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Talk about chutzpah. In what only can be described as pure stubborn selfishness, a United Auto Workers (UAW) local in Indiana voted this week to close a General Motors (GM) parts supplier employing 650 workers. The closure is a harsh blow for a state with 10.2-percent unemployment and a unionized auto industry that has been in free fall for decades -- UAW membership has fallen from 1.5 million in 1979 to only 300,000 in 2009.
Motors Liquidation Co., which was created to sell surplus GM property during the automaker’s bankruptcy, owns the facility. Without a buyer, the plant will be forced to close in October 2011. JD Norman Industries, of Addison, Ill., planned to purchase the Indianapolis Metal Center and have it continue producing fenders, hoods and other metal parts for GM. Norman also planned to bring in new orders from other automakers.
Indiana Gov. Mitch Daniels and other local elected officials have been scrambling to save the plant. Blair West, representative for Indiana Secretary of Commerce Mitch Roob, pointed out in the Detroit News, “It does not just keep open that plant for the current workers, but keeps it open for future workers.”
Norman agreed to save the supplier from closure under the condition that UAW workers bring their pay closer to the industry average. The result would be a 50-percent pay reduction. That would amount to $15.50 an hour down from $29 for unskilled workers, and $24 an hour, down from $33 for skilled trade workers Employees who continued working at the plant and agreed to the reduced salary would retain GM seniority and receive a cash bonus up to $35,000. Employees who did not want to accept the pay cut would be free to transfer to other GM plants for up to two years.
Yet rather than agreeing to a pay cut and receive a cash bonus or transferring to other plants, union members of UAW Local 23 balked. On Monday they voted 457 to 96 against the giving into concessions, which will likely result in the shuttering of the factory. Chicago Business.com reported Norman announced after the vote, “We are withdrawing from pursuing the plant any further.”
After the vote, Secretary Roob reprimanded the workers reminding them of the $50 billion in taxpayer dollars GM received last year. “We're exasperated by this …. The taxpayers of this country bailed out General Motors and their workers. Now, those workers here turned their backs on future generations of people who might have had their jobs in Indiana,” he was quoted in Forbes.
Even other UAW officials saw pay cuts as the answer to saving the plant. Maurice “Mo” Davison, executive director of UAW Region 3, which includes Indianapolis, said that with the cuts, the factory could survive and the number of those employed could triple to 2,000. At the height of production, the 2.1-million-square-foot factory employed several thousand workers.
Norman addressed the concerns of pay cuts in an August 17 letter. “While I understand the sentiment of those employees who would rather transfer to another GM plant, our proposal would guarantee their GM transfer rights without having to close a facility,” the letter read. “Why then would any employees want to see the plant close?”
The actions of UAW Local 23 illustrate how unions helped bring Detroit automakers to their knees. Members of the local could have simply walked away, moved to other plants and been paid the same amount. They also could have stayed and accepted pay cuts with a bonus. Either option would have allowed a factory to remain open. But that wouldn’t have allowed for displays of bravado like that of UAW Local 23 bargaining chairman Gregory Clark, who told the Indianapolis Star, “The contract they offered us wasn’t a contract ...It just gutted everything we had come to know as a contract between employers and employees.”
So the union chose to close the plant. Most members of the local will now be allowed to transfer to other facilities anyway, but the toll on the local economy will linger. The plant pays $1.8 million a year to Marion County in property taxes and has a payroll of about $40 million. The potential workers who would have been hired had the plant remained open will now have a harder time finding new jobs.
It is no wonder some carmakers are forgoing the heavily unionized states in the Midwest and opening new plants in Southern right to work states. They don’t want to fall victim to the next such display of union muscle flexing.