Leading Off: Red Flag—Mercedes Benz, MN8 & Ionity

A repository of future jobs in the so-called “green economy” is certainly in the electric vehicle (EV) industry and, as important, the offshoot products to support EVs. Chief among the support system will naturally be charging stations because, obviously, you have to have enough power to be able to drive significant distances to make EVs a viable replacement to fossil fuel-driven automobiles (putting aside for the moment the question of the alternative: financing public transportation as a replacement for autos).

Question: will the charging stations wing of this industry pay a livable wage that fits into a “high bar” Just Transition?

The question, without answers yet, comes into focus if we take a look at the plans by Mercedes Benz.

The company recently announced an expansion of its thrust into the charging stations market:

Mercedes-Benz said Thursday that it would install a network of 2,500 high-powered chargers in the United States by 2027, a sign the German carmaker is expanding its commitment to electric vehicles by borrowing a page from Tesla’s playbook.

The fast chargers, distributed among 400 stations, will operate under the Mercedes brand. Owners of the company’s cars will have preferential access, although the network will be open to cars from other manufacturers.

Mercedes will split the cost of the network with MN8, a company that will be added to Mercedes’ existing alliance portfolio that already includes Ionity, a European charging network.

What do we know about these companies? Mercedes has a powerful union presence…in Germany but, in the U.S., its posture has been a familiar one among the so-called foreign transplant operations: avowedly anti-union. Its large factory in Tuscaloosa, Alabama has been buildings SUVs since the 1990s—and the company has employed standard approaches to cutting down union support. In addition, in early 2022, announced the opening of a plant for EV battery packs nearby to the existing Tuscaloosa facility.

Ionity has a detailed “Code of Conduct for Business Partners” that proclaims adherence to:

Internationally proclaimed and recognized human rights and labor rights are to be respected and protected. Applicable standards and regulations and fundamental principles including, in particular,
> Prohibition of slavery, forced labor and human trafficking,
> Prohibition of child labor and protection of young employees,
> Prohibition of discrimination and harassment,
> Fairness and lawfulness in recruitment, compensation and benefits, working hours, occupational health, safety and fire safety,
> Freedom of association and collective bargaining, are to be adhered to at any time throughout the whole supply chain.

That code of conduct would presumably throw up a read flag: Mercedes violated labor laws when it prevented union organizers from handing out literature inside its Tuscaloosa plant.

We were curious about the wage levels offered by Ionity—so we queried the company. So far, crickets.

As for MN8, we’ve also asked about the wage levels offered. So, far, crickets.

That said, it can also be incumbent upon customers of MN8, and customers of every company, to set forth a “high bar” Just Transition as a condition of doing business, especially customers with a public interest component. A partial list of MN8 customers includes many public institutions and higher education institutions: County of Los Angeles, U.S. Army, City of Phoenix, Sonoma Clean Power, U.S. Air Force, United States Navy, Hawaii Department of Transportation, Marin Clean Energy, NYSERDA [New York State Energy Research and Development Authority], City of New Brunswick, City of Tuscan, City of Bryan,Washington Metropolitan Area Transit Authority, Education Entities, University of California, Georgetown University, University of Minnesota, Stanford University, University of Colorado, Boulder, Manhattanville College, Stonehill College, Brown University, Massachusetts Institute of Technology and The California State University.

We will endeavor to query customers in the coming months to learn what position each customer takes when it comes to “high bar” Just Transition.

SPONSOR MESSAGE

A message from the Maritime Union of Australia

The MUA is proud of the high union density in the maritime industries, and encourages all maritime workers to join the union to benefit from the solidarity and collectivism that unionism brings. Learn more about our campaigns on behalf of maritime workers here.

Spotlight: A Bad Way To Use Public Money For Just Transition

Gov. Jim Justice announced today that Form Energy, Inc. (Form Energy) will partner with the State of West Virginia to build its first iron-air battery manufacturing facility on 55 acres of property in the northern panhandle of West Virginia, along the Ohio River, in the city of Weirton. The new battery manufacturing plant is expected to create a minimum of 750 new full-time jobs and will represent a total investment of up to $760 million.

“Weirton is long overdue for some incredible news,” West Virginia Governor Jim Justice said. “At one point, Weirton was one of America’s most important steel towns— a national leader in steel production. Now, this historic city is looking toward the future, and it’s very bright with Form Energy opening its doors. We structured a unique financial incentive package worth up to $290 million in asset-based, performance financing to support their decision to locate in Weirton.”

“The funds put toward this project are guaranteed, secured, and collateralized through ownership of all land and buildings by the state,” Gov. Justice added. “The West Virginia Economic Development Authority allocated $75 million toward the purchase of land and the construction of buildings in Weirton this morning. I plan on working with the West Virginia Legislature and our federal partners to obtain an additional $215 million needed to finalize our agreement. Resiliency and reliability of power resources for America will be produced in West Virginia, once again, allowing Weirton to be a national leader of this growing industry.”

What’s the issue?

First, the track record of the results of handing over public money through incentive packages to corporations is very poor. In the vast majority of cases, the packages—which can combine tax breaks, infrastructure subsidies (“We will build the roads you need to your factory”) and sometimes direct cash grants—never pay back their value, either in terms of economic development or promised jobs. Even by the math of the proponents, the proposed total investment is $1,ooo,ooo per job. And, as important, nothing in the celebratory press release of this deal mentions whether the agreement has any “claw back” provisions—does the company have to return any portion of the subsidies if it doesn’t live up to the job promises? And as a further head scratcher: Form Energy is backed by Bill Gates, whose company (Microsoft) is non-union, so it’s hard to understand why public money would subsidize the venture of one of the wealthiest people in the world.

