Book Review: "End of Detroit" by Jim Burt (10/5/2003)
End of Detroit provocative, if not always sound.
Fall weather has settled in over the Motor City, and like the weather forecasts, the news out of Detroit is dour at best.
General Motor Corp., Ford Motor Co., and DaimlerChrysler have negotiated new contracts with the United Auto Workers, but analysts are now suggesting the new labor agreements will not be enough to bolster the competitiveness of the Big Three in the battle with foreign competition.
Chris Ceraso of Credit Suisse First Boston said in research report that "there does not appear to be any fundamental game-changers that will dramatically improve the competitiveness or profitability of the Big Three."
Some kind of closing
Nevertheless, the contracts do allow the automakers to move ahead with a series of plant closings that will cut costs and boost efficiency.
With a new four-labor agreement in place, Ford Motor Co. plans to close two plants by the end of the year and a third during the first quarter of 2004.
"Our new four-year agreement is a good one," said Dennis Cirbes, the Ford vice president in charge of labor relations. "The contract is consistent with our restructuring plans," he added.
Roman Krygier, head of Ford's manufacturing operations in North America, also said the contract allowed Ford to trim its production capacity by one million units — the goal first outlined in the turnaround plant the automaker rolled out back in 2002.
The Vulcan Forge in Dearborn and Cleveland Aluminum Casting plant will close by the end of this year, Ford officials now say. In addition, the Ford assembly plant in Edison, N.J. will shut its doors in the first quarter of 2004. Ford also plans to eliminate one shift at its St. Louis assembly plant in the summer of 2004 and Ford will close another assembly plant in Lorain, Ohio in 2007. With the retirements and plants closings, Ford could eliminate over 12,000 blue-collar jobs in the next four years and probably more.
The plant closing in North America also come amid another round of cuts in its salaried and contract personnel in the U.S. as well as in Belgium and Germany. In all, the jobs of 1500 contract personnel and 2000 salaried positions are on the block.
Cuts at Chrysler
Chrysler, which has suffering from poor sales on top of the heavy cost of sales, also is moving to make additional cuts in its salaried staff. The company instituted a hiring freeze last spring and has moved to eliminate the jobs of 400 salaried designers.
John Franciosi, Chrysler vice president of labor relations, said that both the company and the union have agreed to study indirect labor at all of the company's remaining manufacturing operations.
Once the study is complete, the company and the union will then jointly decide on a mutually acceptable solution to improving productivity.
Franciosi dismissed suggestions that the report would lead to the elimination of as many as 5000 jobs, but the contract also provides for some skilled tradesmen and other employees whose jobs could be phased out by the contract and who will be offered early retirement, added Franciosi.
Another 1500 jobs will be eliminated by the closing cf plants in Indianapolis and Detroit by the end of the year. Another 4500 jobs in Syracuse, N.Y., Huntsville, Ala., and New Castle, Ind., will be transferred to other companies.
Nate Gooden, director of the UAW's DaimlerChrysler department, said the agreement, which includes permission to close and sell operations, was necessary to protect the long-term health of the Chrysler Group.
GM, for example, got similar breaks from the union when it was in trouble, Gooden said. The agreement will lead to the shutdown of two plants and the elimination of about 1500 jobs, Franciosi acknowledged. The other parts of the agreement, however, call for selling plants rather than closing them, which preserves the jobs, he said. GM also will close at least two plants under the terms of the current agreement.
Meanwhile, auto parts suppliers also are eliminating jobs as well. Delphi Corp. confirmed last week it will cut 500 white-collar jobs, or about three percent of its work force, by the end of the year. Delphi hopes to fill the quota voluntarily without layoffs. ArvinMeritor also has announced plans to close a plant in Indiana, eliminating approximately 900 jobs.