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PUTTING ON THE BRAKES
MARCH 12, 1996
TRANSCRIPT
Eight days ago, 3,000 United Auto Workers went on strike at two GM brake factories in Dayton, Ohio. Though no other workers have joined them, the strike has crippled GM's auto assembly plants throughout North America. Margaret Warner reports.
MARGARET WARNER: General Motors closed more auto assembly plants today, part of the ripple effect of a strike that began last week. Here to explain what's happening between the union and General Motors is Don Gonyea, a reporter with National Public Radio. He is covering the strike and he joins us from Detroit. Welcome.
DON GONYEA, National Public Radio: Good evening.
MARGARET WARNER: What percentage now of GM's total plants and workers in this
country or in North America are affected by this strike?
MR. GONYEA: Well, it's probably best just to look at the total plant number. There are 29 assembly plants in North America. And I think the latest count today is they're up well over half of them. And we are up over 60,000 workers who are out, and we will get more plants going down tomorrow. Some are saying that by mid-week, by week's end, if they don't reach a settlement, that GM could virtually be shut down in North America.
MARGARET WARNER: Now, if the only workers actually on strike are these two brake plants in Dayton, Ohio, explain why in just eight days GM has felt it's had to shut down so many others?
MR. GONYEA: The workers at these brake plants, those who are on strike, produce brakes that are used in 90 percent plus of all the vehicles that GM makes and sells. What happens is there are very quickly parts shortages at GM assembly plants because of these just-in-time inventory systems that all of the auto makers use these days. You
know, in the old days, they used to pile up all kinds of parts right on site, right on the factory site, and then they'd go get them when they needed them, and then they'd order a whole bunch more. Now, about the time that part comes in the door, it's being assembled as part of a vehicle that's about to roll out the door. They really don't have any, any inventory sitting around. So as soon as a strike like this disrupts that flow of inventory--and again this is a key plant, supplying, you know, 90 percent of the brakes for GM cars--it doesn't take long at all for the assembly plants to go down.
MARGARET WARNER: And what--
MR. GONYEA: That's only part of it. The other part of it is when the assembly plants go down, all of the other parts plants around the country that also supply other parts to these assembly plants have no place to ship their parts, so they shut those plants down as well. So 3,000 workers can really put a lot of people on the sidewalk really fast, you know, in a targeted strike like this.
MARGARET WARNER: And what effect is this having so far on GM's bottom line?
MR. GONYEA: Analysts are saying that a strike like this can cost the company between 35 and 45 million dollars a day. Now, that is, that is based on potential lost sales. So it's not really a pure calculation, and there is a possibility that if they settle it, you know, relatively quickly, they'll be able to up their production levels and perhaps make up at least some of it later on down the road.
MARGARET WARNER: Because right now--
MR. GONYEA: That's seen in all of it.
MARGARET WARNER: Right now they are still selling GM cars and trucks.
MR. GONYEA: They are certainly still selling cars and trucks, which is another part of this, and it might explain why GM has not been quite as ready to settle this quickly in past strikes like this, and there have been a whole string of them over the past four or five years, as soon as GM saw its supply of cars start to dwindle, they have settled, but now there is about an eighty--a seventy-nine or eighty days' supply of GM cars out there on dealership lots. Now, ideal or at least normal maybe is a better word would be about a 60-day supply. So they, they don't mind having that excess of cars sell down a little bit. The catch is they didn't have that big supply of some of their more popular vehicles, some of their trucks and things, and those are high-profit vehicles, so they are losing truck sales.
MARGARET WARNER: And who--is anyone paying--either the striking workers or the laid-off workers?
MR. GONYEA: Well, the striking workers are certainly paying because instead of getting their usual, you know, high UAW salary, I don't know if they were working overtime, so I don't know exactly, you know, what their weekly wage would be, but suffice to say, it was a really nice weekly wage. They are now settling for $150 a week strike wage. They haven't gotten any of that yet.
MARGARET WARNER: From their union?
MR. GONYEA: From their union.
MARGARET WARNER: All right.
MR. GONYEA: And those first strike checks will got out, I guess, later on this week. Now, the workers who are not on strike but who have been laid off by the company temporarily pending a settlement of this thing, they're, they're not getting strike pay because they're not on strike, but they're also not getting their regular income from the company. They are all eligible to apply for unemployment benefits through their local state unemployment office.
MARGARET WARNER: Okay. Let me--
MR. GONYEA: Every state has different rules.
MARGARET WARNER: Let's go back to why they went on strike. Why did they go on strike, these brake plant workers?
MR. GONYEA: Yeah. It really is over how many workers General Motors needs to have at this facility. The workers there are concerned that, that future jobs there, future
work there will be shipped out to outside non-union, non-GM companies, outside suppliers, who say they can do the job more cheaply and give GM more flexibility and all of that. The workers are really trying to keep as much of this work at GM parts plants inside the company. They don't want it to go to these outside suppliers. Now GM is certainly the largest of the big three auto companies. It is also by far the most dependent on its own internal suppliers. Ford and Chrysler buy many, many more parts from outside suppliers, at least as a percentage of what ends up in the car, than GM does. GM is trying to get, get down to where they are, at least closer to where they are, which would be shedding some jobs.
And the--the workers in Dayton are really trying to protect every job they've got and make sure future work comes to this plant.
MARGARET WARNER: And very briefly, what do you think the prospects are for settlement? Which side needs a settlement more quickly here?
MR. GONYEA: Well, GM losing, you know, and I'll do the math, maybe $250 million a week. Again, though, that is a little difficult to calculate. They're not going to want to go too long before it starts affecting the bottom line. Workers, I'm sure they've been saving up for a while in anticipation of this, so they've got a little bit socked away, and they're probably ready to hold out for a while, but right now neither side is budging, and absolutely no new talks are scheduled. They didn't talk over the weekend; they didn't
talk today; and nothing is scheduled at this point. So who knows who will budge, or at least when somebody will budget.
MARGARET WARNER: Well, thanks very much. Thanks for being with us.
MR. GONYEA: Thank you.
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