L.A. Could Lose Valley Auto Plant : GM Drives a Hard Bargain
Last December, when General Motors announced it was selling its closed South Gate plant, thousands of displaced workers who had dreamed of its reopening finally had to accept permanent eviction. GM also warned workers at its Van Nuys plant that they too might face a closing. But a United Auto Workers and community campaign to save the valley plant, combined with GM’s own conflicting public statements, may make Van Nuys the plant GM couldn’t shut down.
GM explanations for wanting to close its Van Nuys facility have been constantly shifting. First, probably most candidly, the company has argued that in order to maximize profits, it is cheaper to consolidate all production in the Midwest, utilizing “same-day parts inventory systems” to ship fully assembled cars back to California.
The UAW, with a coalition of labor and community activists, have in turn argued that “discretionary” plant closings--closing down profitable plants to pursue greater profits elsewhere--are an irresponsible use of corporate power. Further, the union says, it is incomprehensible why General Motors would even talk about closing Van Nuys, not when GM is the No. 1 seller of cars and trucks in California--more than 403,000 units last year, with Van Nuys accounting for more than $1 billion in sales.
The coalition argued that GM could build a stamping plant in greater Los Angeles, hire laid-off South Gate workers and purchase parts from local suppliers, thereby helping rebuild the devastated industrial base of the city and cut down on the company’s shipping costs. But if GM closed the plant instead, then the coalition threatened to initiate a boycott of General Motors products in the largest new-car market in the U.S.
GM then tried another explanation, telling workers that quality was the key to keeping the plant open. Workers responded by raising quality at Van Nuys to third place among 34 plants in the Chevrolet-Pontiac-Canada group. GM showed its gratitude with a barbecue and a free trip to Disneyland; then came the announcement that the plant may close in 1988.
GM’s latest explanation is production: Because the Chevrolet Camaro will be built with an all-plastic shell in 1988, it can no longer be produced in Van Nuys. This looks to be a smoke screen. GM’s underlying strategy seems to be to build other plants in the Midwest, consciously producing an oversupply of capacity. This forces individual UAW locals to bid against each other for best-selling cars--setting up a desperate game of musical plants with the losers facing a closing.
GM keeps trying to close Van Nuys, but the Camaro built there sells too well. The next ploy is to make the plant less profitable by removing the Camaro, while union and community groups demand that GM retool the plant and keep the Camaro right where it is.
The company is now proposing a new plan, euphemistically called “the team concept”--meaning groups of seven or eight workers learn a variety of jobs. The late Walter Reuther, former UAW chairman, long advocated a version of this idea to allow workers greater job satisfaction. But if GM tailors the plan to cost-cutting objectives, the “team concept” could become a marathon of over-work, speed-up and workers pitted against each other as each sick, injured, or exhausted employee becomes an impediment to the Orwellian “team.”
GM has made clear that if workers do not accept the team concept, the plant will be closed in 1988. There are union members who want to explore the idea provided effective protections against abuse can be built in, but if the company ends each discussion with the threat of a plant closure, then collective bargaining is obliterated.
Then came the incident no one could have anticipated, carried by bad air and prompting a new short-term response by GM that may be contrary to its own long-term desire. A hastily installed new paint system in the Van Nuys plant sent odors into surrounding neighborhoods, prompting the Air Quality Management District to explore solutions, including closing the plant until the problem was solved. GM, determined to protect its next two years’ profits, moved into action:
--The odor problem was solved by investing more than $5 million in new filtration and exhaust systems.
--A coalition of small-business people, homeowners, community agencies and auto workers was mobilized by GM to testify on the devastating effects of a plant closure.
Philosophically, GM argued that the Van Nuys plant was more than a private enterprise. It was, according to a Chamber of Commerce report encouraged by GM, a “vital and integral part of the San Fernando community since its opening in 1947.” The report documented the economic and human toll of a closing at Van Nuys: loss of 5,000 jobs, with a payroll of $161 million; loss of another 35,000 non-manufacturing jobs; closure of 514 retail establishments, relocation of 50,000 families.
At about the same time GM announced that South Gate was for sale, the South Coast AQMD voted that GM had successfully cleaned up the Van Nuys problem.
Bruce Ackerman, executive vice president of the San Fernando Valley Chamber of Commerce, explained the long-term price:
“GM did an incredible job of community mobilizing. And GM knew full well what they were doing, they were supporting every major premise of the union’s Keep GM Open Coalition, building a powerful case for plant permanency. I have to be encouraged that GM now plans to stay in Van Nuys. For if they try to leave now, there can only be a terrible backlash among the many politicians, community groups and business people who came to GM’s defense.”
Yet threats of closure at Van Nuys continue. The union-community coalition plans demonstrations for spring to convince GM that a Southern California boycott of its products would make closing Van Nuys a most unwise and unprofitable decision. The auto maker itself helped bring the community and union members together. GM could stop explaining and may finally decide it is in its best interest to continue to make cars--and profits--in Los Angeles.
