New reality for Orion's laid-off workers
Laid-off workers at General Motors Co.'s Orion assembly plant may not
feel like the vanguard of an uncertain future for unionized autoworkers,
but they probably are.
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.
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.
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