Labor Laws and Unions

Background information

The Harley-Davidson, Inc was founded in 1903 by William Harley and Arthur Davidson in the city of Wisconsin. For almost a century, Harley-Davidson, Inc has been the sole motorcycle manufacturer in the United States (Reynolds, 1987). The company has over the years created a public brand that is not only popular but also inspirational among many bike enthusiasts. The mission of the company is to preserve and perpetuate the quality of products through continuous improvement and innovation (Linneman et al, 1990).

Legal Issues and Obstacles Encountered

The automotive industry is very competitive and Harley-Davidson Inc. has not been spared. The firm faced the issue of stock price manipulation during its peak period in the 1990’s. Having produced the world’s most popular models, Harley-Davidson, Inc has been rapidly expanding in the global market. The policy of recording sales only when delivered to the dealers often inflates the sale numbers. This way, the process of channel stuffing occurs.

Channel stuffing refers to the process of creating demand and accepting more inventory than desired. Due to the in ‘unreal’ demand, the stock prices are bound to spiral downwards. This subsequently leads to a dramatic decrease in the share prices and benefits only a few individuals. This case scenario was experienced in 2004 when the share prices dropped from $60 to slightly under $40. This issue is considered as a betrayal to valuable investors and a case of fraud.

Federal, State, or Local Laws that are broken as a result of the Legal Issues

The Securities Exchange Act (1934) of the United States prohibits the acts of market manipulation for the benefit of any organization. The federal law of the United States is under Section 9(a) (2). The stock manipulation is a crime that is punishable by law under the Act. The anti-fraud law combats market manipulative practices for the protection of public interests and the welfare of investors.

Organization’s benefits in joining a Union

Unionized organizations enjoy legal privileges from the government. The immunities that companies enjoy include exemption from taxation and protection from antitrust laws. The non-enforcement of other laws by the expected authorities (such as the police, who coincidentally are unionized) also serves as an advantage to the unionized organizations. The immunities by statute and by un-enforcement of laws largely benefit the unionized organizations (David, 2002).

Unionization Process

The unionization process involves the establishment of unions under the National Labor Relations Act. The process enables the employees of an organization to join, organize or form trade unions. Trade unions have leaders or officials who represent their members in collective bargaining processes with the employer. This serves as the force behind collective bargaining for the desired conditions.  Furthermore, trade unions advocate for better employee wages, improved working environment and protection from unfair employer practices (Lewis, 1986).

Effects of union Bargaining on the Organization

Union bargaining may pose detrimental effects on the organization and cause decreased outputs and subsequent increased losses.  Companies are forced to compensate for underperforming employees who are least productive in the organizations. These wages or salaries tend to be in an upward scale above the market rate offers for the skills and production levels offered. Collective bargaining agreements offered by unions also create significant benefits for non-motivated employees who are at the least interested in performance or increased output.  Unions also lead to high costs-per-employee that an organization incurs in the funding of pensions for retired or laid-off employees. Trade unions bargain for higher pension and benefit plans during negotiations and bargaining agreements (Reynolds, 1987).