Labour turnover and management retention strategies in new manufacturing plants

Abstract

This paper draws from on-going research on labour-management relations in transnational companies within a new town in the English Midlands, Telford (Elger and Smith, 1998a, 1998b; Smith and Elger, 1998). The paper examines the issue of labour turnover and the management of labour retention using two contrasting case examples from Japanese TNCs. The paper seeks to contextualize management decision-making with regard to labour turnover through a political economy and firm-level analysis. At the macro-level we highlight a shift from using wages (Fordism) and strong internal labour markets (bureaucracy) as labour retention mechanisms, towards an inter-firm collusion on wages, non-poaching and union-avoidance. At the micro-level these strategies are matched with firm-level HRM policies of careful labour selection, company paternalism, segmentation of the labour force into temporary and permanent group and accommodation to higher levels of labour turnover to balance product demand and labour supply. TNCs in our research site, Telford, dominate manufacturing employment, representing 60 per cent of all manufacturing jobs. This is similar to other sites of new jobs growth in the UK, for example Swindon where 66 per cent of manufacturing jobs are with TNCs and other new sites of TNC manufacturing investment. The findings are therefore applicable to other areas in which TNC employment has been dominant in manufacturing.