Facing Global Competition, General Motors Tries To Reboot (Again) In Deep South
A French reporter travels to the Tennessee location of a once and maybe future auto plant, as GM looks ready to bet on a regional workforce that is better trained than foreign rivals – and cheaper than Detroit.
SPRING HILL - After outsourcing, re-sourcing! Michael O'Rourke, President of Section 1853 of the United Auto Workers (UAW) expects a pair of new assembly lines two years from now in Spring Hill, Tennessee. There, if the negotiation with the union is accomplished, General Motors will restart the production of cars at this factory which was shut down two years ago, and renounce on-the-spot its earlier plans to open a factory in Mexico.
Summary of the past few episodes: In City Hall, a headline from the local daily, The Tennessean, on July 27 1985 proclaimed: "Saturn Has Landed," predicting the arrival of 20,000 new jobs. In reality, even at the height of production, there weren't more than 7,200 employees working at GM in Spring Hill.
But it's at Spring Hill where GM, at the time the No. 1 car company worldwide, had chosen to raise production of the Saturn, sedans which in 22 years of production had never encountered more than moderate success. In June 2009, after having lost more than $100 billion dollars in four years, the parent company was on its last legs. Recapitalized and saved by the state, GM had to restructure itself in a dramatic way. Four of its eight brands, even the celebrated Pontiac, were axed. Saturn itself also cut the salaries of its assembly line workers who qualified for early retirement or those who resettled elsewhere.
The union members, in front of the local chapter of the UAW, don't dare believe that GM is not only returning to Spring Hill, but also pumping in $417 million to create 1,700 jobs to assemble two new models there. "Their past actions leave us with no reason to trust them," one union member says.
GM has yet to comment, but O'Rourke hopes for a contract within a matter of weeks. Mayor Mike Dinliddie is equally hopeful. "The site is recent, high-quality, and suitable for mobility," he explains, "GM is not acting as a philanthropist, since investing here will cost much less than elsewhere and the labor is instantly operational." Maybe, also, GM needed to "make a gesture."
O'Rourke credits Obama with having "saved GM, and millions of employees." At the time, Republican Senator Bob Corker and his counterpart in Alabama, Richard Shelby, were willing to "let the American automobile industry collapse," he adds. If GM now "returns the favor," suggests another union worker, "it wouldn't be surprising."
Lower wages, fewer benefits
But the "re-localization" of GM to Tennessee cannot only be explained by Obama's aid alone. The majority of employees will be new to the site. Upon being hired, they will earn $15 to $19 per hour, as opposed to the $29 dollars hourly wage earned by their colleagues in Michigan. Social security and retirement will also be much below previous GM standards.
Japanese, German, South Korean and Japanese automobile companies have moved in across this entire region, while imposing conditions well below those that UAW had obtained in the past. Volkswagen and Nissan produce in Tennessee. Mercedes, Hyundai and Toyota are based in Alabama, and Toyota also has a base in Mississippi. BMW produces its cars in South Carolina.
All "see the declining working conditions, well below the collective agreements, with 30% to 40% of all employees as temporary staff," explains O'Rourke. "GM does everything to prevent the presence of unions at their sites. If we want to save our employees, it is necessary that we adapt."
GM has accepted the union presence at Spring Hill. In return, the labor group will make concessions. "We are in a globally competitive market. We must stick together, or else we will sink together," said the broad 54-year-old man who spent 30 years with GM. "How much longer will we be able to stay competitive with these working conditions?"
With a slightly disillusioned smile, the union leader offered some business analysis. "To re-industrialize America, one must accept some concessions. It is better to work in worse conditions than to not work at all."
Re-industrialize America? For Jim Smith, a retired banker who worked for the city treasury, the return of GM is a sign. "My crystal ball tells me that we will see more and more companies reinvesting in the United States. With the lowering of labor costs, it will become more profitable. So then our salaries will remain better than elsewhere!"
Mr. O'Rourke himself has wonderful memories from his time spent in Germany last year at the IG Metall labor union. "It's great there! Fantastic working conditions, and an industrial strategy founded upon quality and a respected union." He says that knowing that with expensive factories and public benefits that Americans can only dream about, Volkswagen is becoming the No. 1 automobile producer worldwide.
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photo - Legacy Images