COVER

THE JUNKING OF AMERICA

DESPAIR OVER NAFTA SWEEPS THE RUST BELT

JOHN DALY December 14 1992
COVER

THE JUNKING OF AMERICA

DESPAIR OVER NAFTA SWEEPS THE RUST BELT

JOHN DALY December 14 1992

THE JUNKING OF AMERICA

COVER

DESPAIR OVER NAFTA SWEEPS THE RUST BELT

JOHN DALY

Patsy Stiltener has done remarkably well for a Virginia coal miner’s daughter who left school in the eighth grade. She says that in 1967, she saw no hope for a rewarding life in her state, and Stiltener and her husband, Donald, loaded their young daughter, Donna, into a 1955 Chevrolet and drove north to Detroit, Mich., the hub of the then-booming U.S. automobile industry. Donald Stiltener worked as a carpet installer and later in a steel factory. Patsy Stiltener found work in an auto-parts plant. Like millions of other blue-collar families, the Stilteners worked hard and earned a slice of the American Dream: a three-bedroom bungalow in the Detroit suburb of Warren. But now, soft-spoken Patsy Stiltener, 50, says that much of the auto industry and the prosperity that it created are disappearing due to low-wage competition in Mexico. She earns $10.45 an hour in a plant owned by Signet Industries, which makes plastic door and window parts for cars. Three years ago, the factory employed 900 people. Now, there are fewer than 100, and Stiltener says that she fears that the North American Free Trade Agreement (NAFTA) will accelerate the exodus. Said Stiltener: “A lot of our jobs have already gone south. You wonder when it will stop.” Even before U.S., Canadian and Mexican trade officials began hammering out NAFTA, that exodus was already underway. Over the past five years alone, the Big Three Detroitbased automakers, General Motors Corp., Ford Motor Co. and Chrysler Corp., have reduced their production in Michigan to 1.8 million cars from 2.6 million. They are also reducing their workforces. In total, the Big Three and their parts suppliers now employ fewer than 450,000 people in the state, down from 517,000 in 1986. And last week, GM announced that it would cut 18,000 more in the United States and Canada, half of them in Michigan. The major Canadian casualty was a rear-axle plant in St. Catharines, Ont.

Decline: Although the Big Three have cut back in Michigan and elsewhere in the United States and Canada, they have opened new plants in Mexico. That country’s auto production has more than doubled over the past five years to almost one million vehicles a year. And more than 100,000 Mexicans now work in auto-parts and assembly plants, most for wages between $15 and $25 a day. Stiltener and other Michigan auto workers say that they simply cannot compete against the Mexicans in product lines where wage differentials are decisive. And even though the Big Three have tried to modernize some of their plants in the state,

Stiltener and other workers also question whether anyone—auto industry executives, politicians or union leaders—can do anything to reverse the industry’s declining fortunes.

The evidence of that decline is stark and sobering. Detroit has lost half of its population since 1950, and in the 1990 census, the Motor City’s population slipped below one million for the first time since the early 1900s. The People Mover, a 2.9-mile elevated monorail transit system completed in 1987 that loops through the downtown business district, is on the verge of shutting down because of disuse and huge operating losses. Driving north on Woodward Avenue, once the city’s main downtown shopping street, tidy Art Deco buildings soon give way to liquor stores and vacant premises. Further north, General Motors’ his-

toric 15-storey headquarters overlooks blackdominated midtown neighborhoods that have yet to recover from riots in the mid-1960s.

The Big Three have been shifting operations out of the city for decades. But they are also sensitive to charges that they are abandoning Detroit and, as a result, they have made some new investments there recently. Two years ago, Chrysler levelled its aged Jefferson Avenue plant, located in the middle of a rundown east-end neighborhood. The factory dated back to 1905 and was the oldest working auto plant in the United States. In its place, the company built a sprawling $ 1.3-billion Jeep plant which opened last January, a symbol of what Chrysler chairman Lee Iacocca said are “what you think your responsibilities are to your community.”

But keeping the factory and its 2,100 jobs

proved to be extremely costly for Detroit. In total, Chrysler received tax breaks and other government aid worth more than $500 million to build the plant. So far, however, it has had little visible impact on the surrounding neighborhood. Many of the wooden houses are dilapidated or abandoned. On a recent afternoon, two men behind a strip of vacant stores across the street from the plant were smoking crack.

Big Three executives say that although they would like to maintain their operations in the

Detroit area, they must keep costs in line with their competitors. And that means transferring production to the southern United States or Mexico if taxes and land and labor costs are lower there. Some longtime Detroit residents, however, argue that at least some of the Big Three’s financial difficulties are the result of two decades of mismanagement and poor product design. A few blocks away from the new Jefferson North Assembly plant, Kevin Abbott, the owner of Consumers Auto Parts, an autowrecking yard, pointed to a flattened 1977 Ford sitting on top of a pile of crushed car bodies. “They made better cars in the 1970s,” Abbott said. “You see that 1982 Chevy underneath it? That car shouldn’t be here.”

