ANNOUNCER: The numbers just aren't adding up. You run a leaner operation
or you shut down. How many people will you have to let go? Or is there another
way?
Tonight on FRONTLINE, what does it take to stay in business today?
ROBERT EATON, CEO, Chrysler Corporation: We had to go through that
down-sizing period or we wouldn't have survived.
ANNOUNCER: Correspondent Jeff Madrick looks at the hard decisions
companies have to make and the people they affect.
BILL DONNELL: There is no loyalty anymore to the employee of America.
ANNOUNCER: Tonight, "Does America Still Work?"
JEFFREY MADRICK, Correspondent: Milwaukee, Wisconsin, has been called
the city that works, the city with sweat on its brow. But something has changed
in America and some Milwaukeeans are listening to a new message.
PAT BUCHANAN, (R), Presidential Candidate: Corporate profits are
soaring! I don't mind corporate profits soaring, but why aren't the working men
and women and the American families sharing, if the times are good?
JEFFREY MADRICK: The day before the 1996 primary, Patrick Buchanan
brought his anti-corporate message to town.
PAT BUCHANAN: We got to stand up for that idea and that ideal, something
called a "living wage" for the men and women of America, and these trade deals
have sold that out. You and I know it.
BUCHANAN SUPPORTER: I_ I got a job. I don't want to see it go away
because they can find someone that_ that'll work for less than what I'm
getting. I want it_ I want it there and_ so I'll be able to support my
family.
JEFFREY MADRICK: Buchanan received nearly 40 percent of the Republican
vote in Milwaukee. He touched a nerve not only here, but across the nation. Now
the mainstream candidates are echoing him.
Pres. BILL CLINTON: Many of our largest companies are laying off
workers, some of them because they have to to compete in the global economy.
Some of them are doing it even when their profits are going up.
JEFFREY MADRICK: The electoral battle for the hearts and minds of the
"anxious class" is in full swing.
Sen. ROBERT DOLE, (R), Kansas, Presidential Candidate: Corporate profits
are setting records, but so are corporate lay-offs. There's a wide and growing
gap between what the government statistics say about our economy and how
Americans feel about it.
JEFFREY MADRICK: After a decade and a half of down-sizing and lay-offs,
corporate America has borne much of the blame this election season. Robert
Eaton, the chairman of the Chrysler Corporation, takes exception.
ROBERT EATON: Now, I don't mean to get personal, but my mother has been
my biggest fan over the years. At least she was until recently. Now the poor
lady is getting confused. That's because every time she opens a magazine or
turns on the television, she's told that people like me are no good. She reads
that people like me like to fire thousands of other people so we can impress
Wall Street and get bigger bonuses for ourselves.
Oh, I_ this_ you know, I'm trying to address all of this stuff. I mean, the_
the_ the rhetoric out there is absolutely not in agreement with the facts.
JEFFREY MADRICK, Correspondent: Well, I know you've criticized the
Newsweek piece, the New York Times down-sizing piece. You_ are
you saying they're just plain wrong?
ROBERT EATON: Oh, absolutely. I think it's_ it's just sensationalism
that just absolutely makes my blood boil. The number one responsibility that we
have is survival so that we can, you know, employ people, so that we can pay
taxes, so that we can contribute to the community. And_ and to_ to say that_
that_ that management, you know, their whole objective is to_ is to reduce
employees, they don't care what happens and_ it just is_ shows a recognition of
simply not understanding the world at all.
JEFFREY MADRICK: Rudy Kuzel heads the United Auto Workers local at
Chrysler's Kenosha plant just south of Milwaukee.
RUDY KUZEL, President: There's so much, to use their own euphemism,
"down-sizing" and temporary employees, sometimes I think of this economy as a
game of musical chairs and for every 100 people, there's only 20 or 25 chairs.
And when the music stops, 20 or 25 have got good jobs and the rest of them are
standing. Now they've got part-time jobs or crummy jobs, but they don't have a
good job.
JEFFREY MADRICK: In Milwaukee, as in much of America, job security was
once the norm, but it's increasingly harder to come by. One by one, many of the
big corporations that made this city famous have either left or cut their
workforce.
Reporter Jack Norman has covered business here for the last 14 years. He
writes for the Milwaukee Journal Sentinel.
JACK NORMAN: Nobody can breathe easy. The place I work was so
secure, so comforting, we called it "Ma Journal." "Ma Journal" last year threw
hundreds and hundreds of people out. It will happen anywhere, it can happen any
time and nobody can be secure.
JEFFREY MADRICK: In a globally competitive world, what responsibility do
corporations have to their workers? Is it still possible in America to have a
social contract where hard work is exchanged for a secure and decent life?
For the last five years, FRONTLINE has followed the stories of several
Milwaukee families and of two workers whose fortunes are tied to the
dramatically changing relationship between American business and its
employees.
Bill Donnell was laid off by an auto maker.
BILL DONNELL: You know, I_ I understand down-sizing, but you have to
have a limit. You have to take care of your employees. You can't keep doing
what you're doing and say the first thing is employees get laid off.
