Business

A shutdown nobody needs

Neither side can win in the GM strike

ROSS LAVER July 27 1998
Business

A shutdown nobody needs

Neither side can win in the GM strike

ROSS LAVER July 27 1998

A shutdown nobody needs

Business

GM has cut jobs...

Neither side can win in the GM strike

They have long memories in Flint, Mich., which is what you would expect in a town filled with reminders of a proud past. Outside the Buick City assembly plant in the city’s grimy north end, a bronze plaque marks the spot where, in 1905, William C. Durant opened his first car factory—the beginnings of what grew to become the world’s biggest automaker. Nearby, a labor-sponsored museum displays photographs from the legendary sit-down strikes of 1937, when 3,000 defiant workers brought General Motors to its knees and forced it to recognize their union, the United Auto Workers. All around the plant and the museum, hundreds of abandoned, crumbling buildings attest to a time when Flint was one of the busiest manufacturing centres in the world, home to men like Louis Chevrolet and Walter Chrysler, and birthplace of the UAW.

The city, the company, the union—all three have been in decline for longer than most Flint residents care to admit. When Americans began buying imported cars by the shipload in the 1970s, the city’s fate was sealed. For years afterward, GM and its workers carried on as though the company’s loss of market share—from 50 per cent of the North American car market in the 1960s to 30 per cent now—was a temporary aberration. Now, both sides know that the world has changed for good, and the realization has made them want to fight that much harder.

The result, this summer, is a continent-wide standoff that can have no winner. Since the first of two strikes at GM parts plants in Flint began on June 5, the automaker has been forced to close 26 of its 29 U.S. and Canadian assembly plants, idling 165,000 workers and costing the company more than $1.8 billion. “Looking at it in actual dollar terms, it’s hard to justify, but our long-term viability is on the line,” Donald Hackworth, GM’s group vicepresident for North American operations, said last week. From union members, the refrain was similar. “This isn’t about money,”

said AÍ Smith, 45, who has spent 17 years working in GM’s Delphi Flint East components factory. ‘We’re fighting about one thing only, and that’s to preserve our jobs.” Smith and the dozen other UAW members who were waving placards outside the Delphi East factory gate last week have no illusions about the future. They know GM is determined to cut costs, and that to do so it intends to sell or mothball inefficient parts plants—including, in all probability, their own. “If they don’t close this place during the strike, they’ll probably close it three or four years from now,” said Jesse Dickinson, a picket captain at GM’s Flint metal-stamping plant, which churns out hoods, fenders and engine cradles for a wide assortment of GM cars and light trucks. “The way I see it, that means we’ve got nothing to lose.”

ROSS LAVER

Dickinson’s pessimism is widely shared in Flint, an archetypal company town that is now a symbol of Rust Belt decay. Over the past 20 years, GM’s workforce in the city has shrunk by two-thirds, to just over 27,000. Next year, the company plans to eliminate another 2,700 jobs when it closes Buick City, the 22-square-block plant that makes full-size Buick LeSabre and Pontiac Bonneville sedans. The Billy Durant Automotive Commission, a local economic development agency named for GM’s founder, has warned that the company could eventually shut as many as 12 of its 18 factories in Flint, starving the city of badly needed tax revenue. Already, 12 per cent of the houses in the city are vacant. In the downtown area, all but a handful of stores are boarded up. The burglary and violent crime rates are among the highest in the United States.

Against that bleak backdrop, even relatively minor labor disputes can flare out of all proportion. The current shutdown began six weeks ago when 3,200 workers walked out of the metal-stamping plant, accusing GM of reneging on a commitment to invest $270 million in the facility so it can make parts for a planned new sport truck. GM responded that the union had dragged its heels on several promised productivity improvements.

The most controversial of those concerns a contract provision that allows 600 employees to stop work early with a full day’s pay—in some cases after as few as 4V2 hours—as long as they produce a set number of parts. Known as a “pegged rate,” the practice was common in the auto industry in the days before foreign competition. GM officials say it led to a $50-million bill for unnecessary overtime last year, which in turn contributed to a $75-million loss for the factory.

The frustrations on both sides are longstanding, but the local grievances are really only proxies for the underlying cause of the strikes: GM’s determination to cut costs by reducing its reliance on company-owned component plants. On average, GM makes 70 per cent of the parts in its vehicles—everything from driveshafts to spark plugs and air filters. Ford and Chrysler, in contrast, purchase more than half of their parts from outside suppliers, which in many cases pay far less than the $31-an-hour average earned by GM workers. To match its competitors’ efficiency, Wall Street analysts say GM will have to shrink its blue-collar payroll by as much as 50,000 workers over the next few years, out of a current total of 220,000.

The striking workers in Flint dispute the company’s claims about low productivity and say the real problem is GM mismanagement. “For the last few years, all they’ve been trying to do is show a loss here so they can justifying shutting us down,” Dickinson said. like many of those on the picket line, however, he is no more angry at his employer than he is at Americans who drive imported cars. Dickinson’s two children, both in their 20s, recently bought Japanese compacts after concluding they were cheaper than GM products. Their father will not allow them to park in his driveway. “It burns me up, because those kids were raised on American cars,” Dickinson said. “But when I complained they told me, ‘Hey dad, we don’t earn as much as you do.’ ”

In fact, Flint is probably one of the few cities in North America where GM vehicles still rule the roads—the locals view even Fords and Chryslers with suspicion. The city’s heavy dependence on a single major employer has bred a kind of love-hate relationship between the company and area residents. With a population of 140,000, the city still counts on GM for 38 per cent of its manufacturing jobs. A charitable trust set up by a former GM board member, the $3.4-billion Charles Stewart Mott Foundation, regularly doles out money to the city’s medical facilities and cultural organizations. It has also financed an exhaustive economic study to help local officials attract other industries. “The problem is that for decades the leadership in the community did not diversify the economy,” said film-maker Michael Moore, a Flint native whose 1989 documentary, Roger & Me, chronicled the impact of plant closings in the city. “They put all their eggs in one basket, which was a huge, huge mistake”.

Last week, GM asked a U.S. district court judge in Detroit for an order to end the walkouts, saying they are illegal under its national contract with the UAW. Union officials dismissed the charge, but agreed to let an independent arbitrator rule on the matter. The two sides are due to return to court this week, but even if GM’s ploy succeeds, the future of its Flint facilities will remain in doubt. After releasing its second-quarter results last week—worldwide profits fell 81 per cent from the same period a year earlier, to $580 million—the company said it was reviewing all future spending on “marginal products and facilities.” In addition to GM’s operations in Flint, the review is likely to focus on underperforming car brands—analysts are calling for the elimination of either Buick or Oldsmobile—and the possible closure of one or more assembly plants, including a factory in Ste-Thérèse, Que., that makes Chevrolet Camaro and Pontiac Firebird muscle cars. Any such downsizing would further reduce the demand for parts made in Flint, jeopardizing thousands of additional jobs.

To John Yorko, the workers’ plight is reminiscent of the situation 61 years ago, when he and his fellow workers in Fisher Body Plant No. 1 sat down next to their machines to protest company demands for increased productivity. “It’s not just GM,” said Yorko, 84, now president of the UAW’s 522,000-member international retirees’ advisory council. ‘You see the same attitude up and down Wall Street— nothing but corporate greed.” Few of the strikers believe they can change that, but they won’t go down without a fight.

With JANE DOUCET in Toronto

JANE DOUCET