Is labour the missing link in research on Asia’s automotive value chains?

Much of the excitement about the economic rise of Asia is concerned with industrial development. Many argue that the rise of the so-called new ‘middle classes’—a euphemism for rising middle income households and western-style consumerism—has been, and is being, accompanied by a shift towards cutting-edge ‘modern’ industries. The idea, which transcends a range of economic development theories, is that high-growth economies, particularly in East Asia, are undergoing a transition from labour-intensive, low-technology and relatively low-value ‘light’ manufacturing activities, such as garments, textiles, toys, consumer electronics, etc, to more capital-intensive, technologically-sophisticated and higher-value manufacturing activities, like ship-building, steel, aerospace and auto production.

My research has mainly focused on the role of auto production and workers within it, focusing especially on India, to some extent China and, increasingly, Indonesia. Historically, the auto industry is a leading sector in capitalist economies, setting standards in quality manufacturing, technology and employment relations. ‘Fordist’ mass production emerged from this industry, revolutionizing complex manufacturing. By the 1980s, a new model of ‘lean production’ had become widespread. This was originally developed by Toyota after World War II and is based upon a management philosophy (Womack, Jones and Roos, 1990) of waste reduction, cost cutting and demand responsiveness. Although different companies used different terminology, lean production has become the norm in most major carmakers. In Asia, lean production has been introduced by transnational corporations, mostly from Japan, Western Europe and the US, since the 1980s.

The auto industry is a very well-researched area in richer, OECD countries (Kochan, Lansbury and MacDuffie, 1997; Pulignano et al, 2008; Rinehart, Huxley and Robertson, 1997). As it has spread across Asia, as well as Latin America and, to a lesser extent, Africa, studies on middle income and developing countries have also grown. For example, research has been conducted on countries as diverse as South Korea (Lansbury, Kwon and Suh, 2007; Lansbury and Woo, 2001) or Brazil (Humphrey, 2003; Posthuma, 1995). More recently, studies have emerged on China (Chin, 2010) and India (Gulyani, 2001).

However, comparatively little research has been conducted on the role of workers in Asian auto production. Key works have tended to focus on relations between state institutions and foreign firms (like the works by Chin and Gulyani cited above) or on relations between global institutions and local production (Noble, Ravenhill and Doner, 2005). There has even been a World Bank-sponsored comparative study of auto production in China and India (Sutton, 2004) but, like most other studies, there was little focus on employment or labour.

There are some very useful studies of auto workers in countries like China or India (e.g. Bose and Pratap, 2012 or some chapters in Posthuma and Nathan, 2010). But most studies continue to downplay the crucial role of labour. In my view, this relates to a more general problem that has been raised in the literature on ‘Global Value Chains’ (GVCs). A GVC refers to a supply chain dominated by ‘lead firms’. GVCs encompass diverse industries and lead firms are usually powerful transnational corporations. The auto industry is one type of GVC, dominated by global firms based in the West and Japan.

It has been widely acknowledged that the GVC literature as a whole has tended to downplay the importance of workers (Barrientos, Gereffi and Rossi, 2011; Taylor, Newsome and Rainnie, 2013). There have also been some intriguing explanations for labour’s absence—see, for example, Neilson’s (2014) outstanding article on the shift to the ‘mainstream’ in GVC research or, from a more radical angle, research on the theoretical roots of GVCs (Selwyn, 2012).

Labour’s (relative) absence is particularly problematic as it can lead to false expectations. See, for example, the prediction that auto industry development represents good-quality, highly-skilled and stable jobs for workers (Lakhani, Kuruvilla and Avgar, 2013). This view contrasts sharply with some of the empirical studies cited above, which suggest employment and working conditions in auto factories in different Asian countries can often be very poor (although this can depend significantly on the company in question).

The lack of research into labour continues to be a problem. Take, for example, a very interesting piece in the most recent issue of Journal of Contemporary Asia (Doner and Wad, 2014). This article looks at auto development in Southeast Asia, particularly in Thailand and Malaysia, and suggests that divergent national development paths have been followed in these countries despite the common experience of economic crises and local sectors which tend to be dominated by foreign transnational corporations. The analysis is most interesting but, again, there is virtually no mention of the impact on workers or their communities. This is a major omission.

