09/12/90
APPENDIX
L
Sourcing
GENERAL MOTORS CORPORATION
The
Corporation will work with the Union at both the Local and International Levels to
preserve jobs, replace jobs which may be lost by outsourcing action, and to
create jobs for bank and laid off employes. It is also an objective of the
Corporation to grow the business and to continue to rely upon its employes and
facilities as the source of its products. During the life of the 1990
Agreement, data regarding work brought in‑house and that regarding work
outsourced will be given to the International Union in a quarterly meeting. In
this manner, the parties can judge the success of mutual efforts toward improve
job security. The Corporation further agrees to address its sourcing during the
1990 Agreement, in accordance with the guidelines herein.
The rationale for sourcing actions will consider the
criteria of quality, technology, cost, timing, statutory requirements, the
impact of long‑term job stability, the degree to which the corporation's
resources can be allocated to further capital expenditures, the overall
financial stability of affected facilities, and the impact on related
facilities. The national parties will jointly further develop the above
criteria to be used to address sourcing issues. In developing this criteria,
transfer pricinq profits will not be considered in making sourcing decisions.
only appropriate return on investment and burden will be considered. The
International Union and where appropriate, the local union will be provided
full and timely access to all appropriate data, including financial
information, that is pertinent to evaluate product competitiveness and
contemplated sourcing.
If the local union cannot resolve a sourcing issue,
it may file a grievance at the Second Step of the grievance procedure.
In addition the following specific commitments have
been made to address sourcing‑related job security concerns of UAW
members:
1. INSOURCING
The Local JOBS committee will discuss the
practicality of insourcing, in whole or in part, work previously
outsourced or new work which the committee
identifies as that which might be performed competitively within the locations
based on the criteria outlined above. To assist in this process, the
International Union will be furnished a complete list of work similar to that
currently performed at the location that has been (1) outsourced from that
location or (2) is currently performed by non‑GM/UAW suppliers for
General Motors. These lists will be furnished within 90 days following the
effective date of the Agreement. Thereafter the parties will initiate efforts
to insource particular work consistent with the aforementioned criteria to
create prospects for growth and to provide jobs for bank employes and employes
on layoff.
If it is established that certain work can be
performed competitively judged by the above criteria, management will adopt the
Committee's proposal and, barring unique or unforeseen circumstances, bring the
work in‑house. The Union shall thereafter obtain any necessary approval
or ratification within 30 days of the decision to bring the work in‑house.
2. OUTSOURCING
Outsourcing as used herein means the Corporation's
sourcing of work from GM/UAW locations, including work connected with current,
new or redesigned vehicles, fabricated parts, powertrain, and component
products.
When an outsourcing decision is contemplated the
International Union and the local union will be given 120 days written notice,
or longer advance notice, when possible. The notice will include the reason for
the outsourcing, description of the work involved, the impact on the workforce,
the identification of the sourcing authority, and all financial information.
Proposals to keep the work in‑house will be made by the Union within 60
days of the receipt of the written notice.
a. When such an
outsourcing decision is contemplated and within the control of the Local
Management, the written notice will be given to the chairman of the Shop
committee. A copy of such notice will be sent to the Director of the General
Motor Department of the International Union and the vice President, Industrial
Relations Staff, for the Corporation.
b. When such a
contemplated outsourcing decision is controlled at the Divisional or BOC, CPC,
Truck and Bus, or ACG Group level, the written notice
will be given to the Chairman of the Shop Committee
of the local Union by the designated management representative at the impacted
location covered by the 1990 GM‑UAW National Agreement. Also, a copy of
such notice will be given to the Director of the General Motors Department of
the International Union and to the Vice President, Industrial Relations Staff,
for the Corporation.
c. When such contemplated
outsourcinq decision is initiated by the Corporation, or by the BOC, CPC, Truck
and Bus, ACG Group, or Divisions not part of ACG or plant external to the
impacted location covered by the 1990 GM‑UAW National Agreement, such
organization will provide sufficient advance written notice to allow the
designated management representative at the impacted location to comply with
the notification procedure. Additionally, International Union input to early sourcing
decisions will be sought by the Corporation's Groups and Divisions.
d. The sourcing authority
will not enter into a contractual relationship with a non‑GM/UAW supplier
until such time as the designated management representative of the impacted location
provides written verification that the above notification procedure and,
discussion by the JOBS Committee, has taken place.