JEFFREY MADRICK: When Sheila Caldwell got laid off from her job, she
felt it changed her.
SHEILA CALDWELL: I was so bitter toward everyone and I had no patience.
It was just a side that I had never seen in myself and I_ I wasn't used to
that. I'm usually friendly, out-going, but this really_ it really just made me
just pure bitter.
JEFFREY MADRICK: Back in 1991, when FRONTLINE producers first met
Sheila, she had lost her union job at Briggs & Stratton. Briggs, mainly a
maker of lawnmower engines, had long been Milwaukee's largest private employer,
providing over 10,000 family-sustaining jobs.
JACK NORMAN: Briggs was paying good wages because it had a strong union
that negotiated the wages and that Briggs was profitable enough to be able to
pay those wages. Didn't have as much in the way of competition. People bought
lawn mowers and paid a lot of money for them.
REPORTER [Local news report]: Years ago, if you wanted a small engine,
you got a Briggs & Stratton.
JEFFREY MADRICK: But in the 1980s, Briggs was forced to compete with
low-priced Japanese imports, so it decided to try and cut costs partly by
asking for wage concessions. Long, debilitating fights between union and
management followed.
REPORTER [Local news report]: At a membership meeting, workers rejected
a company request for concessions.
BRIGGS WORKER: They were asking for outrageous things, I think. We
worked for six years without a pay increase and there's no reason why we should
have to keep conceding.
JEFFREY MADRICK: Briggs began to eliminate jobs in Milwaukee. By 1994 it
had cut its local workforce almost in half.
JACK NORMAN: Ultimately, Briggs had a business decision to make. In
order to compete, especially in order to compete in engines for lawn mowers
that would be sold at the Wal-Marts and the other big discounters where price
is all that matters, Briggs had to get some relief on the wage side and they
did that by telling its union, "You either cut your wages or we're going
south."
REPORTER [Local News report]: The sun was shining over Statesboro,
Georgia, today as Briggs & Stratton executives broke ground on a new $75
million small engine plant.
JEFFREY MADRICK: The company said it had no choice. Briggs's future was
at stake. Ultimately, the strategy worked. By the early 1990s, Briggs had
record profits and its stock price soared. But for many in Milwaukee, CEO Fred
Stratton was now just another corporate villain.
JACK NORMAN: Fred Stratton, the man, is being vilified inappropriately.
Fred Stratton is a businessman and he's doing what he sees is necessary for his
company.
JEFFREY MADRICK: Fred Stratton declined to participate in this
program.
STEPHEN HAUSER: If you were to interview Mr. Stratton, I'm sure he would
tell you that the labor leaders at his Milwaukee plant were hard-headed and
that much of this is their fault and that they weren't willing to deal on
certain crucial issues when he needed them to deal. If you were to talk to the
labor leaders, they would, of course, throw it back in Fred Stratton's court. I
don't think that it's that simple.
JEFFREY MADRICK: Historian Stephen Hauser has tracked the consequences
of corporate flight in Milwaukee.
STEPHEN HAUSER: You're in the heart of what once was the old Allis
Chalmers complex. This really was a state-of-the-art manufacturing facility in
its day. Now what I see is a microcosm of what's happened to the United States
between the 1950s and the 1990s. You see a place where jobs for $4 or $5 or $6
an hour have replaced jobs that used to pay around $16, $18 or $20 an hour,
right on the same location.
JEFFREY MADRICK: This was the new economy Sheila Caldwell found herself
in after she lost her job: low wages and, as important, few of the benefits
she'd taken for granted.
SHEILA CALDWELL: When I was laid off from Briggs & Stratton, I was
off for about what, a month? And my insurance played out and it was hard to
make ends meet, at times, and sometimes I used my MasterCharge or whatever just
to pay for medical and_ and medication.
JEFFREY MADRICK: Sheila needed the medical insurance, but she couldn't
find a job that offered it. She says she didn't want to go on Welfare, so she
wound up working for $3.50 an hour at a medical parts plant.
SHEILA CALDWELL: I don't like to depend on nobody but myself, moreso_ if
I go to work, I know I'm going to have a paycheck.
JEFFREY MADRICK: Sheila's problem was that she was going into debt
paying for medical treatments for her daughter, Tamara. Tamara had been
diagnosed with cervical cancer.
SHEILA CALDWELL: When I first found out my daughter had cervical cancer,
I was afraid and I didn't want to believe it. And I was angry because I had the
insurance through Briggs when this first happened and I was able to go in and
get medical attention, good medical attention. And then after my insurance ran
out, it was more or less, like, "You come in here, we want your pay first." It
was more or less when I had insurance, I was treated with kindness and respect.
And then after the insurance ran out, it was more or less, "We don't want you
here because you don't have the money." You_ you know, on that order. And that
really upset me.
JEFFREY MADRICK: Sheila was paying the price for what was seen as the
necessary transformation of the American economy. The question is, was it too
high a price?
Labor secretary Robert Reich.
[interviewing] Do you think corporate streamlining has just gone too
far?
