Word: auto
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...U.A.W. walkout would hurt the industrial states of the Rust Bowl. Despite attempts to diversify into new industries, Michigan, Ohio, Indiana and Missouri are still heavily dependent on the auto industry. Michigan factory towns like Pontiac and Flint, now enduring unemployment rates of 18.8% and 12.4%, respectively, could suffer an economic earthquake. Steel, rubber and glass producers could lose their biggest customer. GM, for example, buys about 10% of all the steel produced in the U.S. Sales in stores and restaurants are likely to slip when striking workers stay home, and tax revenues will slide...
Nonetheless, even if the union decides to expand its walkout, a GM strike is unlikely to repeat the damage done to the U.S. economy by the 1970 shutdown, which helped trigger a temporary recession. The auto industry today simply does not enjoy the commanding position in the economy that it had 14 years ago. During the intervening years, banking, retailing and other service industries, plus the new high-tech fields of semiconductors and computers, have become more important, and foreign manufacturers now hold 23% of the U.S. market, vs. 15% in 1970. One American worker in six was employed...
...declining economic signficance of the U.S. auto industry created the quandary that led the U.A.W. to call last week's strike. Japan can build small cars for $1,500 to $2,000 less than American producers, in part because the hourly wage and benefit costs of a Japanese autoworker total only about $12. By contrast, the U.S. hourly cost is $23. U.S. automakers have chosen two main solutions to meet the Japanese challenge: construction abroad and automation at home. By 1990 GM expects to be building 500,000 small cars overseas for import to the U.S. Ford is constructing...
U.A.W. leaders realized that developments like the moves abroad could mean disaster for the union. Even after seeing its membership slide by 20% over the past five years, the union figures to lose 500,000 more industry jobs by 1989 if the auto companies, led by GM, go ahead with their plans. Union leaders, therefore, decided to aim their demands for job security first...
Union officials are aware of this. They contend that increasing productivity through capital improvements and a more skilled labor force will compensate for the higher pay workers receive. In the long run, they hope to limit many auto imports with domestic-content legislation in Congress, which would require that all cars sold in this country contain a specified minimum percentage of U.S.-made parts. By opposing the movement of manufacturing functions to lower-wage countries, the union is fighting a rearguard action. It is the same battle that has already been lost by workers in the textile, toy, photographic, radio...