The Hoosier Legacy

Law’s success in Indiana prompted Michigan to embrace right-to-work legislation

Indiana State Capitol Building / Flickr
December 17, 2012

The right-to-work law passed in Michigan last week is based on similar legislation in Indiana, the success of which prompted Michigan Republicans to pass the legislation.

"If you look at Indiana, the evidence is very strong that they’ve seen a tremendous increase in economic activity and companies coming to Indiana that previously didn’t look to the state," Michigan Gov. Rick Snyder said in a news conference, pointing to companies relocating in Indiana and thousands of jobs created.

The Indiana Economic Development Corporation (IEDC) said 90 companies have told them that Indiana’s enactment of the right-to-work law will be a significant factor in their decision-making process. Sixty-seven of the ninety companies have already progressed to the "pipeline stage," an economic term for entering into final negotiations, said Kevin Brinegar, president and CEO of the Indiana Chamber of Commerce.

Thirty-one of the companies have already signed on the dotted line because of Indiana’s right-to-work law, Brinegar said. That accounts for at least 3,700 new jobs and more than $431 million in investment are coming to Indiana.

"The results have far exceeded our expectations and have proven the point that this was well worth the effort to get this enacted," said Brinegar.

He jokingly said that Indiana would have liked to hold the title of the only state in the Rustbelt with a right-to-work law a while longer.

"I guess imitation is the best form of flattery," Brinegar said. Indiana also faced backlash from unions in passing its legislation. Brinegar said that approximately 2,000 union workers staged protests.

One union in Indiana said it would now stand with its Michigan counterparts in fighting the law there and in Indiana.

"Hoosiers stand in solidarity with our brothers and sisters in Michigan as we fight to repeal this bad law and to restore the rights of working people. Indiana has passed and repealed it once before, and we will repeal it again. And so will Michigan. The fight has just begun," Indiana AFL-CIO’s president Nancy Guyott said in a release.

Right-to-work laws do not eliminate unions or workers’ ability to join a union. Workers are instead given a choice in whether they want to join and they are not penalized for declining to join.

Brinegar said that approximately 10 companies per month are entering into negotiations to relocate to Indiana and one of the key reasons is Indiana’s right-to-work law.

However, the AFL-CIO claims those results reported by the IEDC are not true and companies have been pressured to say the RTW law has impacted their relocation or expansion decisions.

"In Indiana, we’ve seen firsthand the pressure put on companies to say this legislation impacted their decisions by state officials who make financial rewards to them when one was brave enough to stand up and deny it played a role. No matter their claims, the truth is that no employer has gone on record saying that such legislation was the determinative factor in a decision to locate to Indiana. Not one," Guyott said.

The Washington Free Beacon interviewed officials with one company that recently expanded in Indiana and one site selection company that firms hire to assist with relocation. Both said the right to work law was an important factor for companies who are seeking to locate or expand in a state.

AFL-CIO’s claim that "not one" company has gone on the record can now be disputed. Steel Dynamics (SDI) told the Free Beacon that Indiana’s RTW legislation was part of its decision to expand.

"Regarding the right-to-work vote in 2012 and SDI Pittsboro—at the time of the right-to-work legislation the Pittsboro facility was proposing a capital expansion project," said Barry Schneider, vice president and general manager of SDI, in an email.

"The Steel Dynamics board of directors considered the right-to-work legislation as a positive factor and subsequently it was part of the decision to approve the expansion project for SDI Pittsboro. This expansion will see the mill capacity increase by 50 percent and the addition of up to 50 well-paying jobs."

Schneider said SDI’s CEO has been vocal about right to work and has voiced his support.

"My personal opinion is that right-to-work is a positive addition to Indiana," Schneider said. "I believe that by providing the choice to Indiana workers, more companies will compete for access to this excellent labor pool.  Companies like SDI must compete to find and retain the best employees."

"SDI must provide a safe culture and environment to be successful, our people are our most important asset and they choose to work at SDI," said Schneider. "Right-to-work ensures that each employee in the state has that same ability to choose. Union representation is every worker’s right in America, right-to-work is how workers can ensure they have a choice in that representation."

The Free Beacon asked Brinegar why some companies are not willing to speak freely of their desire to locate in a right-to-work state.

"Most companies do not want to be harassed or boycotted by union people," he said.

AFL-CIO’s Guyott said, "Right-to-work is a lie. It has nothing to do with economic development or jobs. It’s about power and politics."

However, according to one site selection firm, right-to-work does come into play when companies seek out a state in which to do business.

"It is one of the first filtering criteria in corporate site selection," said John Bays, vice president, of Site Selection Group. The Dallas-based company is hired by companies to assist in finding the right location for their business.

Bays, who handles manufacturing and distribution, said, "It is very prevalent to consider" the labor climate in a state.

When asked how many projects he handles a year, he said between 60 and 70. Of the companies he deals with, "a vast majority consider right-to-work."

Bays said he was in Indiana on Thursday—the day before the Free Beacon interviewed him—with a client. That client, Bays said, "would not have been there had it not been a right-to-work state."

Indiana had already "broken its all-time record for number of deals won" by the end of November, said Dan Hasler, secretary of commerce and chief executive officer of the IEDC in a statement. "This is especially remarkable considering the ongoing concerns over the ‘fiscal cliff’ that have caused many companies to curtail investment plans."