It’s Over! Both Sides Claim Victory As Gm Workers Vote To End Crippling Strike

The deal that ended a crippling strike at two General Motors parts plants allows the United Auto Workers union to claim it saved or gained hundreds of jobs for members in Ohio.

It lets GM continue to use “outsourcing” - the purchase of components from outside suppliers - as a tool in its campaign for lower costs and greater productivity.

It also means that thousands of other companies that depend on General Motors Corp. for business can begin backing away from production cuts and layoffs and start trying to make up for revenue they lost because of the virtual shutdown of GM vehicle assembly in North America.

By Friday, when workers at the two Dayton plants approved the deal and began returning to their jobs making brakes and other parts, more than 177,000 GM workers had been laid off. The walkout forced closings at GM assembly plants as they ran out of what was made at Dayton. Then it forced cutbacks at parts plants that supply the assembly plants.

Analysts estimated it would cost the world’s largest automaker hundreds of millions of dollars in short-term profits. Some estimates approach $1 billion.

Many other vendors to GM also will feel a profit pinch.

Ryder System Inc., the nation’s largest car-hauling company, said Friday that its first-quarter earnings would fall short of year-ago levels primarily because of the strike. GM is Ryder’s largest customer. ITT Industries, a major parts maker, said its first-quarter operating income would be reduced by about $30 million, but that it expected to recover all but $10 million to $12 million during the rest of the year.

The strike’s effects on the nation’s economy will show up in the statistics of the first and second quarters of this year.

Diane Swonk, an economist with First Chicago NBD Corp., says the strike may reduce gross domestic product growth by three-quarters of a percent in the first quarter. “If it all shows up (in the quarter), it will take growth down close to zero,” she said.

But as GM resumes operations and boosts production to make up for that which was lost, the economy will be pushed ahead in the second quarter. Swonk forecasts a growth rate of about 3 percent.

The union insists the Dayton strike was over local issues, particularly the shift of work from the GM plants to outside suppliers. It said the settlement will add at least 392 jobs to the two brake plants, provide security for 122 anti-lock brake systems jobs, and establish a committee to pursue 269 new positions.

GM’s agreement to make $5.6 million in payments to the Dayton workers to resolve grievances over use of outside suppliers seems to be an explicit acknowledgment that it violated an agreement not to out-source the work.

But by settling with cash payments, and keeping intact its plan to buy brake systems for 1998 Camaros and Firebirds from Robert Bosch Corp., GM showed that it would not back down from its drive to choose the most competitive suppliers, even if they are outside the GM family.

“The settlement doesn’t affect any sourcing decisions that are in place,” said a company official, who spoke on condition of anonymity. Nor does it change the existing agreements that govern how the company must deal with the union when it wants to use outside suppliers instead of inside production.

“I think they got the union’s attention with a message that pushing them around on outsourcing wasn’t going to be easy,” Burnham Securities analyst David Healy said.

MEMO: This sidebar appeared with the story: TERMS OF THE AGREEMENT BETWEEN GM, UAW Here are the terms of the agreement according to the union: Guarantees 122 existing jobs for anti-lock brake systems work through 2004. Adds 200 more production workers; 117 skilled trade jobs such as plumbers and carpenters; and 75 workers to relieve employees whose jobs include repetitive motion. Establishes a committee to pursue 269 new jobs. GM agrees to pay $5.6 million to workers to settle dispute over subcontracting and other issues; to resolve more than 600 safety complaints; and to spend $6.5 million to correct health and safety violations.

GM’s response: Says the new jobs cited by the union had been agreed to previously, based on new business coming in. Confirmed the $5.6 million payouts. Wouldn’t confirm the resolution of 600 safety complaints or the $6.5 million to be spent on health and safety violations.