Beyond Detroit’s city limits, white-dominated residential suburbs, including Bloomfield Hills and Grosse Pointe, still appear to be astonishingly wealthy. And other nearby com-

munities are the home for such gleaming new facilities as Chrysler’s Technology Center in Auburn Hills. Although much of the affluence of the past endures, even more of the economic base beneath it is crumbling. Detroit’s suburbs are also dotted with scores of small auto-parts factories like the one Patsy Stiltener works in.

Many of them have already been badly battered by Mexican competition—and face even bleaker prospects under NAFTA. Daniel McCarthy, the president of Local 417 of the United Auto Workers (UAW) union, which represents workers in Stiltener’s plant, said that, in total, six of the 36 plants in his local have shut down in the past 15 months. Most of those parts plants make relatively simple items: small electronic components, plastic and metal wiring holders and so-called injection-molded plastic parts, just the type of low-skilled, labor-intensive items that McCarthy says are most threatened by free trade with Mexico. Indeed, he said that he visited four U.S-owned plants in the northern Mexican city of Matamoros last month as part of a union delegation. He said that all the factories had injection-molding machinery similar to that in Stiltener’s plant.

Closures: Those concerns about low-wage Mexican competition extend far beyond Detroit. Many smaller cities across Michigan have been hit as hard or harder by plant closures. Flint, for one, a city of 160,000 where William Durant founded GM in 1908 and where the UAW won its first major victory in 1937, after a 44day sit-down strike, has lost almost 15,000 automotive jobs over the past decade. Under closures announced by GM last week and earlier this year, it stands to lose 9,500 more by 1995, when a v-8 engine plant and a truck assembly plant are scheduled to close.

Flint has survived industry downturns before, but many longtime residents now say cj that it will never recover. Ben Hamper, a former assembly| line worker and author of the I irreverent 1991 best-seller “ Rivethead, said that “the

town that was the birthplace of the automobile industry is now becoming the graveyard of the automobile industry.” As with many Flint families, Hamper’s father and grandfather worked for GM. Hamper, 37, said that when he joined the company in the late 1970s, it still had a “revolving-door” hiring policy—almost anyone with a high school diploma could walk into a plant and obtain a secure, well-paying job. Now, he said, “doing that would be like coming out of high school and running for president of the United States.”

As the auto factories have closed, efforts to diversify Flint’s economy have been largely unsuccessful. Many of the storefronts on Saginaw Street are empty. Nearby is Autoworld, a 300,000-square-foot, $100-million indoor amusement park that was supposed to help attract tourists and conventions to Flint. On opening day on July 4, 1984, Michigan gover-

nor James Blanchard told a cheering crowd that Autoworld would lead “the rebirth of the great city of Flint” and provide hundreds of jobs for local residents. But Autoworld closed two years later because of poor attendance and is now only used a few days a year for special events. A skeleton staff—often just a single caretaker—maintains the dormant attractions, including an indoor ferris wheel, a recreation of downtown Flint at the turn of the century and a giant model of an automobile engine. A recent visitor, Michael Palma, 38, who managed the facility in 1984 and 1985 and who returns for special events, turned on the electricity to power a spiral ramp of audiovisual exhibits. The flashing and ringing in the empty arcade was eerie—like a scene from the 1960s television show, The Twilight Zone.

In Flint, despite the continuing shift of industry to the south, longtime residents are reluctant to leave their home city. In the Komer Bar, across the street from the site of GM’s historic Fisher autobody plant, which closed five years ago, bartender Ava Suffel, 52, was serving beer in quart bottles to a half-dozen afternoon customers. All of them used to work at the plant, including Suffel’s husband David, 45. He said that he was lucky—he had enough seniority to transfer to a nearby Buick plant.

Matthew Grab, 34, by contrast, said that he agreed to wave his recall and seniority rights in 1989 to accept a $50,000 severance settlement from GM. He then took a job at a small welding factory for $ 11 an hour, $6 less than he

made at GM. But Grab was laid off in June, 1991. In February, he and his wife divorced. Now, he is living on his savings, and working occasionally as a home builder. Still, he says that he is reluctant to leave Flint because his 4year-old daughter lives there with his ex-wife. Said Grab: “I’ve gone from being well-off to getting by on next to nothing.”

Grab and the other bar patrons scoffed at outgoing President George Bush’s claim that increased trade with Mexico will create jobs on both sides of the border. “America may benefit from this in 30 years,” said Ava Suffel. “But we’re not going to live to see that.” Regardless of who else wins or loses under NAFTA, thousands of families in the state that once dominated the auto industry are certain that they will be among the first casualties of freer trade.

JOHN DALY in Flint

Canada U.S. Mexico

Organized labor 31 : 16 ; 35

(as a percentage of the labor force)

Number of hours worked

per week in manufacturing 39 41 : 46

Number of strikes and lockouts j 658 46 ; 174

Latest annual comparisons