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A strike by the United Auto Workers has forced General Motors to shut down 25 of its North American plants, affecting nearly 90 percent of its production capabilities. Following a background report, Elizabeth Farnsworth and guests discuss the reasons behind the strike and its economic implications.

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A RealAudio version of this segment is available. NEWSHOUR LINKS: June 19, 1998: A background report GM strike. March 12, 1996: The United Auto Workers strike in Dayton, Ohio. Browse the NewsHour's coverage of business. OUTSIDE LINKS: General Motors United Auto Workers

ELIZABETH FARNSWORTH: And for more on strike we’re joined by Harley Shaiken, Professor of Labor & Industrial Relations at the University of California, Berkeley. David Bradley, an auto industry analyst with the investment firm JP Morgan. And Don Gonyea, who covers labor in the auto industry for National Public Radio.

Don, bring us up to date. What’s the scene in Flint?

The scene in Flint, Michigan.

DON GONYEA, National Public Radio: Well, we have more plant closings today. We have talks continuing in Flint today, but there has been no sign of progress whatsoever in Flint. They have continued to meet every single day of this strike—these strikes, the first of which is now starting its third week, the other one a little over a week old. But, again, both sides say they would like to get this thing finished as soon as possible, but there is just no sign of any movement at all at the table, so it goes on, and we’ll get more plant closings in the days ahead.

ELIZABETH FARNSWORTH: Don, there seems to be a lot of emotion associated with this strike. We read about workers comparing it to the 1937 forty-four-day sit-down strike, the historic UAW strike. Is there as much emotion as there seems?

DON GONYEA: I have covered a lot of these strikes, and this one does seem to have more of an emotional edge to it than I’ve ever seen before. And I think a lot of that is because this is in Flint. Flint is where General Motors was founded. Flint is where this UAW was founded, where they won the right to organize back in 1936/1937, in the great sit-down strike. And it is also a town that the auto industry built but that has lost 30,000 auto jobs since the 1970’s. More than half of the auto jobs in Flint have disappeared since the 1970’s, and that happens to coincide with an increase in production by General Motors and other auto makers in places like Mexico. And when you talk to these workers on the picket line in Flint, they really feel like they’re drawing a line in the sand here, that they’re just trying to hold onto some jobs and send a message to the company that that’s enough.

ELIZABETH FARNSWORTH: So why draw the line here? What’s at stake? What is the issue that they’re most concerned about? I’m sorry, Don. I’m asking Harley. I should have said.

DON GONYEA: Oh, I’m sorry, okay.

A "collision between the global economy and the birthplace of the UAW."

HARLEY SHAIKEN, University of California, Berkeley: Well, what we’re looking at is a collision between the global economy and the birthplace of the UAW. For UAW workers there’s tremendous passion and apprehension that’s all tied up into this mix. What they’re really concerned about is not whether GM competes, because the UAW workers, surprisingly, are as committed to making this a competitive corporation as GM, itself. What they’re concerned about is how GM competes. There really are two routes that GM could take. One route, which will certainly improve the bottom line, is to close plants in Flint and move them to Mexico or Thailand or elsewhere, where workers earn sometimes less than $1 an hour. The other route would engage the workers in Flint in a more competitive GM and the bottom line would improve, but also what would be good for GM in this regard—to paraphrase a famous statement—would also benefit Flint. And that is the latter route that the UAW workers are taking a strong stand. And they feel it very passionately, that it’s not simply $1 an hour; it’s their future, and it’s a past that’s strongly remembered.

ELIZABETH FARNSWORTH: But just specifically, pick one issue and explain it.

HARLEY SHAIKEN: One of the things that the union is most concerned about and particularly in the Delphi East plant, which is one of the two struck plants where they make spark plugs, air filters, and other small parts, is the fact that the company really isn’t so much interested in improving competitiveness in Flint as in outsourcing or shipping work to non-union suppliers, or even to Mexico. We’ve seen in the last decade an enormous rise in the number of auto jobs in Mexico. In fact, in the last four years in the auto assembly plants or maquiladoras near the border, 80,000 jobs have been added. GM is now the largest employer in Mexico, so it’s that that workers so much fear in the Delphi East plant, and that resonates throughout Flint. In a city where 40,000 jobs have been lost in the last decade or so, there is enormous fear that what GM has in mind is a bottom line that improves not with Flint but at the expense of the community and at the expense of the economic pace in the U.S..

ELIZABETH FARNSWORTH: David Bradley, what’s at stake for General Motors here?

DAVID BRADLEY, J.P. Morgan: Let me step back for a minute and just talk about the issue of export of jobs. From what—from my perspective I don’t see export of jobs as really being an issue in the strike. The strike originated at the stamping plant in Flint, and stampings virtually are never made overseas and shipped back to the U.S.. It looks as if the Delphi East strike is really a sympathy strike supporting that strike. But it’s really about its productivity and competitiveness. Because of that, Flint has been the hotbed of union radicalism for many, many years. Over the years many very arcane work rules have worked their way into the GM factories, making them extremely inefficient. Take for example the stamping plant at Flint. There are 3,000 workers—

ELIZABETH FARNSWORTH: I’m going to interrupt you just one second. Explain what a stamping plant does.

DAVID BRADLEY: A stamping plant has large metal presses to stamp out sheet metal that goes on to form the body of a car, so that one press will make a hood, another press will make a door, and so forth. So returning to the point I was making, the stamping is never done overseas. It’s always done contiguous to the plant in question, as close as possible to the plant in question. But what we have here is a plant with 3,000 workers doing the work that probably 1500 or maybe even 1200 workers could do. At the Ford plant down the road a similar size facility would be using 1500 workers. That’s largely because of featherbedding and arcane work rules. We have a plant where workers on average work four hours a day and get paid for eight hours a day. And, remember, $44 an hour is the total low-end cost for the eight hours, so we’re looking at $88 an hour if we consider they’re only working four hours.

