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OM in the News: Outsourcing Auto Workers at Nissan

March 23, 2014
Nissan's truck line in Tennessee

Nissan’s truck line in Tennessee

Nissan, the first of many foreign automakers to set up shop in Tennessee, is leading a trend, writes The Washington Post (March 9, 2014). Companies from Amazon to Asurion to Dell have outsourced their warehouses and call centers to the hundreds of staffing agencies that have cropped up in the region. Tennessee went from having 51,867 temporary workers in 2009 to 80,990 in 2012, while median wages have stayed flat. Temps make up 3.1% of all jobs in the state.

Tennessee holds its low unemployment rate up as a shining example of success in the global economy — the return of American manufacturing after decades of decline, and the future of work for those left jobless by globalization and technological change. Nissan was Tennessee’s first major investment by a foreign automaker, and has since attracted a constellation of suppliers that support thousands more jobs. Since the plant opened in 1983, the town of Smyrna has grown from 8,000 to 41,000. In the plant’s first 2 decades, getting a Nissan job was like winning the lottery.

But Nissan’s brush with bankruptcy in 2001 and a turnaround plan that involved new models and much lower production costs led to using temps into front-office functions. In 2007-2008, Nissan reduced its permanent workforce by 1/3. As demand returned, it started to backfill production jobs with contractors, too — first on the “pick line,” where workers run parts up to assembly, and then throughout the plant. Now a majority of its 7,000-person workforce is supplied by staffing agencies.

Many work for Yates Services, an in-house contractor that’s hired thousands of people over the past few years to ramp up production. Yates is like a company within a company, with separate bulletin boards, rules and procedures. The bona fide Nissan employees are easily recognizable through their logoed shirts, which Yates workers don’t receive. Yates pays between $10 and $18 an hour, which is about half what Nissan employees make. The gap in benefits is equally wide.

Classroom discussion questions:
1. Will Nissan’s outsourcing lead to a plant unionization?

2. What are the advantages and disadvantages of this move by Nissan?

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