in which our society has changed since the 90’s (when Ricœur wrote his piece on responsibility) make this point even more urgent. While Kant assumed a contemporaneity of actions and consequences, Ricœur sought to re-introduce duration and narration.</p>
<p>Let us return to our first introductory example. Algorithms or chatbots do not distinguish between “good” and “bad” people, good and bad comments, and so on. They are managed by people and other software. In what context does an inappropriate behaviour occur? Who and “what” should be blamed for it? What is our responsibility as citizens? Should we judge just the sentences produced today? Should we remove the tool and punish the people who fed the system with bad and inappropriate behaviours, with a full knowledge of what they did and a knowledge of the law? Should we also impute responsibility to the engineers who opened the door to artificial learning? From a more prospective perspective, shouldn’t we also blame the companies investing massively in AI and performing more and more the idea of autonomous intelligence? Where should we stop this assemblage of people and things in our responsibility-focused narration? The more we retrospectively and prospectively dig into our present and the more it seems interwoven with automats and technologies.</p>
<h2>Responsibility within complexity</h2>
<p>The problem is even more complex in the case of Carlos Ghosn and other corporate scandals. Shared roles in organisations strengthen the possible dilution of responsibility. We do not want to exonerate Carlos Ghosn but we also need to consider that a company is made of processes, infrastructures, boards of directors, modes of governance that introduce collective forms of responsibility. The everyday life of organisations is often more complex, and made of very subtle events that can be at the heart of a disaster.</p>
<p>This is also epitomised by the recent social movement of the ‘Yellow vests’ in France. This movement, which largely emerged in and by means of social media, is a complex assemblage of people, heterogeneous slogans, deep frustration and despair. There are obviously many micro-organizations inside Facebook and people sharing roles offline, on the street, at crossroads, and in the streets. But as suggested by <a href="https://www.latribune.fr/opinions/tribunes/gilets-jaunes-macron-pris-au-piege-d-un-mouvement-social-deliberement-desorganise-799769.html">Valiorgue and Roulet</a>, the movement remains largely disorganised, more or less purposefully. We see again here a very interesting, troubling issue: nobody is responsible for the worst. A member of the ‘yellow vests’ protest, often invited on TV shows, recently said: “I am not responsible”, just before explaining that next Saturday awful things may happen. But how can a social movement become political without being responsible? And the argument is ‘reversible’: the French president and the government claim a kind of irresponsibility. No roles in front, no legitimate spokespersons, so no legitimate dialog. Of course, we are particularly sceptical about this counterargument, which is particularly irresponsible from actors expected to embody, more than others, responsibility. </p>
<p>Indeed, the yellow vests movement is particularly intriguing and probably very different to our two other examples. Less technological than the chatbots, less
organised than the Ghosn story, yet much more visible and interwoven
with moral sources of responsiblity than both of them. </p>
<p>Ricœur’s invitation to explore responsibility is fascinating, because it paves the way to the exploration of key questions for management and collective activity. It opens the door to ontological discussions around the materiality, time and space of the experience of responsibility. We move from the question of <em>being responsible</em> to that of <em>becoming responsible</em>. Responsibility is continuously produced by assemblages A of assemblages B, thus blurring the boundaries between A and B. <a href="https://www.cairn.info/revue-vie-sociale-2009-3-page-71.html">How to responsibilise people</a> also becomes a fundamental question.</p>
<hr>
<p><em>A June 2020 workshop by the PSL, Université Paris-Dauphine, <a href="https://workshopoap.dauphine.fr/">“Organizations, artifacts and practices”</a> (OAP) will explore the issues raised in this article. Titled “Responsibility and accountability in the digital area: Do collective and artificial intelligences change the deal?”, the event will bring together organisation scholars, sociologists, political scientists, anthropologists and philosophers and activists.</em></p><img src="https://counter.theconversation.com/content/107980/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>François-Xavier de Vaujany is president of the network and think tank RGCS (<a href="https://collaborativespacesstudy.wordpress.com/">https://collaborativespacesstudy.wordpress.com/</a>)</span></em></p><p class="fine-print"><em><span>Jeremy Aroles ne travaille pas, ne conseille pas, ne possède pas de parts, ne reçoit pas de fonds d'une organisation qui pourrait tirer profit de cet article, et n'a déclaré aucune autre affiliation que son organisme de recherche.