Be Afraid of Big Labor in the Supply Chain

One of the quiet areas that procurement organizations often probe when qualifying new suppliers is their dependence on (or exposure to) organized labor within their supply chain. For many companies doing business in the industrial or automotive markets, suppliers with union labor exposure face a much more significant uphill battle than non-union vendors -- and for good reason. It's one thing to face supplier financial viability and operational risk, quality and on-time performance risk when working with new suppliers, all areas that are theoretically under the control of management. But it's something else entirely to face organized labor risk that is outside of the direct control of the supplier.

As one example of labor flexing its muscle despite the state of the economy, consider how the world's favorite near bankrupt airline, British Airways, recently faced "possible disruption from ground crews at airports around the world if [a] planned cabin crew strike went ahead. In a show of support for the Unite union, baggage handlers at Frankfurt airport are expected to go slow, while Australian ground crews are considering a refusal to load, clean and refuel BA jets. In America, the supply of aviation fuel at JFK airport, New York, was in question as a Unite delegation discussed last night an offer of support from a powerful union whose members manage refueling at the airport."

Worldwide, unions are testing out the waters in pushing both healthy and not-so-healthy employers to the limit. The wildcard in much of this behavior is whether governments will be willing accomplices to labor's newfound demands, despite the stifling impact on the business environment. If Obama's March/April recess appointment of controversial labor proponent Craig Becker to the National Labor Relations Board is any indication of what's to come, then procurement organizations should double down in understanding labor exposure within their supply chains. While the NLRB is supposed to be a neutral arbitrating party, Becker's history suggests more activist leanings.

As background, Breitbart suggests that "The NLRB has two primary functions: one, to prevent and remedy unfair labor practices, whether committed by labor organizations or employers, and; two, to establish whether or not certain groups of employees desire labor organization representation for collective-bargaining purposes, and if so, which union." The NLRB currently believes that employers should have a role in the unionization process of companies, but Becker's track record suggests that he believes employers have no rights in the matter. As the former associate general counsel of the Services Employees International Union (SEIU), Becker suggested that employers should have no say on NLRB proceedings: "Employers should have no right to be heard in either a representation case or an unfair labor practice case, even though Board rulings might indirectly affect their duty to bargain." One wonders that if this is how Becker feels about employers' rights, how does he feel about customer rights further up the supply chain?

- Jason Busch

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