Second, the most crucial issue, however, is our refrain about jobs: there is no promise to pay wage levels that would equate to a “high bar” Just Transition. This isn’t an issue about wage levels in West Virginia. As we described last month in this newsletter, Sparkz, a battery manufacturer, reached an agreement with the United Mine Workers of America to employ union members at union wages at the company’s planned factory in West Virginia; it will initially employ 350 workers, with that number growing, perhaps, to 3,000.

We’ve reached out to Form Energy to ascertain the planned wages at this new facility. So far, crickets.

Ideas: A Tool For Just Transition—Pay Transparency Laws

We noted in the past—and above—that a major challenge to ensuring Just Transition for workers is a lack of knowledge about what wages are being offered in so-called “green industries” or, generally, jobs offered as replacement for fossil-fuel industry jobs. As a general matter, it’s almost impossible to get reliable broad information on a job salary to empower sweeping negotiations to cover tens of thousands of workers—even with the virtual job sites available.

Pay transparency laws are picking up some momentum—not per se having to do with climate change, Just Transition for workers. The trend is more motivated by the decades-long secrecy of pay that fed discrimination and exploitation of workers seeing a job.

In the United States, on January 1st 2023, California, Rhode Island and Washington joined the roll call of a small group of states with pay transparency laws. California’s law requires any employer with at least 15 employees to publish a pay scale that goes with any job advertisement.

In 2021, the European Commission proposed pay transparency rules. Those rules were then tentatively adopted in December 2022 after negotiations—if the EU ambassadors and the Parliament approve the rules, member states will have three years to translate the rules into legislative language in individual country’s constitutions. Though a main driver of the rules was gender pay inequity, there is also this:

Pay transparency for job-seekers – Employers will have to provide information about the initial pay level or its range in the job vacancy notice or before the job interview. Employers will not be allowed to ask prospective workers about their pay history.

Pay Transparency laws could be a good tool for Just Transition advocates to use to assess whether a future job promise is going to land a worker pay and benefits that equal a current job—and, at least, then, a known published salary level that pays less can be plugged into a conceptual framework that calculates a projected gap in future earnings that can be the basis for a demand for a “top up” with corporate and/or public money to achieve a “high bar” Just Transition for workers.

Three cautionary, inter-related points to note here.

First, enforcement of any wage laws is creaky, at best, and often absent.

Second, transparency laws might not cover everyone—as evidences by the U.S. experience to date. One runs the risk, then, of creating a “haves” and “have-nots” in terms of knowledge and the leverage that comes with that knowledge.

Lastly, without strong, enforceable, global pay transparency, very little will prevent movement of jobs to countries where wages are a mystery to workers, which are often the very countries will lower wages, weak unions rights and very little government enforcement.

Opinion: Total National Debt Forgiveness Is Crucial For Just Transition

By Jonathan Tasini

Money flows in one door—and out the back door. That’s the playbook, to date, for financial relief flowing to deeply indebted countries—a dynamic that must change if a “high bar” Just Transition for workers is to be viable.

There have been a number of initiatives calling for rich countries to underwrite the climate change actions undertaken by poorer economies. At the most recent United National climate summit (COP27) rich countries agreed to stand up a fund to pay for “loss and damage” to poorer countries from the polluting activities of the richer countries. This is a fine initiative—and one should point out that promises in the past to provide financial support have come up far short.

But, a bigger question is: assuming such a fund comes to fruition, how will sending billions of dollars to deeply indebted countries help if, at the same time, the same countries are shelling out far more money every year to service crushing debt owed to a variety of rich country institutions and private investors?

Here is the scale of the problem: Over the coming months, we will face the “largest spate of debt crises in developing economies in a generation”, we are told by the World Bank. And per the United Nations Development Programme, “the 54 most debt-vulnerable countries include 28 of the world’s top-50 most climate vulnerable nations.”

And it’s getting worse, as even the International Monetary Fund (IMF) concedes:

Governments are now struggling with rising import prices and debt bills in a highly uncertain environment of elevated inflation and a slowdown in growth. As monetary policy tightens to curb inflation, sovereign borrowing costs will rise, narrowing the scope for government spending and increasing debt vulnerabilities, especially in emerging market and developing economies. To complicate matters, the extent of liabilities and their terms are not fully known in many cases…With the end of debt relief, and interest rates set to increase, borrowing costs could rise significantly, placing pressure on national budgets and making it increasingly difficult for low-income countries to service their debt. About 60 percent of low-income developing countries are already at high risk of or in debt distress. The economic shocks from the war in Ukraine only add to their challenges. Continued support from the international community will be critical for these countries.

So, it is simply inconceivable that, if the financial picture remains the same, a large array of countries will be able to finance a “high bar” Just Transition.

The only solution is a complete, 100 percent, global debt forgiveness effort, an idea that first surfaced decades ago among activists. Barring the back door outflows of money—money going into the coffers of rich countries and wealthy individuals—is both the moral path but also the smart economic strategy to ensure that workers have money in their pockets to pay for the basics that keep countries from sinking into bankruptcy.

Tasini is the founder and executive director of Just Transition For All.

Links

UNDP: the United Nations Development Programme provides useful data on economics and global development.