Monday, February 26, 2007

GM pushes new plant work rules

Friday, February 23, 2007
GM pushes new plant work rules
Additional jobs for workers, outsourcing are among changes sought to increase competitiveness.
Sharon Terlep / The Detroit News

General Motors Corp. is pushing union locals across the country to accept money-saving factory work rule changes or risk losing future vehicle production work.

Working off a set of standards GM calls its "True North" practices, GM leaders have been visiting plants to push for changes that range from getting workers to take on more jobs to outsourcing work not directly related to building vehicles.

GM's goal is to make its plants fully competitive with those of its Japanese rivals in the United States.

"The corporation is telling the international and local unions that if changes are not made, they will be unable to compete with our competitors," United Auto Workers leaders in Lordstown, Ohio, wrote in a recent newsletter to members.

The strategy is not new, but in the midst of a massive restructuring, GM has stepped up its efforts in recent months, sending managers to meet with union locals about so-called competitive operating agreements.

GM loses $1,300 on average for each vehicle it makes in North America, while Toyota Motor Corp. makes about $2,100 on each car and truck built here, according to Sean McAlinden, chief economist for the Center for Automotive Research in Ann Arbor.

While more flexible factory rules won't eliminate that gap, they could save GM hundreds of dollars per vehicle.

It's a tough challenge

But changing long-accepted work practices is a delicate and politically charged task for automakers and union leaders.

Workers who once literally could not turn a screw if it wasn't in their job description are now being tapped to perform multiple tasks. They're being asked to take on a greater role in day-to-day operations and assume leadership roles for the first time. And the union is being pushed to surrender work not related to building cars and trucks -- such as custodial work and grounds keeping -- to companies that can provide cheaper labor on a contract basis.

While such concepts are commonplace in Japanese-run factories, they run counter to hard-won labor agreements that for decades have protected workers in the domestic auto industry.

"We're going to sit down and negotiate responsibly," said George McGregor, president of UAW Local 22, which represents workers at GM's Hamtramck assembly plant. "It's negotiable if both sides can get something out of it. Especially if it comes down to getting a job or not getting a job."

Where Ford Motor Co. has come out publicly pushing such agreements, GM is taking a more subtle, gradual approach.

Ford has about 20 factories operating under more competitive work rules, and has been straightforward about its desire to get the union to change.

GM doesn't talk much about its work rules, but the company over the years has compiled scrupulously detailed data laying out exactly how well each plant is meeting goals, which are based on benchmarks -- some set by GM, some by other automakers -- that are deemed the best practices in the business. Plants are graded on how closely they adhere to those guidelines. The data comes into play every time GM doles out new production work.

"We benchmark every part of the business, and each plant is at a different stage of the journey," GM spokesman Dan Flores said. "With the urgency of where we're at in our turnaround, clearly we have to look for ways to close the competitive gaps and to do it as quickly as possible."

Some plants adopt new rules

Some plants are further along than others. Two GM Lansing-area factories, both opened within the past six years, have among the most flexible rules in large part because GM was able to get a fresh start with the work force there.

At Lansing's Grand River Assembly plant, which builds the Cadillac CTS sedan, workers team up on the line and everybody knows how to do everybody else's job. They all cooperate to streamline the process.

"The fact is, you can't build cars like you did 30 years ago," said Fred Charles, a union official for the plant's Local 652. "It's a constant struggle. They have their ideas on how the business should be run. We want to protect the high-paying jobs in America."

Perhaps no GM workers are under greater pressure than those in Lordstown, where GM builds the Chevrolet Cobalt and Pontiac G5.

GM, which has long lost money making small cars in the United States, is positioned to move that work to another country. Already GM is building the new German-bred Saturn Astra compact car in Belgium. The car goes on sale in the United States later this year as a 2008 model.

Many analysts think Lordstown could be in line to build that vehicle eventually, if it can get the job done the way GM wants.

"GM can move production to Mexico or to off-shore and break the UAW," according to McAlinden, who said Lordstown is a plant to watch as an example of how well UAW locals can compete in an age of globalization.

Negotiations on a new local contract agreement got under way this week in Lordstown. Jim Graham, president of UAW Local 1112, which represents Lordstown workers, declined to discuss the specific terms being discussed with GM, but acknowledged that the plant's future is at stake.

"The key is to get a new car for Lordstown," he said Thursday. "It's not going to be an easy contract. The membership understands that. They also understand the importance of getting a new product."

New work rules in the plants won't save GM. Much of the profit gap the company faces is from health care and retiree costs not shared by foreign rivals. GM spends nearly $1,400 per vehicle on health care for retired and active workers.

But changes at the plant level can help, McAlinden said.

About 23 percent of GM workers fall into the highly paid skilled trades category. Getting that figure down to 10 percent would save GM up to $180 on each car it builds, he said.

McAlinden said GM will have a tougher time winning concessions than Ford because GM has already announced which plants it will close as part of its restructuring. Ford has said it will close plants, but has not specified which ones, giving the automaker more leverage among workers who fear their plant will make that list.

But, even at GM, workers know they're vulnerable and are willing to work with the company, said Harley Shaiken, a labor expert at the University of California-Berkeley. GM lost $91 million in the third quarter of last year and saw its sales drop nearly 17 percent in January.

"Workers read the balance sheets, too," Shaiken said. "You've got a work force at GM that is well aware of the severity of the situation and the need to improve. You've got workers who want to see a successful GM."

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

New factory work rules

Some types of changes GM, other automakers are seeking:

Fewer job classifications that allow workers to perform more tasks

Workers taking on leadership roles and helping find efficiencies in the production process

Relaxing of rules that make it difficult to hire contract workers for jobs not directly related to building vehicles

© Copyright 2007 The Detroit News. All rights reserved.


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