The company (FOUNDRYTA) is now facing collective bargaining with DKMETAL- Labor Union. The aim of the talks is to reconcile the demands of the workers

The company (FOUNDRYTAŞ) is now facing collective bargaining with DÖKMETAL-İŞ Labor Union. The aim of the talks is to reconcile the demands of the workers and the company’s available resources to the satisfaction and welfare of both parties. The well-established and strongly backed DÖKMETAL-İŞ Labor Union represents 60% of 2000 employees, of whom 2% are top management, 6% are the rest of the administration, 70% are foundry workers (at greatest level of risk associated with job hazards), 10% are shop floor supervisors (medium to high risk) and 12% are service level employees (minimum risk). The largest number of members is from among the 70%, none from top management, and a few from the rest of the administration and the service departments. The Union demands a real 14% to 25% increase in salaries for the first year (14% for minimum risk level and 25 percent for the highest risk level but actually they would like 20 to 32% respectively), and Central Bank interest rate + 5% for the next two years. Also demanded are fringe benefits such as free transportation, milk and a 15-minute break, an extra week of vacation and health insurance. One meal while at work is already given. The Union is ready to drive a hard bargain, but they know that they have to be realistic. If everything goes bad, they may consider an all-out strike, with 30% of current salaries payable in support of strikers for upto a year. FOUNDRYTAŞ, established more than 30 years ago and with a history of “safe” financial policies but certainly affected by the current global economic crisis (prior to which they were exporting 80% of their annual production of $450 million, now down by 30% overall), would like to consider a 8% - 15% increase in salaries (15% for highest risk and 8% for the lowest risk but they know that 10% to 20% is more realistic), with few or no fringe benefits. If fringe benefits are to be included, this, for them, should significantly reduce the percentage increase to be negotiated. The Company would like to resolve the issue in a conciliatory fashion, but this does not exhaust other alternatives, including, ultimately, the possibility of a lockout.

1. Can this deal be negotiated? Why or why not?

2. Assuming you think it cannot be negotiated, what would be the next step?

For questions 3 to 10, assume you said “Yes, it can be negotiated.”:

3. What is the pie? Show the ranges of the company and union separately but in the same diagram.

4. What is the company’s (real) BATNA?

5. What is the union’s (real) BATNA?

6. What is the company’s reservation point?

7. What is the union’s reservation point?

8. What is the company’s ideal (target) range?

9. What is the union’s ideal (target) range?

10. What would be the company’s opening figure?

11. What would be the union’s opening figure?

12. Close to what figure do you think this negotiation would tie up?

13. What elements/factors would affect your answer for question 12? (Name and explain at least four)