The Uaw Fires A Shot Across Gm's BowKathleen Kerwin
It started small. Grievances had been piling up for months from the 240 union workers at a Lordstown (Ohio) tool-and-die shop that General Motors Corp. plans to close this year. Then, on Aug. 27, all 2,300 members of the United Auto Workers at GM's Lordstown stamping plant walked off their jobs.
From there, the strike's effect spread quickly. Lordstown supplies key parts to a dozen assembly plants around the country, and tight "just-in-time" inventory management means those plants can run out of components rapidly. Saturn was forced to shut down Aug. 28, despite a heavy backlog of orders for its hot-selling small cars. Factories making vans, compacts, and luxury cars quickly followed suit. Within a week, GM saw seven plants and 34,800 workers idled. A total of 12 assembly plants could be affected if the strike lasts much longer.
RADICAL SHIFT. That could deliver a blow to a U.S. economy that has enough problems. So far, the impact is limited mainly to GM's own aftertax losses of roughly $60 million a week, figures PaineWebber Inc. analyst Stephen J. Girsky, and some $2 million a day more for each additional plant idled. But the U.S. Bureau of Labor Statistics will soon conduct its September payroll survey. If the strikers are still out, their absence, as well as that of the other idled workers, will show up in the employment report to be released on Oct. 2. GM's lost output could also drag down industrial-production numbers.
Pretty impressive for a strike that's supposedly about narrow local issues. But consider the backdrop to the strike: Ailing GM vows to slash 54,000 hourly workers from its payroll by 1995, and a year from now it will renegotiate its three-year contract with the UAW. This strike, say auto analysts and labor experts, is the opening skirmish in a much larger battle to protect job security. "The UAW is firing a shot across the bow," says Harley Shaiken, a professor of labor studies at the University of California at San Diego.
The issue provoking this lightning strike is the same one that shocked the company's outside suppliers this summer: a radical shift in how GM says it will purchase parts. In early June, newly appointed GM parts czar J. Ignacio Lopez de Arriortua notified components makers that all contracts are up for grabs and that GM's own parts operations will have to compete with outside suppliers on the same terms. Since captive components units employ about one-quarter of the 265,000 UAW workers at GM, "this goes right to the heart of the UAW's membership," says Shaiken. "If you tear up captive contracts, you're also tearing up the collective-bargaining contracts."
What the UAW fears is that Lopez will eliminate lots of union jobs by shifting parts work from GM factories to outside suppliers. GM initially soothed such worries by pointing out that when Lopez set up a similar program for GM's European operations, the share of business held by GM's own parts operations trebled from 8% in five years. But the suspicion and anger that GM's outside suppliers now feel toward the company seems to have galvanized the UAW as well.
Like suppliers, the union cooperated in cutting costs and boosting efficiency to benefit GM. The union and suppliers now wonder what their help bought them. But the UAW can do more than most suppliers to thwart the corporation.
STREET JITTERS. Job security is bound to be the hot issue when the UAW squares off with the Big Three next fall. The union seems prepared to concede the job losses from plant closings that GM needs to shrink its excess capacity. But the UAW is reluctant to allow deeper cuts at parts plants. And where jobs can't be saved, the union will certainly demand that GM again ensure income security, as it did in 1990 by committing $3.4 billion to pay or retrain laid-off workers.
The Lordstown strike is making Wall Street jumpy, as it waits for evidence that GM won't back down from its sweeping restructuring plans. "I would be nervous if management caved in on this," says Girsky. For now, the Street seems to approve of GM's tough posture. GM shares, at around 34, have barely budged since the strike began.
Still, the pressure is on GM to settle. The longer the strike drags on, the more GM may have to concede to restart operations. Chances are the company and the UAW will reach a settlement dealing only with the arcane details of the local disputes. That will leave the big issues for next fall. But if the UAW wanted to send a message to GM, the union can be sure it was heard--loud and clear.