ROBERT REICH: I think "re-engineering" or "restructuring" or
"down-sizing" or "right-sizing" or whatever you want to call it _ it's
basically firing _ has gone way too far. Employees, as I talk to them across
the country, feel that they are not respected, they are not valued. They are
worried about their jobs. They simply feel that the company is no longer loyal
to them. Why should they be loyal to the company, they ask me? "Why should I go
the extra mile? Why should I care?"
JEFFREY MADRICK: You think they've lost trust in their companies and
their managers?
ROBERT REICH: Trust is the most fragile commodity in any organization,
in any culture, in any society. Once trust is abused, once it's lost, it is
very hard ever to regain it.
REPORTER [NBC News Report]: They've been building cars in Kenosha for 86
years, but soon the big old auto plant on the lake front will close. Chrysler
is leaving town. So are 5,500 jobs.
JEFFREY MADRICK: It was 1988. Chrysler had bought out American Motors
and its Kenosha plant just the year before. Now only 1,000 workers were left
here.
PICKETERS: Hey, Lee, what do you say? How many lies have you told today?
Hey, Lee, what do you say? How many lies_
RUDY KUZEL: Well, everyone had_ had great expectations when Chrysler
bought this plant because they came to the community and promised that the
plant would be in operation for at least five years, assembling two Chrysler
cars, the L body and the M body. And they weren't here a year when they
announced they were closing the plant.
LEE IACOCCA: Blame us for being dumb managers for spending $200 million
to put two old cars in an 86-year old plant, but please don't call me a liar
when I've got to close it sooner than I thought.
RUDY KUZEL: Management said, "Gee, we're sorry. We_ we made a promise,
but we can't keep it because we promised the people in Detroit, too. So tough
luck."
JEFFREY MADRICK: Those were rough times in 1987, when Kenosha was
closed. Was it_ looking back, was it really necessary?
ROBERT EATON: There isn't any company in the world that_ that is
competitive, doing well, that says, "Golly, I'd like to down-size." We had to
go through that down-sizing period in_ in '89, '90 or we wouldn't have
survived. And so while it's very unpleasant for the_ for the company, and_ and
moreso even for the people_ clearly, not something that you want to do. It's a
hard_ unbelievable hardship on_ on the employees, and so forth. But it's a
necessary thing to do to be able to ultimately grow and_ and change and be more
competitive.
JEFFREY MADRICK: Chrysler had laid off five out of every six workers at
Kenosha, 5,500 in all. Bill Donnell was one of them. He'd worked 16 years on
the assembly line.
BILL DONNELL: It's like your whole world is coming to an end. I mean,
you watch that last car go down the line and you're, like, "Wow." You know,
"This is it. What am I going to do?" You try to keep up your morale and then
you got to go home and say, "How am I going to keep my house? How am I going to
keep my family?"
JEFFREY MADRICK: Bill couldn't find a well-paid permanent job, so he
worked mostly through temporary agencies.
BILL DONNELL: In this area, I was a door-to-door salesman. I sold ice
cream and it was all commission and my job was to sign up new customers. So I
would go around with a half gallon of ice cream and hand it to them and come
back a couple days later and tell them about our service, leave them a brochure
and ask them to go through it. And I worked for that company for nine months.
It's not like being hired in. You don't feel comfortable, okay? It's, like,
you're only there temporary. The people treat you that way in a lot of
situations. I was fortunate, more fortunate than other people, because I got
along with everybody and they said, "You're one of the best temps we had," you
know, but I didn't feel_ you know, but you don't really feel part of it.
This is one of the places I worked as a distribution supervisor and I only
worked there for about five months.
Here, I worked here approximately around six weeks and for $5.25. I was
working for another temp service called Cornwell, at the time.
I was supposed to be here for 30 days and it could have turned permanent, but
it_ I only worked here seven days. I don't know what was the reason why, but I
guess_ when I got here, I found out that the company had filed Chapter 11.
You don't have it the way you had it back in the '50s and early parts, where
you went to work for a company, they took care of you, the did everything in
their power to keep you. Now it's, "Let's make the money. We don't care what
plant we close, where we go. We got to where_ but yet we're willing to pay
these top executives millions of dollars a year" and they're willing to put
people out on the street and they say, "Well, it's the global economy." Wait a
minute. You don't have to keep moving out because us_ we're the ones that are
paying for it, ultimately.
ROBERT EATON, CEO, Chrysler Corporation: Through the '80s, there's no
question about the fact that the auto industry in the United States was not
very competitive, either from the time it took to do a product, the amount of
investment it took, the_ the cost to build it or the quality. And_ and the
industry went through a very substantial changeover domestically. We were
either going to change or we weren't going to survive. We almost didn't
survive. We had another brush with bankruptcy only six or seven years ago and I
think there's nothing that focuses people, you know, like that survival
instinct.
JEFFREY MADRICK: Sheila Caldwell also had to fight for survival. After
two years at low-wage jobs, she just couldn't make it, so she quit work and,
with some public assistance, attended school full-time to retrain in the
medical field.
SHEILA CALDWELL: I decided to go ahead and quit my job and go to school
and try to make the best of it while I can because I don't know when this
opportunity is going to come again and I'm getting older and the children are
getting older and I'm going to have to do something.
