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Although this took place several years ago, it is an interesting aspect of labor relations. Read the attached Laboru2019s Comeback. In-sourcing Work at Northwest Airlines.docx transcript Please write a response with your reaction to the video.  Minimum of 250 words.

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Labor’s Comeback: In-sourcing Work at Northwest Airlines This program includes conversations with airline machinist Marv Sandrin, and Northwest Vice President, Richard Anderson. Sandrin is former president of District Lodge 143 of the Machinists’ Union. He was employed at Northwest Airlines before the ESOP (Employee Stock Ownership Plan) gave him and his union an ownership stake in the company. Under that ESOP, unions gave up $900 million in wage and work rule concessions, and the owners gave labor three seats on the corporate board and 30 percent ownership of the company. The deal made Northwest Airlines’ ESOP one of the biggest in the U.S. Sandrin has also participated in one of the most important experiments at Northwest: the creation of a union-management committee which gives workers a chance to bid on jobs that would otherwise be outsourced. Do you find the attitudes are changing in the union? Marv Sandrin is former president of District Lodge 143 of the Machinist Union. He is now representative of the Grand Lodge. Sandrin was employed at Northwest Airlines as a machinist before the ESOP gave him and his union an ownership stake in the company. Under that ESOP, unions gave up $900 million in wage and work rule concessions, and the owners gave labor three seats on the corporate board and 30% ownership of the company. The deal made Northwest Airlines one of the United States biggest ESOPs, employee stock ownership plans. Marv Sandrin has also participated in one of the most important experiments at Northwest, the creation of a union management farm out committee that gives workers a chance to bid on jobs that would otherwise be outsourced. Later, I'll talk with Northwest vice president Richard Anderson. First, my conversation with Marv Sandrin. This is impressive. They do this how often? It's ever so many hours, but the pylon lodge right now are the ones that the FAA came out and said they need to be beefed up, that the pilots actually need to be beefed up for the engines. Otherwise, the engines are falling off? Well, the structure becomes weakened and there's cracks. Not necessarily the engine would fall off, but the possibility would be there. They found that as the aircraft ages, because of the vibration and stuff, that's exactly what happens is you get cracks in the pylons, so they're beefing them up. The older aircraft is what we called a light wings, which means that they had less bracing in the wing itself to keep these engines on, so there's more beefing up to do. There's more structure work that needs to be done to get it to what the FAA requires. How did you find out, as a union leader, that management wanted to ship this work out to Singapore? We have to farm out committee here that is used for the company to give us information on how and when farm outs are going to happen. When we do find out, when the machinist union finds out, we then come back with an assessment of our own to see if we can do it as cost effective in-house as they think the vendors can do it. So that farm out committee is really important to you in terms of hanging onto work. The farm out committee's extremely important for that, to keep work in-house. Absolutely. So how does the farm out committee work? Have you been able to save jobs, keep them in-house? Not only have we been able to save jobs or to keep the people here that are already working, but we've added this year alone, close to 800 mechanics because of the work that was previously farmed out brought back in-house. Northwest is one of the few airlines that's doing this job here? Most of the other airlines are shipping it out to Asia? Far as I know, Northwest is the only one that's doing this. There maybe others, but I'm not aware of them. So Northwest is kind of blazing a trail, doing these pylons. What do you mean "blazing a trail?" Well, when you have a new project like this, as big as it is, you can look at our paper and everything looks great, but when you get right down to doing the actual work, problems are created. You need certain jigs to hold certain parts in place. Well, they're not made, so the mechanics on the floor have to make these jigs up. They design with engineering, and then they end up making the jigs to take care of the parts. So you're exploring how to do the work as well as doing the work. We are. We are exploring, yes. If you add this whole project up, what does it mean to the machinists, to the workers here? Well, it means a couple of things. It means that a project of this magnitude can be brought in-house after the company had the idea to farm it out. It can be brought back in-house and be done successfully. It means job security for our members because of, not only the additional mechanics hired, but it shows that we are successful in a project of this magnitude, we can be successful in other projects also. To our outsourcing, it can be brought back in. So it strengthens your argument to keep business work in the house on other projects. Yeah, it does. It does that. Now, if you add it up, just in dollars and cents terms, how many jobs, how many hours of work, how many millions of dollars of pay, what does this add up to? This pylon project, over a six year period, equates to 500,000 man hours of work, equates to an additional 100 mechanics, and approximately an $80 million payroll, as well as, as I said, the success that we can bring other insourcing back in. Was it tough to persuade management to do this in-house? I mean, how long did