A strike by 3,400 union workers at a General Motors stamping factory in Flint, Mich., began to be felt elsewhere Monday as a parts shortage forced closure of five GM assembly plants in the United States and Canada.
The walkout, a local dispute over job security and competitiveness issues that began Friday, threatens to shut more than half of GM's 29 North American car and truck assembly plants within a week.
Negotiations between the United Auto Workers and GM were continuing late Monday. Labor and industry analysts said it was uncertain whether the dispute would be settled quickly or balloon into a major confrontation.
"It is in everyone's interest to come to a quick resolution," said Michael Robinet, analyst for CSM Forecasting, an auto-supply research firm. "It will be costly to GM, but the long-term prosperity of the UAW is also on the line."
A shortage of doors, hoods and fenders made at the shuttered Flint metal-fabricating plant prompted GM to stop operations at assembly plants elsewhere in Flint and in Orion, Mich.; Moraine, Ohio; Fairfax, Kan.; and Oshawa, in the Canadian province of Ontario. About 13,100 workers were idled.
A prolonged strike could sharply curtail GM's production, costing the nation's No. 1 auto maker crucial market share and as much as $300 million a week in lost profit, analysts said.
Most importantly, it could disrupt GM's production of high-profit trucks at a time when sales are hot. The strike also has the potential to disrupt the launch of GM's redesigned 1999 full-size pickups, the Chevrolet Silverado and GMC Sierra--high-volume vehicles that are expected to yield profit of $5,000 to $7,500.
The strike is the 11th to hit GM in the last three years. More are looming. Another Flint parts plant, with 5,000 UAW members, might be struck as early as Thursday.
The dispute has tapped into simmering resentment against GM by UAW workers in Flint, the company's birthplace. In the 1970s, when GM controlled nearly half the U.S. market, the company employed 77,000 workers in Flint. But as GM's market share dwindled to less than a third, so did its work force. The auto maker now employs only 33,000 in Flint, and the UAW says that could shrink by an additional 11,000 in the next few years.
Flint, site of the 1937 sit-down strike that forced GM to recognize the UAW, has long been a hotbed of hard-line union activity. A decade ago, plants there gave rise to New Directions, a labor movement that opposed cooperation with management.
GM says the main issue in the current dispute is the UAW's unwillingness to implement agreed-upon work-rule changes that would allow the plant to become more efficient.
The UAW counters that the company has reneged on a promise to invest $300 million in new stamping equipment and wants to outsource--farm out to subcontractors--factory work, eliminating 200 jobs. The union also complains of numerous health and safety violations within the plant.
The auto maker says it has invested $120 million in new equipment at the Flint plant but will not do more unless the union allows work-rule changes that will improve output. GM wants to eliminate a rule that allows workers to meet a daily production quota in less than eight hours but get paid for a full shift.
"We will not continue to invest in plants that are not competitive," said GM spokesman Gerald Holmes.
A report soon to be released by Harbour & Associates, a Troy, Mich., manufacturing research firm, found that GM's factories are less efficient than those of Big Three counterparts Ford and Chrysler. While GM's stamping plants improved their efficiency in 1997, the Flint plant's efficiency declined, Harbour found.
The strike highlights the growing distrust between GM and the UAW at a time when the union's ranks and power are dwindling. The union was particularly angered by GM's removal of dies--huge shaping machines used to form sheet metal into panels--from the Flint plant a week before the strike deadline and moving them to a plant in Ohio.
"It's a sad state of affairs that we have these continuous problems with General Motors but we are able to work out problems with Ford and Chrysler," said UAW President Stephen Yokich last week.
Labor experts found significance in the timing of the strike. It comes when auto sales are brisk, increasing the unions' leverage against the company. It also comes just before the UAW annual convention in Las Vegas, a sign the leadership wants to make a point with members.
"To have a high-visibility strike on the eve of the convention shows there has been a complete breakdown in the relationship between the union and GM," said Harley Shaiken, a labor professor at UC Berkeley.
Wall Street has supported GM's hard line against the union in recent years. Analysts believe that the company must reduce its work force and operate its factories more efficiently to be competitive.
"GM has to hold the line," said Maryann Keller, an analyst with Furman Selz in New York. "This could be a long strike, but there is more at stake than just lost production. GM has to become more efficient."
GM shares fell $1.25 to close at $74 in trading on the New York Stock Exchange.
The Michigan assembly plants closed Monday make the Buick Park Avenue and Riviera; Oldsmobile Aurora and Eighty Eight; and Pontiac Bonneville. The Ohio plant builds the Chevrolet Blazer; GMC Jimmy and Envoy; and Oldsmobile Bravada sport-utility vehicles. The Kansas plant assembles the Oldsmobile Intrigue and Pontiac Grand Prix.
The Canadian plant makes the Chevrolet Lumina and Monte Carlo. A sister factory will make GM's new full-size pickups.
In another development Monday, GM won a nine-year legal fight to make 84,000 retirees pay for part of their health-care coverage when the U.S. Supreme Court refused to consider the workers' appeal.