If it is established that the work can be performed
competitively, judged by the criteria listed earlier in this Appendix, Management
will, barring unique or unforeseen circumstances, keep the work in‑house.
The Union shall thereafter obtain any necessary approvals or ratification
within 30 days of the decision to keep the work in‑house.
e. The Corporation agrees
to a full disclosure to the International Union of the procedures utilized in
sourcing activities.
3. FUTURE PRODUCT SOURCING
The International Union will be notified in writing
by the appropriate Group or Division upon "Group Concept Initiation
Approval" to proceed with a new or redesigned vehicle, subsystem or
component part. BOC, CPC, Truck and Bus, ACG and Divisions not part of ACG will
each work with the designated International Union representative(s) to develop
one generic process for a11 aforementioned groups and divisions whereby union
in‑put to sourcing discussions in connection with new
or redesigned vehicles, subsystems or component
parts will be utilized to advantage every opportunity to use internal
resources. The agreed upon process will be established and reduced in writing
within 90 days of the effective date of the agreement, and * a copy sent to the
Director of the General Motors Department of the International Union and to the
Vice President of Industrial Relations, for the Corporation. Since design and
processing systems have such a major impact on cost and quality, these factors
will be given priority consideration.
The commitments expressed in this Appendix are
intended to contribute significantly to our cooperatively working together to
provide General Motors employes in the United States improved job security by
growing the business.
A. HISTORY
1. Prior to the March 21,
1982 National Agreement there were no provisions in the contract that
restricted the Company's right to determine the source of the components used
in the building of its products.
(a) Its right to
determine the source of vehicle components flowed from Paragraph
(8).
2. When the 1979 National
Agreement was negotiated, General Motors built ‑ in the U.S. and Canada –
approximately 95% of the components used in the vehicles it produced and
assembled in these two countries.
(a) While there had
previously been sourcing of parts to companies outside GM, both domestic and
foreign, there also was insourcing of components to GM plants in the U.S. and
Canada.
3. Beginning in early 1981
there were increased reports of loss of jobs from GM plants due to the
outsourcing of work, while at the same time there were only limited reports of
jobs being returned to GM plants.
(a) Investigation over a
period of time disclosed that jobs were being sent to both domestic and foreign
manufacturers ‑ many of which were non‑union.
(i) The Corporation
contended that some components could be acquired cheaper by outsourcing the
work rather than by producing it in‑house.
(ii) The International Union
determined that the problem had to be attacked through negotiations.
4. The March 21, 1982
National Agreement contained provisions covering both outsourcing and
insourcing of work.
(a) Initial administration
and implementation of these provisions were the responsibility of the local
union bargaining committee.
5. The 1984 National
Agreement contained revisions designed to increase the awareness of local union
personnel when sourcing decisions were contemplated.
(a) A Job Opportunity Bank‑Security
Program was created in 1984 negotiations to protect eligible employes against
layoff caused by a number of factors including outsourcing.
(i) The local JOBS
Committee was to be involved in the decisions relative to sourcing decisions.
(ii) The initial
responsibility for administration and any necessary implementation continued to
reside with the local bargaining committee.
6. The 1987 National Agreement expanded the
relationship between sourcing and the Job Opportunity Bank‑Security
program.
(a) The involvement of the
joint local JOBS Committee in discussions and decisions regarding sourcing was
substantially increased.
7. The 1990 National
Agreement language was drastically modified and was made part of the main body
of the agreement (Appendix
L). The
language of Paragraph
46 (1) was also modified to accommodate the specific arbitration details.
The focus of the new language now is directed towards growing the business and
towards reducing banks and recalling those laid off, through replacement work
on outsourced items, emphasis on Insourcing opportunities and Future Product
Sourcing In‑House.
B. PURPOSE
1. The purpose of the
sourcing provisions is to provide a procedure for the Company and Union at all
levels to jointly consider and evaluate the factors involved in decisions
regarding the sourcing of work and to do this before decisions are made which
impact on job security.
(a) The purpose of the Sourcing agreement is a vital
factor to be remembered when considering the propriety of sourcing a particular
component or components.
