Page 192 - DMGT548_GLOBAL_HRM

Unit 10: International Industrial Relations

temporary switching of production in order to defeat industrial action has been utilised to Notes
some extent in the automotive industry.
3. Ability to move production facilities to other countries: For employees and trade unions,
job security may be threatened if a multinational seeks to produce abroad what could
have, or previously has been manufactured domestically. National relative advantages
provide MNCs with choice as to location of units.

Example: Within the EU, multinational management is locating skill-intensive activities
in countries with national policies promoting training and with relatively high labour costs.
Conversely, semi-skilled, routine activities are being located in countries with lower labour
costs.
Threats by MNCs to reorganise production factors internationally with the accompanying
risk of plant closure or rationalisation will have an impact on management–labour
negotiations at a national level. The technical and economic investments would reduce a
multinationals propensity to relocate facilities.
4. Remote locus of authority: It refers to the corporate head-office management of a
multinational firm. While many multinationals report decentralisation and local
responsiveness of HRM and industrial relations, but trade unions and works councils
have reported that the multinational decision-making structure is opaque and the division
of authority obscured. Employee representatives may not be adequately aware of the
overall MNC organisational strategy and activities.
5. Production facilities in many industries: Most multinationals operate in many product
lines to diversify their risk and production facilities.

6. Superior knowledge and expertise in labour relations.
7. The capacity to stage an “investment strike”: When the multinational refuses to invest
any additional funds in a plant, thus ensuring that the plant will become obsolete and
economically uncompetitive.
Trade unions claim that they have difficulty accessing decision-makers located outside the host
country and obtaining financial information. Misinformation has been central to the management
strategy of using potential investment or disinvestment in seeking changes in certain
organisations.

Example: In companies such as Heinz, Ford, Gillette, and General Motors, workers have
established that they had on occasions been misinformed by management as to the nature of
working practices in other plants.
Response of trade unions to multinationals has been threefold:
1. To form International Trade Secretariats (ITSs)
2. To lobby for restrictive national legislation
3. To try and achieve regulation of multinationals by international organisations.

1. International Trade Secretariats (ITSs): There are fifteen ITSs, which function as loose
confederations to provide worldwide links for the national unions in a particular trade or
industry (example, metals transport and chemicals). The secretariats have mainly operated
to facilitate the exchange of information.

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