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Tentative Contract Reached Between GM, UAW

Wednesday, September 26, 2007 at 7:31 AM

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The United Auto Workers and General Motors have agreed to a tentative contract that would end a two-day-old walk-out. The union rank and file still need to ratify the pact to make it official. But that stamp of approval is not a given, because of the landmark nature of the deal, shifting the burden of health care from the company to the union. If the strike were to continue, Ohio's economy could feel the impact. ideastream's economics reporter Tasha Flournoy looked into that side of the story. She reports on those who might suffer beyond GM and its workers.

Ohio may have lost tens of thousands of auto jobs in recent years but it still has 150,000 automotive-related manufacturing jobs and seven major auto assembly plants. Only one other state has more—that’s Michigan.

So, Ohio has a lot at stake in the outcome of this contract dispute and the walkout by GM’s union workers yesterday, comes at a critical time in Ohio’s economy.

The state has seen some of the highest foreclosures numbers in the nation, unemployment is worse than the national average, And, manufacturing continues to shrink.

Auto production is moving from the Great Lakes region out to less unionized Western and Southern states—as well as to Mexico and Asia—as the Big 3: GM, Ford, and Daimler-Chyrsler downsize and restructure their operations. In the process, many of the businesses that supply parts to the big three are shrinking too.

John Colm, director of Wire-Net, a Cleveland based economic development and advocacy group for the manufacturing industry, says there is a surplus in domestic auto parts supply that is forcing auto suppliers to consolidate.

John Colm: There’s been an handful of auto parts companies announcing closings in the last few months. That is in part because of the over capacity and what’s happening as the industry restructures, the companies that have high cost structures are being squeezed out of the industry.

Even without the strike, Cleveland is expected to lose about 300 jobs when three major auto parts suppliers close up shop by the end of the year, according to NEO CAM or Northeast Ohio’s Campaign for American Manufacturing. One of those companies, Dickey-Grabler, will most likely survive but probably under a different name. 

Colm—and other analysts—say these kinds of consolidations and the two-day old strike by GM’s union workers could greatly affect suppliers operating at the margins.

John Colm: There probably will be related layoffs. Hopefully just temporary. You know a fair number of automotive suppliers are under financial stress because of the transition of the industry. It’s conceivable a few in the area might be able to reopen.

Ryan Augsburger of the Ohio Manufacturers Association also is worried for the businesses that supply GM and other major auto-makers.

Ryan Augsburger: You have fabricated metals. You have rubber and plastics. You have processed metals, but you also have the creation of metals. So the ripple effect on the supply chain in addition to the direct employment in those automotive companies is measurable.

Just how big is the pond that might have that ripple effect—well about three out of every four auto jobs today is not with the big auto makers… they are with the businesses that supply the parts. Many of those suppliers are located around Cleveland, Columbus, and Dayton.

Analysts like John Colm of Wire-Net says everyone connected with the auto industry is concerned.

John Colm: This has a huge impact on the community. This is not just a private business situation. This is gonna continue to have a huge impact on the broader community, on our tax base, on our ability to provide quality education. Jobs. The whole nine yards.

And the pain won’t stop there if it’s a long strike, according to Gordon Goff who represents Ohio’s retail merchants.

Gordon Goff: You know if it’s a protracted strike you know it really could have a negative impact on the retail sector. Sure any retailer is going to be concerned that folks won’t be in their stores purchasing items.

Some retailers are already worried about lousy Christmas sales this season because of uncertainties in the economy. The labor dispute only adds to that worry.

Tasha Flournoy, 90.3.

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Regional Economy/Business - News

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