That's protruding, hernia, swelling.
I told them I was going back to school and they were shocked and I was telling
them that, "Don't get mad and don't begrudge me of this," so they look and now
they're at a point, "Well, okay, we'll give you study time. We'll help you
study."
Spell it, then.
RAYTRELL CALDWELL: You got five seconds. One_
SHEILA CALDWELL: Okay, I give up.
RAYTRELL CALDWELL: _three, four, five. Spinal cord.
JEFFREY MADRICK: Without medical insurance, Sheila couldn't afford to
keep up with proper care for her daughter, Tamara.
SHEILA CALDWELL: Well, I look at her and I say, you know, "Why is this
happening to my child? Is it going to go away?" I was told no, she would never
be cured of it. I don't know what's going to happen in the future. I don't know
what she's going to do in the future.
JEFFREY MADRICK: Sheila was training to become an EKG technician and a
health unit coordinator. At the time, EKG technicians started at about $9 an
hour.
SHEILA CALDWELL: Even if I had to take two part-time jobs, it would be
pretty good, as long as I would get the benefits that would be included in on
it. That's the main thing, the health benefits, because without those health
benefits, I don't know. It's going to be rough.
BILL DONNELL: "Retraining"_ that's all you ever hear about, is everybody
says "retraining, retraining." What are you retraining these people for? Are
you retraining them for jobs that exist? Are you retraining them for jobs in
the future?
When I lost my job at Chrysler, I was told, "Finish your education. Get a
better education. You'll move on." And I've got certificates up kaboo to show
you that I attended and I maintained somewhere around a 3_ you know, from a 4.0
to a 3.7 in my training programs, but I yet couldn't get a job.
Here you got C&C turning, my computer repair_ they're not in order_
electronic fundamentals, computer software systems. I got tons of them_
mathematics. Here's blueprint reading 1. Here's my supervisory management
certificate and_
JEFFREY MADRICK: Finally, Bill Donnell got what he thought was the
opportunity he'd been waiting for, a state-run retraining program that promised
a good job upon completion.
BILL DONNELL: I thought, "If I can't believe the state of Wisconsin, who
am I going to believe?" If there's going to be more computers in this country,
they got to have computer repairmen. So I thought, "This is great, something
that I've always wanted to do."
JEFFREY MADRICK: Part-way through the course, the retraining program
folded and there were no jobs. The students were left in the lurch.
1st STUDENT: We're saying PRIDE has been, since the beginning_ that we
want that training. We want the training we were supposed to get.
2nd STUDENT: Right.
BILL DONNELL: And I thought I checked it out because my wife asked, "Is
this going to be one of these other scams where they promise you this education
and a job at the end with no job?" I says, "No, hon." I questioned everybody.
"Do we have employers at the end of this program?" Well, I'll tell you what. My
wife is sitting there laughing and she was ready to divorce me. I'm not kidding
you.
"I told you so. You wasted 29 weeks out of your life." What the hell are we
going to do? I can't keep working like I am without_ you know, how are we going
to make it? Because I borrowed on my credit card and stuff like that. I mean, I
did.
My wife, she works at a bank. She makes enough to pay the mortgage and the
second mortgage. She pays for the medical, okay, which is the life saver. But
when it gets real tight in the month, if I'm not working, we can't make it. So
she's the one that's kept us together, I mean, by working and that. But I_ it
does put a strain on us, I mean, family-wise. My kids can't do as much as they
used to do.
Kim_ what kind of future does she have? We've got more McDonald's and sandwich
places than we do factories.
I don't know if I could even afford to pay to send them to school. I mean,
right now, if either one of them would want to go to college, I couldn't give
them the money, so I don't know how they would be able to afford to go. I'm,
you know, scared that if I make a promise, I won't be able to keep it and
that's_ so I don't try to make any promises. I'm sorry. Maybe that's not the
answers you want, but that's it.
ROBERT REICH, Secretary of Labor : A lot of people in the middle are
anxious and they are anxious for two reasons. One, because of the long-term
decline in median wages. That's the wage of the person right smack in the
middle and everybody below. But also because the rate of job loss that is
permanent is higher in the 1990s than in the 1980s. You have two wage earners
most families rely on, or they rely on a single wage earner who is the sole
parent in that house. And therefore, if one wage is lost, that can mean the
difference between making ends meet or destitution. So for a whole variety of
reasons, there is genuine economic insecurity out there, even though the
economy, overall, is doing splendidly.
JEFFREY MADRICK: Like millions of Americans dislocated in the new
economy, Sheila's retraining didn't enable her to replace what she had lost.
She was now working 16 hours a day. She had two full-time health care jobs,
catching a few hours of sleep between them so she could work all night.
SHEILA CALDWELL: I would leave at 10:30 to be at County Hospital by
11:00 o'clock at night. And then I would get off at 7:00 in the morning, change
clothes and then work from 8:00 o'clock in the morning until 4:00 o'clock in
the evening at Family. I would leave there, come home and then cook, wash,
clean, take care, you know, of the children's problems, grocery store, whatever
I had to do.
