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GM plant a sign of decline

When the line stops at General Motors' Baltimore van assembly plant Friday, some 1,100 factory workers will face new questions about their futures that go well beyond the loss of their high-paying jobs.

Those who don't retire have the security of knowing they'll be paid for another two years. But what happens after that is weighing on the minds of some Baltimore workers who have watched GM's finances deteriorate during the few months since the closing was announced.

Baltimore workers express a range of emotions about the closure, from confidence that the company will survive its latest money troubles to hope that the factory won't close this week. But some worry that they could end up like the retired Bethlehem Steel workers at Sparrows Point who lost their health coverage and part of their pensions after the steelmaker declared bankruptcy. Others who had hoped to transfer to a nearby GM auto parts plant aren't as optimistic as they once were.

"I really believe for the first time that there's a lot of concern for the future," said Joe Evans, 58, who has worked at GM for 40 years. "You're playing with people's livelihoods, their lives."

In the Broening Highway plant's heyday, two shifts a day churned out vehicles, pumping life and money into the local economy. It was symbolic of a time when consumers were proud to buy products made in the United States and one in four people worked in manufacturing jobs. Many of those workers thought they would make GM vehicles for years and retire with the perks long associated with the auto industry.

Now, as production of the Chevrolet Astro and GMC Safari vans in Baltimore nears an end, experts say what is happening at the 70-year-old factory is symbolic of something else: the struggles of a troubled company. General Motors is losing footing to international competitors with lower production costs, paying a high price for health care for employees and retirees and, experts say, making vehicles that a growing number of consumers don't want.

"General Motors is a broken company," said Peter Morici, an economist and professor of business at the University of Maryland's Robert H. Smith School of Business. "If you sell an inferior product and you expect a premium price, you're going to go out of business. That's General Motors' problem."

Bad news at GM

Since announcing the closing in November, the news from General Motors has been dismal. Last month, the company reported its biggest quarterly loss in more than a decade - $1.1 billion for the first quarter of 2005. Sales for the quarter fell 4.3 percent to $45.8 billion.

The company's bond rating has been cut to junk status, it is losing a price war with Japanese automakers, and rising oil prices are making gas-guzzling sport utility vehicles less attractive to consumers. GM has gone from holding about 50 percent of the U.S. automotive market share in the 1970s to about 25 percent today.

"Their business has shrunk so much that they're structurally unprofitable in North America," said David Healy, an auto industry analyst for New York-based Burnham Securities who predicts more layoffs, plant closings and white-collar salary cuts at General Motors.

"Closing the plant in Baltimore was a good decision," said Walter McManus, director of the Office for the Study of Automotive Transportation at the University of Michigan's Transportation Research Institute, "but they need to do more of it, and that's the bad news."

For generations, working at a factory like the GM plant meant a nice, middle-class lifestyle. When soldiers came home after World War II, they returned to jobs and booming businesses. Americans bought American cars. Solid wages and benefits became ingrained in major industries, such as auto and steel, said Jack W. Plunkett, chief executive officer of Plunkett Research Ltd., a market research firm in Houston.

Big health care costs

Today, an autoworker can earn up to $80,000 a year with overtime, said David E. Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich. In addition, experts said, General Motors is the largest health care provider in the world - and about 70 percent of its health care costs are going to retirees.

In 2004, General Motors spent $5.2 billion in health care. The company covers 1.1 million employees, retirees and their dependents. For every vehicle GM produced in 2004, the company spent $1,525 on health care and $675 on pension costs, said GM spokeswoman Pam Reese.

General Motors' obligation to its U.S. pension plans was $89 billion in 2004, according to documents filed last year with the Securities and Exchange Commission. In an SEC filing this year, the company said it "remains burdened by a high fixed cost structure due to its large retiree base." Reese said that for every current GM employee there are 2.6 retirees.

Analysts say those wages and benefits, among other things, are catching up with GM.

"GM is at a critical crossroads, needing to do everything it can to reduce costs," Plunkett said.

