NY Times, November 19, 2005 For a G.M. Family, the American Dream Vanishes By DANNY HAKIM
FLINT, Mich. - Four generations of the Roy family relied on General Motors for their prosperity. Over more than seven decades, the company's wages bought the Roys homes, cars and once-unimaginable comforts, while G.M.'s enviable medical and pension benefits have kept them secure in their retirements. But the G.M. that was once an unassailable symbol of the nation's industrial might is a shadow of its former self, and the post-World War II promise of blue-collar factory work being a secure path to the American dream has faded with it. After a long slide, it now looks like the end of an era. "General Motors, when I got in there, it was like I'd died and went to heaven," said Jerry Roy, 49 - who started at G.M. in 1977 and now works on an assembly line at a plant operated by Delphi, the bankrupt former G.M. parts unit that was spun off in 1999. When Mr. Roy was hired at G.M., nearly three decades ago, his salary more than doubled from his job at a local supermarket. He traded in his five-year-old Buick for a new Chevy and since then he has done well enough to buy a pleasant house on a lake near Flint. But now he faces the prospect of either losing his job or accepting a sharp pay cut. And for those coming after him, "it's just sad that it's ending, that it looks like this," he said. In his hometown, he added, "all these places that used to be factories are now just parking lots." Those factories supported the Roy family for generations. Jerry's great-grandfather, John Westley Roy, came to Michigan from Missouri in 1931, in the depths of the Depression. He built a home five blocks north of a plant operated by General Motors' AC Delco division and worked there for a decade before he was injured and retired to a farm. Mr. Roy's grandfather, Edward, worked at the Delco plant during the war, when it was converted into a machine-gun plant: he would tell a story about a day one of the guns came off a mount and began shooting holes in the wall of a cafeteria. Mr. Roy's father, Gerald, started at G.M.'s Fisher Body unit in 1951, was laid off after a year and a half, and then got a job in 1954 at AC Delco. Gerald's sister, uncle and future wife, Delores, worked at the plant. The elder Mr. Roy remembers the 1950's and '60's as a golden era, when everything seemed possible. "There were three shifts - they worked around the clock," he said of the AC Delco plant, adding, "you'd go in there and you couldn't even hardly walk." Buoyed by such prosperity, the auto industry was the pioneer in advancing what became the American model for the social contract between workers and their employees - from the $5 a day Henry Ford offered workers in 1914 to the all-inclusive health care and pension benefits that became a mainstay of the vast expansion of the middle class in the second half of the 20th century. In many ways, it was not the government but Detroit and other major industries, at the prodding of their unions, that created the American-style social safety net, and helped foster the shared prosperity that is now fracturing. "The days when blue-collar work could be passed on down the family line, those days are over," said Gary N. Chaison, a professor of labor relations at Clark University in Worcester, Mass. "Where you did have automobile plants it was always looked at as an elite job. It was hard work, but good, steady work, with wonderful benefits and good solid pay, and you were in the upper middle class." Now, with G.M. and other domestic automakers and suppliers fighting to survive brutal global competition, Detroit is planning to cut even more manufacturing jobs. At the same time, the industry is moving to rewrite or even tear up its labor contracts in a bid to turn itself around by drastically reducing both wages and benefits. Today, Mr. Roy and Gerald, 71, who once helped him get his job, are both preparing to make sacrifices. Robert S. Miller, the turnaround specialist who became chairman and chief executive of Delphi in July, said in an interview in October that Delphi and the United Auto Workers would have to grapple with how much to take from the retirees pockets and how much from workers. "This is a tradeoff," he said. "I can't satisfy what everyone would like to have." [But Delphi is pressing for such large cuts from both constituencies that one top U.A.W. leader, Richard Shoemaker, recently called the company's proposals a "roadmap for confrontation."] Not only is the company seeking to cut two-thirds of its 34,000 hourly workers in the United States, it wants to cut wages from as much as $30 an hour to as little as $10. Worries about a strike at Delphi have also been among the many issues weighing on G.M. itself. [Talk of bankruptcy has become so persistent around G.M., despite the significant cash and other resources it still has at its disposal, that Rick Wagoner, the company's chief executive, went out of his way in a letter this week to state that there was "no plan, strategy or intention for G.M. to file."] Delphi is also seeking major cuts in the health care and pension benefits of retirees, though under the terms of the spin-off of Delphi, G.M. would have to assume much of those costs, setting up a further quandary because simply dumping troubles on G.M., its largest customer, is not necessarily palatable to Delphi or the union. Delphi plans as well to do more of what it has been doing since its spin-off, by continuing to shift thousands of jobs overseas. An internal memo obtained earlier this month by The Detroit News listed the Flint plant where Jerry Roy works among factories targeted for closure. Delphi has called the memo incomplete and preliminary. Delphi puts the choices facing Detroit and its workers in starkest