Good night. No Nintendo, no T.V. Good night.
JEFFREY MADRICK: What had been lost was an old-fashioned American
promise that a balance could be struck between a hard day's work and a quality
of life for herself and her family.
It is five years later. In 1996, we returned to Milwaukee.
[interviewing] Jack, what was the attitude? What was the environment
like in the early 1980s, when all these companies were leaving Milwaukee?
JACK NORMAN The Milwaukee Journal Sentinel: First it was a shock
and a surprise, as each one would either leave or shrink. And then, over the
years, it builds up and then people come to expect that that's what's going to
happen, till the point when it becomes a kind of surprise when a company
doesn't do that.
JEFFREY MADRICK: One company that has stayed in the face of hard times
is Harley-Davidson.
JACK NORMAN: Harley-Davidson was making big motorcycles and it got
killed by the Japanese motorcycles. It also was a company that found itself
sold off to a big conglomerate that just didn't care about this little
motorcycle operation and quality just completely went kaput.
JEFFREY MADRICK: But Harley decided to make itself over and it's riding
high.
[interviewing] So this is the pride of Milwaukee?
RICHARD TEERLINK: This is Milwaukee iron. It's_ this happens to be a
product called the Fat Boy. It's a soft-tail motorcycle, which is_
JEFFREY MADRICK: Richard Teerlink is the chief executive and part of the
team that engineered a management buy-out.
[interviewing] Was there a decision that had to be made about staying
in Milwaukee or did you never really consider leaving?
RICHARD TEERLINK: If you go back to 1981, which was the time we did the
leveraged buy-out, we didn't have a choice because we didn't have any funds to
relocate. And if you also go back to that time, you find that was when we had
to face a very tough decision in 1982 to lay off 40 percent of our people. We
also vowed at that time we'll never do that again. Our challenge was we had too
many people. We didn't_ we weren't efficient. We weren't making products of a
quality that our customers wanted. And we started the whole issue of getting
people to understand what they want to do to satisfy customers.
JEFFREY MADRICK: Couldn't you make more money if you moved to an area
where labor was cheaper or didn't have a union shop?
RICHARD TEERLINK: If you view that the objective is only to make money,
yes. But we view that, you know, what we have to do is balance stakeholder
interests. We have six stakeholders we have to serve. The investor is one. Very
important one. We also have employees and we have customers and we have
suppliers and we have government and society. And we have to try and deal with
all of those, not just one, because if all I worry about is the bottom line and
abuse my employees, I'm not going to have quality products.
JACK NORMAN: Harley-Davidson spent money to modernize its headquarters,
yet preserving its jobs in Milwaukee. And while from time to time, it may have
some difficult relations with its unions, it's managed to always resolve those
situations in a peaceful fashion and has not only that, but has extended itself
into its_ the immediate neighborhood of its community.
JEFFREY MADRICK: It's a community that has been devastated by the
departure of its manufacturing base, but Harley is not the only company to stay
in the inner city. In Metcalfe Park, once a middle class neighborhood, the
Master Lock company is prospering.
[interviewing] A climate has been created, I think, in corporate
America in the last 10 or 15 years that it is okay to leave. It is okay to go,
find the cheapest_ the cheapest labor you can find. Master Lock decided not to
do that. Why?
JIM BEARDSLEY, President and CEO, Master Lock Co.: When plants relocate,
they're generally in search of a more cost-effective environment. We have a
very cost-effective plant here. Our manufacturing efficiencies are based on
vertical integration and a skilled labor force, so we do our own die-casting
and stamping and heat treating and plating. We even make the plastic bumpers
that are on the Master Lock padlock. And in order to maintain a plant like
that, you need a skilled labor force. Our labor force has grown up with the
company. The average age of the individual we have working here is
approximately 44 years. They have approximately 14 years of seniority. That
level of skill is necessary in order to keep this process going and keep it
efficient.
JEFFREY MADRICK: In Milwaukee, jobs at Master Lock are coveted and
Sheila Caldwell landed one.
SHEILA CALDWELL: When I get the lock bodies, I check and make sure that
the lock bodies have rivets in them, checking for the springs and making sure
the springs are in there and then in there right.
JEFFREY MADRICK: After all her retraining, Sheila had decided to go back
to the assembly line. In return, she got a job with regular hours and full
benefits.
SHEILA CALDWELL: Master Lock more or less brought me out of a hole. You_
you're so down. You have no self-esteem. You_ it's more or less like you hit
rock bottom and then, all of a sudden, you have another chance.
JEFFREY MADRICK: Since we last saw her, Sheila has become a grandmother
and her daughter, Tamara's, cancer is in remission. Sheila's insurance paid for
Tamara's crucial surgery.
SHEILA CALDWELL: You don't pay for your insurance. Master Lock pays for
that. And if you have a referral from your main doctor, you know, to go to the
other doctors, all that's free. That's a blessing in itself.
JEFFREY MADRICK: One of the reasons that Master Lock has been able to
stay in the community is that, for the most part, management and labor have
stopped fighting each other. The last major strike here was in 1980.
