How bosses and workers pranged GM

IT USED to be said that what was good for General Motors was good for America. So what happens when the world's largest company suffers the longest and costliest strike in its history?

As dust settles from a 54-day stoppage that crippled production at 26 of GM's 29 North American plants and lost it $2.3bn (pounds 1.4bn), the answer appears to be that America has come out of it bruised but substantially healthy. For GM, however, it has proved a particularly damaging episode that only confirms its long and seemingly inexorable decline.

What began as a local dispute about productivity and investment at a metal-stamping plant in Flint, Michigan, spiralled into a showdown between GM and the United Auto Workers union - a showdown that both sides acknowledge produced only losers.

Dale Brickner, professor emeritus of labour and industrial relations at Michigan State University, said: "The two sides were like a couple of pre-pubescent kids shouting at each other in the playground." If the strike ran so wild, it was partly because of the size and bureaucratic clumsiness of General Motors. All it took was a UAW threat to call out its workers in other parts of America for the two sides' publicity machines to turn the threat into a self-fulfilling prophecy.

Part of the problem too was an animosity and mistrust between the two sides that has dogged GM since the formation of the UAW during a sit- down strike in Flint in 1936.

But the key issue, which was in the background without becoming explicit, was GM's need to modernise and raise efficiency in the teeth of opposition from both the union and its own traditionally minded managerial ranks. Too many GM plants are old and inefficient and too many of its workers are on long-standing contracts that no longer reflect modern technology or working practices. Thus a highly trained parts maker is paid the same hourly wage as a low-skill assembly- line worker. A ban on multiple tasks creates situations in which employees stand idle for several hours a day.

GM's strategy has been plain since the hi-tech, non-unionised Japanese came into the American market in the 1980s: to close inefficient plants, especially in unionised centres like Flint, and open ones with non-militant labour forces. This devastated a number of Rust Belt cities in the 1980s. With the North American Free Trade Agreement, GM has moved much of its labour-intensive activities to Mexico, raising UAW suspicions that it wants to move out of the Rust Belt altogether. But that does not appear justified. Rather, the company wants to stay in the Midwest, which has a vast market on its doorstep, while raising efficiency by contracting out parts manufacture and assembling cars as far as possible with robots. GM is little different in this ambition from its chief US rivals, Ford and Chrysler. But its entwined relationship with the UAW, and the inefficiencies created by its size, have made transformation a longer and sneakier process. Instead of closing a plant outright and risking union confrontation, GM has tended to promise new investment in exchange for better productivity. In many cases workers have then achieved the new targets, despite their outmoded machinery, only to find the investment is not forthcoming.

"This is a company that reneges on its promises all the time. How are we supposed to trust them?" said Norm McComb, a UAW official at a metal- stamping division in Flint. GM accuses the UAW of failing to recognise economic reality and points to labour strongholds like Flint as seedbeds of intransigence and inefficiency.

This strike was born of exactly such divergent viewpoints - a decision by GM to withdraw new investment and move stamping dies out of a metal fabrication plant in Flint, coupled with the union's failure to meet promised new production quotas. After 54 days, the dies were returned, the investment was recommitted and the union made the same old production pledges once again.

In many ways, GM and the UAW are two sides of the same coin, both committed to models and production methods that have long since gone out of style.

GM's clunky traditional models are no longer selling, and new models are coming off the assembly line too slowly to keep up with the competition.

Over the past 30 years GM's market share has dropped from 50 to 30 per cent, and, for all its downsizing efforts, it still has higher labour costs per vehicle than any other US company. The country has become inured to its woes,which helps explain how the strike has been viewed as little more than a blip in the economic boom, even though it is expected to shave half a percentage point off national growth for the second quarter.

Next year GM is set for another showdown with the UAW when it renegotiates its national labour contract. Although there are hopes the futility of the past two months might avert another bloody conflict, nobody is counting on it. "GM is claiming communication with the union has been re-established," a Flint union activist said. "Ican tell you ... that is BS. We don't trust each other as far as we can spit."

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