</span></em></p>What do the Carlos Ghosn scandal, the rising power of algorithms and the “gilets jaunes” have in common? The need to extend the spatial and temporal definitions of responsibility.François-Xavier de Vaujany, Professeur, PSL-Université Paris-Dauphine (DRM), Université Paris Dauphine – PSLJeremy Aroles, Assistant professor in organisation studies, Durham UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/895522018-02-13T12:39:55Z2018-02-13T12:39:55ZWhy hard Brexit could cost UK car industry £4.5 billion in tariffs annually<figure><img src="https://images.theconversation.com/files/206164/original/file-20180213-44657-tukjg0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/empty-parking-lots-aerial-view-586368239?src=M3LeIUsfPKfsrgk9zQn5lQ-1-2">shutterstock.com</a></span></figcaption></figure><p>Britain’s car industry has been the exception to the rule that UK manufacturing has declined precipitously since the 1980s. More than 1.7m vehicles roll off its production lines annually, it employs 814,000 workers <a href="https://www.smmt.co.uk/wp-content/uploads/sites/2/SMMT-Motor-Industry-Facts-2016_v2-1.pdf">and boasts an annual turnover of £71.6 billion</a>. </p>
<p>Nissan in Sunderland is arguably the <a href="http://www.chroniclelive.co.uk/business/business-news/nissans-sunderland-plant-produces-more-12507467">most spectacular success story</a> among many. The Japanese giant has invested £4 billion in the UK since 1986. Its Wearside plant in the north-east of England is one of the world’s most advanced manufacturing sites and among the most successful. </p>
<p>In 2016 the plant produced <a href="https://newsroom.nissan-europe.com/uk/en-gb/media/pressreleases/426175387/nissan-announces-2016-uk-production-statistics">more than half a million vehicles</a> and has been rewarded with promises of further heavy investment to make the company’s Qashqai model, as well as a next generation of electric vehicles. It, seemingly, underlines the company’s commitment to the UK as part of its global strategy.</p>
<p>But the lack of clarity over the UK’s post-Brexit trade relationship with the EU is casting doubts on the industry’s future. The president of the SMMT car trade body, Tony Walker, <a href="https://www.autocar.co.uk/car-news/industry/brexit-already-damaging-automotive-industry-says-smmt-president">has demanded</a> clarity on the issue. Yet it seems impossible to get this while negotiations continue with deep uncertainty around core issues, including access to the EU’s single market. </p>
<p>The government has still not made clear what its end goal is – beyond vague ideas of <a href="https://theconversation.com/brexit-deal-breaks-deadlock-experts-react-88879">“regulatory alignment”</a>. It is not a phrase that inspires confidence. </p>
<p>Meanwhile, European leaders <a href="https://www.ft.com/content/09e57792-a3f9-3c23-8a38-51d83eb4f289">continue to press for details</a> on what the UK wants from Brexit. They make clear that access to the single market <a href="https://www.reuters.com/article/us-britain-eu-barnier/no-such-thing-as-frictionless-trade-barnier-warns-britain-idUSKBN19R0O9">is impossible</a> if the UK leaves not only the European Union but also the customs union. </p>
<p>The commitment to the <a href="https://www.theguardian.com/politics/2017/dec/03/tory-brexiters-set-new-red-lines-over-ecj-and-free-movement">“red lines”</a> of ending the jurisdiction of the European Court of Justice over UK laws and halting freedom of movement make the government’s call for “frictionless” access to the single market impossible. </p>
<h2>Stalling profits</h2>
<p><a href="https://www.autocar.co.uk/car-news/industry/brexit-already-damaging-automotive-industry-says-smmt-president">According to the SMMT</a>, 1,100 lorry loads of automotive components arrive daily from the EU, without customs checks or tariffs. More than half of the £34.3 billion worth of cars exported from the UK go to Europe. So falling back on WTO rules could cost the industry £4.5 billion in tariffs annually.</p>
<p>Another cause for alarm for the car industry in the UK is falling consumer confidence, affecting domestic sales – which have recently <a href="http://www.bbc.co.uk/news/business-42571828">taken a plunge</a>. Then there is also sterling’s <a href="https://theconversation.com/brexit-shock-has-caused-a-sterling-crash-of-historic-proportions-heres-just-how-bad-it-is-for-the-pound-62191">decline in value against the euro since the EU referendum</a>. This raises costs for car companies, which import many of their components from the EU. </p>
<p>Honda and Toyota produced <a href="https://www.smmt.co.uk/wp-content/uploads/sites/2/SMMT-Motor-Industry-Facts-2016_v2-1.pdf">more than 300,000 cars in the UK in 2015</a> but between them the three Japanese giants depend on the UK for just 10% of global profits. So the technology, and even entire production sites, can be moved elsewhere if market conditions dictate such a radical step. </p>