it take? Actually, it took about six months to convince the company. What we ended up having to do was find out from their records what it would cost for Singapore to do it. They were very open about that. They gave us, basically, carte blanche to see how Singapore was going to do it. We were then able to assess it and come up with some cost figures of our own, which the company agreed with. How'd do you find that management was going to farm out this work to Singapore? We have a farm out committee on this property that is comprised of senior vice presidents for the company and the president directing general chair and general chairs. In that farm out committee meeting, the company informed us they were forming this work out to Singapore Airlines. So that's farm out committee is really important to keeping this stuff in the shop here. That farm out committee is very crucial, and not only keeping this work in-house, but to find out what other outsourcing will be done so that we can give them a cost estimate to bring it back in-house. And this project is going to help build confidence between management and labor for other partners. As successful as this project is, and as big is it is, it will definitely help down the road. Do you find the attitudes are changing in the union among your members? I do. Yes, I do. I think the guys here believe that we should be working with the company to do exactly what we're doing here, bringing this in-house, bringing this work back in-house. Rather than, you know, you're on your side, I'm on my side, and we're going to fight until Hell freezes over because it's so competitive. It's de-regulated. I mean, it's de-regulated, so you have to. But you're talking-There's no other alternative. You're talking about a wholly changed the world, here. Maybe not wholly changed, but you're talking about big changes in people's attitudes, their ts. You're talking, right, a culture change, and our members have to be educated for-- those that don't believe that have to be educated. Those of us who've been out there working know what it's really like to work for $7 an hour, $8 an hour, and you break your back, and you come home tired. And then we go to school, and we get these types of positions. We know that we have to maintain this because it's a lifestyle, and it's a hell of a lot easier than digging a ditch. How do you find Northwest as a company, the management, to deal with? The top management, I've found have been open to suggestions. When the machinist union comes in there and said we think that your project, here, is going down the wrong tangent. We need to back up. They're willing to stand by us or take a step back and listen to us as long as we have the facts. And hey, it's their ballgame. We have to get into their ballpark, play by their rules, and show them that we can strike the batter out that's coming up. And they're listening to us. They are listening to us in that regard. How different is that today from, say, 10 years ago? Oh, lord, totally different. It's like day and night. 10 years ago, we were nothing more than people that worked for a company. All the management, 10 years ago, cared about were the shareholders and how much money that they were going to earn. They didn't care about the employees. They figured the employees were here to make a profit for the shareholders. Today, they believe Dasburg, Washburn, Anderson, the senior people, Dan Hurst, the senior people that I deal with-- they believe in dignity and respect in the workplace. Major, major difference over 10 years ago. How do you account for that change in management's attitude from hostility to dignity? I think there's two reasons for it. One, looking at past history, where you look at the Easterns and the Lorenzos, the New York Air, where you had all the hostility, they didn't survive. It's a different climate. These people also came from an environment, like Marriott, they came from a Continental, they came from an Eastern that saw that that type of philosophy did not work, and that Marriott philosophy did work. Treat people with dignity and respect, and you have a more harmonious work place. What's the toughest part of this new relationship for you, as a union leader, to persuade your own members as good? What's the toughest part to sell to your own membership? I think the hardest thing to explain to our membership is that we can get things accomplished without having to, as the quote goes, crawling in bed with the company, that we can earn our respect by giving them the facts and solutions to certain problem on the floor, that our membership is good enough to take care of, that they can handle it. So what you're saying, to a certain extent, is some union members missed the confrontation. Confrontation is what told them they were winning. Some of our members are accustomed to the culture that Northwest had 10 years ago because we had the 25 and the 30-year people. Keeping in mind, between 1970 and 1980 at Northwest Airlines, there were 17 months of strikes, and a lot of our people lost time. They lost pay, and they were not recalled at the end the strike. Some of them were not recalled for two and three years after. So that culture is still there. That hate that was built up, Ford Management, was still there today, and people were still working there. They don't forget that. How do you overcome that? Projects like this pylon project were able to show we could do it as cheap as the vendors outside, and that we could do better quality in work. Over a period of time, our people understand that that's exactly what we have to show to bring the work back in-house. The hate is lessened toward management. How important is it to the psychology of your members that they're now part owners of this operation? I believe most of them don't really see themselves as part owners. This was