Facing ‘Edge of a Cliff’ at GM : Auto industry: Despite the financial cushion provided by their contract, some workers are concerned that their layoffs might become permanent.
Like his father before him, Chris Dorval is an auto worker at General Motors’ Van Nuys plant. But Dorval hasn’t been spending much time making cars lately. Since Dec. 17, he has only had a chance to work a total of 25 days. The rest of the time, the plant has been closed because the Chevrolet Camaros and Pontiac Firebirds assembled there aren’t selling well.
So Dorval, 35, a door assembler at the plant for nearly 14 years, occupied his time by studying electronics. He built a walkway outside his house in Palmdale. He planted raspberry bushes.
Mike Gomez, 47, an 18-year GM veteran who works as a repairman in the paint department at the Van Nuys plant, has been catching up on his reading, cooking and spending more time with his 11-year-old son. With a little luck and some scrimping here and there, he’ll be sending his son to a private school in the fall.
When it comes to being laid off these days, things could be a lot worse for GM workers.
Under a three-year United Auto Workers contract ratified last October, GM production employees essentially get paid to not work. The labor pact--virtually unprecedented in the length and breadth of its coverage--provides for auto workers to receive about 95% of their take-home pay when they are laid off because of production cuts. The Van Nuys workers normally earn about $16 to $17 an hour before taxes. The benefits last until the employees are called back to work or find another job.
With the financial cushion provided under the GM-UAW contract, some workers say they enjoy the downtime. “To be honest, I like being laid off,” said Nick Faiella, a 30-year-old GM Van Nuys worker who fills in for absent employees. He’s been spending his days off surfing, skiing and bike riding.
Faiella is one of about 650 of the plant’s 2,700 workers who were indefinitely laid off last week when GM took a more drastic step to cut production and eliminated the second shift. The layoffs were done according to seniority; those laid off at Van Nuys were hired by GM after Oct. 5, 1978.
But Faiella’s not worried about the future, he said, and he’s also got the union contract to thank for that because it requires that employees who are laid off for 36 consecutive weeks be brought back to work at full pay.
If there is no work for them at the plant, they will go into a so-called “jobs bank” and might do community service or other temporary work.
But not all GM workers are laughing their way to the unemployment office. In fact, Gomez said, “Many of us are looking right at the edge of a cliff and it’s not a good feeling.”
One reason for Gomez’s pessimism is that the 95% income guarantee for laid-off workers sounds better than it really is. After taxes are paid on their unemployment checks, workers could actually be faced with a 30% pay cut from what they earned on the assembly line.
Another problem is it often takes a month or longer for unemployment checks to roll in. That’s because workers must wait two weeks after being laid off to apply for state unemployment benefits, and another week for the first check to arrive. Workers then submit paperwork to GM to get the rest of their unemployment pay, which can take another week or two to arrive.
For Larry Barker, a 41-year-old GM welder, that means putting off buying new tires for the car, explaining to his 13-year-old son why he can’t fix his bike and forgoing the usual family camping trips because he can’t afford to buy gas for his RV. But that doesn’t bother him as much as the calls he gets when his mortgage payments are late. The holder of his mortgage is a subsidiary of GM.
Some workers also worry that the $4 billion GM has set aside to pay the company’s share of unemployment benefits will run out before the contract expires in 1993. Mark Masaoka, a plant electrician and unit chairman at UAW Local 645--the union’s Van Nuys-based chapter--said $500 million has already been used up by the company for unemployment benefits, and the rest of the funds will be depleted more rapidly because more employees are now idled due to slow car sales. Also, when state unemployment benefits run out, GM must foot the whole bill for a laid-off worker.
John Maciarz, a GM spokesman in Detroit, said the benefits fund is “still in good financial condition.” But he wouldn’t guarantee that the funds would last the life of the contract.
What’s worse, unlike past periods of auto industry layoffs when workers figured they would be rehired once car sales rebounded, many workers fear this time around GM is downsizing for good. The auto maker recently reported its biggest quarterly operating loss ever, $1.6 billion in the fourth quarter, and a record net loss for all of 1990.
Things don’t look to get better. A recent study by the accounting firm Arthur Andersen forecast the Big Three U.S. auto makers--GM, Ford and Chrysler--would lose up to 7% market share by the turn of the century as Japanese competitors continue to gain ground.
Amid such predictions, said David Lewin, director of UCLA’s Institute of Industrial Relations, GM workers “have an understandable concern that layoffs are permanent, not temporary.”
The entire Van Nuys plant has been on shaky ground for some time. Production of the Firebird and Camaro is slated to move from Van Nuys to Canada in the fall of 1992, and GM has not yet said if the 44-year-old Van Nuys plant will get another model to build. Hopes that the auto maker might build its Impact electric car at Van Nuys were dashed last month when GM said it would make the car in Lansing, Mich.
The company has said it might convert Van Nuys into a “flex plant,” which would be capable of building different cars on short notice, depending on demand. But no commitment has yet been made to that plan.
Despite the gloomy scenario, most GM workers aren’t rushing out to find new jobs. In past periods of layoffs, many displaced auto workers landed jobs for comparable pay at Lockheed Corp. But that isn’t an option now because the aerospace concern has also been downsizing and moving production out of the state. To the Van Nuys workers, many of whom don’t have high school diplomas, the prospect of slinging hamburgers or mopping floors for minimum wage isn’t too tempting.
In a sentiment that might be echoed by many GM workers, Barker, the welder, said he won’t look for other work until he knows for sure there’s no future at Van Nuys. “I have too many years to turn around and walk away from it,” said Barker, who has worked at the plant since 1977.
Greg Hilliker, a psychotherapist at the Family and Personal Stress Clinic in Flint, Mich., which treats many displaced GM workers in the town chronicled in the film “Roger and Me,” worries that auto workers are mired in a state of “learned helplessness.”
The feeling among the workers that they have no control over their lives, Hilliker said, is perpetuated by the UAW contract because it acts as a disincentive for them to change their situations. As a result, many workers become depressed and adopt a fatalistic attitude toward the future, he said.
Masaoka said many workers are seeking training in other fields such as auto repair and electronics, and some are taking advantage of tuition assistance offered by GM to take university courses. But, he said, even with new skills, employment prospects are dim in light of the recession. Many workers would settle for steady work paying $10 an hour, Gomez added. “But I don’t think there’s even many of those around,” he said.
Meanwhile, Gomez and several other Van Nuys workers say they’re channeling their frustration by meeting regularly to discuss ways to pressure GM to keep the plant open. They plan to stage rallies to generate public support and have talked about trying to launch a boycott of GM cars until the company makes a commitment to keep Van Nuys open.
Gomez said he doesn’t know if these efforts will pay off, but it does give him something to focus on when he’s not working. Without a place to go each day, many workers lose a sense of purpose, he said. “I see people drinking more and gaining a lot of weight,” he said.
Manuel Hurtado, 44, said he paid a visit recently to a fellow GM worker in the hospital recovering from heart surgery. The timing of his friend’s heart ailment was no coincidence, Hurtado believes. “Most of the time, when we come back to work, we say, ‘Who died this time?’ When you’re laid off, people die.”