<p>Nissan and other Japanese car makers need European customers and supply chains, as well as easy access to skilled researchers and other experts from the continent, so they are just as keen to retain free movement of labour. </p>
<h2>The offer of sweeteners</h2>
<p>Business secretary, Greg Clark, optimistically <a href="https://hansard.parliament.uk/Commons/2016-10-31/debates/3BAC6B0F-E41B-431D-8062-C42D89C9ADA8/NissanSunderland">referred to</a> government support for the domestic component supply chain to Nissan, presumably believing this can eventually take over from imported parts. He also promised the most mutually beneficial trade deal between the UK and the EU post-Brexit – a consistent government line throughout the Brexit process. </p>
<p>Meanwhile, Theresa May recently <a href="http://www.bbc.co.uk/news/business-42975116">met Japanese business leaders in Downing Street</a> and stressed the potential for a post-Brexit free trade deal with Japan. </p>
<p>Yet the UK government’s lack of clarity in its Brexit negotiations must be alarming to Japanese auto makers and politicians alike. Japan’s ambassador to the UK, Koji Tsuruoka, <a href="http://www.independent.co.uk/news/uk/politics/japan-brexit-theresa-may-ambassador-uk-leave-deal-profit-nissan-mazda-car-manufacturing-deal-trade-a8201286.html">warned</a> that a botched Brexit could lead his country’s manufacturers to quit the UK if staying was no longer profitable. </p>
<p>So, what can we expect of Nissan as the Brexit process continues? Despite assurances, the long-term prospects are far from certain. Supporters of a hard Brexit, like the industrialist James Dyson, point to the EU’s declining proportion of world trade as a sign of its diminishing importance to the UK. </p>
<p>It is doubtful that auto makers in the UK see things in the same way. Most trade is <a href="https://hbr.org/2005/12/regional-strategies-for-global-leadership">more regional than global</a>, so European markets of high spending consumers are critical to UK auto manufacturers.</p>
<p>Nissan made a swift promise after the June 2016 referendum of major investment in the UK. But the public are not party to what the UK government offered in return to secure this. Its letter of reassurances to Nissan is still deemed <a href="http://www.independent.co.uk/news/business/news/nissan-brexit-letter-uk-government-greg-clark-sensitive-disclose-plant-a8118756.html">too sensitive to release</a>, despite parliamentary opposition and media demands to know what “sweeteners” may have been involved. </p>
<p>Critics <a href="https://www.ft.com/content/5f92ad40-bbc2-11e6-8b45-b8b81dd5d080">suggest</a> that any support offered to Nissan would need to be replicated for other manufacturers, and indeed other industries – and would come at a significant cost to taxpayers. </p>
<p>Not so long ago, Ford produced <a href="https://www.ft.com/content/5f92ad40-bbc2-11e6-8b45-b8b81dd5d080">one in every three cars</a> made in Britain. It ceased vehicle production in 2002 (though it still makes engines in Bridgend and Wolverhampton). The car industry is global and has proved highly agile in the past. Whatever was promised to Nissan, nothing about the company’s future in the UK should be taken for granted.</p><img src="https://counter.theconversation.com/content/89552/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Simon Sweeney is a member of the Liberal Democrats.</span></em></p>Nissan might have promised post-Brexit investment, but leaving the single market and customs union could change everything for the UK.Simon Sweeney, Senior Lecturer in International Political Economy and Business, University of YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/827422017-08-23T02:03:39Z2017-08-23T02:03:39ZUAW’s loss at Nissan auto plant masks genuine progress for organized labor<figure><img src="https://images.theconversation.com/files/183017/original/file-20170822-30547-wqzpxi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The 5,000-strong pro-union march in March suggested labor support in Canton is growing.</span> <span class="attribution"><span class="source">AP Photo/Rogelio V. Solis</span></span></figcaption></figure><p>A spirited, decade-long effort by workers to organize a union at the sprawling Nissan assembly plant in Canton, Mississippi, seemed to drive into a ditch on August 5, when officials finally tallied the election ballots.</p>
<p>The <a href="https://nissanourfuture.com/nissan-employees-elect-to-self-represent-in-nearly-2-to-1-margin/">margin looked definitive</a>: 1,307 workers voted to have the United Auto Workers represent them, while 2,244 voted against.</p>
<p>It was a dismal and disappointing result for organized labor that would seem to conform to the half-century slide in its ranks and impact on the U.S. economy. At first glance, the outcome threatens to further solidify a standard of falling wages, more temporary workers and fewer workplace rights from Long Beach to Long Island. </p>