Take Indonesia, for example: the new industry minister recently claimed that about 3.1 million workers were employed in car and motorcycle production in Indonesia. Many of these workers are joining unions and have played a key role in recent conflict over wages (see analysis here and here). While quite a lot of research has been conducted in Indonesia on the labour-intensive industries that were central to economic development during the Suharto era, and that continue to play an important role, relatively little research has been conducted on labour issues in the auto industry or, indeed, other capital-intensive sectors. And Indonesia is not alone—the lacuna on labour continues in these industries that, the argument goes, will be increasingly crucial to economic development and prosperity across Asia.

Note: photo courtesy of: “Geely assembly line in Beilun, Ningbo” by Siyuwj – Own work (creative commons)

References:

Barrientos, S., Gereffi, G. and Rossi, A. (2011) ‘Economic and social upgrading in global production networks: a new paradigm for a changing world’ International Labour Review, 150 (3/4), pp. 319-340

Bose, AJC and Pratap, S., 2012. Worker voices in an auto production chain: notes from the pits of a low road. Economic and Political Weekly, vol. 47, no. 33, pp. 46-59.

Chin, G.T., 2010. Chinas Automotive Modernization: The Party-state and Multinational Corporation. Basingstoke, Palgrave Macmillan.

Doner, RF & Wad, P (2014) Financial Crises and Automotive Industry Development in Southeast Asia, Journal of Contemporary Asia, 44(4), 664-687

Gulyani, S. (2001). Innovating with Infrastructure: The Automobile Industry in India. Basingstoke: Palgrave.

Humphrey, J., 2003. Globalization and supply chain networks: the auto industry in Brazil and India. Global Networks, no. 3, pp. 121–141.

Kochan, T.A., Lansbury, R.D. and MacDuffie, J.P., 1997. After Lean Production: Evolving Employment Practices in the World Auto Industry, New York, Cornell University Press.

Lakhani, T., Kuruvilla, S. and Avgar, A. (2013) ‘From the Firm to the Network: Global Value Chains and Employment Relations Theory’, British Journal of Industrial Relations, 51, 3, 440-472

Lansbury, R.D. and Woo, S., 2001. Production systems, human resources and employment relations in Korea: the case of Kia motors. Asia Pacific Journal of Human Resources, vol.39, no. 2, pp. 54-66.

Lansbury, R.D., Kwon, S. and Suh, C., 2007. The Global Korean Motor Industry: The Hyundai Motor Company Global Strategy. Routledge, London.

Neilson, J. (2014) Value chains, neoliberalism and development practice: The Indonesian experience, Review of International Political Economy, 21:1, 38-69

Noble, G., Ravenhill, F. and Doner, R., 2005. Executioner or disciplinarian: WTO accession and the Chinese auto industry. Business and Politics, vol. 7, no. 2, pp. 1-33.

Posthuma, A., 1995. Restructuring and Changing Market Conditions in the Brazilian Auto Components Industry, Santiago, Economic Commission for Latin America and the Caribbean

Posthuma, A. and Nathan, D. (eds) (2010) Labour in Global Production Networks in India New Delhi: Oxford University Press

Pulignano, V., Stewart, P., Danford, A., and Richardson, M., 2008. Flexibility at Work: Critical Developments in the International Automobile Industry. New York, Palgrave Macmillan.

Rinehart, J, Huxley, C. and Robertson, D., 1997. Just Another Car Factory? Lean Production and Its Discontents. New York, Cornell University Press.

Selwyn, B. (2012) ‘Beyond firm-centrism: re-intregrating labour and capitalism into global commodity chain analysis’, Journal of Economic Geography, 12(1): 205-26

Sutton, J., 2004. The Auto-component Supply Chain in China and India: a Benchmarking Study, London School of Economics and Political Science, http://sticerd.lse.ac.uk/case/_new/publications/abstract.asp?index=2057, accessed 28 January, 2013.

Taylor, P., Newsome, K. and Rainnie, A. (2013) ‘Putting Labour in its Place’: Global Value Chains and Labour Process Analysis, Competition and Change, Vol. 17 No. 1, 1–5

Womack, J.P., Jones, D.T. and Roos, D., 1990. The Machine that Changed the World, New York, Scribner.

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