something that most of our membership believes was forced on them. But that does not detract from the fact that they watch that stock go up and down, and they want the stock to climb higher because it also makes more money for them. But I don't believe it's a big-- because there's not enough shares of stock per person there, so it's not a big issue. At least I don't believe it is. People want more, more ownership, or would they just as soon sell their stock when they get the option? Based on the past two chances that they had to sell the stock, they're keeping the stock. They believe it's going to go higher, and I believe-- well, I don't believe. They do believe it's going to go higher because they feel this is a good carrier to work for. They really feel this is a good company to work for. Well, that's pretty strong evidence. If you got two shots to sell your stock, and you didn't like the stock, you get the heck out. Yeah, we had less than 14% that sold their shares of stock. So 86% are hanging on. Right. I also talked about labor management relations and the farm out committee with both Marv Sandrin and a management counterpart, Richard Anderson, Northwest's senior vice president for technical operations. I want to ask you all, from your experience initially, Mr. Anderson, what is the nature of the relationship today between the management and the machinist's union here at Northwest Airlines? How would you characterize it? I would characterize the relationship between management and the IM as pragmatic, as realistic, and as based in common sense. And if you go back a bit in time at Northwest, to the '80s and the '70s and the '60s, the relationship was best characterized by acrimony. And in a customer service business, that didn't prove to be successful. In fact, it proved that an airline that was going to be a really successful airline wasn't going to be successful if management didn't have a good working relationship with the union and the employees that the union represented. So we embarked on changing that when this management group came into Northwest in 1989 and 1990, and it's now evolved to the point where I view the union leadership, all the way from the stewards to Marv Sandrin, Duane Worth, Bruce Retrum and the flight attendant's union, that they play a critical role in providing leadership in the company. And that we have to have a good working relationship if the airline's going to be successful. And so as a senior manager, my responsibility is to establish that relationship, it's got to be based on trust, it's got be based on respect, and most of all, it's got to be characterized by pragmatism because the union and its membership will only be successful and prosper if the company's successful and prospers. Why was it so important to you to set up a farm out committee? Well, there are several reasons for that. One of them was to get the information. We had not had access to information on parts being farm out, or even aircraft that were being farmed out. When our representatives went on a floor, the general chairs, they would be asked questions about this is being farm out or they were being told this is being farmed out, why are you allowing this to happen, and we had zero response. Prior to-Because you didn't know anything. Because we didn't know anything because prior to 1994, in this farm out meeting, we had access to no information whatsoever. We'd go to the management, and they'd basically blow us off. So we started this meeting, this session, once a month, farm out meeting, and we would then, as our GCs would walk through the floor, the members would ask what about this [INAUDIBLE] that was being sent out, this pump. Our people didn't know. They'd jot it down, we'd take it to the meeting, and we'd say, all right, why are you guys farming this pump out? So what are you talking about? Losing jobs to outside contractors? Well, we had two things that we were concerned about on the farm outs. One, we thought we could do them in-house, and in most cases, we had been doing some of this stuff in-house. Two, our people were watching the quality of the work that was being done out there, and they were concerned because they are now part owners. 1993, we gave up 11.7% in return for stock and the guarantee of dollar for dollar investment back., so they were concerned that these vendors were basically ripping us off because we are now part owners. They watched the quality of it. They thought the quality of the work wasn't what it should be. They would see these pumps go on these airplanes, and within a matter of a week or two weeks or three weeks, the pump would fail. They would come back in-house, we'd do a check, and in some cases, and I don't know what percentage it was, maybe a very low percent, but it was too high for our membership. And their jobs were at stake. And we had the other thing was job security, correct. Job security was, and still is today, a major issue in this industry, a major issue for the members that we represent here on Northwest Airlines. But more than that, the farm out committee was necessary so, one, we could either disprove the company's recommendation of sending out this pump as an example. Or some work. Or some work. Or they were legitimate in sending it out, and we could go back to our membership with the information at hand. Some executives in American companies believe that this is their most crucial power, deciding whether work'll be done inside the company or out. You were willing to share that power. I hadn't really ever thought of it in that way, as being a great powerful prerogative. I was sort of, once again, more pragmatic about it. Just the ability to make the call that I'm going to outsource an engine or air frame without taking into consideration what all of our options were, to me, seems like you're limiting your ability to