REPORTER [Local news report]: This morning the police made their
presence known. They lined the streets as non-union workers drove in and out,
keeping the couple hundred picketers on the sidewalk.
DONALD CHEATHAM: I was the head of the strike committee. It was rough.
We had other companies from other cities coming in and joining us on the picket
line. We had solidarity day where we flattened cars. To look back on that and
we go, "Man, that really happened."
JEFFREY MADRICK: Don "Tiny" Cheatham is a union worker and Master Lock's
representative for community relations.
DONALD CHEATHAM: Six years ago, the company asked me if I would mind
getting into the community and find out why the residents were so bitter about
Master Lock.
JEFFREY MADRICK: He oversees the company's neighborhood outreach
program.
DONALD CHEATHAM: And the reason we're doing it is because we want to
open up to the minority ladies because we have_ we're getting our young men,
but we want some women. And it's not a dirty_ it's not_ you know, you won't get
dirty. I can go like this. This is how I used to go when I_
We've had a lot of kids throw water and throw stones. We had graffiti on our
building. And if we didn't get involved with our community and have somebody
that's out there in the field, so to say, then I think we wouldn't be here.
One of the things that I was going to be involved doing was getting rid of bad
actors in our neighborhood. And this building was one of them. This was
prostitutes, drugs, you name it. I mean, the cops were here every night. And we
leveled it. We didn't literally tear it down by hand, but we got the city and
the people at the City Hall to be in power with us to help us get rid of this.
We done that with the people in the neighborhood.
Officer RICHARD ORCHOLSKI: When I first started about five years ago,
the houses were just kind of_ I couldn't see anybody living in them. But now,
as you drive through, there's more and more houses being rehabbed and the
really bad ones are being torn down and they're building new ones.
JIM BEARDSLEY, President and CEO, Master Lock Company: The environment
in which our people come to work, the environment in which they work, in which
they live, have a great effect on their attitudes, the constructive approach
that they bring to the job.
JEFFREY MADRICK: It makes them feel better. It makes your employees feel
better.
JIM BEARDSLEY: It makes them more productive.
JEFFREY MADRICK: But companies like Master Lock may be more the
exception. Dan Luria is a management consultant.
DANIEL LURIA: No more than 20 percent of American companies are clearly
on the high road to stay. Everyone else has either chosen the low road or is
being actively tempted to take the low road. And that is, in large part, what's
wrong with the American economy. It's what makes us produce too many things
that are at the low end of the food chain in manufacturing and not enough at
the high end.
JEFFREY MADRICK: Is it simply becoming fashionable in corporate circles
to take what you describe as "the low road"? Is it just the thing to do, look
for low wages and low-investment production facilities, rather than high wages,
good managerial techniques, high investment?
DANIEL LURIA: Doing the right thing is risky. And if the right thing
involves making big investments in equipment, in old plants, in older workers,
those are all things which carry risks.
JEFFREY MADRICK: You could put all this money in, you could have the
best intentions in the world, and you could lose your shirt.
DANIEL LURIA: Absolutely right. But if you don't take the risk, you are
not going to be a leader in your field, in the long haul.
JEFFREY MADRICK: One other company that decided to take the risk and
invest in the Milwaukee area is Chrysler. The company invested aggressively in
the Kenosha plant, which makes engines for the popular Jeep Cherokee. It also
upgraded its technology and retrained its workers. Of the 5,500 laid off, 500
were rehired.
Bill Donnell is an auto worker again. He's back, making over $18 an hour with
full benefits and an annual bonus.
BILL DONNELL: It was the best day of my life! I mean, smiles and
everything! I'm not kidding you. I mean, because it was, like, to myself, "Hey,
that's a $10 an hour raise!" You know, more_ you know, I was, like, "Great!" I
kiss that ground right now every day I go in! I mean, I_ I_ I'm serious! I
appreciate it.
ROBERT EATON, CEO, Chrysler Corporation: There was an effort that
started, really, in 1987, '88 to completely rejuvenate the product line up with
the Chrysler Corporation and at the same time try to_ to bring the workforce in
as a partner in_ in working to improve cost and quality.
RUDY KUZEL, President, UAW Local 72: No longer can an auto company
afford to have the so-called "dumb assembly line worker" that doesn't know
anything. These people are doing industrial engineering. They're doing
ergonomic engineering. They sit in groups and brainstorm and do problem
solving. We've had our whole assembly line re-engineered and re-done by the
people that work out there.
JEFFREY LUTZ, Assembly Worker: What they've come to realize is the
people that are out on the line, doing the job day in and day out, learn a lot
about their job and about_ a lot about how it should work.
JOE GARTNER, Engineer: We have designs. We talk about what the design
people are proposing, and then exchange, "Will this work or won't this work in
our context?" And being an engineer, I have a mindset as to how things should
work, whereas the assembly people, our union workers here, have different ideas
and actually have the work experience to do it.
RUDY KUZEL: You can dislike the management, but you can't dislike your
customers and you can't dislike yourself. Now, workers and management have got
a common objective that nobody can argue with and that's giving your customers
the best possible product they can give them.