C. SCOPE
OF APPLICATION
1. The provisions covering
outsourcing apply to all of the in‑unit work performed in General Motors
plants covered by the 1990 National Agreement.
(a) These provisions also
apply to any other in‑unit work brought into such General Motors plants
in the future.
D. CORPORATION
COMMITMENTS
1. General Motors made a
number of commitments to the Union during National Negotiations and these are
reflected in the agreement.
(a) The Corporation
committed to work with the Union at both the local and International levels in
effort to:
·
Preserve
jobs
·
Replace
jobs lost as the result of outsourcing
·
Create
jobs for bank and laid off employes
·
Grow the
business and rely on UAW/GM employes and facilities as sources of its products
·
Quarterly
meetings
- Furnish data on insourced and
outsourced work
(b) The rationale for
sourcing will consider several criteria
·
Quality,
technology, cost, timing and statutory requirements (i.e. fuel and emission
control requirements)
·
Impact
on long‑term job stability
·
Degree
to which the corporations resources can be allocated to further capital
expenditures, overall financial stability of affected facilities and the impact
on related facilities.
(c) Transfer pricing
profits are no longer appropriate in sourcing decisions. Neither are
inappropriate return on investment nor inappropriate burden allocation.
(d) The International Union
and where appropriate the Local Union will be furnished complete and timely
access to all relevant information, including financial, product and
competitiveness data regarding sourcing issues.
(e) If the Local Committee
cannot resolve a sourcing issue it may file a grievance at the second step.
(1) Such a grievance should
be handled as normal through the subsequent steps and may be arbitrated (see Paragraph
46 (1).
E.
INSOURCING
1. Appendix L establishes
a procedure to address insourcing.
(a) Work eligible to be
insourced means any work that was previously outsourced or new work.
·
It is
our position that this applies to any work being done in any non‑UAW‑GM
plant including plants in other countries.
(b) Within 90 days of the
effective date of the agreement the Corporation must submit a complete list of
work eligible to be insourced.
(c) The local parties may
initiate efforts to insource work to create growth and to provide jobs for bank
and laid off employes.
·
In doing
so, the above agreed upon criteria will be used.
·
If
competitiveness is established using the above criteria the work will be
brought in‑house.
·
Only
unique or unforeseen circumstances could cause any exception to the above.
(d) In the event agreement
is reached to insource work the local union then has 30 days to obtain any
necessary approval or ratification.
F. INSOURCING
‑ CONSIDERATIONS
1. The Local JOBS
Committee is responsible for evaluating the potential for returning work or
introducing new work into the unit.
(a) Implicit in this
provision is the requirement that sufficient information will be made available
for the local committee to intelligently evaluate costs and other relevant
factors in order to reach a fair conclusion as to the feasibility of insourcing
the work.
(b) The criteria outlined
in Section D is applicable when evaluating potential insourcing.
(i) That criteria is still
being further developed and you will be updated as that occurs.
(ii) It is the position of
the GM Department that cost and burden analysis for insourcing work should only
include those that are directly resulting from the work coming in‑house.
(c) There may be instances
when work was outsourced for reasons over which the Local Union and the Local
Management had no control and, moreover, some work cannot be returned to its
plant of origin or may not be subject to recovery.
(i) The work may have been
outsourced to free up floor space for expansion of existing production capacity
of another component or for a new product.
(ii) The work may have been
moved to another GM plant in the U.S. in which event insourcing provisions do
not cover the work in question.
(d) It is not always
possible to ascertain the various types of situations involved in a previous
decision to outsource work. Thus, it is imperative that the local committee
have as much information as possible furnished to them regarding the
circumstances surrounding the initial decision to outsource, including cost
information.
(i) When discussing a
question of insourcing the local committee should consider all of the known
circumstances which existed when the work was outsourced for comparison with
the current circumstances.
2. When it is established
that the work can be competitively insourced, the agreement requires that it
will be insourced providing the Union obtains any necessary approvals or
ratification.
(a) Changes made in a Local
Seniority Agreement, Shift Preference or any other local agreements that were
ratified initially require ratification by the local union membership and may
require approval of the International Union and the Corporation.
(i) On the other hand
changes in the local rules for implementing Paragraph
(71) for example, are purely a local matter and would not require the
approval of the International Union and the Corporation.