make decisions as a manager. I've got a number of examples. We've had a number of examples of the farm out committee. Give them to me. Well, the classic, the main one, I think, the one that we really made the first headway on were airplane checks. We were farming out DC-9 checks in Atlanta, and let me not get too technical. A DC-9, in most air frames, about every 18 months, have to come to the hangar and have about 5,000 hours worth of work done on them. It's like a major tune-up. And we were spending more time doing those then what we thought we should spend. In other words, it was taking 18 days airplane out of service instead of 15 days out of service, and depending upon the type of check, heavy checks were taking 30 days out of service when they should have been about 18 days out of service. Well, I suppose as a manager, you could just say, well, I'm going to go outsource all that. So you were looking at somebody outside because somebody outside can do it faster. Well, first of all, we found out that wasn't always true because the kind of work we're talking about isn't stamping widgets. It's very technical work. It's very, very complicated, takes a lot of training and a lot of experience to be able to do an overall on a jet airplane. But that question aside, why wouldn't we go talk to the employees who probably have more experience? And when I say talk to the employees, go talk to Marv because Marv worked for 10 years down in these hangars overhauling DC-9s. Instead of seeing the union as, in traditional union management terms, as an adversary, why not go to somebody like Marv and say, Marv, we have a problem in Atlanta, and the problem is it's taking 28 days to do an h-check on a DC-9 that ought to take 18. Now, we've got a couple choices here. I can go outsource it, and your members are going to be angry, and your union's going to lose jobs, or we can sit down and see if there's a way for us to figure out how to solve some problems in Atlanta, which is where our DC-9 check facility is, and turn the checks out on time. And that resulted in our agreeing to something that was probably more controversial for him than me, which was 10 hour days. And the old union mantra always was eight hours of work for eight hours of pay. You work five days a week, eight hours a day. Well, Marv and I signed a letter that created four 10-hour days because one of the problems we had was getting the right manpower loaded on the airplanes to work the task sufficiently. So Marv put together-- we started in the farm out committee because he brought it to the farm out committing, and Marv said, look, you guys got to quit farming out DC-9 checks. And I said, Marv, I've got to farm out DC-9 checks. We aren't turning airplanes fast enough, so our factory, where we check four airplanes at a time, our factory can't keep up with the demand because we're taking too long to get the job done on each airplane. And I candidly think it's his responsibility to help solve that problem, and I think it's the responsibility of every mechanic on the floor, because if they're worried about job security, the only real job security comes from a prosperous company. And the only we're going to be prosperous if we had our deadlines. Hence, we put together some teams, and we came up with a whole bunch of recommendations to improve the check process in Atlanta. OK, how do you feel about that? How do You feel about management saying to labor, whether we're talking engine pylons or refurbishing DC-9s, you've got a responsibility to make it work? My feeling is that if you have a problem out there in the workplace, and of course, you have to have management with the attitude that the people on the floor know what they're doing, and it is our job. It is our job to, as I like to say, work smarter not harder and be as productive with the minimal amount of work that's necessary. Now, that entails making decisions and going along with these checks like in Atlanta. One of the things that our people found out was we have check cards, so the mechanics go get these cards, and they do all the work on these check cards. Well, we were finding out there were two, three, and sometimes even four cards doing the same job. And our guys kept coming and saying, we could cut a lot of work because Marv has to do the work, Tom has to do the work, and Dick has to do the work, and if you have a panel that's got 60 or 70 screws, you just don't get that job accomplished in five minutes. So you're wasting all those hours of work for nothing because the first person already did it, but yet it's on these other cards. So they went through, and-So what were you able to offer the company on that issue, the DC-9s? We were able to take a 32-day check and bring it down to 18 days, and it consisted of, we had three mechanics that the company allowed off the clock. When I say off the clock, they were doing company work. They were sitting with management, deciding how to solve these problems. They traveled to United. They traveled to American. They saw how other checks were done, and they came back with this list of recommendations. But the inception of this committee was from the farm out committee. We put it together, the farm out committee. Our people on the floor got together, decided what needed to be done alongside management, made the decisions, which is something that is new and unusual. Usually, we have ideas as a union, and management decides as to whether or not they want to implement them. Not in this case. In this case, it was management and labor making the decisions together. So what's the criteria that determines whether or not you keep it in or ship it out? Well, first of all, understand that the ultimate power really does still rest with us, in the sense that, within confines of fairness, reasonableness, and not undermining the collective bargaining