<p>But the story doesn’t end there. Behind this loss there’s a glimmer of hope for labor. Decades of research on labor and globalization, particularly in manufacturing and the auto industry, lead me to believe that while the pro-union workers may have suffered a setback, the campaign is far from over. In fact, there are signs that the UAW’s organizing effort has made some lasting inroads that could lead to success down the road. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/183026/original/file-20170822-21526-1ctcy2b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/183026/original/file-20170822-21526-1ctcy2b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=346&fit=crop&dpr=1 600w, https://images.theconversation.com/files/183026/original/file-20170822-21526-1ctcy2b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=346&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/183026/original/file-20170822-21526-1ctcy2b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=346&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/183026/original/file-20170822-21526-1ctcy2b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=435&fit=crop&dpr=1 754w, https://images.theconversation.com/files/183026/original/file-20170822-21526-1ctcy2b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=435&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/183026/original/file-20170822-21526-1ctcy2b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=435&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">UAW members and their volunteers stood outside an entrance to the Nissan vehicle assembly plant in Canton as voting was set to begin.</span>
<span class="attribution"><span class="source">AP Photo/Rogelio V. Solis</span></span>
</figcaption>
</figure>
<h2>What happened in Canton</h2>
<p>Nissan, a <a href="http://www.marketwatch.com/story/nissan-profit-up-27-as-sales-incentives-rise-2017-05-11">highly successful Japanese automaker</a>, operates with unions at <a href="http://www.chicagotribune.com/business/sns-bc-us--nissan-union-20170803-story.html">all its auto assembly plants worldwide</a> except the two in the United States (the company has <a href="https://www.nissanusa.com/about/corporate-info">two other U.S. factories</a> that assemble powertrains). </p>
<p>Nissan workers at the Canton car factory – which makes up to 450,000 Altimas, Frontiers, Armadas and other cars and vans a year – <a href="http://www.mpbonline.org/blogs/news/2017/07/28/state-leaders-unionizing-nissan-will-not-help-mississippi/">began to organize</a> soon after it opened in 2003. </p>
<p>As the Canton effort gained momentum, workers and UAW organizers built a <a href="http://www.beneaththeshine.org/docs/MAFFAN-Background.pdf">social movement</a> in the plant and in the broader community. Churches, community groups, civil rights organizations and political leaders all became involved. The workforce, overwhelmingly African-American, defined <a href="https://www.theguardian.com/us-news/2017/aug/05/mississippi-nissan-workers-vote-against-union">their struggle</a> in terms of civil rights.</p>
<p>That’s because workers felt their right to join a union and bargain collectively was being <a href="http://www.epi.org/publication/bp181/">violated</a>. Those rights were enshrined in the <a href="https://www.nlrb.gov/who-we-are/our-history/1935-passage-wagner-act">1935 National Labor Relations Act</a>, also known as the Wagner Act or often described as labor’s Magna Carta.</p>
<p>The act created the National Labor Relations Board, which <a href="http://www.press.uillinois.edu/books/catalog/76xke7xd9780252030048.html">initially told companies to remain neutral</a> when workers are considering forming a union because, as Alexander Hamilton <a href="http://avalon.law.yale.edu/18th_century/fed79.asp">warned</a> a century and a half earlier, employers have an inherent power over their employees: “a power over a man’s support is a power over his will.” The National Labor Relations Board, particularly in its early days, deemed a company’s anti-union statements equivalent to unfair labor practices, according to <a href="http://www.press.uillinois.edu/books/catalog/76xke7xd9780252030048.html">historian David Brody</a>.</p>
<p>But workers say Nissan took a strong anti-union approach and mounted a no-holds-barred <a href="https://www.nytimes.com/2017/08/05/business/nissan-united-auto-workers-union-mississippi.html">campaign of fear</a>. Some of the tactics included mandatory group meetings, one-on-one supervisory interrogations, surveillance of union activity and nonstop videos featuring top plant managers predicting dire consequences if the union succeeded. </p>
<p>Phil Bryant, the governor of Mississippi, a <a href="https://theconversation.com/right-to-works-rapid-spread-is-creating-more-union-free-riders-38805">right-to-work</a> state, also <a href="http://www.mpbonline.org/blogs/news/2017/07/28/state-leaders-unionizing-nissan-will-not-help-mississippi/">weighed in ominously to reporters on the eve of the vote</a>: </p>
<blockquote>
<p>“If you want to take away your job, if you want to end manufacturing as we know it in Mississippi, just start expanding unions.” </p>
