Plan Could Save GM’s Plant at Van Nuys
Massive unemployment in America’s auto industry has sparked a bitter, unusual struggle within the United Auto Workers, and the outcome could affect labor relations practices throughout General Motors.
The internal UAW battle is over jobs and stems from the deep inroads made in U.S. car sales by foreign car manufacturers. Employment in the industry has plunged 25% since the peak of 624,500 just eight years ago. UAW membership in the industry dropped 30% to 285,000 in the same period.
General Motors has said it plans to close several plants around the country soon, meaning a loss of an estimated 32,000 more jobs. Thus, many GM plants are in competition with one another to stay off the corporate “hit list.”
The company and union have a national contract that provides substantial protection for laid-off workers, including one provision that guarantees them 95% of their pay for up to a year. Other provisions give additional help to those put out of work by economic hard times or technological advances. But none of the guarantees of help are as good as a full-time, year-round job, and that fact is the source of the internal union fight.
But some sources say that General Motors, perhaps unavoidably, has pitted about 4,000 union workers in Van Nuys (about 1,300 of whom are now on layoff) almost directly against another 4,000 union workers in Norwood, Ohio. All are UAW members covered by the master, nationwide GM union contract.
GM set up the rivalry by indicating that the two plants are among several that will almost surely be shut down soon as part of the company’s retrenchment program around the country.
What puts the two plants in almost direct competition for survival is that both Norwood and Van Nuys turn out Pontiac Firebirds and Chevrolet Camaros, models not in great demand these days.
GM’s troubles with the Firebird and Camaro have meant, among other things, that UAW Local 645 in Van Nuys and Local 674 in Norwood are both trying to avoid being hit by the GM ax.
GM delayed announcing a decision on which plants will be closed until after Tuesday’s political election. Presumably, the reason is that any plant closure just before the election might have hurt Republicans, since President Reagan is so strongly opposed to demands by unions and their Democratic allies for restrictions on foreign imports.
But the company’s decision is expected soon, and it will be based on a variety of factors, not the least of which is the fact that it costs an estimated $70 million a year more to produce Firebirds and Camaros in Van Nuys than in Norwood.
This differential comes to about $400 a car, due largely to the cost of shipping parts here for assembly. Because of that figure alone, it would seem that GM executives in Detroit would almost surely shut down Van Nuys, not Norwood.
Norwood may well be getting an extra assist because of the furious fight raging within the Van Nuys local. Fights between union leaders and workers will not encourage GM management to pick Van Nuys as a plant that is likely to be most productive.
The Van Nuys plant does have an advantage but, ironically, that advantage is itself the cause of the fights within the union.
Last May 30, UAW members in Van Nuys narrowly voted to accept a “team concept” of work at the plant. It is a moderate, sensible plan strongly advocated by Bruce Lee, UAW regional director in the West, and by Ray Ruiz, Local 645 bargaining committee chairman.
Some call it a Japanese style of management because it gives workers a significant voice in the decisions made about their jobs. It also reduces the number of job categories, gets rid of time clocks and eliminates many special executive privileges, such as parking and eating facilities.
Lee argues that the plan should set the stage for the Van Nuys plant to go to the top of GM’s plant survival list because GM’s top management admires such worker-participation systems.
The plan should increase workers’ pay, end some dull, repetitive assembly line jobs and increase productivity, which is so essential in Van Nuys’ competition with the plant in Norwood and with other GM facilities where there is no similar team concept of management.
The plan is sensible, and it may just be enough to offset the cost advantage that GM has in Norwood. Without the plan, there would be almost no chance that GM would keep the Van Nuys plant open, even though it is the last all-domestic auto factory on the West Coast.
Strangely, despite what seems to be the self-evident fact that the team concept of work is the only real hope that Van Nuys workers have for saving the plant, foes of the plan within Local 645 want to scuttle it. A group led by Local 645 President Pete Beltran is trying to oust the union leaders who back the plan, charging that they are “selling out the workers.”
Beltran and his allies allege that GM management is trying to deceive the workers, supporting the team concept plan only as a device to trick them into making concessions and working harder than ever by pretending to give them some voice in the management decision-making process.
With considerable justification, Beltran’s forces are relying heavily on a history of worker mistrust of GM management to kill the plan. The cooperative plan is designed to reduce that mistrust. But the effort to eliminate the plan may be the weapon that kills the assembly plant itself.
If, despite the internal union fight, the worker participation plan turns out to be the medicine needed to save the Van Nuys plant, it will add momentum to efforts in other GM plants and other companies around the nation to develop similar labor relations programs.
And if, despite the plan, Van Nuys is closed, it won’t prove that the plan is bad. It will only prove that the Norwood cost advantage, combined with the internal union fight in Van Nuys, were too high a hurdle for Lee, Ruiz and other advocates of worker participation to overcome.
Out of Luck at Gemco
Far too often in the struggle to save jobs these days, those preserved are held by a few top corporate executives. Too often ignored are the jobs of thousands of workers whose economic well-being is sacrificed to help their bosses either continue working or at least get the infamous “golden parachutes” to ease the pain of dismissal.
There seems to be a growing public awareness of job-preservation problems, which are increasingly critical because of such widespread economic phenomena as plant closures, takeovers, mergers and consolidations.
But public awareness hasn’t helped the luckless employees of Lucky Stores’ Gemco discount chain.
To avoid a takeover by New York investor Asher B. Edelman, Lucky executives decided to “reorganize” the company. For Lucky executives, reorganizing meant selling Gemco. The sale is designed to bring in about $450 million so the company can repurchase additional Lucky shares, drive up the stock price and thus make the takeover too costly for Edelman.
The corporate executives are still in there, running Lucky’s supermarkets. But about 14,000 workers are out of jobs that some of them had held since Gemco opened its doors 27 years ago.
Fifty-four of Gemco’s 80 stores are going to Dayton Hudson, which will reopen them as Target discount stores. The non-union Target company says it isn’t going to give any hiring preference to former Gemco workers, who are members of the United Food and Commercial Workers Union and who earned between $6.50 and $8.50 an hour.
But those Gemco employees who do get hired by Target aren’t really very lucky. When Target took over the unionized FedMart stores in 1983, it rehired few FedMart workers and slashed wages about in half--to an estimated average of $4 an hour.
No one knows what would have happened if Lucky’s top executives had allowed Edelman to take over, but they would probably have been out of jobs. On the other hand, Edelman did say that if he won control of Lucky, “I would not have fired those people (Gemco employees).”
Thus, while a critical issue today is job preservation, the more critical question is, whose jobs should be preserved: those held by thousands of workers or those held by a few top corporate executives?