"The idea that a large company can never disappear, that's not true anymore," Cole said. "It's a very, very challenging period, to put it mildly."

Dwindling sales

The Chevy Astro and GMC Safari vans, the only products made at the Baltimore plant since 1984, haven't been remodeled in 20 years. Sales dwindled as America's love affair with minivans grew, dampening demand for larger vans. In 1994, GM sold 131,214 Astros and 46,153 Safaris. By last year those sales figures had fallen to 34,564 and 8,345, respectively, according to wardsauto.com, an automotive information company in Southfield, Mich.

The vehicles' safety and reliability record also has suffered. The vans rated poorly in some government crash tests during the 1990s and were branded the worst in their class this year. Consumer reliability was below average and owner satisfaction was rated fair in a 2003 Consumer Reports reliability survey.

The Baltimore plant closure had been rumored for years. In 2000, it went from two shifts to one. Employment has fallen from a peak of about 7,000 workers 30 years ago.

Joe Kuhn, 49, believes that, if it had had greater market share, GM would have retooled the Baltimore plant for a new vehicle or built another assembly plant somewhere in the region. A 21-year plant veteran who repairs machines in the paint shop, Kuhn said he will be one of the workers helping to decommission the factory this month.

"It's going to be somewhat mixed feelings and a sadness for me to participate in tearing out a lot of equipment that I used to maintain," Kuhn said. "We were just one of the unfortunate victims."

Gail Hardinger, 57, who has been working at the Broening Highway plant for more than 30 years, raised two sons on her own with her GM salary. She has never driven anything but a GM car.

She feels the plant closing was inevitable but believes the problems at General Motors are being exaggerated. Still, she is concerned about the future. "We're always concerned about our benefits and about not ending up like [Sparrows] Point," she said.

Most workers will continue building the vans until Friday. Employees said the weeks leading up to the closing have been business as usual, though some said the mood at the factory has been more somber in recent days. When GM threw a party for its workers in honor of the plant's 70th birthday recently, some didn't attend because they felt there was nothing to celebrate.

Still, plant manager Timothy E. Stansbury said last week that employees "remain extremely upbeat through this difficult time."

Once the plant closes, workers can either retire or go into the job bank to do community service, go back to school or wait until a position opens at another GM plant. The company is offering a choice of retirement incentives, such as $25,000, said Walter Plummer, president of the United Auto Workers Local 239, which represents the workers at the Baltimore plant.

The final vehicle to be produced began its journey through the Baltimore assembly line Friday at 3:40 p.m. This Friday, that van will end the plant's 70-year run. Four union workers - chosen from a pool of those with perfect attendance records this year - will be given vans to drive home the last day, Stansbury said.

Some equipment will be moved to other GM facilities when the plant closes, Stansbury said. Additional staff will stay on to help decommission the plant, but Stansbury declined to say how many and how long it would take. Shutting down the factory is expected to cost GM up to $6 million a month in employee compensation and benefits.

Wide economic impact

Every job in an automotive plant affects 9.4 jobs elsewhere in the economy - at the companies that supply goods to the plant, neighborhood grocery stores, barbershops and restaurants, said Cole of the Center for Automotive Research.

Already, a Michigan supplier of vehicle frames has said it will close its Harford County operation as a result of the GM closure in Baltimore.

The economic value of a plant job is about four times that of the average job in the American economy, Cole said.

"Most communities don't have a realistic picture of just how valuable those [factory] jobs are," he said.

State officials hope to persuade GM to donate the 182-acre site and use it as a global trade and technology center.

But J.T. Binebrink, who works in the chassis department at the factory, is still holding out hope.

After all, he has been working at GM for a dozen years. He knows other workers were told in the past that Baltimore would never get another vehicle to build - only to see a new model come along. Now, perched on his barstool at the Poncabird Pub in Baltimore, smoking a cigarette and drinking a beer, the 33-year-old Binebrink isn't ready to give up on GM.

"Until they bring in the wrecking ball," he said, "there's always hope."

Copyright © 2015, The Baltimore Sun
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