relief. G.M., at least so far, has sought a more compromising approach, in large part because automakers face slightly less-onerous competitive dynamics than their suppliers. Earlier this month, U.A.W. members reluctantly agreed to allow the company to shave $15 billion, or nearly 20 percent, from its retiree health care liability. The elder Mr. Roy and other retirees will now be required to pay monthly premiums, deductibles and co-payments for medical services for the first time, with costs of as much as $752 a year. For his part, Gerald Roy is more worried for his son Jerry than himself. "What worries me the most, or bothers me the most, is him working for 28 years for G.M. and he might lose his retirement," he said. But the Roy's are the lucky ones. Gerald and his wife, Delores, another G.M. retiree, are healthy and not on medication, and their son is single and does not have any children. They are both aware that the good life that auto work has afforded their family for four generations, and for hundreds of thousands of other families in Michigan and elsewhere across the country, is ending. Indeed, others face more difficult times ahead. "We're going to have to make a choice between what bill to pay, whether to go to the doctor," said Larry Mathews, who works at the same Delphi plant as Mr. Roy and is also the editor of The Sparkler, a paper for plant workers. If the pay cuts go through, Mr. Mathews said he would no longer be able to afford his son's college tuition. "I know I'm going to have to call my son at Central Michigan and tell him to come home," he said. "I bet those executives don't have to make those calls." Like Gerald Roy, Mr. Mathews's father retired from G.M. at a time when the bond between the company and its workers was still strong. Mr. Mathews's father died from an asbestos-related illness stemming from his plant work. Even so, Mr. Mathews said his father, who became ill in his late seventies, refused to sue. "He said, 'This place paid for everything I got today; I'm not going to sue them now,' " Mr. Mathews recalled. But now, Mr. Mathews makes clear that he has no desire for his own son to continue the family tradition. "Given what we've lost here in the past decade, I really didn't want to see him come to work at G.M. or Delphi," he said. "The security just isn't there." When the web of labor contracts was woven during the postwar American auto boom, industry executives wanted, above all, to keep the union at bay and profit rolling in. With young workers and no Toyotas and Hondas to worry about, there was little short-term downside to the industry's concessions. "The work forces were young, the pension costs were low, the exposure for health care wasn't really there and they didn't promise a lot to begin with," said Gerald Meyers, a professor at the University of Michigan and the former chief executive of American Motors. Each contract, he said, "added a little more and a little more and a little more." "The thinking in top management," he said, speaking from personal experience, "is that they've kicked this ball in front of us, and keep kicking it. And when it comes due, we're not going to have to pay it." "It's like the national debt," he added. "We'll spend it now and let the kids worry about it. Well, here we are in 2005, and the kids are now the management. They're paying for their fathers' sins." G.M. workers should not expect the dire approach that Delphi has taken, at least on wages, because assembly work has always been better paying, including for competitors like Toyota and Honda in their American plants. G.M.'s problem, at least in terms of its costs, is the enormous price of health care benefits for hundreds of thousands of retirees. G.M. is the largest private provider of health care, covering more than a million Americans. "If I look at our priority list on the things we need to do to get cost competitive, wage rates are nowhere near the top for us," Mr. Wagoner, the G.M. chairman and chief executive, said in a recent interview. Not that anyone has much chance of getting a job at these companies anymore. Wages are less important because the industry is so much more efficient than it used to be and has already cut so many jobs. G.M. plans to cut its blue-collar work force even further, though, to 86,000 Americans nationwide by the end of 2008, about the same number of people it once employed in Flint alone in the 1970's. At its peak, G.M. employed more than 600,000 Americans. "Frankly in our business, the progress in improving productivity has been dramatic," Mr. Wagoner said. "Over a 10-year period, we have gone from a ballpark of 40-plus hours a vehicle in assembly to 20-plus hours a vehicle." Benefits are another matter. G.M. pays about $1,500 per car assembled in the United States for health care, more than it spends on steel. Even with the coming cuts for retirees, the elder Mr. Roy is not concerned; he's actually more worried about paying heating bills for the large house he built two years ago, abutting woods just outside Flint. "It costs a lot to heat this place," he said, sitting on a swivel chair in his sun room, before taking a visitor on a tour of his house, including his own woodcarvings displayed in his basement. "We really made out," he said. "I bought a little cabin out on the lake and made a chalet on it, turned around and made enough money to buy this house." But his son Jerry, knowing that his job may disappear and that his pay is likely to shrink no matter where he ends up, faces much greater uncertainty. "What can you do?" Jerry asked. "People survive somehow, regardless of what happens. I mean, it's sad, I could cry all night, but I'll figure out a way to get by - somehow." Jeremy W. Peters contributed reporting from Detroit for this article.