(b) It is recommended that
in the event the local discussions result in an understanding to insource work,
the local union insist that there be a management commitment in writing that if
the local union membership ratifies any agreement requiring ratification that
the work in question will be placed in that plant.
(i) Any required approval
or ratification procedures should be completed within thirty days.
(c) It is recommended that
the written commitment by the Company specify a projected timetable and a
manpower estimate, at the very least.
(i) A more precise
timetable and other details attendant to implementing the agreement to insource
can be worked out later.
G. OUTSOURCING
1. The agreement's
procedure applies to outsourcing of work from UAW‑General Motors
locations in the U.S. regardless of where the work is destined.
(a)
Includes
work connected with current, new, or re‑designed vehicles, fabricated
parts, powertrain and component products.
H. OUTSOURCING
‑ NOTICE
1. When outsourcing is
contemplated at least 120 days written notice must be given to the
International Union and the Local Union.
(a) Longer advance written
notice will be given where possible.
(b) The written notice must
include the reason for the outsourcing, a description of the work involved and
the impact on the workforce, the identification of the sourcing authority, and
all financial information.
(1) It is the position of
the International Union that the clock does not start ticking on the 120 days
until all information required in notice is available to the Union.
(c) When the contemplated
outsourcing decision is within the control of the Local Management the written
notice is given to the Chairman of the Shop Committee with a copy to the
Director of the GM Department of the UAW and a copy to the Corporation's Vice
President of the Industrial Relations Staff.
(d) When the contemplated
decision to outsource is controlled at the Divisional or BOC, CPC, Truck and
Bus or ACG Group level, written notice will be given to the Chairman of the
Shop Committee of the affected location. Copies will be provided to the
Director of the UAW's GM Department and the Corporation's Vice President of
Industrial Relations.
(e) When a contemplated
outsourcing decision is initiated by the Corporation or by the BOC, CPC, Truck
and Bus, ACG Group or divisions not part of ACG, or plant external to impacted
location, notice will be furnished to management at the impacted location so
that the notice to the local union can be met.
(1) In‑put will be
sought from the International Union by the Corporations Groups and Divisions on
early sourcing decisions.
(f) When notice on
contemplated outsourcing is given, the decision to outsource has not yet been
made ‑ it is only being contemplated. It is contrary to the agreement to
conclude an outsourcing decision prior to giving notice to the Union and prior
to providing written verification that notice was given and the matter
discussed with the Union.
(1) It is a violation of
the agreement when less than 120 days notice is given.
(g) The notice to the Union
must specify the reason the work is being outsourced.
(1) The reason given for
outsourcing can be very important to the Union, even when the reason is a
legitimate one from the point of view of that plant.
(2) The reason for
outsourcing could be to make room for new work which will subsequently be
brought into the plant. In that event the International Union should be alerted
so that efforts can be undertaken to source the old work into another GM plant.
(h) If competitiveness is
established using the earlier cited criteria the work will be kept in‑house.
(1) Only unique or
unforseen circumstances could cause any exception to the above.
(i) The Corporation has
agreed to a full disclosure to the International Union of sourcing procedures.
(1) As an example, the
Corporation uses a written "Competitive Analysis Guide" for this
purpose. In many areas the C.A.G. is inconsistent with Appendix
L. In all cases Appendix
L
must
govern.
I. OUTSOURCING‑INFORMATION
1. Management is required
to provide relevant information including financial data involved in the
contemplated decision to outsource the work covered by the notice.
(a) Information furnished
must be in sufficient detail to permit a fair understanding and evaluation of
the factors involved.
(1) At the very least, the
information should include items, such as:
·
impact
on Job Banks and unemployment
·
labor
costs
·
applicable
burden
·
volumes
·
investment
·
material
costs
·
other
applicable costs and data
·
competitors
price and investment
·
number
of employes affected
(b) Management in some
instances may take into account some investment considerations.
(1) A huge Corporation
investment in new machinery to accomplish a limited amount of work may not be
required.
(2) When exceptions are
relied on to justify the contemplated outsourcing, the information should be
forwarded to the General Motors Department where the information can be
evaluated.
(3) The Company must submit
detailed and convincing evidence when invoking any exceptions.
(e) It was agreed
information furnished regarding sourcing and the discussions in connection with
such information may require the information remain confidential until the
Corporation consents to its release.
