Outsourcing, a fighting word GM vs. UAW: The Dayton strike a curtainraiser for industry-wide strife and change.

March 30, 1996

LABOR AND MANAGEMENT are well aware the recent 17-day strike that shut down General Motors operations nationwide, including here in Baltimore, was just the latest skirmish in a long, long war. The issue that brings out the brass knuckles is outsourcing -- the practice of having outside non-union companies supply component parts at prices much cheaper than high-wage in-company plants can match.

The United Auto Workers union considers this practice a threat to its very survival. Its membership today is just over 800,000 -- half of what it was in the 1970s. Much of that attrition is due to foreign competition. But some of it is due to outsourcing. Chrysler buys 70 percent, Ford 50 percent and GM 30 percent of their parts from outside suppliers that are 80 percent non-unionized.

General Motors can cite these same figures to underscore its own dilemma. While near-bankruptcy in the early 1980s enabled Chrysler and Ford to go to outsourcing over union objections, GM's relative prosperity kept in an old mold that is now its cause of grief. Its aggressive management is determined to follow the path of its competitors. When the Dayton strike was all over, GM had reinforced its plans to have a Bosch anti-lock plant in South Carolina become a second major brake supplier.

The UAW also has tough new leadership that was quick to revel in the $1,700 bonuses it got for its Dayton members plus GM's promise to stick with plans for continuing its Dayton operations.

Actually, both sides in this dispute are somewhat the prisoners of demographics that will influence their coming battles.

During the next seven years, a third of the aging unionized work force in the U.S. auto industry will be retiring, thus triggering a hiring binge for more than 200,000 new workers. For now, the UAW concentrates on protecting the jobs and benefits of its veteran members. But soon, it will have to look to its newcomers, many of whom will come from non-union suppliers. This will create a dynamic that management will try to use to set up a two-tier wage system -- higher for assembly plants and lower for in-house parts plants competing with non-union suppliers.

So look for a lot of unrest, angst and restructuring in an industry important to Baltimore. Dayton was just a warning of what may come.

Pub Date: 3/30/96

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