Can GM keep its word?

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October 2, 2007
— David Cole understands the sense of security that embraced Janesville and other auto towns when the United Auto Workers said last week that it received “unprecedented job guarantees” from General Motors as part of its tentative contract settlement.

But after the excitement that came with word that the Janesville plant would build the next generation of full-size sport utility vehicles subsided, several questions surfaced:

- How can GM make such a guarantee, particularly one that outlines product assignments that won’t take place—at least in the case of Janesville—for six more years?

- What, if any, are the conditions attached to the guarantee?

- If sales of the big SUVs continue their decline, how will there be enough work for two shifts of autoworkers in Janesville and its sister plant in Arlington, Texas?

While the UAW’s announcement of product guarantees certainly beats the alternative, Cole, who heads the Center for Automotive Research in Ann Arbor, Mich., said many communities might be interpreting the contract details too literally.

In fact, the UAW’s package of contract highlights that was distributed to local workers Monday doesn’t refer to the replacement product for the current Chevrolet Suburbans and Tahoes, GMC Yukon XLs and Yukons as a “guarantee.” It refers to the next generation as a “product commitment.” The UAW’s White Book, which spells out the details of the recent contract agreement, refers to the next generation as a “product opportunity.”

“You really can’t make any guarantees,” Cole said. “But I do think that what GM is doing is improving its competitive situation.

“I’m not talking about being competitive in Brazil or China or India. I’m talking about being competitive with the (foreign automakers) doing business here.

“Once you’re competitive, a lot more is possible.”

The theory, he said, is that if GM can right its foundering financial ship, it can compete on its own turf and put itself in a prosperous position where job security is a virtual given. The marketplace will determine future product assignments, he said.

Still, the early commitment is significant for the Janesville plant, said Mike Sheridan, president of UAW Local 95.

“We still have to strive to be the best we can be, not only for the people of Janesville but for the union and the company as well,” Sheridan said. “We need to continue to be a leader in the corporation.”

John Dohner Jr., Local 95 shop committee chairman in Janesville and a member of the UAW’s national negotiating team, said future production is certainly a function of market demands.

“GM has committed to a future product at the Janesville plant, along with the continued production of the current product,” Dohner said. “They’ve said that with all the savings from this contract, they will be in a position to come into Janesville with the next generation.

“That’s what they’re telling us.”

And that’s what Dohner will tell his fellow Local 95 members at informational sessions Wednesday in Janesville. Members will vote on the national contract throughout the day.

Heading into this round of national negotiations, GM said it needed to trim a gap of $25 to $30 per hour between the wages and benefits it pays its hourly workers and those offered by foreign competitors with non-union U.S. plants.

Cole said this contract, which also includes an important health care trust for retirees, does just that.

“GM has been trying to run a race with one foot tied behind it for too long,” he said. “GM and its labor force have been collaborating for some time now, and I think this contract was the final nugget for them.

“GM’s now in a very good position to be competitive, and if they’re not competitive, then they’re not. I don’t know that labor can be blamed for that.”

Either way, Cole said the face of every GM plant in North America will change in coming years as scores of long-time employees retire. The average age of a GM hourly worker is 49, which is slightly younger than the 51 reported two years ago when 35,000 workers took buyout and early retirement packages.

Cole said it’s likely as many as 20,000 jobs will open at GM plants as current employees retire.

The majority of those jobs will be filled as current non-core production employees move into assembly positions. As a result of the 2007 contract, those non-core jobs will be available at a two-tier wage rate, which will pay about $15 per hour.

Cole believes those jobs will require two-year technical education degrees.

“The days of being a high-school dropout and getting a job at the plant are over,” he said.

“These will be excellent jobs, where people have to work in self-directed work teams without a lot of supervision,” he said. “The people getting these jobs will be entering into a period of lifelong learning.”

After a few years at the lower pay rate, they’ll be able to move up to higher-paying assembly jobs, he said.

“I’m really impressed with what GM’s doing with its global integration, cost reductions and research and development,” Cole said. “I’m more confident and comfortable with GM’s future than I have been in a long time.”

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