(1) The agreement does not
anticipate that the Company will deny information to the Union on the basis
that it is confidential. Rather, it provides that the Union will keep such
information confidential.
J. OUTSOURCING ‑
UNION PROPOSAL
1. The agreement provides
that the Union may make a formal proposal in matters dealing with outsourcing.
Generally this will fall in the area of "operating efficiency".
(a) In the event
"operating efficiency" is the key issue affecting the contemplated
outsourcing decision the Union has 60 days from the date of the notice to make
proposals to resolve the matter.
(1) Such proposals should
include true evaluation of costs applicable to specific operations and effects
of JOBS and other costs.
(2) Operating efficiencies
could include changes in work practices or other local operations improvement.
2. Any agreement reached which
includes provisions related to outsourcing should include a company commitment
in writing that the work involved will not be outsourced.
(a) In the event the
agreement on outsourcing is included as part of the negotiation of a new local
agreement, the local union should insist on commitments from management similar
in nature to those described in Section F herein.
K. COMPETITIVENESS
1. The theme of the
Sourcing Agreement is that the Corporation will work with the International
Union and the Local Unions to preserve jobs, replace jobs lost due to
outsourcing action, to create jobs for Bank and Laid‑Off Employes and to
grow the business.
2. There was no
understanding in national negotiations as to what factors were to be considered
or what local understandings, if any, could or should be changed to become
competitive.
(a) The GM Department will
not approve or permit a local union to negotiate any agreement that contains
provisions which:
·
Reduces
the hourly wage rate of a classification.
·
Reclassifies
existing work to a lower wage classification.
·
Reduces
relief time below the amount specified by the national agreement.
·
Increases
production standards above the reasonable working capacity of a normal
operator.
·
Removes
or reduces workers' health and safety protection.
·
Reduces
workers' rights guaranteed by the national agreement.
·
Infringes
on or reduces employe health care benefits.
3. There are various
understandings, work practices and agreements at some local levels which could
exceed anything specified in or contemplated by the national agreement. This is
the area in which the local union should consider the matter of
competitiveness.
(a) This approach should be
viewed in the light of the present competitive position of the Corporation and
to spur sales of domestically produced General Motors vehicles.
(i) The local union should
bear in mind that any present modifications of work practices and/or agreements
which it may make can be made the subject of future local negotiations.
(b) There are a number of
understandings, work practices and agreements at the local level which could be
considered as contributing to the plant's competitive position.
·
Non‑environmental
relief time that may exceed that provided for in the national agreement.
·
The amount
of "free time" available to those workers who complete their
production output for the shift early.
·
Changes
in the transfer provisions of the local agreement to adjust the number of moves
that must be made to fill a vacant job.
·
Special
agreements to cover temporary deviation from strict seniority order in the
recall of employes to permit necessary training when there is a production
increase. (This same procedure could be considered for a decrease in
production, if practical.)
·
The
frequency of shift preference application moves when there is no hardship for
the employe.
(c) The above items are but
examples of matters the local union may want to consider. However, each local
union is aware of the individual work practices, etc. in the plant and the mood
of the membership relative to them.
(d) When a fair evaluation
establishes that competitiveness is met, outsourcing is not justified and it
would be contrary to the agreement if it would occur.
(e) In that event, if
management chooses to outsource the work the Local Union should file a
grievance at the second step.
L. FUTURE
PRODUCT SOURCING
1 This section is new to
the Sourcing Language and provides greater opportunity to place new product
work into UAW‑GM plants.
2. The agreement requires
that the International union be notified in writing at the point that
"Group Concept Initiation" approval is given by the Group or
Division.
(i) This notice is required
in all instances involving new or redesigned vehicles, subsystems or component
parts.
(ii) This notice gives us
opportunity to have input in sourcing discussions with the purpose of gaining
every opportunity to use internal resources.
3. The language requires
that the Union and Corporation develop one generic process to implement these
commitments.
(i) The generic process is
to be in writing and be completed within 90 days of the effective date of the
agreement.
(ii) The written agreed upon
process is to be forwarded to the Director of the GM Department of the UAW and
the Vice President of Industrial Relations for the Corporation.
4. Priority consideration
will be given to design and processing systems since they have such a major
impact on cost and quality.
DETROIT, MICHIGAN 48214
