How Might the Card Check Legislation Impact Supplier Cost Structures?

Earlier this week, the Senate reintroduced legislation focused on making it easier for unions to organize. Depending on your perspective, some call it the "card check" act or "employee free choice act". I just call it stupid, especially in a recession. But what do I know? Take it from the legislative and business pros who know more about it than I do. According to the above-linked Supply Chain Digest commentary on the bill, "Business leaders object not only to the card check provision for unionization instead of a secret ballot, but also other less publicized provisions that could be part of the law. For example, one version of the bill says that if the company and new union cannot agree on a contract in 120 days, a government arbitrator will come in and write the agreement for them." Even Obama supporters are against it. "Gary Shapiro, president of the Consumer Electronics Association in Arlington, Va., said more than 60% of the group's members supported Mr. Obama in an October poll, but that its 2,000 member companies are "universally" against the bill. Some have told Shapiro that they will move factories overseas if it passes."

Politics aside, I believe this new legislation could play a role in increasing supply risk and driving up supplier cost structures. What can you do to proactively minimize potential damage? As companies register, monitor and on-board suppliers, they should now not only take into consideration whether or not a supplier's workforce is entirely or partially unionized but also the existence of overseas facilities (or overseas partnerships) that could help them to get around potential union strikes or union-based price increases through shifting production offshore. Otherwise, procurement organizations could soon find that they face the double whammy of rising prices thanks to increased supplier labor costs as well as the possibility of supply disruptions as unionized workers start strutting their stuff, showing off their sense of power and entitlement. Capiche, comrade?

Jason Busch

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