Sunday, July 08, 2007

A GM town fears for its future

Friday, June 29, 2007
2007 UAW CONTRACT TALKS: Second in an occasional series
A GM town fears for its future
As carmakers look overseas to cut costs, workers have to decide how far they will go to try to save jobs in the industrial heartland
Sharon Terlep / The Detroit News

In a part of Ohio known as Steel Valley, where deep green ravines hold the ghostly remnants of a once-mighty industry, locals remember the day Youngstown Sheet and Tube said it was leaving town.

Word came on a late summer Monday in 1977. Within a decade, the region's other steel giants would be gone as well, the jobs shipped overseas.

Today, cheap labor in foreign lands again looms over the Mahoning River Valley, home to Lordstown Assembly, one of General Motors Corp.'s biggest plants.

The automaker, bleeding money and market share, says it must drastically cut costs at Lordstown, the valley's last bastion of good-paying blue-collar jobs, located just a few miles west of beleaguered Youngstown.

If the United Auto Workers union and GM can't agree on ways to save hundreds -- possibly thousands -- of dollars on each Chevrolet Cobalt and Pontiac G5 built there, the work could go to another plant, maybe in Mexico.

Among the key questions going into national contract talks this summer between the UAW and Detroit's Big Three is whether American plants can compete with those of foreign automakers and whether the union is willing to make the sacrifices needed to perform at that level.

The thorniest issues in that discussion are playing out in Lordstown, where national UAW leaders are involved in a clash with GM over changing factory rules and workers' fear for their jobs.

The challenge in Lordstown comes as Detroit's automakers are making big moves to save money by building vehicles outside the United States for sale here. The Chrysler Group has a deal with China's Chery Automobile Co. Ford Motor Co. is considering building a small car in Brazil. And GM will launch the compact Belgium-made Saturn Astra here this fall.

"They've made all these strides in productivity, job performance -- the scary thing is, who knows if that's enough," said Michael Chaffee, mayor of Lordstown, a village with a population smaller than the 3,400 people who work at GM.

"It's counter to everything we learn in life: You do your job well and everything will fall into place. Well, you can do everything right and it still might not work out."

Population, jobs lost

Streets near the Lordstown plant are lined with split-level ranch homes and above-ground pools that signal a comfortable blue-collar way of life made possible by GM and other now-defunct industrial companies. American-made cars sit in front of most homes, framed by well-manicured lawns.

The towns of Steel Valley, which sit at the geographic center of the U.S. manufacturing belt, are home to just under 600,000 people, about 100,000 fewer than in the 1960s and '70s, when the steel industry was booming.

Youngstown, the region's economic and population center, estimates that it has lost more than 40,000 factory jobs in the last few decades. Its population, at 82,000, is about half of what it was 40 years ago.

The valley's decline evokes some of Detroit's worst fears. Financial pressures from leaner foreign competitors forced steel companies to consolidate or go out of business. Labor strife exacerbated the financial woes until the companies closed or moved abroad.

The valley, much like Detroit, never managed to diversify beyond its core industry.

An exodus of jobs and people left the region with vast tracts of abandoned buildings, undeveloped land and dilapidated housing.

Still-rural Lordstown escaped the same fate largely because many of the workers who rushed to the region earlier in the century never settled there, instead moving to larger towns nearby.

Decades later, tension about the plant's future is palpable throughout the community. Locals worry about home values and keeping jobs that depend on business from the plant. An online message board at the local newspaper is filled with verbal volleys between plant workers and anti-union zealots.

Lordstown's Mayor Chaffee, after driving around town for a week in his mother's late-model Toyota Corolla, promptly received calls from two local television stations investigating a tip that he had purchased a foreign car.

"With the steel mills gone, we're the only game in town," said Jim Graham, president of UAW Local 1112, which represents GM workers in Lordstown. "If GM went down, this whole valley would implode."

Fears have returned

Lordstown has been through this before.

In 2000, Lordstown and surrounding communities launched a massive campaign to secure production of the Cobalt and G5.

