Baltimore's Stake in the GM Pact


For Baltimore, the real test for the new three-year contract signed between General Motors and the United Auto Workers union will be seen in the continuing vitality of the GM assembly plant on Broening Highway. Right now its 3,400 employees are working overtime as demand continues strong for its Chevrolet Astro and GMC Safari minivans.

The outlook is bright that these jobs are secure clear through the end of the century, but there are no guarantees. GM is going to have to grow out of its doldrums, and there is little indication the generous labor terms in the new contract will help it.

The common wisdom on Wall Street is that GM had been backed into a corner by the Ford and Chrysler settlements and had no choice but to sign an agreement similar to that of its thriving competitors. The corporate giant just could not take a strike, what with demand outrunning inventories because of production shortfalls, even though the contract will add to its towering unfunded pension liabilities, its job security costs and its wage .. and health benefits package.

Nevertheless, it is too early to judge the new, younger management team at GM a failure. It is not trumpeting any concessions it received from the union because it does not want to endanger ratification by the rank-and-file. And provisions built into the contract to accelerate a severe downsizing of the work force can be judged only by results. In the meantime, industry observers note that the UAW leadership would scarcely have wanted to antagonize its GM members by winning Ford and Chrysler contracts they would envy.

In the past three years, GM has lost an astonishing $17 billion in its North American car and truck operations. Its pension liabilities, now totaling $14 billion, could grow to $25 billion and higher as a result of the contract. Its fully funded health care benefits, with no co-payments required, contrast with a faltering system nationwide. Wages above $18 an hour, pensions above $2,000 monthly, 70 percent and higher paychecks for laid-off workers -- all these benefits may be worth it if labor-management antagonism gives way to a new harmony.

GM, however, is determined to cut 65,000 workers from its payroll. It won a provision that will allow it to transfer a worker up to 100 miles if his plant is closed. Management figures more workers will take early retirement rather than move.

Luckily for Baltimore, these are problems for somewhere else. Nonetheless, the Broening plant can be secure over the long run only if GM as a whole protects its market share, cuts its costs and improves its productivity.

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