</blockquote>
<p>A regional director of the National Labor Relations Board <a href="https://uaw.org/app/uploads/2017/07/Nissan-4th-Amended-Complaint.pdf">issued a complaint</a> in July that accused Nissan of threatening to terminate employees involved in the unionizing effort and to close down their plant if their organizing drive succeeded – both illegal acts under Wagner. </p>
<p>Clearly, the workforce was divided. Many workers were nervous about challenging the status quo because they were earning more at Nissan than they would have at other jobs in <a href="https://www.theatlantic.com/business/archive/2012/04/the-10-states-and-10-jobs-with-the-most-low-wage-workers/256553/">low-wage Mississippi</a>. Others simply didn’t want a union or believed the company’s scare tactics suggesting unionization would lead to terrible results. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/183084/original/file-20170823-13319-ki3sf2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/183084/original/file-20170823-13319-ki3sf2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=418&fit=crop&dpr=1 600w, https://images.theconversation.com/files/183084/original/file-20170823-13319-ki3sf2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=418&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/183084/original/file-20170823-13319-ki3sf2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=418&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/183084/original/file-20170823-13319-ki3sf2.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=526&fit=crop&dpr=1 754w, https://images.theconversation.com/files/183084/original/file-20170823-13319-ki3sf2.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=526&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/183084/original/file-20170823-13319-ki3sf2.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=526&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Mississippi Republican Gov. Phil Bryant claimed a pro-union vote at Nissan would lead to job losses in the state.</span>
<span class="attribution"><span class="source">AP Photo/Rogelio V. Solis</span></span>
</figcaption>
</figure>
<h2>Unions and wage growth</h2>
<p>A <a href="http://journals.sagepub.com/doi/abs/10.1177/0003122411414817">mountain of scholarship</a>, however, concludes strong unions historically have contributed to higher wages and a growing middle class – <a href="https://theconversation.com/the-rise-and-fall-of-us-labor-unions-and-why-they-still-matter-38263">even for workers who aren’t unionized</a>. </p>
<p>Unions paved the way to the middle class after World War II by <a href="http://www.nytimes.com/2012/08/05/books/review/the-price-of-inequality-by-joseph-e-stiglitz.html">linking rapidly rising productivity</a> to growing wages and benefits. </p>
<p>When unions are dismantled, such wage gains unravel, and so does the middle class. That’s what we’ve seen for the past 50 years. The <a href="http://equitablegrowth.org/equitablog/the-challenging-and-continuing-slide-in-u-s-unionization-rates/">sharp union decline</a> since the late 1970s triggered “substantial wage losses among workers who do not belong to a union,” according to a <a href="http://www.epi.org/publication/union-decline-lowers-wages-of-nonunion-workers-the-overlooked-reason-why-wages-are-stuck-and-inequality-is-growing/">2016 Economic Policy Institute study</a>. Western and Rosenfeld found that the decline of labor explains a fifth to a third of the growth in inequality. </p>
<p>Economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman found that despite the U.S. economy almost doubling in size since 1986, <a href="http://gabriel-zucman.eu/files/PSZ2017.pdf">almost all the gains flowed</a> to the upper reaches of the income distribution, primarily the top 1 percent. The authors blamed “weakened unions” as one of the reasons the bottom half of wage earners – 117 million Americans – were largely left behind. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/183083/original/file-20170823-13299-qduiho.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/183083/original/file-20170823-13299-qduiho.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=391&fit=crop&dpr=1 600w, https://images.theconversation.com/files/183083/original/file-20170823-13299-qduiho.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=391&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/183083/original/file-20170823-13299-qduiho.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=391&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/183083/original/file-20170823-13299-qduiho.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=491&fit=crop&dpr=1 754w, https://images.theconversation.com/files/183083/original/file-20170823-13299-qduiho.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=491&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/183083/original/file-20170823-13299-qduiho.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=491&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Vehicles are suspended above other installation stations as they are moved along the assembly line at the Nissan Canton Vehicle Assembly Plant.</span>