The city and state gave GM millions of dollars in tax breaks. The union agreed to work rule changes to make the lines cheaper to operate. And people in the community, from plant workers to civic leaders, snapped up T-shirts and bumper stickers declaring, "Bring It Home! Get the Next Generation of GM Cars for Our Valley."

The crusade was launched because, years earlier, GM had moved production of full-size vans out of the plant and torn down part of the factory, a move many felt was meant to deliver a message of vulnerability to the union.

"We realize Japanese plants are small and competitive -- they educate us well on that," said Richard Bower, who has worked for GM in Lordstown since 1983. "They're always dangling that out there. You have to do everything the company wants, or they'll shut us down."

With GM again looking to cut costs, the fear of losing work has returned.

But this time, community and union leaders say, there's a sense the plant's fate is out of their hands.

GM hasn't approached government officials looking for tax incentives. And talks about the next product for the plant are being handled by national UAW leaders who got involved to make sure local union officials don't give away too much and compromise the UAW's authority nationally, according to several people close to the talks.

At Lordstown, as at other plants, GM is pushing the UAW to agree to money-saving work rule changes -- from reduced break time to more leeway to outsource jobs -- that mirror policies in plants run by foreign competitors, especially Toyota Motor Corp.

Plant-by-plant battles like the one in Lordstown have broad implications at the national level because they could set a conciliatory tone for the UAW heading into the contract talks, which begin in July. GM wants to be firm on ending money-wasting practices, and the union doesn't want to appear too ready to give up hard-won safeguards in the workplace.

GM was close to cutting a deal with local union leaders in Lordstown when officials from the UAW in Detroit stepped in. The national leaders halted the talks. In response, GM temporarily stopped pre-production work to ready the plant for GM's next-generation small car. The move was considered largely symbolic, driving home the point that, at any time, GM can move the work done at Lordstown elsewhere.

The conflict in Lordstown is exacerbated by the fact that GM loses an average $1,400 on every vehicle it builds in the United States, according to the Harbour Report, a closely-watched annual study of auto plant productivity.

The Lordstown plant, according to Harbour, is one of the most efficient small car factories in the United States. But that's not helping GM, scrambling to pull its North American operations out of the red, make money on the fast-selling vehicles.

"Despite all we've done together, we're still not generating positive cash flow in North America," said GM spokesman Dan Flores, who declined to specifically discuss Lordstown. "Fundamental competitive gaps still exist."

The workers of UAW Locals 1112 and 1714 in Lordstown are known for being fiery and well-informed. The union has a history of using strikes to muscle GM into meeting demands, and its workers have resorted to rogue tactics. The phrase "The Lordstown Syndrome" was coined there in the 1970s, when a work force seen as hostile and disaffected came to represent everything wrong with organized labor.

Today's workers, with an average 1 1/2 years of college experience, talk about efficiency and a global economy.

"Years ago, you would exercise muscle," Graham said, sitting under a larger-than-life portrait of Bill Clinton in his union hall office. "Now you have to have more of a business-type approach and think three times about every step you take.

"They can put up a new plant somewhere else in nine months these days, not two years."

Workers are quick to point out that they're aware of the challenges created by globalization of the auto industry. They quote figures from the Harbour Report and express a willingness to work with GM on cost cutting.

"We can keep doing things the way we've been doing them, but we're not necessarily going to stay in the game that way," said Stephen Lucas, who started at the Lordstown plant in 1979.

Sipping beer at the local bar, Lucas described a work force divided. Lots of workers are willing to bend to GM's needs if it means keeping their jobs, he said.

Others are wary, wondering if GM is doing all it can to cut costs and skeptical the automaker will keep its word even if the union makes concessions.

"Some people are aware of the global value of the industry, and some people don't look past traditional values," Lucas said. "They need to wake up -- it's a different game today."

You can reach Sharon Terlep at (313)223-4686 or

© Copyright 2007 The Detroit News. All rights reserved.


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