agreement, we can make decisions about outsourcing. But that's not a power you abuse. In the end, the decision is is it something that's a core competency. And I know that's sort of a buzzword you hear these days, and I don't like buzzwords, but let me tell you what I think core competency means. Is it something we do well? And is it something we can do well? And will it fit in with our system, in the sense that we have the hangar capacity and the tooling and the ability to do it and the in-house expertise to do it? And second, what are the economics of insourcing versus outsourcing? And I see it as those being the two prongs to make the farm out decision, and then as we're going down that path, it's an open kimono approach with Marv. Open kimono means? Open kimono means whatever information I have about this farm out decision, Marv, is yours. I'll share a contract with you, I'll share the labor rates, I'll share what the outside people are telling us. Whatever you want, we'll provide to you. It's unusual. It's very unusual, Rick. And keeping in mind that what other alternative to do we have? I don't know of a contract, at least in the transportation industry, and I've been in this business for 17 years being a representative, that can't stop any type of outsourcing. The contracts are pretty vague when it comes to outsourcing because a company won't allow that language to be in there. They need it to survive. They need it that if an aircraft need to check, they need to be able to take the check and put it out. The company, Northwest, has been very open about giving us any information, financial information, who the vendors are out there so we can double check. And how important is that to you? Extremely important. It builds up a trust between the union and the company, because the first few times, you do check these things out. And that doesn't mean that you don't do spot checks throughout to make sure, but when they say a is a, and you go out and check it, sure as shooting that is a, you start after, a period of time, building up the trust. And besides that, once the company gets caught lying, the trust-- or the union, for that matter, either one. The trust is gone, and you'll never have it again. It's kind of like a marriage. Wait, keep going. It's kind of like a marriage? It's kind of like a marriage. You get caught with your finger in a cookie jar over at the neighbor's, talking to the neighbor's wife more often you should, there isn't any trust from that point on. From your perspective, how do you think this trust has built up that Northwest between labor and management? Trust is built over a period of time, and the period of time that I had dealt with Richard and that I had dealt with Don Washburn and Jeff McClellan, all the principal people in the pylon program, the trust had been built to where we could come up with solutions. We would sign a letter, and everybody on that letter did not just live up to the letter or to the agreement, they lived up to the intent of the agreement. And that is much more important than just saying, well, I signed an agreement, lived up to the agreement because in a agreement, you cannot write everything down, everything that could possibly happen. These three people, including myself, lived up to it over a period of time. That's how you build the trust up. That's why the trust was there when we went into this pylon mode. How long did the negotiations on the pylon issue take? The pylons, we started around the first part of the summer, and it was until around January. About the middle of '95 through the first part of '96, so about six months. There was dialogue and conversation going on for a period of six months. Complicated issue. Extremely complicated. The pylons are not simple. They are extremely complicated. There were things we needed to do, such as changing some work rules, to bring the cost down. There were some things the company was not aware of, where we could show them how to bring the cost down. So over the period of six months, we came up with out final solution. Do your members object to your go along with changing the work rules to get along with management? The union does not take the relaxing of work rules in a workplace lightly, but we must also keep in mind, in this particular arena, these work rules were negotiated and agreed to almost to the letter in a regulated industry. We now have a non-regulated industry, and even though this is 20 years later, because in 1978, '79 is when the deregulation act went into effect, even 20 years later, we've only had two contracts because of the length of the contract, because of the carriers having economic goals, two contracts where we have never been able to discuss work rule changes. And this area right now, because we are in contract negotiations, happens to be one that we are changing some work rules. Look back to '93, as you're coming and taking over even before that. Have you seen the attitudes of your union members change on this whole collaborational approach with management? Not just the leadership, but the rank and file. I've seen the rank and file make changes, but I don't see the change as greatly as I would have liked to have seen it. A lot of it has to do because of culture. The trust is not there with the lower management. By the same token, I have not seen lower management being as readily agreeable to the changes that higher management is also requiring. So it's a combination of having it on both arenas, or both areas, that the trust is not there towards the other. So what you're saying is the leadership on both sides is further along than the middle and the rank and file. The theory and the philosophy on the leadership on both sides is definitely way ahead over the rank and file, and the lower management. It is.
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