Mr. Franky Marchand, the vice president and general manager at the Volvo Trucks Plant in Virginia, USA, sat at his office after a first round of meetings with the United Auto Workers (UAW) union contemplating
the company’s next move. When negotiations failed to produce a new contract at the plant in April 2021, its 2,900 blue-color workers went on strike. The 1.6-million-square-foot New River Valley assembly plant, located on nearly 300 acres in Dublin, Virginia, is the largest Volvo truck manufacturing facility in the world. The plant is certified under the ISO
9001 quality, ISO 14001 environmental, and ISO 50001 energy standards. The New River Valley plant produces all Volvo trucks sold in North America, including the VNM, VNL, VNX, VHD and VAH models. The UAW represents about 2,900 of the 3,300 workers at Volvo's New River Valley plant. In the first round of negotiations, the company proposed — at least to the UAW’s President, Ray Curry and his team, who recommended it to their members: pay raises, signing bonuses, and lower-priced health care. Yet the
workers overwhelmingly rejected the proposal. And then a second one, too. Finally, they approved a third offer that provided even higher raises, plus lump-sum bonuses. For the union, it was a breakthrough that wouldn’t likely have happened as recently as last year. That was before the pandemic spawned a worker shortage that’s left some of America’s long-beleaguered union members feeling more confident than they have in years due to shrinkages in their size and influence. “We were extremely emboldened by the labor shortage,” said Travis Wells, a forklift driver. “The cost of
recruiting and training a new workforce would’ve cost Volvo 10 times what a good contract would have.” In addition to 12% pay raises over the six-year contract, the Volvo deal provided other benefits: Many of the union workers will be phased out of an unpopular two-tier pay grade that had left less-senior workers with much lower wages than longer-tenured employees. All current workers will now earn the top hourly
wage of $30.92 after six years and the workers achieved a six-year price freeze on health care premiums. Volvo conceded that it’s had difficulty finding workers for the Virginia plant but says it offers a strong pay
and benefits package “that also safeguards our competitiveness in the market.” Mr. Marchand said in a statement that the agreement will provide employees with a continued “great quality of life" and “will also
help secure the plant’s long-term growth and sustainability."
(i)Critically analyze whether companies, such as Volvo Trucks USA, will need to revisit aspects of their employee pay structures and compensation packages to prevent worker unrest moving forward from the COVID-19 pandemic.