Over the past several weeks, Tesla CEO Elon Musk has been getting a taste of what it’s like to operate a business in a part of the world where unions still have formidable power.
It seems the richest man on the planet didn’t anticipate a localized dispute with mechanics in Sweden snowballing into a regional labour action. But that’s exactly what has happened.
For years, Tesla has refused to recognize the union that covers auto mechanics in Sweden, IF Metall. The latter union represents more than 300,000 workers across a range of industries in the country. Although Tesla doesn’t manufacture any of its electric cars in Sweden, it does operate repair shops through a subsidiary, TM Sweden. With electric vehicle purchases growing across Sweden, Tesla is now the Nordic country’s top-selling car brand, rendering electric auto mechanics and technicians important workers in Tesla’s Swedish market.
Sweden’s industrial relations system is very different from the North American “Wagner model” of the United States and Canada. Unlike in Canada, Swedish employers are not legally compelled to recognize a union when a majority of workers express their preference for one. Signing a collective agreement is therefore not mandatory for any company, but it is customary. At the same time, workers and unions are given wide latitude to engage in industrial action to compel employers to bargain and respect union contracts. Unions can strike particular employers for recognition and unionized workers in other industries can engage in solidarity strikes — both of which are unlawful in Canada.
In other words, Sweden’s model of labour relations is at the same time much more voluntary for employers and a great deal more permissive for unions than the system in North America. Historically, unions in Sweden, as well as in other Nordic countries, have used their collective power to extend collective agreement coverage to the vast majority of workers, commonly through sectoral bargaining. Even after several decades of neoliberal restructuring and a less favourable macroeconomic climate, Swedish union coverage remains at nearly 90 per cent.
When it comes to labour relations, in other words, Sweden is not the United States, as Musk is finding out.
According to the international union federation IndustriALL, IF Metall had been attempting since 2018 to engage with Tesla and compel the electric car maker to negotiate a collective agreement with the 120 mechanics and technicians at TM Sweden in order to improve pay and extend pension and benefit coverage. On October 27, with the company still refusing and the union out of options, IF Metall called a strike against the Tesla subsidiary.
Tesla employs more than 127,000 workers globally, none of whom are currently represented by a union or covered by a collective agreement. The Swedish mechanics’ strike is the first workers’ action against the notoriously anti-union company anywhere in the world.
The strike was initially restricted to TM Sweden, but after Tesla withdrew from meetings called by Sweden’s National Mediation Office to broker a solution, the union expanded its labour action to all repair shops that service Tesla vehicles in the country. According to German Bender at On Labor, Tesla cited “corporate policy not to sign collective agreements in any country” as its rationale for ending mediation.
This proved to be a major miscalculation on Tesla’s part.
On November 7, the Swedish Transport Workers’ Union began a solidarity action by refusing to offload Tesla cars at any of the country’s four main ports, making it impossible for new cars to enter the country. The transport union, which represents 57,000 workers in Sweden, said it won’t handle any Tesla vehicles until the company signs a collective agreement.
The dock workers’ strike was enough to bring Tesla back to the table. But when further talks produced little progress, additional unions joined the fray.
On November 17, electrical workers stopped providing services at Tesla facilities and to more than 200 charging stations. Unionized cleaners stopped attending to Tesla offices. In all, nine unions began actions against Tesla. Perhaps most notably, the Swedish Union for Service and Communications Employees on November 20 refused to deliver mail and parcels to the car maker, making it impossible to get new licence plates, an action which Musk called “insane.”
While Musk might question the sanity of Swedish union leaders, he should understand these strikes as an indication of how seriously workers take the protection of the Nordic industrial relations model.
Rather than recognize IF Metall and sign a collective agreement, Musk and Tesla instead sued the Swedish Transport Agency over the inability to receive licence plates. The court originally directed the Transport Agency’s PostNord to release what plates it held within seven days. However, on December 7, a Swedish court ruled that the postal service and its workers are not required to make deliveries to Tesla, effectively allowing the solidarity action by union members to continue.
Strike action has also spread across Scandinavia. Last week, unionized dockworkers and delivery drivers in Denmark began solidarity action by refusing to deliver or handle Tesla vehicles bound for and coming from Sweden. Norway’s largest private sector union then announced it would do the same by December 20 if no agreement is reached with the Swedish workers. Finland’s dockworkers will also join the action on December 20 and refuse to handle Tesla cars.
This isn’t the first time an American corporation has found out the hard way that running roughshod over Nordic labour relations doesn’t end well.
In 1994, when Toys “R” Us opened in Sweden, the company initially refused to sign a collective agreement with a union representing retail workers. Three months of strikes by a range of unions disrupted deliveries, garbage collection, as well as postal and banking services. The company eventually relented and recognized the union.
McDonald’s arrival in Denmark in 1981 involved a similar, and quite amusing, story. The American fast food giant also refused to sign a sectoral agreement covering hotel and restaurant workers. The ensuing sympathy strikes drew together unions from across the economy. Dockworkers refused to handle shipments bound for McDonald’s. Truckers stopped making deliveries. Construction workers laid down their tools and stopped working on McDonald’s storefronts. Workers at banks refused to accept deposits from the company. Even typographers refused to print McDonald’s menus and advertisements. The fast food giant conceded in the face of this supply chain disruption and signed a collective agreement.
These types of recognition strikes, even when they involve relatively few workers, are taken seriously by Nordic unions. Sweden, in particular, continues to have one of the highest unionization rates in the world, in part because unions fight hard to protect the country’s model of industry-wide collective bargaining.
Refusing to sign collective agreements is seen by unions as an attempt to engage in unfair competition at the expense of workers. Even some employers — many of whom are also organized into centralized employer associations for the purposes of collective bargaining — view the issue this way. In fact, the Swedish Confederation of Transport Enterprises, an employer association, has advised Tesla that it can join their organization and sign onto the collective agreement in this way.
For Tesla, the Swedish battle is largely symbolic. While recognizing IF Metall’s union contract would certainly improve the situation of the 120 mechanics, doing so would hardly put a dent in Tesla’s global profits. Avoiding the precedent set by recognizing a union and submitting to collective bargaining is Tesla’s primary objective.
Who ultimately sets the example in Sweden — the union or Tesla — is perhaps all the more significant now that the United Auto Workers have announced a nationwide organizing campaign targeting all non-union automakers in the U.S., including Tesla. While Tesla doesn’t currently manufacture in Canada, reports suggest the company is planning to invest in a battery production facility in Ontario. In Europe, as well, there are tens of thousands of Tesla workers who could opt for union coverage. Workers around the world are watching.
Understandably, IF Metall is hugely invested in the outcome of this strike. From the perspective of Swedish labour, allowing a foreign multinational to snub its nose at the country’s social model and disregard established labour relations norms is unacceptable. The Guardian has reported that IF Metall is “firmly dug in for the long haul” with a strike fund large enough to cover workers’ strike pay for a decade.
Susanna Gideonsson, head of the Swedish trade union federation fighting Tesla, confidently predicts: “This will end with the employees winning a collective bargaining agreement, one way or another.” If the company continues to refuse, she concluded, “Tesla can leave the country.”
Let’s hope Swedish workers win and workers in all countries where Tesla operates take note.
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