TOPICS > Economy

Auto Parts Supplier Experiences Cutbacks

January 26, 2006 at 12:00 AM EDT


DEAN BRAID, GM WORKER: I’d like to welcome you –

PAUL SOLMAN: A makeshift union hall at the Ramada Inn in Flint, Mich.

DEAN BRAID: One person here, all of us together, we have power.

PAUL SOLMAN: Striving for militancy here in flint, birthplace of the United Auto Workers, a splinter group of the UAW is trying to invoke the spirit of 1937.

GREGG SHOTWELL, Delphi Worker: Walter Reuther said, “If you close one plant, we will close all the plants.”

PAUL SOLMAN: This was the sit-down strike of ’37 that launched a previous generation of blue-collar Americans on the road to the middle class. Now, however –

GREGG SHOTWELL: They want to steal our pensions. They want to deprive us of health care. They want to cut our wages. But over and above that, they want to strip us of dignity on the job.

PAUL SOLMAN: Gregg Shotwell, like many here, has long worked at Delphi, Flint’s beleaguered parts supplier, which used to be owned by GM, but was spun off back in 1999 to sink or swim on its own.

This fall, Delphi’s so-called turn-around-artist CEO, Steve Miller, took the firm into bankruptcy.

Miller wants a judge to void the health care and pension promises of Delphi’s UAW contract, slash the $27-an-hour wages of these workers to less than half that.

Delphi declined our request for an interview. Its workers, however, were more than willing to talk.

LEROY SIZEMORE, DELPHI WORKER: We wouldn’t be able to support our family, to take care of our families. It’s not fair.

SONYA PHELPS: We’d be going through bankruptcy ourselves if we had to take that big of a pay cut, you know?

ERNEST VAN ARSDALE, DELPHI WORKER: It’s a bunch of crap. You want to know the truth? That’s crap. I mean, we got them where they are today.

PAUL SOLMAN: Unfortunately, where they are today is on the rocks. Delphi does turn out technology intensive products. But it also still relies on simple parts, like sparkplugs, that can be made a whole lot cheaper abroad.

TODD SEIBT: Right behind us is the factory that makes millions of sparkplugs for General Motors today.

PAUL SOLMAN: Todd Seibt has done research on sparkplug economics for the local newspaper.

TODD SEIBT: The average cost of all the plugs built in this plant is about $2. They sell that to GM, Delphi’s former parent company, for about $1.50. But GM can buy that same plug on the global market for about $1.

PAUL SOLMAN: So wait. So it costs them $2 to make it?

TODD SEIBT: Approximately.

PAUL SOLMAN: GM pays them $1.50.

TODD SEIBT: Correct. Delphi is losing 50 cents, and GM is getting a 50-cent deal, but still losing 50 cents over the global price.

PAUL SOLMAN: GM propping up its supplier, Delphi, still losing money. Dead-end economics, says the company, so it’s targeted the usual suspects, the workers. It’s a situation all too familiar in GM’S once-hopping hometown.

FOOTAGE: Teamwork, teamwork –

PAUL SOLMAN: During the first half of the 20th Century, Flint’s fortunes rose as General Motors grew into the largest and most profitable corporation in the United States.

Back in 1955, GM employed over 80,000 people in Flint alone, including those who made sparkplugs in-house. But it’s been pretty much downhill for decades, as GM has shed market share and lost tens of thousands of jobs.

ROGER SMITH (1986): Today we are announcing the closing of 11 of our older plants.

NEWS REPORTER: The effect on Flint is absolutely devastating.

PAUL SOLMAN: By 1989, when Michael Moore declared a state of emergency in “Roger & Me,” his anti-GM diatribe, Flint’s GM job count was down to 30,000.

Today it’s below 16,000 as things have just kept getting worse. The famed Chevrolet complex, called “Chevy in the Hole” for the valley it filled as recently as two years ago, is now just the hole.

The epitaph for the once-massive Buick City complex, “Demolition means progress,” and the $80- million Six Flags Auto World, which raised Flint’s reverie of revival in the ’80s, was itself razed a decade later.

Flint’s former glory, meanwhile, as the cradle of union militancy is preserved at the local museum. Professor Neil Leighton turns back the clock for us to the mythic winter of 1936-1937. The auto industry is rolling in money; the lower-class auto workers, an exploited afterthought.

NEIL LEIGHTON: Labor conditions are horrible. People are working long hours under terrible conditions and their pay is not going up. There’s no such thing as benefits or retirement or anything like that.

PAUL SOLMAN: So, in December, the workers sit down on the job at Flint’s Fisher body plant and occupy it. When the police come to evict them.

NEIL LEIGHTON: The workers are up on the roof of the plant. And it’s 16 degrees out and they open the fire hoses and coat the police with a nice coating of ice.

And in addition to that, they drop fire extinguishers on them, coping tiles, and ultimately, they take car hinges, which are great ammunition, especially when they’re fired from an inner tube.

NEWSREEL NARRATOR: Rioting and violence flare in the tense atmosphere of the nation’s greatest auto strike.

PAUL SOLMAN: The strike paralyzed GM, at its peak of profitability, for more than 40 days. Its resolution ushered in a shared prosperity for more than 40 years, narrowing the income gap between labor and management in ways unimaginable back then. Meanwhile, confounding union critics, the economy grew as never before.

