European Unions: Labor's Quest for a Transnational Democracy

9. A Euro-Democratization Union Strategy: The ABB Alstom Power Case

c h a p t e r n i n e  A Euro-Democratization Union Strategy The ABB Alstom Power Case O n April 10, 2000, about 2,000 workers, mostly from France, Germany, Belgium, and Italy, demonstrated in Brussels to protest against plans by ABB Alstom Power to cut a fifth of its workforce. They were protesting against the Commission for its failure to consult labor before approving the merger between the ABB and Alstom power divisions. This was not the first European labor demonstration , but it was the first time that an EWC, the EMF, and national unions jointly organized such a protest rally (Lemaître 2000). The demonstration did not remain an isolated event, but was the first in a series of several successful transnational mobilizations. Correspondingly, the ABB Alstom case came to be used as a prototype for successful European unionism in labor education seminars (Wagner 2004). The ABB Alstom Power unionists triggered European collective actions and contributed to the creation of a European public sphere and a politicization of the EU integration process. Thus, the unions followed a Euro-democratization orientation, as defined in the analytical framework presented in chapter 2. This joint action of European, national, and company -level unions and works councils is surprising when compared to other cases. How, then, can we explain transnational collective action and the adoption thereby of a Euro-democratization strategy in the ABB Alstom case? [128] Toward Supranational Management Structures? One thesis introduced in chapter 3 is the following: the increasing Europeanization of the economy will force organized labor to cooperate across borders. To assess this thesis, this section discusses the governance structures of ABB Alstom Power compared with the structures of its two mother companies, ABB and Alstom, which were also products of prior company mergers. ABB—a Trend-Setting, Genuine Multinational Asea Brown Boveri (ABB) is often presented as a result of one of the most successful company merger cases. In 1988, the Swiss Brown Boveri Corporation (BBC) and the Swedish ASEA announced that the two electro -technical multinationals would merge to reach economies of scale similar to its main competitors, GE and Siemens. The management also used the merger to restructure and justified this citing the increasing competition that would result from the establishment of the European single market in 1992 (Uyterhoeven 1993).1 In the 1990s, ABB became a trendsetter in management and globalization debates (Bélanger and Björkman 1999). The press celebrated ABB as the most successful merger case since Royal Dutch linked up with Shell in 1907, and the Financial Times ranked the ABB executives, Percy Barnevik and Gördan Lindal, in the top twenty of the world’s most respected business leaders (Sklair 2001).2 The positive ABB image had three sources (Berggren 1999). First, ABB was a company with genuine global aspirations. Second, the ABB management model was portrayed as a panacea for the big-company disease because it included major cutbacks of intermediate and central management staff. Finally, the ABB matrix structure, which combines local-territorial and global-sectoral dimensions, was praised as the answer to both the persistence of territorial diversity and the increasing transnational integration of business operations. ABB relied on lean headquarters, thirtyfour sectoral subdivisions, forty national centers, and more than one thousand daughter companies. Accordingly, Winfried Ruigrok and Rob Van Tulder (1995) suggest that ABB provided local autonomy within the framework of a giant corporation. However, when we compare the autonomy of former BBC plants with their situation in the ABB matrix structure, it becomes clear that the ABB merger led to a loss of autonomy. The headquarters of multinationals often lacked the capacity to enforce their will against the joint opposition of A Euro-Democratization Union Strategy 129 local management and labor. The central BBC management in Switzerland , for instance, was not able to prevent the BBC Mannheim plant from competing against the Swiss BBC Baden plant with autonomous offers for tenders in third countries. To the anger of the Swiss central management, the German offer often prevailed because the German BBC daughter could count on greater support from its national government than the Swiss mother company could. These conflicts involving export sales were aggravated by a number of other factors, as pointed out by Hugo Uyterhoeven , a Harvard Business School academic and ABB consultant.3 It is therefore not surprising that after the 1988 merger the...