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September 25, 2007 - Image 8

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The Michigan Daily, 2007-09-25

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8 - Tuesday, September 25, 2007

The Michigan Daily - michigandaily.cam

In Michigan and nationwide, 73,000 walk out

Answering a crucial
question: How long
can each side bear a
work stoppage?
By MICHELINE MAYNARD
The New York Times
The United Automobile Work-
ers union wielded its most potent
weapon against General Motors
yesterday, sending 73,000 workers
to picket lines in its first national
strike at GM since 1970.
Union officials said they were
left no choice but to strike because
General Motors was unwilling to
accept the union's demand that it
protect workers'jobs and benefits.
"We've done alotofthingstohelp
that company," said Ron Gettelfin-
ger, the union's president, in a news
conference shortly after the 11 a.m.
strike deadline. "But look, there
comes a point in time where you
have to draw a line in the sand."
For General Motors, its unyield-
ing stance reflects its decision to
accept the short-term pain of a
strike at 80 sites in 30 states to
achieve its goals: alower cost struc-
ture and more flexible workforce
to better compete against surging
Japanese automakers like Toyota
and Honda.
"Thisreallyis adefiningmoment,"
said James P. Womack, an expert on
manufacturing and co-author of
"The Machine That Changed The
World," which studied the plants of
Japanese automakers in the United
States. "GM has backed away from
defining moments for generations.
And now somebody there has final-
ly said, 'We have to do this because
it's a new era."'
The length of the walkout may
depend on two questions: How
long can the UAW afford to stay
out? And how long can GM endure
a strike? While neither side can
endure an indefinite strike, both
have decided they have more to
gain by standing tough.
GM is better positioned to handle
astrike than in earlier contracttalks,
though not for reasons that have to
do with strength. With its opera-
tions shrinking in the United States,
the majority of its sales and profits
are now coming from abroad.
It is selling more vehicles built
in Canada, Mexico, and Europe,
the source of new models for its
Saturn division. And it is expand-
ing production rapidly overseas,

especially in China, which is fast
becoming one of the world's major
car markets.
The company's problems at
home, which resulted in losses of
more than $12 billion in the last
two years, have forced it to close all
or part of a dozen factories, cut tens
of thousands of jobs and offer deals
to workers to quit or retire. A small-
er GM means there are far fewer
workers involved in this strike, so a
halt in production inflicts less pain
on the company.
The UAW has seen its member-
ship at GM shrink by more than 80
percent since the 1970 strike, when
400,000 workers were off the job
for 67 days.
In recent years, the UAW has
been more cooperative with
Detroit automakers, working side-
by-side with auto executives to
fashion early retirement incentives
to shrink the work force and better
match Detroit's diminished stature
within the industry. It also agreed
to concessions on health care at
GM and Ford Motor.
But on Monday, UAW officials
dispelled any doubts among its
membership thatit could still stand
up to management.
"A strike gives the union an
opportunity to say we're not com-
pletely acquiescent," said David L.
Gregory, a professor of labor law
at St. John's University in Queens,
N.Y.
"I think a lot of people are happy
the strike happened, because they
believe the company is walking
over them," said Eldon Renaud,
president of UAW Local 2164 in
Bowling Green, Ky., where workers
make the Chevrolet Corvette and
Cadillac XLR sports cars.
The strike occurred despite GM
and the UAW agreeing to discuss
a health care trust - called a vol-
untary employee benefit associa-
tion, or VEBA - that would have
assumed GM's $55 billion liability
for medical benefits. GM consid-
ered the formation of a VEBA its
major demand.
. Investors and GM managers have
pushed for a VEBA as a way to move
the liability of generous health care
benefits for current and retired GM
workers, as well as their families,
off the books of the automaker once
and for all, even if it required a huge
upfront payment.
GM has long said that such costs,
representing hundreds of dollars for
every car it builds, put it at a disad-
vantage with foreign competitors.
Gettelfinger, in fact, stressed
that the strike was over other

issues besides the VEBA, with job
security topping the list.
Tom Wickham, a GM spokes-
man, said, "Thebargaininginvolves
complex, difficult issues that affect
the job security of our U.S. work
force and the long-term viabil-
ity of the company." He added that
company officials would "continue
focusing our efforts on reaching an
agreement as soon as possible."
Negotiators from each side were
back atthe bargainingtable byearly
afternoon on Monday. But industry
analysts said that, given how far
apart the two sides appear to be,
the strike could last for weeks.
Jonathan Steinmetz, an analyst
with Morgan Stanley, said the com-
pany could endure a strike lasting
several weeks, but not more. After
that, GM would begin to burn cash,
and investors, who have encour-
aged GM to take a firm stand with
the UAW, might eventually grow
impatient in the face of a months-
long strike.
Another analyst, Mark Oline of
Fitch Ratings, cautioned that the
damage caused by the walkout
would have a ripple affect on sup-
pliers that sell parts to GM "The
UAW strike has the potential for
far-reaching, crippling repercus-
sions throughout the industry,"
Oline said in a research report
issued Monday.
The union, which pays workers
$200 a week in strike pay if they take
shifts on the picket line, has nearly
$900 millioninitsstrikefund,enough
to cover a two-month walkout.
GM, meanwhile, had a 65-day
supply of vehicles at the end of
August, about normal for summer,
and ithad already announced plans
to reduce production in the final
three months of the year because
of slowing sales.
Beyond that, however, the two
sides risk damage to their images.
In recent years, the UAW had craft-
ed an image of being more of a part-
ner than a foe in Detroit's efforts to
restructure.
Even last week, Gettelfinger said
in an e-mail message to union mem-
bers that the UAW was committed
to avoiding a walkout, although he
acknowledged Monday that he sus-
pected last week a strike was likely.
Likewise, GM has spent years
trying to convince consumers that
its vehicles are the equivalent of
high-quality Japanese models,
and that its brands are every bit as
appealing as the Toyotas, Hondas
and Nissans. An angry work force,
or one worried about its future,
may scare off some buyers.

UAW workers on the picket line outside of the General Motors Willow Run plant in Ypsilanti yesterday afternoon. Union workers
walked out at 11 am. after UAW President Ron Gettelfinger announced a nationwide strike.

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