Logistics workers from the Unite union have voted in favour of strikes over a pay dispute with DHL Supply Chain across all of Jaguar Land Rover’s (JLR) manufacturing plants in the UK, a move that could severely disrupt production. DHL and JLR have said that contingency plans are currently in place, while the union has said negotiations are on-going and that any strike would be weeks away.
Following a ballot on the night of July 8th, Unite workers at DHL have now voted in favour of industrial action at JLR’s vehicle assembly plants in Castle Bromwich, Solihull and Halewood and DHL’s Northwest Transport operation in Liverpool, which also serves the carmaker. The union has also approved strikes at Hams Hall in the Midlands, where DHL has its base of operations for the JLR transport network and a crossdock for the sequenced delivery of parts to the carmaker, according to Simon Maris, a DHL Supply Chain spokesperson.
The workers that would potentially strike include DHL staff carrying out line-feeding operations, warehouse and in-plant logistics and truck drivers.
According to Maris, Unite has rejected DHL’s offer of a 4.5% increase this year for all workers, and a rise in 2014 of at least 3% or the retail price index, whichever is higher. He said that the company had also offered a 1.7% cash lump sum for all workers this year.
The union is seeking pay rises over the next two year of 12.8% for workers handling parts at warehouses and plants, and 20.6% for drivers. The union’s pay demands would bring DHL workers’ wages to levels similar to those of JLR employees.
A statement from DHL Supply Chain called the union’s demands “completely unsustainable” and its planned strike “reckless”. The statement said that DHL’s current offer would put its pay well above average for the UK logistics industry, including in the top 25% for drivers, and the top 10% for workers sorting parts.
A spokesperson for the Unite union has said there was still time for negotiation and that any strike would still be several weeks away.
An extensive logistics partnership
Lisa Palmer, a Jaguar Land Rover spokesperson, said that the matter was an internal dispute between DHL and Unite, and that the company wasn’t involved in negotiations. “Jaguar Land Rover is disappointed that Unite members have voted in favour of industrial action,” she said in an official statement. “We encourage them to return to the negotiating table to reach a satisfactory outcome for all parties as soon as possible.”
Jaguar Land Rover has used DHL as a ‘lead logistics provider’ since 2009 in a contract notable for its extensive outsourcing. Among the functions that DHL handles for the carmaker include line feeding, stock management and warehouse operations. In these cases, DHL staff often work directly beside JLR employees, but are paid less.
DHL is also responsible for managing most of the European and UK inbound freight that moves to JLR plants, including less-than-truckload and full-truckload shipments as well as a number of crossdocks. Not all of the DHL facilities are dedicated to JLR, while DHL purchases some of the transport from other providers. JLR’s Palmer said that only DHL’s labour would be affected by the strike.
However, wide-scale action by Unite would be expected to shut down production. DHL has about 1,000 workers serving JLR in at its plants in Castle Bromwich and Solihull, and a further 800 workers at its plant in Halewood. Nearly of JLR’s plants in the UK are running on 24-hour production schedules to meet rising global demand, and there would be little room for supply disruption.
According to DHL, “detailed contingency plans are in place to minimise disruption to the customer”. A spokesperson declined to comment further.
It is the second straight year that protracted negotiations between Unite and DHL have threatened to disrupt JLR production. DHL gave Unite workers an average 10% increase last year.
Palmer declined to comment on whether any disruption could threaten JLR’s contract with DHL. She also declined to comment on when the current contract with DHL would be up for renewal, citing commercial sensitivity.
In a feature interview last year with Automotive Logistics, JLR’s global material planning and logistics director, David Dyke, said that the pay disputes with Unite at the time had not affected JLR’s relationship with DHL. He credited the logistics agreement with DHL with allowing the carmaker to be more flexible in its logistics planning.
Jaguar Land Rover sales in the first five months of this year were up 15% to 176,451 vehicles. The company is increasing its global vehicle exports out of the UK, and also plans to grow exports of UK and European-manufactured parts as it increases production in emerging markets, including China (read more here).
