THE INDUSTRIAL RELATIONS OF FOREIGN OWNED SUBSIDIARIES IN THE UNITED KINGDOM
| DOI | http://doi.org/10.1111/j.1467-8543.1971.tb00852.x |
| Author | M. D. Steuer,John Gennard |
| Published date | 01 July 1971 |
| Date | 01 July 1971 |
THE INDUSTRIAL RELATIONS OF FOREIGN
OWNED SUBSIDIARIES IN THE UNITED KINGDOM
JOHN
GENNARD*
AND
M.
D. STEUER?
INTRODUCTION
INTERNATIONAL
direct investment, in contrast to portfolio investment,
involves foreign control over subsidiaries operating in the receiving
country. While this type of international capital movement has
a
long
history, there are significant changes in the post-war years compared to
earlier periods. Increasingly the foreign owned subsidiary
is
becoming
part of an internationally integrated production and distribution complex.
The volume of direct investment is growing at roughly twice the rate
of
international trade, much of this growth being due to investment originat-
ing in the United States. The investment is especially important in science
based industries. Many observers see these changes taken together as
having important implications for industrial relations in host countries,
including the United Kingdom, which, after Canada, is the second largest
destination for United States direct investment. But what are these
implications, and indeed, what has happened up to now? The known
facts are few and the sources of information widely scattered. The purpose
of
this paper is to draw this information together, treating the United
Kingdom as a case study.
It is often suggested that the foreign owned subsidiary is more pro-
ductive and profitable than its domestic counterpart, and that this
superior performance is at least partly due to better labour utilization.
This implies that the foreign firms behave differently in the labour
market, have different personnel policies, and may tend towards a different
mode of industrial relations. If true, this could be
a
source of friction as
well as of innovation in industrial relations. And even with similar be-
haviour compared to domestic firms, the multinational corporation can
alter the power relations between employers and employees. For these
reasons we may anticipate responses to the growth
of
multinational firms
on the part
of
British trade unions. Some responses have begun already and
are discussed below.
Detailed and recent figures on foreign direct investment in this
country are sadly lacking, The 1968 Census of Production has yet to be
analysed from this point of view. The 1963 Census was only recently
corrected. It shows that foreign owned firms accounted for roughly
10
per
*
Lecturer in Industrial Relations, London School
of
Economics
t
Reader in Economics, London School
of
Economics
143
144
BRITISH
JOURNAL
OF
INDUSTRIAL RELATIONS
cent of total United Kingdom sales in manufacturing, and that these
firms employed about
8
per cent of the manufacturing work force. The
Survg
of
Current
Business,
published by the United States Departmcnt of
Commerce, affords much more recent information. Sales of foreign owned
manufacturing subsidiaries here could now be in the order of
14
per cent.
There is some tendency for United States investment to be shifting more
to the Continent, but this is not marked. Foreign direct investment here is
substantial, and the North American component is in excess of
80
per cent.
But the quantity of direct investment alone is not critical. It is the ‘foreign-
ness’ of subsidiary behaviour which matters to industrial relations. In the
sections below we discuss the responses of British trade unions to the
foreign firm, the strike experiences
of
these subsidiaries, and their labour
utilization. Lastly we look at the impact of direct investment on industrial
relations practices and outline some policy issues.
TRADE
UNION
RESPONSES
TO
THE
MULTINATIONAL FIRM
Despite the growth of foreign firms in the United Kingdom, the
British trade union movement has not reacted to a great extent. This is
due in part to the fact that foreign companies operating here have tended
to accept the main features of the British industrial relations system,
which we discuss in a later section. Also, British unions have suffered
little from the effccts
of
‘runaway’ industry, i.e. the potential ability of the
multinational to move its production from one country to another.
Notable exceptions are the former A.E.F. experience in its dealings with
Roberts-Arundel, who after facing a twelve-month strike for union
recognition removed their operations back to the States. And in February
1970 shop stewards at Ford’s questioned the chairman
of
the company
concerning their fears that as a result of strike action replacement for
Escort models would be built up in Germany rather than the United
Kingdom. Towards the end of that year the Ford Motor Company in
fact changed from a small diecasting supplier in the Midlands to a com-
ponent supplier in Germany. In
1971
Ford announced they were not
going to build
a
L30m. plant in Britain because
of
industrial relations
problems.
The response of the British trade union movement to the multi-
national firm can be categorized in four ways. Firstly, at the international
level, it is seen in membership
of
the International Confederation of Free
Trade Unions (I.C.F.T.U.) and the International Trade Secretariats
(I.T.S.)
;
secondly, at the national level through the Trade Union Con-
gress; thirdly, at the individual union level and fourthly, a response at
a
level outside the official union movement by shop-steward conveners in
multinationals in the
U.K.
Often the response has been sparked
off
by
initiatives from U.S. unions and in particular the United Automobile
Workers (U.A.W.). The A.F.L.-C.I.O. have expressed continued anxiety
To continue reading
Request your trial