Hit by Strike, GM Wrestles With Success, Downsizing
Michigan plant shuts down as employees complain of overwork. UAW CLOUT
SPURRED by what they consider corporate penny-pinching, 12,000 workers at General Motors' Buick City complex walked off the job on Sept. 27, effectively shutting down the entire company.
The strike marks an ironic situation for a company making a strong comeback.
Just as GM has begun to realize a small profit, the company is scrambling to cope with a different sort of crisis: too many customers, and now an exhausted work force.
Since the automobile market bottomed out four years ago, GM, the world's largest industrial corporation, has proved to be about as agile as a Cadillac in a mud pit. It has lagged behind Ford and Chrysler in the race to cut costs.
Customers are buying
Americans are flocking to automobile showrooms, and demand for GM vehicles, particularly light trucks, is so hardy that only 12 of the 27 plants GM has targeted for elimination have been closed or sold.
At most factories, GM has sped up assembly lines, added work crews, hired as many temporary employees as the union will allow, and instituted up to 16 hours of overtime a week per worker.
But despite strong sales, GM is married to its downsizing program, and officials say the automaker has no plans to add production capacity or hire any permanent workers. As a result, GM could finish the year with 600,000 unfilled orders.
According to GM spokesman Chuck Licari, Wall Street investors have put the automaker under intense pressure to lower its operational costs. GM is not hiring any new workers, he says, because it is under a mandate to bring productivity levels into line with Ford and Chrysler.
Analysts say GM has already reduced its work force from 267,000 to 250,000 workers in the last year, but further reductions must be made if the automaker hopes to match the per-worker productivity of its rivals.
In simple terms, GM is trying to squeeze more out of the resources it already has.
While auto workers appreciate the record overtime levels that will push their wages as high as $70,000 this year, they say they can only take so much toil.
``I'm grateful for the money,'' Ed Fleming, an auto worker at GM's vast Buick City complex here, said before the strike, ``but the bottom line is that we're overworking people. GM is not bringing in the replacements they should, and there's a lot of tension in the factory right now.''
Because Buick City produces torque converters for 85 percent of all GM vehicles, every GM assembly plant in the world could be paralyzed within three days if the strike is not settled. Talks broke down on Sept. 26 after UAW officials concluded that a GM offer to hire an undisclosed number of new permanent workers was insufficient.
``Heavy workload is a contractual issue,'' says Dave Yettaw, president of United Auto Workers' (UAW) Local 599. ``We want management to hire more workers. If they don't, it all comes down to this.''
Mr. Yettaw says that after several months of sustained overtime, workers are tired of being unable to leave the line to use the bathroom, and the pace is taking a toll on worker health and safety.
Other GM-based UAW locals tell similar tales. ``We need 500 workers,'' says Charlie Coy, president of UAW Local 598, the chapter that represents 2,500 workers at GM's Flint truck plant. ``If GM could run the corporation with 20 people who will work for low wages and no benefits, I think they would do it.''
Licari said before the strike that GM is concentrating on relocating laid-off or protected employees.
When GM closed plants in Van Nuys, Calif., and Tarrytown, N.Y., many workers accepted transfer offers at different GM plants. But some UAW workers, whose contract includes a job security provision that supports them in the event of a layoff, are holding out.
Despite GM relocation packages worth as much as $60,000, these workers are hesitant to pack up their families and move to another uncertain situation. Yettaw explains that in the past, GM has shifted workers over and over again, turning them into ``automotive gypsies.''
``GM won't hire because if the market goes into the tank and they've hired 7,000 workers, that could cost them an arm and a leg,'' says Sean McAlinden, a Labor economist at the University of Michigan. Due to the terms of the last UAW contract, Mr. McAlinden says, ``Jobs in the auto industry are basically jobs for life.''
Still, Mcalinden notes that both Ford and Chrysler, though already leaner than GM, have expressed confidence in the current sales recovery by hiring thousands of workers in recent months.
While he agrees that GM has ample reason to be cautious (the automaker lost $17 billion from 1990 to 1993), he contends that GM executives could rightly have more confidence in their company's ability to compete. He notes that the Buick LeSabre, one of the cars assembled at Buick City, has the lowest defect rate of any car, foreign or domestic, in North America.
But the real issue, McAlinden says, is how many jobs there will be at the GM of tomorrow. Before the decade is over, 250,000 auto workers - at least 60 percent of the current work force - will likely retire. Whether this new generation of auto workers will be willing to work for less, he says, is a subject of speculation.
What is certain is that auto industry jobs, with their $18-an-hour wages and generous benefits, are still a potent catalyst for the economic rehabilitation of a community. When the industry flopped in the late 1980s, few places were hit as hard as Flint, a factory town almost totally dependent on auto industry jobs.
GM's decision not to hire more workers draws the ire of some in this town of 160,000 that once hosted 82,000 GM jobs. Today, nearly half of the city's children live below the poverty line.
Tony Rhodes, an usher at the Inner City Christian Outreach Center downtown says things would be a lot brighter here if GM padded its payroll. ``This is what you get when a big company turns its back,'' he says.