Image Credit: CNN
I saw this fascinating CNN article on Wednesday, March 6th:
The Lordstown, Ohio plant has been closed for nearly a week now. It made its last Chevy Cruze sedan on March 6th. Another sign of the times. General Motors (GM) has shrunk from more than 618,000 workers to just north of 100,000 people.
Auto manufacturing in the U.S. has been declining for a while now. The closure of Lordstown is part of GM’s shift in strategy – Away from sedans, more focus on higher-margin trucks and light SUVs, as well as researching and developing electric and autonomous vehicles. GM has also invested in a ridesharing platform called Maven.
In addition to a declining workforce, U.S. auto workers have experienced a drop in wages (Roughly 18 percent since 1990, adjusted for inflation), and less retirement benefits. Just two years ago, only eight percent of factories offered pensions.
Lordstown sits in the Youngstown, Ohio region, halfway between Cleveland and Pittsburgh. The average worker in Youngstown made $38,000 per year in 2017. Compare that to $61,000 to $88,000 per year for full-time GM production workers, according to their United Auto Workers union contract. And that doesn’t include overtime pay and bonuses.
The Lordstown plant started to see changes about two years ago. As the demand for the Cruze sedan declined, the second and third shifts were cut, and 3,000 people were laid off. Of the remaining 1,400 people, about 400 accepted transfers to other plants, and they are able to hold on to their healthcare and pensions. There were 350 workers eligible for retirement. Those transferred workers will receive $30,000 in relocation assistance.
One of the workers interviewed for the article, at GM since 1995, thought she had enough seniority to transfer to another facility, such as the metal fabrication plant in Cleveland or the transmission factory in Toledo. However, relocating is not ideal, either. She’s stuck, quoted as saying GM has her in a “chokehold.”
“I make $32 an hour. I’m not going to go get a $12-an-hour job. I couldn’t survive on that at all. I’m going to get up and go, ride it out, try to get the best gig I can get, and be done with them.” She’s hoping to net her 30 years at GM – which won’t happen until 2025.
The Youngstown region has watched manufacturing slide downhill since the 1970s. The auto industry started to crack less than a decade later, with stiffer competition from Japanese automakers. In 1994, the North American Free Trade Agreement (NAFTA) dealt another blow, as work was outsourced to lower-paying suppliers. In 2007, as the automakers were having systemic issues related to the financial crisis and impending Great Recession, a lower-wage tier was created for entry-level workers, where they made 45 percent less per hour and got a 401(k) rather than a guaranteed pension. GM’s bankruptcy two years later tightened things even further.
For Lordstown, the community has thrived on GM. At one point, GM helped bring more than $2 million in tax revenue, among other benefits to schools and community ventures. Twenty years ago, Lordstown was competing with other cities to win another car model to replace the Chevy Cavalier. The community banded together, and along with plant officials, were successful in winning that car model. The community tried it again in 2018 – Posting signs, writing letters, and working with politicians. Unfortunately, one of the big factors was plant management wasn’t interested in participating this time.
Many are uncertain and fearful. They’ve watched GM shutter, and then re-open, their plant in Spring Hill, Tennessee. What if that happens in Lordstown?
Another problem is many GM workers were hired without secondary education. Nearly two-thirds of the 13,000 purported job openings in Youngstown, including information technology and healthcare, will require a post-secondary credential by 2021.
One bright spot is trade adjustment assistance, available to GM workers through the state and U.S. Department of Commerce. Truck driving certificates have been popular recently, due to the quick turnaround to earning them, and relatively good pay.
As Lordstown begins to adjust to life without GM, the local high school has started a training program for the logistics industry, helping prepare students for jobs in the various distribution centers in the area. Roughly 15 percent of students have parents worked in the plant. And they’ve already begun to experience losses, as families leave to accept those transfers at other GM plants.
TJ Maxx is building a facility that will employ 1,000 people locally. However, the wage difference is drastic. Where many at GM made $30 per hour or more, entry-level listings for other TJ Maxx facilities sit between $10 and $13.50 per hour.
However, Lordstown doesn’t want the shuttered plant to be turned over to Amazon, Tesla, or any other company. Not yet, anyway.
This story isn’t just about one GM plant in one Ohio town. It’s about history, the manufacturing industry, the changes in the American workforce, and what can be done for those who need jobs now.
Until the next headline, Laura Beth 🙂