ELIZABETH FARNSWORTH: How do they work four hours a day and get paid for eight? How does that work?

DAVID BRADLEY: Well, I think the union has a negotiated a deal whereby the number of hits per hour that the presses make or hits per minute is only five when it’s actually—the press can run at ten. So then they speed the press up to ten, and they finish early and get to go home. That’s essentially the story at Flint. General Motors, because of it’s relatively uncompetitive on costs, compared to the other auto makers, needs to do something to fix its cost structure. It’s going to start in places like this Flint plant that are working at only half of the rate they ought to be working, and it’s trying to get the workers there to agree to a change in work rules that will allow them to speed up the line and allow—make people put in an eight-hour day. Because of the resistance there, certainly there will be some job losses at the end of the day, and it’s unfortunate, but we’re not talking about jobs going to Mexico here.

ELIZABETH FARNSWORTH: Don Gonyea, it must be very important to GM. What are you hearing from managers there? I mean, this is costing them a huge amount of money per week.

DON GONYEA: It is, indeed, costing them a lot of money, and one of the interesting things about this strike is typically in negotiations you hear practically nothing. It’s almost impossible to get anything out of either side during the negotiations to find out what they’re talking about--what the issues are on the table, what kind of progress they’re making. This time both sides are being very vocal and especially vocal has been the company, which is really unusual. They have really kind of launched a PR offensive of sorts, laying out the kind of costs that they have in Flint, talking about how important it is that they get these costs in line if the company is going to be able to remain competitive long-term. They want to get some of these work rule changes. The union has said that the company has reneged on a promise to invest $300 million in the stamping plant there to modernize it and enable it to be more productive. But the company has come right back and said they have invested about $120 million of that into the plant, but it is really crazy to do any more than that until they get some of these—some of these work rule things that they’re concerned about addressed. So that’s kind of how it’s been playing out so far.

ELIZABETH FARNSWORTH: So Harley Shaiken, you already mentioned globalization, but both sides are really driven by the huge changes in the global economy here, aren’t they?

Putting "work rules" into perspective.

HARLEY SHAIKEN: Both sides are certainly being buffeted by these changes in the global economy. And I think it’s important to put these work rule issues in a broader perspective. First, GM’s major problem has not been its work rules; it’s been the fact that it hemorrhaged market share from about 40 percent in the mid 80’s to around 30 percent today. That’s not an issue of work rules. It wasn’t work rules that made people fail to buy the Chevy Impala or the Olds Achieva. It was the quality of the product, or the character of the product. Blaming work rules is a little bit like saying there were problems with work rules in the engine room of the "Titanic." It may have been a problem, but it didn’t determine the direction or the speed of the ship. Second, it—not only is this an issue but GM has made a recovery in the last several years. It made $7 billion last year, made $27 billion since 1993. When it comes to the specific work rules under discussion on these plants it’s not that they’re unimportant, but they have to be put in this larger context. Here, though, in the stamping plant are the numbers David raised, I think are largely fictitious. This isn’t a plant that’s overstaffed by a factor of two. Even GM has been talking about one or two hundred jobs. But the work rules in question were labor standards that were determined by the company and that the union then accepted. But—

DAVID BRADLEY: I have to interject there and say—

ELIZABETH FARNSWORTH: Okay. Mr. Bradley, just let Mr. Shaiken finish real quickly, and I’ll come right to you.

HARLEY SHAIKEN: And then what we’re looking at on all the new press lines that would go into this particular facility—and we’re talking really the real issues are one part of the stamping plant, an area called the cradle, a lot of welding, as well as stamping—on all the press lines that would go in there, the new investment, the union is committed to no quotas for what’s going on here, so this quota or work standard issue only affects part of the plant, and it only affects the part that doesn’t involve the new technology. But I really emphasize, it isn’t these work rules; it’s the larger context. The union has shown a willingness to change all kinds of work rules where they have felt commitment was there. And in the global economy, if they feel changing work rules simply leads to the movement of jobs to Mexico, you’re not going to see that forthcoming.

ELIZABETH FARNSWORTH: Okay. Mr. Bradley.

Trying to stay competitive?

DAVID BRADLEY: Elizabeth, I think that Harley’s right in the sense that this is not the workers’ fault originally. It’s not their fault that GM designed cars the public didn’t want and the market share went from 50 percent to 30 percent over 30 years. And GM management certainly bears a lot of blame on that front. Unfortunately, though, we have met with a situation where we have workers—a company with 50 percent market share, and it only has 30—so there has to be some downsizing of the work force, and that’s been going on. But let me give you a few statistics to put the stamping in context. General Motors employs 30,000 people in stamping. Ford, a company of fairly comparable size, with similar amount of stamping, employs 12,000 people. So we really have a big disconnect between the number of people they need in stamping and the number they have. And that’s really the problem and the challenge. It’s not to move jobs to Mexico, because there simply aren’t 30,000 stamping jobs. The issue is: How do you get a company to be efficient again after a long period of inefficiency? General Motors is striving very hard from a very inefficient starting point to become efficient again. They’re in five years into a ten-year plan. You have to figure out how to deal with those 15,000 extra workers. They do have a program in place that guarantees workers effectively jobs for life, these contracts. So any worker who loses a job gets transferred to another plant or gets on layoff with 95 percent of his pay. So it’s not really an issue of taking away people’s livelihoods; it’s an issue of managing attrition, because there’s ten or twelve thousand people that retire every year, and they can manage that attrition if they can get the work rule changes. I think that’s what the issue is all about; it’s competitiveness for General Motors.

ELIZABETH FARNSWORTH: All right. Well, thank you all very much for being with us.

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