RECKONING to REVIVAL: PART IV Five signs of new life in post-crash Detroit Differential: The divide over wages
RECKONING to REVIVAL: PART IV
Five signs of new life in post-crash Detroit
Differential: The divide over wages
Automotive News | December 27, 2013 – 12:01 am EST
Editor’s note: The U.S. auto industry has come full circle, from boom to bankruptcy to boom. Detroit’s road from reckoning to revival was shorter than expected. This 4-part series examines how workers defied history and why Detroit’s new strength is embodied in Chrysler’s reborn Jefferson North assembly plant in Detroit.
They share a history in hair care: Clark worked as a part-time beautician before Chrysler and Wright still works as a barber on the side. And they each started at $14 an hour — half the $28 hourly wage veteran workers make — and now earn $19 assembling Jeep Grand Cherokees 10 hours a day.
It is on that last point that they differ. Clark and Wright are among about 2,200 workers at Jefferson North who earn what is known as the "second tier" wage.
They started out making less than $30,000 a year, while veteran workers made almost $60,000.
The UAW agreed to establish a two-tier wage system in 2007 in hopes of boosting employment at the Detroit Three. And it worked: Chrysler has hired more than 10,000 workers in the U.S. since coming out of bankruptcy.
Kinship With comeback
Yet two-tier wages have created divisions on the factory floor, which Clark and Wright illustrate.
Wright sees the second-tier wage as an injustice that he wants to set right. "I’d prefer it to be one wage across the board," said Wright, 43, a single father of three, who also works as a tailor and a photographer to supplement his income.
"Equal pay for equal work, that’s why the union came to be. And that’s what we’re doing — we’re doing the same work."
Wright had worked for Ford for 15 years — making $28 an hour — before taking a buyout in 2007 as the automaker was shedding workers to stave off bankruptcy.
He had left Ford after his wife died of breast cancer, hoping it would give him more time with his three children. He ended up working late into the evening at his After Five Gentlemen Grooming Services, offering full valet services to celebrities and professional athletes for $150 an hour.
He felt a tragic kinship to Chrysler’s comeback story since he also had to rebuild his life after losing his wife when their children were 11, 6 and 4 years old.
"I fell in love with the idea of coming out of the ashes like a phoenix," he said. "I did it in my personal life, so I realized it could be done with this company."
‘Give me a week’
So in 2010, when a friend insisted there was no work left in Detroit, Wright, wiry and energetic, applied for a job at Chrysler to prove him wrong.
"Give me a week and I’ll be working," Wright told him. "I found their website, applied and had an interview a week later."
On his first day in May 2010, Wright was energized "to see where I fit in. I thought, this is my opportunity to help this company come back."
Before long, though, he came to believe the two-tier system was dividing the factory floor and demoralizing those paid less.
"I’m constantly trying to boost morale," he said. "And that’s a difficult and uphill battle."
Chrysler contends it may not have recovered if it hadn’t been able to hire new workers at the lower wage. Chrysler said the combined wages and benefits of its UAW workers reached almost $76 an hour in 2007 — $20 an hour more than Toyota’s U.S. workers.
By 2011, Chrysler said its combined wage and benefit costs fell to $49 an hour. Two-tier wages "have been enormously important," said spokeswoman Jodi Tinson. "We’ve been able to add over 10,000 jobs in the U.S. to support growing demand. Would we have been able to do that under the old contract without tier two? I don’t know. It certainly would have been more difficult and much more costly."
Clark had been laid off in 2009 from a good-paying job at a company that transported car parts for Ford. With four children 10 and younger, she was having a hard time making ends meet.
Working part-time in a beauty salon, Clark made "nothing really, but the tips were good."
Clark, 32, received a text from a friend in November 2009, five months after Chrysler emerged from bankruptcy. There’s a rumor, the text said, that Chrysler is hiring. Clark wasn’t buying it.
"I was like, ‘They just laid off so many people,’" said Clark, who texted back: "Are you serious?"
She called her mother, who works at Jefferson North. Clark’s mom confirmed Chrysler was planning to hire a second shift of workers to build the new Grand Cherokee going into production the following May. To Clark, $14 an hour sounded good.
"It looked a lot better than hairdressing," she said. "A paycheck every week with four children? That’s good money."
After she applied online, Clark heard nothing as she struggled through the holidays. To give her kids a Christmas in 2009, she had to seek assistance from a philanthropic agency that "adopted" her family.
In January, she received an e-mail that said: "Congratulations, you are moving to the next step in the hiring process at Chrysler."
Clark, normally quiet, threw up her hands and shouted: "Thank you, Jesus."
On June 1, 2010, Clark entered Jefferson North to work final inspection and check for water leaks on Jeeps rolling off the assembly line. She said she didn’t resent working beside others making twice as much.
