Krueger and Mas traced the consequences of the Firestone strike, which the
company
initiated by making harsh demands on its workers:
Bridgestone/Firestone proposed deviating from the industrywide
pattern bargain by moving from an eight to a 12 hour shift that would rotate
between days and nights, as well as cutting pay for new hires by 30 percent.
Almost
immediately after 4,200 workers walked out on strike, the company hired
replacement
workers. A final contract, which included provisions to recall all strikers,
was
not settled until December 1996. [Krueger and Mas 2004, p. 254]
Following a rash of highway fatalities, the company recalled 15 million tires.
These economists cleverly pieced together the effects of the strike with the
subsequent deaths from defective Firestone tires. The economists were able to
take
advantage of a particular circumstance:
Almost all the P235 tires were produced in three plants:
Decatur,
Illinois; Joliette, Quebec; and Wilson, North Carolina. For nearly three years
from
April 1994 to December 1996 union workers at the Decatur plant either were on
strike or were working without a contract; tires were produced by 1,048
replacement
workers, union members who crossed the picket line, management, and recalled
strikers in this period. The Wilson plant was nonunion, so it did not
experience a
strike. A Canadian union represents the Joliette plant, but labor relations
there
were much less contentious. Joliette had a six month strike over fringe
benefits at
the end of 1995, but the plant did not hire replacement workers (which are
illegal
in Quebec). [Krueger and Mas 2004, pp. 255 56]
Based on claims for compensation for property damage or personal injuries due to
faulty tires, Krueger and Mas discovered that tires from Decatur produced
during the
labor strife were 15 times more likely to have a defect than tires from the
company's other plants. This large discrepancy in failure rates does not
appear in
other years, although the rate for the 1993 was about double that of the other
two
plants (Krueger and Mas 1994, p. 265). They estimate that 40 people died in
crashes
as a result of a strike with which they had no direct connection.
Krueger and Mas observed that just about everybody came out a loser in
this
battle:
The stock market valuation of Bridgestone/Firestone fell from
$16.7
billion to $7.5 billion in the four months after the recall was announced, and
the
top management of Bridgestone/Firestone has been replaced. The company also
closed
the Decatur plant in December 2001 and considered abandoning the Firestone brand
name. If antagonistic labor relations were responsible for many of the defects,
even indirectly, this episode would serve as a useful reminder that a good
relationship between labor and management can be in both the company's and the
union's interests. [Krueger and Mas 2004, p. 287]
Because of the availability of the data on the defective tires, as well as the
insight of Krueger and Mas in splicing together the strike and the highway
fatalities, some of the costs of the Decatur incident became public. Surely,
other
negative consequences occurred as well, even if they were not as dramatic as the
accidents in which defective tires killed or maimed victims.
I believe that this incident may have a larger lesson. The Decatur tire
factory represents a microcosm of the shortsighted, often vindictive efforts on
the
part of capital to win a victory at the expense of others.
Again, the logic of these strikes flowed directly out of the right wing
revolution. Not long after he assumed the presidency, Ronald Reagan broke the
air
traffic controllers union, signaling that attacking labor was a respectable way
of
doing business. The courts, administrative agencies, and legislatures at both
the
state and federal levels all began to work overtime in an effort to undermine
labor's bargaining power. After all, doing so was expected to increase the
rate of
profit. In many cases, this expectation was borne out at least in the short
run.
At the same time, this belligerent attitude toward labor must have
taken a
serious toll on productivity. Yes, of course, business can squeeze out greater
productive efforts by pushing labor harder. But if business drives labor too
hard
by resorting to antagonistic policies, business will deny itself the potential
collaborative creativity of its workers, a loss that will prove costly in the
long
run, even if the consequences are not as dramatic as the Bridgestone/Firestone
case.
Krueger and Mas traced the consequences of the Firestone strike, which the
company
initiated by making harsh demands on its workers:
Bridgestone/Firestone proposed deviating from the industrywide
pattern bargain by moving from an eight to a 12 hour shift that would rotate
between days and nights, as well as cutting pay for new hires by 30 percent.
Almost
immediately after 4,200 workers walked out on strike, the company hired
replacement
workers. A final contract, which included provisions to recall all strikers,
was
not settled until December 1996. [Krueger and Mas 2004, p. 254]
Following a rash of highway fatalities, the company recalled 15 million tires.
These economists cleverly pieced together the effects of the strike with the
subsequent deaths from defective Firestone tires. The economists were able to
take
advantage of a particular circumstance:
Almost all the P235 tires were produced in three plants:
Decatur,
Illinois; Joliette, Quebec; and Wilson, North Carolina. For nearly three years
from
April 1994 to December 1996 union workers at the Decatur plant either were on
strike or were working without a contract; tires were produced by 1,048
replacement
workers, union members who crossed the picket line, management, and recalled
strikers in this period. The Wilson plant was nonunion, so it did not
experience a
strike. A Canadian union represents the Joliette plant, but labor relations
there
were much less contentious. Joliette had a six month strike over fringe
benefits at
the end of 1995, but the plant did not hire replacement workers (which are
illegal
in Quebec). [Krueger and Mas 2004, pp. 255 56]
Based on claims for compensation for property damage or personal injuries due to
faulty tires, Krueger and Mas discovered that tires from Decatur produced
during the
labor strife were 15 times more likely to have a defect than tires from the
company's other plants. This large discrepancy in failure rates does not
appear in
other years, although the rate for the 1993 was about double that of the other
two
plants (Krueger and Mas 1994, p. 265). They estimate that 40 people died in
crashes
as a result of a strike with which they had no direct connection.
Krueger and Mas observed that just about everybody came out a loser in
this
battle:
The stock market valuation of Bridgestone/Firestone fell from
$16.7
billion to $7.5 billion in the four months after the recall was announced, and
the
top management of Bridgestone/Firestone has been replaced. The company also
closed
the Decatur plant in December 2001 and considered abandoning the Firestone brand
name. If antagonistic labor relations were responsible for many of the defects,
even indirectly, this episode would serve as a useful reminder that a good
relationship between labor and management can be in both the company's and the
union's interests. [Krueger and Mas 2004, p. 287]
Because of the availability of the data on the defective tires, as well as the
insight of Krueger and Mas in splicing together the strike and the highway
fatalities, some of the costs of the Decatur incident became public. Surely,
other
negative consequences occurred as well, even if they were not as dramatic as the
accidents in which defective tires killed or maimed victims.
I believe that this incident may have a larger lesson. The Decatur tire
factory represents a microcosm of the shortsighted, often vindictive efforts on
the
part of capital to win a victory at the expense of others.
Again, the logic of these strikes flowed directly out of the right wing
revolution. Not long after he assumed the presidency, Ronald Reagan broke the
air
traffic controllers union, signaling that attacking labor was a respectable way
of
doing business. The courts, administrative agencies, and legislatures at both
the
state and federal levels all began to work overtime in an effort to undermine
labor's bargaining power. After all, doing so was expected to increase the
rate of
profit. In many cases, this expectation was borne out at least in the short
run.
At the same time, this belligerent attitude toward labor must have
taken a
serious toll on productivity. Yes, of course, business can squeeze out greater
productive efforts by pushing labor harder. But if business drives labor too
hard
by resorting to antagonistic policies, business will deny itself the potential
collaborative creativity of its workers, a loss that will prove costly in the
long
run, even if the consequences are not as dramatic as the Bridgestone/Firestone
case.
--
Michael Perelman
Economics Department
California State University
Chico, CA 95929
Tel. 530-898-5321
E-Mail michael at ecst.csuchico.edu
michaelperelman.wordpress.com