<span class="attribution"><span class="source">AP Photo/Rogelio V. Solis</span></span>
</figcaption>
</figure>
<h2>Reason for optimism</h2>
<p>Although the final vote at the Nissan plant was lopsided, it also offers a degree of hope to those who’d like to see the resurgence of organized labor. </p>
<p>The result, which saw 38 percent vote for the UAW, was in fact the union’s best result by far out of three efforts to unionize Nissan plants in the U.S. The UAW <a href="http://www.detroitnews.com/story/business/autos/2017/07/20/uaw-nissan-battle-mississippi-factory-union-representation-representation/103877590/">tried and failed</a> twice before, both times at its car factory in Smyrna, Tennessee, in 1989 and 2001, earning about 30 percent support.</p>
<p>An additional caveat to the seemingly anti-union outcome is that auto plants like Nissan’s are increasingly being run by temporary workers. In Canton’s case, 2,700 out of 6,500 are temporary, hired through an outside contractor and <a href="http://www.detroitnews.com/story/business/autos/2017/08/04/nissan-uaw-election-canton-mississippi/104308020/">paid a starting rate</a> of US$13 an hour – about half what a full-time employee earns for the same work.</p>
<p>Union support ran high among these temps, but they were prohibited from voting. What this shows is that, despite the loss at the ballot box, the unionization drive has galvanized much of the community and created a social movement in Canton. In addition, protests during the campaign led Nissan to promise to adopt some changes that would benefit these temp workers. Failure to meet these promises would also aid pro-union forces. </p>
<p>The loss was a disappointment to be sure. The contemporary labor movement, however, emerged <a href="http://www.loc.gov/teachers/classroommaterials/presentationsandactivities/presentations/timeline/depwwii/unions/">against similar seemingly impossible odds</a> in the midst of the Great Depression. The pro-union Nissan workers, like their peers from the 1930s, have built a social movement on the shop floor and in the community around their cause and have reached what I’d consider a critical mass of support. </p>
<p>On the eve of the election, the UAW filed seven new complaints with the NLRB, which could grant them a new election in six months based on the alleged violations of the Wagner Act. Whatever happens with these complaints, neither these workers nor the UAW are going away. </p>
<p>Union supporters suffered a sharp setback, but it may not be the end of the story, for the Canton workers or the national labor movement.</p><img src="https://counter.theconversation.com/content/82742/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Harley Shaiken is a founding member of the Advisory Board of the Center for American Progress and I am on the Advisory Board of Jobs With Justice</span></em></p>Although workers at a Nissan auto plant in Mississippi rejected a proposal to join the United Auto Workers Union, organized labor has reason to be optimistic about its future.Harley Shaiken, Director of the Center for Latin American Studies and Professor of Letters and Science, University of California, BerkeleyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/649462016-09-06T15:45:11Z2016-09-06T15:45:11ZWhy Britain should heed Japan’s Brexit warning<p>Japan’s <a href="http://www.bbc.co.uk/news/business-37270372">warning</a> that its companies may move their operations outside of the UK if it fails to negotiate favourable Brexit terms is the first major sign of how leaving the EU could affect foreign investment into Britain. Chief among Japan’s concerns is whether or not the UK will remain part of the EU’s crucial four free movements – of people, goods, services and capital.</p>
<p>This is no small matter. Although Japanese investment in the UK only accounts for <a href="https://en.portal.santandertrade.com/establish-overseas/united-kingdom/foreign-investment?&actualiser_id_banque=oui&id_banque=44&memoriser_choix=memoriser">around 6% of inward investment</a> to the country, it is not evenly spread and is concentrated in certain high-profile sectors such as financial services and cars – of which production has become synonymous with certain regions, Nissan in the north-east of England and Toyota in Derbyshire, for example.</p>
