The Strike: Impact and Lessons
* The strike: On March 4, 2,700 workers struck two factories in Dayton, Ohio, that make brake parts for 90% of the vehicles manufactured by General Motors Corp. in North America. Shortages of those parts ultimately closed 26 of GM’s 28 operable assembly plants in North America and trimmed production at 90 parts plants, idling 177,375 GM employees and tens of thousands more at other companies.
* The argument: Workers objected to GM’s plan to buy some brake systems from the German firm Robert Bosch at a cost of 128 jobs in Dayton, symbolizing GM’s practice of outsourcing work to companies that can make parts more cheaply than it can in-house.
* The settlement: Details will not be disclosed until a ratification vote by workers today, but union officials said it addressed only the local dispute. That would leave outsourcing on the table as a central issue when the UAW negotiates new three-year national agreements with GM, Ford and Chrysler this summer.
* The lesson: Today’s manufacturing companies are exceptionally vulnerable to work actions because their greater efficiency leaves them with virtually no inventory on hand. Thus a strike at a single factory can quickly paralyze production elsewhere. But the cost savings of such efficiency far outweigh the penalties.
* The effect on customers: Because GM had too many vehicles on hand to begin with, its dealers say there will be no shortages of most models. Certain cars, such as Saturns and sport-utility vehicles, were already in short supply and the wait for those will be even longer than before.
* The cost to GM: An estimated $500 million to $600 million in earnings after taxes for the first quarter, the result of losing production of 250,000 cars and trucks. Dealers could not buy vehicles that weren’t being built, so the main source of GM’s revenue nearly dried up. But the strike enabled GM to work off high inventories of some models, and production of some other models can be made up later.
* The cost to workers: The 2,700 strikers got strike pay of $150 a week versus average straight-time pay of about $750 a week. Workers laid off because of the strike are waiting for state rulings on whether they will get any unemployment pay.
* The cost to the economy: The production cutbacks could reduce the gross domestic product by up to three-fourths of a percentage point in the first quarter. Combined with the federal government shutdown and severe weather, that could make it a no-growth quarter. But 80% of the lost auto production could be made up and second-quarter GDP could be 3% to 3.5%.