JEFFREY MADRICK: Working together to raise quality is new at Kenosha.
When American Motors owned the plant, worker-manager relations were poor.
JEFFREY LUTZ: I got one instance where it really ticked me off. The
machine broke down that I was running. I knew what broke. They called the
maintenance over and engineers over to look at it and_ and I says, you know, "I
think there's something wrong with the table," you know? "The table don't seem
to be working right. It's supposed to rotate. It rotates, but it_ there seems
to be something wrong." And they told me, "Shut up. We're engineers. We know
what we're talking about." Well, about an hour later, after it's been down this
long, the engineer says, "Oh, I found out what's wrong. The table's off line."
I says, "Yeah, you found out what's wrong. That's what I told him the first
five minutes." But because I was a peon, they didn't listen to me. Now the
first thing they would do is ask me, "What do you think's wrong?"
BILL DONNELL: I enjoy going to work.
JEFFREY MADRICK: Bill Donnell's union seniority got him the job at
Chrysler. Now he's being retrained as an engine repairman.
BILL DONNELL: You have to pay attention. You've got to listen. It's
being trained the right way. It's just a learning experience. If you have
problems, you go talk to another repairman, see if he ever ran into problems
like that. It's using your brain instead of your brawn.
JEFFREY MADRICK: You got something like $5 million for retraining from
the state of Wisconsin. How critical was that at Kenosha?
ROBERT EATON: Well, it_ it's_ it is very, very significant. I mean,
there's no question that_ that_ that it's not only_ it's not only the money,
but it's also the commitment with the community and the recognition that this
is a partnership with_ with the community.
JEFFREY MADRICK: Is there a place for government to help you accomplish
these goals, do you think, through incentives, tax breaks, changes in
regulations?
ROBERT EATON: Well, there isn't any question that there's a lot of
things that_ that would help. Basically, with respect to changing the culture
of the company, we have to do that.
JEFFREY MADRICK: Like Chrysler, Harley also changed its culture. Both
companies claim that a modern corporation has to be socially responsible.
[interviewing] A lot of corporate leaders these days_ perhaps they feel
under the gun, but a lot of them say business does not have a social
responsibility. If it had to worry about that, it wouldn't do business.
RICHARD TEERLINK, Chairman and CEO, Harley-Davidson: They may not feel
they have a social responsibility, but if they ignore the powers of society,
they'll be out of business because society can complain to government and then
government can regulate and government can do the one thing they do very well
and that's over-regulate.
JEFFREY MADRICK: But when times were hard, Harley turned to the
government for help.
JACK NORMAN, The Milwaukee Journal Sentinel: Well, there was
this huge tariff imposed on big Japanese motorcycles and that gave
Harley-Davidson an opportunity, if it could get the quality of its motorcycles
back where it had been and put out good marketing, it had a window, a few years
of high tariffs, to reestablish itself in the market and that's exactly what it
did. In fact, it was so successful that Harley went to Congress and said, "We
don't need the tariff anymore. Get rid of it."
RICHARD TEERLINK: We were where we thought we had to be. Was there a
P.R. advantage to that? Absolutely. But the fact is we did it. All businesses
aren't sitting around, just waiting for a hand-out. If they're given an
opportunity to perform and if there are measures, you might find that they will
do the right thing.
ROBERT REICH: When I talk to chief executives about government, they
always say, "We don't want government. We don't want you in our business."
That's an understandable response. But if you talk to them specifically, "Do
you want a tariff to protect yourself? Do you want a bail-out if you get in bad
trouble? Do you want a tax incentive for tuition assistance to your employees?
Do you want a tax break for research and development?" The story is very
different. "Oh, yes. Well, that's_ yes, something like that is very, very
necessary." And then I come back, "Well, isn't that government?" "Well, yes, it
is government, but it's government helping us." You can't really have it both
ways.
JEFFREY MADRICK: But Secretary Reich's boss, President Clinton, seems to
want it both ways. At last week's conference on corporate citizenship, he used
the bully pulpit to encourage CEOs to do the right thing and make money. He
stopped short of threatening government interference.
Pres. BILL CLINTON: What do employers owe employees? What do employees
owe employers? What, if anything, should the government do to help to deal with
the new challenges that we face?
JEFFREY MADRICK: There is promise in the new economic environment, but
the new social contract doesn't include job security. The simple truth is that
in the 1990s, those who have lost their jobs are, on average, out of work
longer than in most of the 1980s. The new jobs workers find typically pay less
than the ones they lost and the distribution of income in America today,
according to most economists, is more unequal than anywhere in the advanced
industrial world.
ROBERT REICH: Wages for Americans in the top 20 percent of earnings are
doing quite well. If you're in the top 5 percent, you are doing extremely well.
If you're in the top 1 percent, you are doing better than the top 1 percent has
done probably in 50 or 60 or 70 years. But if you're in the bottom 20 or 30 or
40 percent, you're not doing well.
JEFFREY MADRICK: In the meantime, CEOs are certainly in the top 1
percent. The salaries they pay themselves are extraordinarily high. Is_ are
they making too much money?
