eyes on the U.S.

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, Tennessee (Legacy Images)
Spring Hill, Tennessee (Legacy Images)
Sylvain Cypel

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.

Read more from Le Monde in French

photo - Legacy Images

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Future

7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.


But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

commons.wikimedia.org

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

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