|Back from the Brink: Auto Recovery Boosts
North American Manufacturing, Good Jobs
For Bay City, Mich., resident Jack Tobias, the General Motors Corp. Powertrain plant is more than just a job. For Tobias, a native of this small blue-collar city on the shore of Lake Huron, GM is a family legacy.
"My grandfather worked for GM, my dad worked for GM, my uncles worked for GM, many of my friends and their dads worked for GM," says the Local 692 business representative. "It's what keeps Bay City going."
For more than a century, GM meant jobs, not just for manufacturing workers, but for hundreds of construction, service industry workers and other Bay City residents.
But what had been seen as almost a birthright for generations of Northern Michigan workers looked increasingly tenuous as three decades of outsourcing and increased foreign competition shrunk Powertrain's payroll from a high of 3,500 in the 1960s down to 300 in the 2000s.
Yet after going through the worst economic crisis since the Great Depression — one that nearly tanked the entire domestic auto industry altogether — Bay City auto workers now have something they haven't had in a long time: hope.
Since the 2009 federal bailout, GM, once viewed as headed for the scrap heap, has come roaring back, reclaiming its position as the top automaker in the world, bragging rights it lost to Toyota in 2008.
And it's not just GM. Total profits for all three automakers are up nearly $6 billion this year, while auto industry employment is up more than 207,600 since June 2009, when both GM and Chrysler filed for Chapter 11 bankruptcy. It's a recovery that is felt not only in Detroit's boardrooms, but in Midwest communities like Bay City, which haven't experienced good economic news in many years.
After nearly four years without any auto work, Local 692 electricians are back on the job, putting in more than 13,000 man hours at the plant in the last year. "We wouldn't be here if it wasn't for the bailout," Tobias says.
"We feel like we're off to a bright start," says Tobias.
In cities throughout the auto belt, things weren't looking so bright in the fall of 2008. The Big Three were on the verge of total collapse in the wake of Wall Street's financial meltdown. Sales had dropped by more than 30 percent, and both Chrysler and GM — on the verge of bankruptcy — were left for dead.
Forced to go to Congress for a bailout, many elected officials and media figures argued for letting the companies go under, most notably former Massachusetts Gov. Mitt Romney, who penned a 2008 New York Times op-ed titled "Let Detroit Go Bankrupt."
But letting two of the Big Three close up shop wasn't a risk President Obama and Congress were willing to take. More than 8 million Americans and their families depend on auto manufacturing for their livelihoods, according to the Alliance of Automobile Manufacturing. Nearly 2 million are employed directly by the automakers, while another 6 million work for auto parts suppliers or dealerships.
"We cannot, and must not, and we will not let our auto industry simply vanish," Obama said in his announcement of the auto bailout on March 30, 2009. "This industry is like no other — it's an emblem of the American spirit, a once and future symbol of America's success."
It was a risk, but one that proved to be worth taking. The United States and Canadian governments' 2009 rescue plan, which supplied federal loans in exchange for a structured bankruptcy, helped to revive the domestic auto industry in ways few could have predicted, yielding a big return on taxpayer money and saving millions of jobs.
"The restructuring has paid big dividends for the nation, autoworkers and the domestic auto industry," writes Economic Policy Institute researcher Robert Scott.
Not only have the Big Three recovered to pre-recession employment levels, the companies have added an additional 78,000 jobs. And most observers say more hires will be needed to meet increased market demand. This is good news not only for workers in Michigan and Ohio but in Ontario as well, which, as home to Canada's auto industry, is seeing new jobs and investment from Detroit in the wake of the Big Three's revival.
Part of the auto industry's post-2008 restructuring has shifted focus to developing more fuel-efficient and hybrid vehicles, a market that it had ignored for most of the 2000s. Detroit's emphasis on sport utility vehicles, which dropped in popularity as the price of oil spiked past $4 a gallon in 2008, gave Toyota an opening to eat into the Big Three's market share with the introduction of the Prius, the first mass-produced hybrid vehicle.
"By 2006 GM's domestic market share had fallen to less than half of its historic peak," writes Steven Rattner, who served as lead auto advisor for President Obama during the bailout, in his book "Overhaul." "Industry watchers began to speculate whether Toyota might usurp GM as the No. 1 in the U.S., once unthinkable in a country where World War II vets had insisted on American-made cars."
The Big Three learned its lesson. In 2009, GM announced plans for the Chevy Volt, a plug-in hybrid, the engine components of which are produced in Bay City.
"I've had almost no experience with good news," Auto Workers Local 362 chairman Todd McDaniel told the Saginaw News upon hearing the announcement of GM's $37 million investment in the Powertrain plant to make the energy-efficient engines. "I could get used to this."
Green cars are giving a second chance to another historic facility: Ford's Cleveland Engine Plant No. 1. The company recently announced that the 61-year-old plant, which four years ago was on the verge of shutdown, was adding a third shift to meet the demand for its fuel-efficient V6 engines, including its EcoBoost engines, a move that will keep 250 Ford employees on the job.
"Things keep looking better and better," says 18-year Ford electrician John Sabo. The Cleveland Local 1377 member says that more than 140 electricians work in the plant right now. Sabo, who serves as an electrical trainer, says he credits Ford's recovery in part to its commitment to keeping abreast of technological changes in the market.
"They keep updating their line in order to stay up with a changing market and are making sure every worker is involved in the process," he says.
Sabo rode the downturn by returning to school and is currently finishing his bachelor's degree in electrical engineering and computer science at the University of Toledo, which he plans to put to good use at work as hundreds of workers transition to producing new EcoBoost engines.
"Education is vital, not only professionally but for the entire auto industry," he says. North America can take back its lead in manufacturing, Sabo says, but it requires the kind of joint company-labor commitment to promote ongoing high-tech training that he sees at Ford.
"Everyone here is working together to make a top-notch product," Sabo said. Even in the midst of the downturn, both the company and employees partnered to minimize the pain in order to boost morale. "Some of the older guys took time off, to prevent younger members, many of whom had kids at home, from having to be laid off."
And with the increasing need for more highly specialized training to keep the Big Three at the top of its game, the IBEW has a vital role to play in the industry's future.