ROBERT REICH: I think it's not good for a company, in terms of its own
bottom line, to allow too great a gulf to open up between the compensation of
the boss at the top and everybody else.
ROBERT EATON: Well, first of all, there's no question that I think CEOs
in this country are very well paid. They are paid_ they are paid by a committee
of the board, always, in the case of every_ every case I know, at least, of
outside directors who are_ who are dedicated to, you know, representing the
shareholder and_ and there's been a big change in compensation in this country
in the last few years and it's tied to the performance of the stock. Something
in_ approaching 75 percent of my compensation is purely tied to the success of
the stock. We talked about that if_ if_ if the company make_ makes a profit,
everybody benefits.
RUDY KUZEL: On a relative scale, compared to other CEOs, I suppose you
could argue that Eaton is not excessive, when you compare him to the head of
Disney, who's making hundreds of millions a year. But I think they're all paid
too much. They really are. I mean, the Japanese executives_ and this is not_
nothing personal against Bob Eaton, who I think is_ he and Lutz are doing a
very good job of running this company. But I think they're all overpaid. Four
million a year? That's $2,000 an hour. Nobody's worth $2,000 an hour.
JEFFREY MADRICK: But Chrysler's profits are way up and they've adopted a
generous profit-sharing plan for their employees.
WILL HEATHCOTE, Plant Manager: Our new 2-7 V-6 engine, which is new to
Chrysler Corporation_ we'll be building it next summer.
JEFFREY MADRICK: They're also expanding the Kenosha plant to build an
engine they now buy from Mitsubishi.
WILL HEATHCOTE: That'll mean considerably more jobs. We're not saying
exactly how many because_
JEFFREY MADRICK: But with all the new efficiencies, it's likely only a
quarter of those who originally lost their jobs will be called back.
BILL DONNELL: It's a lot better. It's not as stressful until she was
told that she_
JEFFREY MADRICK: Despite being one of the lucky ones, Bill is still
feeling hard times. He's deeply in debt and he figures it will take five years
to get back to where he was in 1988. His daughter, Kim, is working part-time
and considering whether to go to college.
KIM DONNELL: Now that he's making more money, he can pay for my prom
dress and my prom shoes that I just bought yesterday. It's really nice, isn't
it, instead of making me pay for my prom stuff.
BILL DONNELL: There are things that are not yet paid for that Ma doesn't
tell me I pay for.
JEFF MADRICK: [unintelligible] right now.
BILL DONNELL: I know there's_ they went shopping yesterday. I know I
bought something.
I can't tell you how many people that have_ they've come back to work for
Chrysler that aren't married anymore and they're divorced and that the_ just
the pressures of all that time off or during that time_ just isn't the same
like it was. I_ not to say that their families would have stayed together. I
don't know.
But there_ I think there was a big_ you can see a lot of people_ I know a lot
of people that went bankrupt. I know a lot of people that lost their_ that they
lost their families and it just_ you know, certain things_ they're happy to be
back and it's great and they're feeling great that they're starting to live
what they used to live like and they're starting to get their feet back on the
ground again.
SHEILA CALDWELL: Now that I'm working at Master Lock, it seems like I'm
more independent. I'm stronger. It's, like, I can do this on my own, like. I
don't know how you would say it. It seems like it's pride. I don't know. It's
just self-pride.
In my mind, Master Lock is going to be there forever. I see it as my
retirement job.
JEFFREY MADRICK: Can the Sheila Caldwells of your company at last
breathe easy?
JIM BEARDSLEY: Well, I don't think any of us can breathe easy. The
imports produce a low-price produce with low-cost labor. We can't compete on
those bases. We have to figure out how to work smarter, not harder.
JEFFREY MADRICK: Would a smart worker today say to herself, "These are
different times. Anything could happen. I better keep more money in the bank. I
better keep my eyes open for opportunities"?
JIM BEARDSLEY: What we hope Sheila's doing is figuring out how she can
increase her skill levels so she has more to offer Master Lock or more to offer
another employer, so she can do a better job running the improved processes and
the better equipment that we need to stay competitive.
ROBERT EATON: You cannot relax. Again, you know, you've got to think
about whatever you're doing, every single day there is somebody that_ that is
going to_ to buy that product or that service. Every morning, when they wake up
in Japan or Europe or_ or Brazil or whatever, they're trying to become more
effective and more productive so that they can do better in the world market.
And if we don't do the same thing, they'll run right over us.
BILL DONNELL: I was hired to build cars. They don't build cars or build
engines, whatever it is, then I don't have a job again. And I don't want to go
through that again. I don't want to go through that again.
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Next time on FRONTLINE: two American families doing their best to hang onto
the American dream, but nearly every day is a struggle. For the last five
years, Bill Moyers has been documenting their lives_ "Living on the Edge."
Watch FRONTLINE.
RUDY KUZEL: But I think they're all overpaid. Four million a year?
That's $2,000 an hour. Nobody's worth $2,000 an hour.
DOES AMERICA
STILL WORK?
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