DETROIT – The Motor City is facing a fearful holiday season after three of the auto industry’s biggest companies announced nearly 60,000 job cuts in the past week, with more to follow.
After months of bad economic news, mostly about the auto industry, there is a sense that this gritty town is humbled and weary, dreading the tough times ahead and searching its soul: Where did we go wrong? What does the future hold? Where is the light at the end of this godforsaken tunnel?
Many workers don’t yet know whether they’ll keep or lose their jobs, fueling an anxiety that is sure to taint Thanksgiving and other year-end holidays.
“We’re all worried. Everybody is worried,” Robert Paulk, 58, an hourly worker at General Motor’s Warren Tech Center, said Monday. The Novi, Mich., resident supports two teen-agers and a wife. “You can’t help but think about it.”
Just a few hours earlier, GM said it would stop production at 12 plants and cut 30,000 hourly jobs in North America by the end of 2008. Another 2,500 salaried jobs at GM are in the crosshairs.
For nearly three decades, the Big Three automotive companies that dominate this state have struggled in vain to compete against a foreign invasion of cars and trucks. GM, Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group have tried to build more enticing vehicles, yet their share of the United States automotive market has fallen from about 81 percent of all vehicles sold in 1975 to about 60 percent today.
That’s a dangerous drop-off when one considers that each single percentage point keeps an entire assembly plant running, according to some estimates.
As a result, the traditional American automakers have tried to keep up with this decline by reorganizing their businesses, closing plants and cutting jobs, often tens of thousands at a time, to match their company size to their sales.
Restructurings, in fact, have become a way of life in Detroit. More than 100,000 hourly and salaried automotive jobs have been eliminated since 2000.
“They keep coming up with plans, but they never get rid of the people that put them in the hole,” Allen Wojczynski, 58, who works at a GM warehousing plant in Ypsilanti, Mich., said.
The old Chrysler Corp. even merged with the German Daimler-Benz AG.
But none of it has been enough, and the turnaround plan to end all turnarounds has proven elusive. And so automakers keep spinning ever more makeover plans for the future.
Now, a wide-ranging twister of restructuring is here.
In addition to GM’s actions, Delphi Corp., one of several large Michigan companies in bankruptcy, has said it wants to eliminate 24,000 jobs on top of enormous pay cuts for its work force – demands so severe that an angry strike, which could disrupt production at GM, could come as early as January.
Ford, meanwhile, is planning to announce a major restructuring effort, including plant closures, in January. Already, Ford has said at least 4,000 salaried workers and contractors will lose their jobs in early 2006.
(EDITORS: BEGIN OPTIONAL TRIM)
Previously unthinkable pay and benefit cuts are being forced upon union and salaried workers in the automotive business, as well as other industries, namely the grocery and airline business. Everyone seems to be paying more for less.
Michigan’s median household income already has fallen by $9,914 – 19 percent – between 1999 and 2004, more than any other state, according to data from the U.S. Census.
Doug Thompson, wearing a black leather motorcycle jacket adorned with an American flag, spoke to reporters through a chain-link fence during a cigarette break Monday at a GM processing plant in Ypsilanti that is slated to close.
“I blame Detroit and Washington D.C.” he said. “We’re paying the price.”
A single father from Dearborn Heights, Mich., with a 21-year-old son in college and a 16-year-old daughter, the 43-year-old Thompson said he was confident he’d get another job in the company. But he said the pride and camaraderie of the work force that was evident 20 years ago has disappeared.
“I told my kids … I don’t want them caught up in this mess,” he said.
(END OPTIONAL TRIM)
Back at GM, chairman and chief executive officer Rick Wagoner said the automaker’s latest turnaround plan should restore profitability, although he couldn’t say when and didn’t offer the bold profit projections that automakers have made in the past with their turnaround plans.
“No guarantees in this business,” he said. “I can’t really give any guarantees.”
Catherine Madden, an automotive production analyst with Global Insight, a research firm in Lexington, Mass., said GM has made a lot of significant restructuring moves in recent years and this one will help.
“They are still, obviously, not where they need to be yet,” she said.
But it’s clear that workers are getting fed up with the restructurings, the instability and the uncertainty.
“There are lot of people that are really mad,” Paulk, the GM worker from Novi, said. “They think this is the thing that revolutions are made of.”
Dana Johnson, the chief economist at Comerica Bank in Detroit, seemed more certain that GM and Michigan could emerge strong and vital when this period of pain and suffering ends.
“To me, the sooner that GM and Ford aggressively restructure themselves, the better this state’s economy can move forward,” he said.
But even if they do that, he said, it could take until the end of 2008 for brighter days to shine on the Motor City again.
“By the end of that three years,” he said, “I think we will be ready to turn the corner.”
(EDITORS: STORY CAN END HERE)
Kenneth Ross, who retired from GM after 35 years and lives in Macomb Township, Mich., said he blames bad management for the domestic auto industry’s woes, listing about six or seven restructuring plans that never seemed to work out as planned. Still, he remains hopeful for the future.
“I think we’ll work our way out of it,” he said. “I really do.”
—
(Reporters Justin Hyde, Joe Guy Collier, Hugh McDiarmid Jr. and Michael Ellis contributed to this report.)
—
(c) 2005, Detroit Free Press.
Visit the Freep, the World Wide Web site of the Detroit Free Press, at http://www.freep.com.
Distributed by Knight Ridder/Tribune Information Services.
AP-NY-11-21-05 2241EST
Comments are no longer available on this story