New reality for Orion's laid-off workers
Not because their leaders are conspiring to "sell them out" or because managers of recently bankrupt GM are scheming to "ship their jobs overseas," two familiar (and oversimplified) scapegoats. They're trying to do just the opposite, as deeply offensive as their method is to generations of autoworkers seeing lower wages offered to those without enough seniority to resist.
Hundreds of UAW members laid off at Orion this week faced a deadline to decide whether to take a spot at GM's Lordstown, Ohio, plant. Their choice: Move 250 miles to ensure their current wages and benefits or risk being the lower-seniority members offered a reduced compensation package to stay at Orion and build a next-generation subcompact.
This is a glimpse of the new order governing the Detroit auto industry after its ignominious fall, taxpayer-financed resurrection and a conviction to bury for good a business model that was broken long before it collapsed under its own enormous weight.
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Is that a recipe for dissension among the rank-and-file? Sure. Does GM's Orion offer, partly a sop to its owners in the federal government, essentially represent a historic rewriting of the "one-wage-for-all" ethos embedded in the culture of the UAW and the expectations of its members? No question.
The controversial move also shows that the implosion-induced bankruptcies of GM and Chrysler Group LLC, the strings attached to federal bailout bucks, the restructuring of rival Ford Motor Co. and the relentless pressure from foreign competitors have changed the rules fundamentally for everyone.
That includes union members chafing at signs of the new reality coming from Orion and an Indianapolis stamping plant, among others. Meaning Orion isn't likely to be the only place where such distasteful choices are likely to be considered and probably implemented.
Maddening? Probably, which is why a couple of frank reminders are important here. First, two of Detroit's three automakers went bankrupt. Second, bankruptcy could have been the blunt instrument that destroyed the entirety of the automakers, the union and 70 years of accumulated bargaining gains. Third, Detroit's rescue was financed not by Wall Street bankers, but by American taxpayers who've endured the Great Recession taking many of the same financial haircuts.
Fourth, GM and Chrysler collapsed because their business model, including labor contracts, was woefully uncompetitive and too many management decisions were unrealistic.
All of which means, finally, that Detroit's automakers and the UAW are on probation like they've never before seen. Product programs must be profitable; management decisions must be defensible; and labor costs must support the first two, not the other way around.
The other option is, of course, NIA ? Not in America. GM could build its next-generation Chevrolet Aveo and its Buick sister in Asia or Mexico, as all of its competitors ? including Ford ? currently do because the economics of building less expensive small cars in the United States are so difficult to square.
And they'll stay that way so long as the leaders of all three companies push to keep their lower labor costs roughly in line with those of foreign competitors operating in the United States ? a crucial component to delivering the kind of profits that could be distributed to employees in the form of sweetened profit-sharing plans.
UAW President Bob King, credited by industry execs for having a savvy business mind, is fond of reminding whoever will listen that his union is not a heads-in-the-sand throwback to intransigence, featherbedding and indefensible contracts.
The Orion model, hated as it may be by some, is one example proving his point because the alternative is a whole lot worse.