ECONOMY: Workers, management unite to plead the auto industry’s case

By Daniel Pye<br><a href="mailto:pyed@gnnewspaper.com">E-mail Dan</a>

General Motors management, United Auto Workers members, politicians and others gathered Friday at the Tonawanda Powertrain plant for a chilly union rally, which has become a familiar winter sight in Western New York.

But this rally was different, with all sides united behind a cause instead of fighting amongst themselves. Waving signs with slogans like “A bridge loan is not a bailout” and “Stop the race to the bottom,” the crowd came together to try to change the public’s negative view of a $34 million loan currently being discussed in Washington D.C., said Kevin Donovan, assistant director of UAW’s Region 9.

“The perception is that auto workers are overpaid and under worked, and that couldn’t be farther from the truth,” Donovan said. “And people can’t forget that auto workers buy products and services locally. We’re all connected in this one, and if we don’t do something it will be devastating for all of us.”

To keep the auto giants afloat, the UAW is scrambling to find ways to cut costly concessions that it once fought tooth and nail to guarantee. Axing job banks, originally set up to protect workers from outsourcing, is one of the concessions the union is ready to make. The whole idea turned out to be flawed, Donovan said.

“They took a look at it, and over time it wasn’t successful,” Donovan said. “They found it was still cheaper to pay a worker in a jobs bank and outsource the work anyway.”

Shop Chairman Bob Coleman said getting rid of the jobs bank, which currently encompasses 3,500 workers between the three companies but none in Tonawanda, is a necessity if the industry is going to make a successful case to Congress.

“When the CEOs flew up in private jets, that was a bullseye on their backs,” Coleman said. “The jobs bank is a bullseye on the UAW’s back.”

The union is also suggesting that the auto makers delay payments to the Voluntary Employee Benefit Association, negotiated to give the UAW more control over retiree benefits. Restructuring moves that the UAW approved with all three companies last year were aimed at preventing the situation the companies are now embroiled in, but high gas prices and the economic crisis have left the giants in a tailspin.

Local impact of bankruptcy

Coleman said most people don’t understand how deep the community’s ties to the GM plant run.

For starters, there’s the $1.3 million in property taxes the plant pays the town each year. Generally, if the plant were to be closed, GM would still be liable for paying property taxes. But if the company goes belly up, all bets are off.

“What does bankruptcy really mean for a company of this size?” Coleman asked. “I don’t know if anyone is sure.”

Plant Manager Steve Finch added that a GM collapse and subsequent unemployment would also pass property tax defaults on to all of the workers who depend on their salaries to make payments. Even if the bills exist, tax liens don’t amount to dollars that can be dedicated to government services and infrastructure.

“The bottom line is if you don’t have it, you don’t have it,” Finch said.

Suppliers like Lockport’s Delphi plant will be decimated if their customers go under, and dealerships that employ just as many people as factories won’t be far behind, said Duane Paddock, owner of Kenmore’s Paddock Chevrolet and president of the National GM Dealers Council, which represents 7,000 dealers. New York dealerships spend more than $100 million annually in advertising and more than 20 percent of all sales tax revenue, another key source of local government funds, comes from the sale of automobiles. Paddock said the domino effect of an auto industry collapse would be the end of life as Western New Yorkers know it.

“We will never recover in our lifetime from that type of loss of employment and business,” Paddock said.

And after everyone is left in the poor house, there won’t be a poor house because charitable donations are likely to take a nose dive. On top of losses to wages and tax revenue, a GM collapse would result in a serious dent in funding to the groups dedicated to helping the sick and poor. The Powertrain plant donated $300,000 to charitable groups last year, including the United Way and American Cancer Society. Paddock said the Niagara Frontier Automobile Dealers have donated $750,000 to local groups in the same period.

Where to go from here

The UAW is working to amend its agreements with auto makers, but Donovan said those changes alone won’t be anywhere near enough to let the companies dig themselves out. GM announced layoffs Friday for another 2,000 workers at three car factories, but left Tonawanda untouched.

The ball is squarely in the court of Congress, which holds the power to make or break the industry, and the assemblage asked that residents contact their federal representatives to show their support for the loan. Industry leaders both nationally and locally want to make it clear they’re looking for a loan, not a gift. But the banking bailouts have left a bad taste in the country’s mouth, and Congressional leaders want guarantees that companies will use the money to fortify the industry and lead it into a competitive future.

Paddock said the companies are already headed in that direction, with the Chevy Malibu giving the Honda Accord and Toyota Camry a run for their money in terms of fuel economy and performance. But if consumers don’t vote for American cars with their wallets, even a $34 billion loan won’t save the industry.

“We need the public to give us a try and experience what we’re selling,” Paddock said. “It starts with one person. We give them a wonderful experience and they tell three people, but it has to begin from the ground up.”

Contact reporter Daniel Pye at 693-1000, ext. 158.

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