<p>As a result, these companies play crucial roles in local economies. Average earnings in their factories are among the highest where they are located, and their investments support a large number of jobs in related sectors. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/136725/original/image-20160906-6118-npznix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/136725/original/image-20160906-6118-npznix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=367&fit=crop&dpr=1 600w, https://images.theconversation.com/files/136725/original/image-20160906-6118-npznix.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=367&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/136725/original/image-20160906-6118-npznix.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=367&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/136725/original/image-20160906-6118-npznix.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=461&fit=crop&dpr=1 754w, https://images.theconversation.com/files/136725/original/image-20160906-6118-npznix.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=461&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/136725/original/image-20160906-6118-npznix.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=461&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Supply chains could be scuppered.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/iamdabe/4931554963/in/photolist-8vMvtH-8vKPTh-8vKQqw-8vHf6k-8vKE8G-8vGDHk-8vKHtU-8vKDz3-8vGqdP-8vFUcr-8vJDp1-8vJBV9-8vLcVu-8vL95G-8vFZfH-8vKJwq-8vFXyM-8vGdit-8vLcoA-8vHe4P-8vKKb3-8vH8tv-8vJCT3-8vFAs8-8vL1FL-8vGcF6-8vHa9X-8vG1up-8vKSGG-8vKpsf-8vKG1E-8vL9xG-8vH6Ja-8vGKDi-8vKm9s-8vFFkB-8vGSLv-8vL5bf-8vKZbq-8vJFjs-8vGcMg-8vJDVq-8vKqR3-8vH1Gi-8vGLHn-8vL7Tj-8vKCkE-8vLbb5-8vGPhr-8vKTmJ">iamdabe/flickr</a>, <a class="license" href="http://creativecommons.org/licenses/by-nc-nd/4.0/">CC BY-NC-ND</a></span>
</figcaption>
</figure>
<p>The single market has been a <a href="http://www.cbi.org.uk/business-issues/uk-and-the-european-union/choosing-our-future/benefits/">boon to the car industry</a> and other companies that use advanced manufacturing because it allows them to spread the activity of their supply chains across Europe. Activities are not constrained by international borders, but located based purely on cost and return, with high levels of coordination between plants. Companies can use the rules of the single market to move goods and, when necessary labour, freely across the continent. Production becomes more flexible, and with it more profitable.</p>
<p>Leaving the single market and losing these freedoms of movement would therefore put the UK’s continued participation in these supply chains at risk. Companies would not necessarily leave overnight, but it is likely that, over time, inward investors will prioritise other locations over their UK operations. And this applies to all foreign investors – not just Japanese ones. </p>
<h2>Maintaining inward investment</h2>
<p><a href="https://www.gov.uk/government/publications/future-manufacturing-foreign-direct-investment-trends">Research makes it clear</a> that the prospects for inward investment by foreign companies into the UK is threatened by Brexit. This is because stability over labour markets, institutions, exchange rates and interest rates are a big part of what attracts inward investment to the UK. So Japan’s message to the UK called for it to stay part of the EU’s free trade area, “access to workforces” and “harmonised regulations and standards between the UK and EU”.</p>
<p>It is well understood that inward investment is of <a href="https://www.gov.uk/government/publications/ukti-inward-investment-report-2014-to-2015/ukti-inward-investment-report-2014-to-2015-online-viewing">vital importance to the UK economy</a>. This is not merely because of the employment opportunities foreign firms create, often in areas of high unemployment. It also has knock-on benefits for training, technology transfer and employment through related jobs. But possibly the most important contribution that inward investment makes to the economy is in mitigating the effects on an almost permanent trade deficit.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/136639/original/image-20160905-4787-1b4ufum.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/136639/original/image-20160905-4787-1b4ufum.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=326&fit=crop&dpr=1 600w, https://images.theconversation.com/files/136639/original/image-20160905-4787-1b4ufum.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=326&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/136639/original/image-20160905-4787-1b4ufum.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=326&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/136639/original/image-20160905-4787-1b4ufum.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=410&fit=crop&dpr=1 754w, https://images.theconversation.com/files/136639/original/image-20160905-4787-1b4ufum.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=410&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/136639/original/image-20160905-4787-1b4ufum.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=410&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Inward investment and the UK trade imbalance.</span>
<span class="attribution"><span class="source">Nigel Driffield</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
