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Thoughts for Labor Day

As we go into Labor Day in the United States, people are thinking about those who work for a living – e.g. those who Labor.  But what does Labor actually mean?  Is it necessarily a reference to the Blue Collar worker, who toils on the assembly line, perhaps in a union environment, and who builds “real” products?

This is a hopelessly outdated concept, even though there are certainly a lot of such people out there.  But there’s more to the concept that meets the eye, and the idea of what jobs are really about requires a bit of thought, when positioned in the context of the global supply chain.  Dan Gilmore ran an interesting blog post yesterday on some thoughts on Labor Day.  He points out that recent data reveals that the percent of private sector workers of all kinds that are in unions stayed the same at the end of 2011 as it was in 2010, at 6.9%. Even in the manufacturing sector, the rate has fallen to just 10.5%, versus 10.7% in 2011. There are about 1.4 million unionized workers in manufacturing, and that is actually up a bit from last year, as the total number of those employed in manufacturing has risen.  And while unions have lost out on jobs such as at Caterpillar in Joliet, dockworkers may also face the same fate as ports begin to automate.

It seems to me that the issue of Labor vs Management is really not the issue here.  The issue is global competitiveness.  Some of the early results from a study on Global Logistics underway at the SCRC reveals that more and more companies are moving overseas, because that’s where the markets are growing.  And when these companies go to sell their products in places like Vietnam, Russia, Malaysia, Brazil, and other areas, they are discovering governments who insist that they not only have a percentage of their goods produced in the country, but that they also buy most of the inputs from local suppliers.  Even when none of them are currently able to supply such products or services!

This is a massive problem for companies, that requires them to do things they never would have planned in the past.  As many executives i talk to, Free Trade as brought about by the WTO is a MYTH.  The number of tariffs, penalties, taxes, and other factors are driving companies to locate and create jobs in other countries – and labor rates in the US have little to nothing to do with the discussion.

Same goes for ports.  The issue with ocean freight doesn’t have to do with the COST of unloading a container – but rather the SPEED at which it can be done.  Delivery reliability of ocean freight is going down, as ocean shippers move to larger and larger ships.  Even wiht the opening of the Panama canal to larger ships, this means more containers per ship – which means longer to unload, and fewer ports to call on.  All of this means longer leadtimes and less delivery reliability to manufacturers waiting for their goods to arrive.  So if dockworkers are savvy, they need to focus their negotiations on how to be more effective at working on intermodal strategies to coordinate different modes – something we can call Modal Synchronicity.  This effectiveness means linking trucks, rails, ocean freight, and overseas providers electronically to better coordinate and plan shipments and handoffs – something which is completely lacking today.

So as we go into Labor Day – let’s think about the American worker.  And let’s start to have a different discussion about how to create jobs, that doesn’t digress into a left-wing socialist/union versus capitalist/right-wing argument, that ends up nowhere….