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Deadly labour dispute at Firestone

Deadly Labor Dispute

Labor theory has a built-in harmony bias: treat workers well and they will work harder. Treat them shabbily and they'll get even.

In 2000, the Firestone unit of Japanese tire maker Bridgestone and Ford Motor Co. began publicly pointing fingers at each other after a number of people were killed driving Ford's Explorer vehicles when the tires failed. Were the failures due to inappropriate tire pressure, the tires' design, the Explorers on which the tires were mounted, the speed at the time of failure, or perhaps a combination of these factors?

Princeton economists Alan Krueger and Alexandre Mas have a completely different explanation. They noted that a disproportionate number of faulty tires were made in Bridgestone's Decatur, IL plant where there had been a bitter labor dispute. They claim that labor strife was "a major contributor to faulty tires - though not, as the union argues, because strikebreakers were incompetent."

It appears that tires made at Decatur during a 1994-1996 labor dispute were more likely to fail than tires made there earlier or later. They were also more likely to fail than tires made at Bridgestone's nonunion plant in Wilson, NC, or its plant in Joliette, Quebec.

The bitterness broke out when Bridgestone began pressing for wage cuts and 12-hour shifts in January 1994. In July the workers struck. Using replacements, management imposed their 12-hour shifts and kept production moving along. In May 1995, the workers gave up, accepted lower wages and 12-hour shifts, and worked alongside the replacement workers.

The economists found that Firestone tires made during the labor strife in Decatur were 376 percent as likely to prompt a complaint to the National Highway Transportation Safety Administration than tires made in Wilson or Joliette. At times of labor peace, Decatur tires were 14 percent less likely to prompt a complaint.

Source: David Wessel, "The Hidden Cost of Labor Strife," The Wall Street Journal, January 10, 2002, p. A1.

IN 250 WORDS PLEASE ANSWERS THE 5 QUESTIONS BELOW: Questions:

1. Is this a case of sabotage?

2. Does the case suggest that squeezing workers, even in an age of weakened unions, can be bad management?

3. Is this a case where social and political forces are at work?

4. Does this case illustrate the derived demand for labor? If so, how?

5. Does this case illustrate the elasticity of the supply of labor? If so, how?

Solution Preview

1. Not necessarily. There are a number of things that can explain the results that are not sabotage. First, there were a series of replacement workers which means that they began working without any workers to train them and had much less experience than the others. Second, it is highly lightly that there were enough tensions between the union workers and the replacement workers to prevent cooperation and skill transfer. Third, ...

Solution Summary

In 2000, the Firestone unit of Japanese tire maker Bridgestone and Ford Motor Co. began publicly pointing fingers at each other after a number of people were killed driving Ford's Explorer vehicles when the tires failed. Were the failures due to inappropriate tire pressure, the tires' design, the Explorers on which the tires were mounted, the speed at the time of failure, or perhaps a combination of these factors?

Princeton economists Alan Krueger and Alexandre Mas have a completely different explanation. They noted that a disproportionate number of faulty tires were made in Bridgestone's Decatur, IL plant where there had been a bitter labor dispute. They claim that labor strife was "a major contributor to faulty tires - though not, as the union argues, because strikebreakers were incompetent."

It appears that tires made at Decatur during a 1994-1996 labor dispute were more likely to fail than tires made there earlier or later. They were also more likely to fail than tires made at Bridgestone's nonunion plant in Wilson, NC, or its plant in Joliette, Quebec.

The bitterness broke out when Bridgestone began pressing for wage cuts and 12-hour shifts in January 1994. In July the workers struck. Using replacements, management imposed their 12-hour shifts and kept production moving along. In May 1995, the workers gave up, accepted lower wages and 12-hour shifts, and worked alongside the replacement workers.

The economists found that Firestone tires made during the labor strife in Decatur were 376 percent as likely to prompt a complaint to the National Highway Transportation Safety Administration than tires made in Wilson or Joliette. At times of labor peace, Decatur tires were 14 percent less likely to prompt a complaint.

Source: David Wessel, "The Hidden Cost of Labor Strife," The Wall Street Journal, January 10, 2002, p. A1.

IN 250 WORDS PLEASE ANSWERS THE 5 QUESTIONS BELOW: Questions:

1. Is this a case of sabotage?

2. Does the case suggest that squeezing workers, even in an age of weakened unions, can be bad management?

3. Is this a case where social and political forces are at work?

4. Does this case illustrate the derived demand for labor? If so, how?

5. Does this case illustrate the elasticity of the supply of labor? If so, how?

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