GM strike hits closer to home than you might think
By Ed Garsten
July 24, 1998
FLINT, Michigan (CNN) -- If you're not an employee of General Motors or one of its many parts suppliers, what's the big fuss over some strikers raising a ruckus?
Why should you care if someone who makes about $23 an hour to put your next car together from a kind of elaborate Erector set is happy?
OK, you're off the hook. You don't have to care whether the person who operates the giant stamp that bangs out hoods and doors is happy.
But you do have to care when they're not working.
Fighting the big kid on the block
The global auto industry is big business. And GM is the biggest automaker in the world.
One of every five U.S. jobs is tied to the auto industry, including the people who build cars and trucks, sell them and roll out the steel they're made of.
GM alone employs more than a quarter-million people. When they're not working, the economy feels it. And the strikes by 9,200 workers at two plants have idled some 192,000 more at assembly and parts plants nationwide.
Each day the strikes continue, GM loses about $80 million, analysts figure; since the strikes began in early June, the company is thought to have lost more than $2 billion.
A total GM shutdown would lower the U.S. gross domestic product by about 0.5 percent, according to Comerica Bank chief economist David Littman. That may sound like a little number, but if any other company stopped doing what it does, it wouldn't show up at all.
There's an old saying: "What's good for General Motors is good for America." That may have lost a little punch since the auto industry went global, but GM still provides big power to the economy when it's humming on all cylinders.
Inefficiency vs. insecurity
GM and the United Auto Workers union don't even agree on what they are disagreeing about.
Workers at the Flint Metal Center stamping plant say the company reneged on a promise to invest in updated equipment. But GM contends it stopped pouring money into the plant because of inefficient work rules.
For example, under a practice called "pegged rates," once workers meet production quotas, they can call it quits for the day -- even after about four hours -- and still get paid for a full eight-hour day.
The other strike, at the Delphi East parts plant, involves similar issues.
That plant makes spark plugs, instrument panels and air filters. But GM increasingly uses a practice called "outsourcing" to send that work to outside suppliers -- including some in Mexico, where the parts can be made more cheaply. The union is fighting that trend.
Similar matters are in contention at a pair of brake plants in Dayton, Ohio, and a metal stamping plant in Indianapolis. Workers there have voted to authorize strikes if union leaders call them.
Workers at the Saturn plant in Spring Hill, Tennessee, voted just this week to authorize a strike. There, too, outsourcing is among the concerns. A Corvette plant in Kentucky is also a strike candidate.
Redefining a relationship
As the strikes drag on, GM and the UAW submitted their dispute this week to independent arbitrator Thomas Roberts, who will decide on GM's claim that the strikes are illegal.
According to a national contract signed in 1996, production levels and job security cannot be the reason for a strike, but health and safety issues can. The UAW officially contends the strikes are over the latter.
If GM wins, it could seek an order sending the strikers back to their jobs, and it would be allowed to sue the UAW for monetary damages. If GM loses, the strikes go on.
Several analysts believe that the outcome of this fight will alter the relationship between GM and the UAW forever.
While Ford and Chrysler deftly downsized their workforces in the early 1990s, GM is now trying to catch up. GM believes that if it gives in to the union, it will not accomplish its goal of cutting some 30,000 jobs, mostly through attrition.
The union's problem is that it is downsizing, too -- though not voluntarily. Fifteen years ago, the UAW had 1.2 million members, today about 750,000.
While still a powerful force, the UAW has lost some of its clout. It is desperately hoping to hang on to as many members -- read jobs -- as it can.
A matter of choice
If GM blinks first, the company will be forced to preserve jobs it claims it must shed to remain competitive in a global market.
Analysts say a UAW victory may save jobs but could severely wound GM's comeback attempt.
Who cares who wins? After GM workers and labor economists, it may be the car customer who cares most. GM says if it is stuck paying people it doesn't need, it will have to save money somewhere else -- a move the company says could mean fewer choices at the dealer.
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