So it’s the spirit of ’37 that today’s dissidents invoke, believing that as the Fisher body sit-down shuttered all of GM, so would a Delphi strike paralyze it today.

GREGG SHOTWELL: We can bring General Motors to its knees. The sit-downers won because they seized control of the shop floor. They won because they shut down General Motors.

PAUL SOLMAN: So why not shut down Delphi today and force GM to preserve the hard-won gains of the past?

The UAW leadership isn’t talking strike, however, but legal action to enforce the contract. Thus the militants are organizing on their own.

GREGG SHOTWELL: The international has their place at the bargaining table. We have our place at the shop floor at the point of production. We can directly impact production, directly impact profit.

PAUL SOLMAN: Led by Gregg Shotwell, the dissidents have begun with a tactic called “work to rule,” a slowdown in which you do everything strictly by the book.

GREGG SHOTWELL: My machine stops. What’s wrong? I don’t know. They bring the job setter over. “Gosh, I don’t know.” They bring a skilled tradesperson over. “I don’t know.” Now the boss is really sweating because he really doesn’t know, and it’s time for him to make a decision to tell us what to do. He’s the knowledge worker.

That’s the only thing that’s going to affect them; that’s the only thing that’s going to bring General Motors to the bargaining table, and the effect of that is going to reduce the inventories so that when we go on strike, they’re in a more vulnerable position.

PAUL SOLMAN: But aren’t you worried that you’re biting the hand that feeds you?

GREGG SHOTWELL: Biting the hand that’s stopped feeding us. Why should we be slashed to poverty wages and then try to save General Motors? I’m sorry — we have no reason in the world to want to save that company. Either they come to the bargaining table and treat us respectfully, or we will bring them down.

PAUL SOLMAN: You certainly feel for the workers when you look at drab Flint today, its stores boarded up, the parades of yesteryear conspicuous by their absence. And on top of that, this GM engine plant may soon be boarded up, Delphi East closed, costing another 6,000 jobs.

GM Worker Claire McClinton also works in the community.

CLAIRE McCLINTON: You know, emergencies used to be some catastrophic event in people’s lives and now people are seeking help just to live. You know, their life is in an emergency.

PAUL SOLMAN: A local church serving lunch to members of the community, many of them from auto worker families. Any more shutdowns, and the only assembly lines left in town could be those at the soup kitchens. And presumably, things will just get worse if Delphi, and then GM itself are shut down.

CLAIRE McCLINTON: We’re just going to be like a hurricane Delphi; that’s what people are calling it. It’s going to be a devastating, catastrophic event. But on the other hand, the people from Flint, and with our history and the things that we’re hearing is that people are not going down without a fight.

PAUL SOLMAN: Industry analyst David Cole agrees with the natural disaster analogy.

DAVID COLE: We could look at a cascading effect that would be a horrifying kind of thing. It would be Katrina Detroit, literally, or Tsunami Detroit.

PAUL SOLMAN: But, Cole insists, a fight would be futile. This is 2006, not 1937.

DAVID COLE: The company today is not a given. It’s a very fragile position that it sits in. If the dissidents really gain tremendous power, they could kill everything.

PAUL SOLMAN: On the other hand –

DUANE ZUCKSCHWERDT: If someone come up to you and said, “Okay, you’ve got 30 years with this company”– and people plan their lives around thinking I’ve got some sort of guarantee here– and all of a sudden say, “it’s gone,” wouldn’t you be concerned or upset? We understand where our members are at with that.

PAUL SOLMAN: Duane Zuckschwerdt is vice president of the UAW’s regional office in Flint. His backdrop: A monument to the great sit-down strike of 1937.

But while the union honors its militant past, it has long staked its future on peaceful partnership with the likes of GM.

Given the double whammy of automation and globalization, David Cole says the UAW has no choice.

DAVID COLE: The union as a traditional adversarial or confrontational party to management is gone; it’s dead. The union in the collective bargaining negotiations has no ability to define wages and benefits anymore. The market is defining those. And the only hope for the union is as a collaborative partner with management.

PAUL SOLMAN: The dissidents at Delphi, by contrast, denounce the UAW

SUE ATKINSON: They are spineless.

PAUL SOLMAN: Former GM worker Sue Atkinson thinks the union’s partnership strategy is a loser.

SUE ATKINSON: And the international should have stepped up to the plate a long time ago. For the last 20 years, they’ve done nothing, and rank and file is tired of it.

PAUL SOLMAN: The UAW is diplomatic in response.

DUANE ZUCKSCHWERDT: It’s a democratic organization and members have a right to, you know, their opinion.

GREGG SHOTWELL: Take control of production!

PAUL SOLMAN: But even if the UAW thinks a strike would be self-defeating, the dissidents are forcing it to bow, or at least give lip service, to the spirit of ’37.

Is there going to be a strike?

DUANE ZUCKSCHWERDT: That’s — that’s a strong possibility.

PAUL SOLMAN: So — and if you strike Delphi, what happens to General Motors?

DUANE ZUCKSCHWERDT: General Motors could probably be shut down.

PAUL SOLMAN: General Motors shut down at huge cost to almost everyone.

On the other hand, if you were one of these people and had just been offered a pay cut of 50 percent, no more pension, no more health care, what would you do?