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<p>Turnover by foreign-owned businesses in the UK is <a href="http://webarchive.nationalarchives.gov.uk/20160105160709/http://ons.gov.uk/ons/rel/fdi/foreign-direct-investment/2014/index.html">just more than £12.5 billion</a> (some 80% of this is in firms that employ more than 250 people in the UK). This is not evenly spread. The north of England, Wales and Scotland have much higher shares of non-financial sector, foreign-owned activity as a percentage of their total than the south-east of England for example. </p>
<h2>Uncertainty and investment</h2>
<p>The biggest single deterrent to foreign investment is uncertainty. The more uncertainty that firms attach to their value calculations, the less likely they are to invest. </p>
<p>The single event that caused the greatest decline in inward investment was Britain <a href="http://news.bbc.co.uk/onthisday/hi/dates/stories/september/16/newsid_2519000/2519013.stm">leaving the European Exchange Rate Mechanism in 1992</a>. This was not because it necessarily implied any particular weakness about the UK economy, but because of the uncertainty that surrounded it. This could be exchange rate risk, inflation, or concerns over future growth, as well as the more obvious ones perhaps associated with risk in developing or emerging economies.</p>
<p>Meanwhile, the single event that has had the greatest positive impact on inward investment into the UK <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2775954">was the creation of the single market</a>. The other notable advantages the UK offers investors from outside the EU is a flexible labour market, compared with countries such as France and Germany.</p>
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<img alt="" src="https://images.theconversation.com/files/136724/original/image-20160906-6086-6531m3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/136724/original/image-20160906-6086-6531m3.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=328&fit=crop&dpr=1 600w, https://images.theconversation.com/files/136724/original/image-20160906-6086-6531m3.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=328&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/136724/original/image-20160906-6086-6531m3.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=328&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/136724/original/image-20160906-6086-6531m3.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=412&fit=crop&dpr=1 754w, https://images.theconversation.com/files/136724/original/image-20160906-6086-6531m3.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=412&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/136724/original/image-20160906-6086-6531m3.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=412&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Britain’s inward investment trends.</span>
<span class="attribution"><span class="source">Nigel Driffield</span>, <a class="license" href="http://creativecommons.org/licenses/by-nd/4.0/">CC BY-ND</a></span>
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<p>Based on similar historical events, it is likely that Brexit would stunt the long-term growth trend of inward investment coming to the UK. <a href="http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2775954">Research I’ve done into this indicates</a> that there would be a larger short-term shock, which would take about four years to recover from, before developing a new (lower) trend of inward investment. Even once this period had passed, the uncertainty over being in a club where others write the rules and the uncertainty over access to markets will dominate. So Japan’s warning over Brexit comes as little surprise.</p>
<p>International companies with operations in the UK will want, at worst, a “soft Brexit”. This means retaining access to the single market and the ability to move people between facilities at short notice, without recourse to work permits or quotas. It is clear that this is at odds with what many champions of Brexit seek. </p>
<p>The road to Brexit looks long and winding, but it seems extremely unlikely that any outcome which threatens the long-term viability of foreign investment in the UK will be tenable. It is possible that the government will contemplate other ways to retain its attractiveness to investors. This could include lower tax rates, even higher degrees of labour market flexibility (so less protection for workers) and possibly even a lowering of environmental standards. This would doubtless find favour with many of the free-market champions of Brexit, but is likely to make Britain even more unpopular in Europe.</p><img src="https://counter.theconversation.com/content/64946/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nigel Driffield receives funding from ESRC, Leverhulme Trust, OECD, UNCTAD, European Commission DG Regio. He is an inactive member of the labour party and a member of the UCU. </span></em></p>The road to Brexit looks long and winding, but it seems extremely unlikely that any outcome which threatens the long-term viability of foreign investment in the UK will be tenable.Nigel Driffield, Professor of international business, Warwick Business School, University of WarwickLicensed as Creative Commons – attribution, no derivatives.