GM Layoffs Expected to Boost Pressure on Union
General Motors’ decision to lay off 2,190 workers at its Van Nuys assembly plant, although not a harbinger that the factory is doomed, will put great pressure on the United Auto Workers to grant work-rule concessions at the plant, analysts and others said Wednesday.
Company officials want changes that will allow the plant to operate more flexibly in an attempt to improve its competitive position.
Union and company officials are currently having “exploratory discussions” on setting up a team system at the plant that would be a sharp departure from the traditional methods of auto assembly operation, according to plant manager Ernie Schaefer and Ray Ruiz, the bargaining committee chairman of UAW Local 645.
On Tuesday, GM announced the layoff of the entire second shift at Van Nuys as part of an indefinite layoff of 4,700 workers at four plants across the country. The move is aimed at reducing large inventories of slow-selling cars, including the sporty Chevrolet Camaro and Pontiac Firebird made in Van Nuys.
The plant’s future has been in doubt since 1982. The question of how to keep it open has become a political issue in the union and in the community. Late in 1982, workers in Van Nuys were told that the plant was on an “endangered list,” primarily because its location 2,000 miles from GM’s Midwestern suppliers meant that it incurred hundreds of dollars of added shipping costs per vehicle. About 75% of the cars made there are shipped east of the Rockies.
Speculation that the plant would be shut down rose last year when it was disclosed that GM planned to shift production of the successor models to the Camaro and Firebird to another plant after the 1989 model year.
Auto analyst Christopher Cedergren of J .D. Power & Associates in Westlake Village said Wednesday that he expects Van Nuys workers to be recalled to work in September after the traditional summer retooling of the plant needed for next year’s model change. He said sporty models such as the Camaro and Firebird should be increasingly popular as gasoline prices continue to drop.
Van Nuys Seen as Vulnerable
But John Hammond, an analyst with Data Resources in Boston, said he has doubts about the factory’s long-term future. “It’s clear GM will probably have to close four or five assembly plants before the end of the decade,” he said. “Given past labor problems there and the fact that it’s on the (West) Coast, not near suppliers, Van Nuys obviously would be quite vulnerable.”
Ruiz said Wednesday that he is optimistic that GM will produce another model at Van Nuys after 1989 but that it is by no means a certainty.
He said he hopes to have an agreement on a team-production concept negotiated with management by June. “You would have a team of four to five people with a group leader,” Ruiz said. “The members of the group are responsible for everything on their job; they have a lot more say on their job in terms of quality and decision making.” He said he also believed that the new system would enhance workers’ job security.
Such a system is in place at most Japanese auto factories, the GM-Toyota joint-venture plant in Fremont, Calif., and several GM facilities, including the Pontiac, Mich., operation where the Fiero is made. That factory is one of the four that will be affected by the layoffs that GM announced Tuesday.
A group of Van Nuys workers will visit other GM plants where the team system is used later this month. To change the contract and bring in the new system would require a majority vote of the local’s members.
Schaefer, the plant manager, said there is a growing recognition among the plant’s workers that production processes there have to change. “We have to be more competitive, more efficient,” he said. “I think the long-term prospects here are certainly decent. I don’t want to say they’re outstanding. It will cost $100 million to $200 million to retool the plant for another car,” he added.
Local Leader Skeptical
Bruce Lee, Western regional director of the UAW, also expressed optimism about the plant’s future and the prospects for changing the contract. “If the right kind of approach (were) made, the Van Nuys workers would make accommodations,” he said.
But Peter Z. Beltran, president of Local 645, said he remains skeptical about the team system. “I don’t think the team concept is going to help them sell cars,” he said in a telephone interview. “They say it will improve quality, but they haven’t told us how; it’s a big mystery. I’m convinced it’s the newest whipsawing GM is doing. If we do it, there will be pressure on our sister plant at Norwood, Ohio (where the Camaro and Firebird also are made) to do it.
“My understanding is it would mean an additional loss of jobs,” he said, taking issue with previous statements made by Schaefer.
Beltran said the local would continue a campaign that it launched early in 1983 to keep the plant open. He and other members of the local have enlisted the aid of religious, political, labor and business leaders who contend that GM has an obligation to the workers and the community to keep the plant operating because it has generated considerable profit for GM in its 38-year history. The campaign has threatened to launch a boycott of GM products in Southern California if the plant is closed.
“We think GM doesn’t grasp how much support we have in the community,” said Eric Mann, coordinator of the campaign, in a recent interview.
Meantime, Andrew Fernandez, an eight-year veteran at the plant, and 2,100 other workers will continue to fret about their futures. Fernandez, 27, said workers had expected the layoffs because they knew about the backlog of unsold cars. He said the first sign came last month when GM placed 4,100 of the plant’s 5,300 workers on a two-week furlough in an effort to cut back on stock.
Fernandez, who assembles plastic steering columns for $12 an hour, is worried. The San Fernando resident is married and has three children, with another child due this summer. “I’ve been saving for a while, but I don’t know when they’ll bring us back,” he said in an interview at Local 645’s hall across the street from the plant.
He and other laid-off workers with seniority will, for a time, receive up to 95% of their takehome pay through the supplemental unemployment benefits program that is part of the UAW’s agreement with GM. Workers may receive that pay for up to a year based on the amount of money available in the fund.