"That’s what I signed up for," she said. "As long as I have a job that can feed my children, that’s all that matters to me."
The work on the line at Jefferson North is often grueling.
Photo credit: BLOOMBERG
One thing Clark and Wright agree on: The work inside Jefferson North is grueling. Wright is a floater, filling in on the line for workers who are absent.
Clark, after eight months as an inspector, moved to a part of the line where she installs the cloth "headliner" inside the roof of every Grand Cherokee, going down the line at a pace of 72 an hour.
She said the work left her with carpal tunnel syndrome in her left arm and now she’s on "light-duty" work, typing data into a computer.
Chrysler has reconfigured work stations so employees operate "with the efficiency of a surgeon," which has reduced injuries, Tinson said.
Clark is still happy to have that job, though. She hasn’t forgotten how hard life was before Chrysler. Each Christmas since then, Clark has organized the workers in her area of the assembly line to adopt a family to provide gifts, clothes and food for the holidays.
"I’ve been in that place where my family needed to be adopted," she said. "Now I’m able to share that experience with other families in need. It’s just a beautiful experience."
Ignition: ‘Isn’t that what America is all about?’
Terry Thompson was on vacation when Chrysler went bankrupt and word hadn’t reached him about the closing of Jefferson North. So as he pulled into the parking lot Monday morning, May 4, 2009, he was stunned to see nothing but empty spaces.
"It was an eerie feeling," he said. "I thought, ‘This isn’t right.’"
He finally found a supervisor watching over the empty factory.
"Terry, what are you doing here?" the manager asked.
"I’m just coming to work," he responded.
Go home, the supervisor told him. There won’t be any work at Jefferson North or any Chrysler factory for the foreseeable future while the company goes through bankruptcy.
In 35 years at Chrysler — through oil embargoes, bailouts and recessions — Thompson had never faced anything like this.
"All our working lives, the plant is open," the lanky Thompson, now 60, said he thought. "Now the plant is closed? No way."
He refused to believe the shutdown would last. "The U.S. government cannot afford to let this industry collapse," he told himself.
Phyllis Adams wasn’t so sure. She had been at Jefferson North since 1992, shortly after it opened, and seen the Grand Cherokee’s fortunes rise and fall. Bankruptcy was a new low.
"No one knew what was going to happen and that was a little scary," said Adams, 42, stylish and well-coifed. "I updated my resume."
For Adams, Jefferson North was a safe haven in 1992, after she had dropped out of Michigan State University and become pregnant. Her father helped her get the job and the old-timers on the line watched out for her.
"They were like, ‘Oh, baby girl, sit down, you don’t have to do that. We’ll do that for you,’" Adams recalled, laughing. "It was pretty cool."
Back to school
She hadn’t planned to make auto work a career. Yet after earning her degree from Davenport University, she was never able to find a management job that paid as much as the plant.
"I figured I would just do this for a while and I would go back to school and then do something else," Adams said. "Well, I went back to school, but I’m still here."
She earned a bachelor’s degree in business administration at night while working at the plant during the day. And she heeded advice from her father, a Chrysler lifer who also works at Jefferson North.
"My dad always told me, ‘Save your money, it’s not going to always be there. You’ve got to hold something for a rainy day.’"
Suddenly it was storming and plenty of Jefferson North workers were caught without an umbrella. "There were a lot of people living check to check," Adams said. "They were wondering how their families were going to eat."
The lucky ones
Adams and Thompson were among the lucky ones. They were some of the first workers called back to Jefferson North.
Skilled tradesmen like Thompson, a pipe fitter, were called in early to maintain the plant’s mechanical infrastructure. Adams, a team leader of a crew in the paint department, was brought back after only two weeks so she could receive training.
Both Adams and Thompson are among the veteran workers who still earn higher wages than the new hires. As an assembly worker, Adams makes $28 an hour, while Thompson gets the skilled trades rate of about $34 an hour. Though they haven’t received a raise in their hourly rate in years, Adams and Thompson haven’t had their pay cut. All hourly workers, new and veteran, received a bonus of $2,250 this year based on Chrysler’s earnings.
For Thompson, Chrysler was an escape from a low-paying bank job in his hometown of Cleveland. A friend told him about openings at Chrysler, which was booming in the mid-1970s, and before long he was on the line at an engine plant south of Detroit.
After 20 years, he took training to become a pipe fitter. He was sent to Jefferson North in the mid-’90s to serve his apprenticeship and has been there ever since.
He and his wife live in a suburban home. He put his three children through college on what he has earned inside Chrysler factories for 39 years.
"The auto industry created the middle class," he said. "With this job, I’ve been able to live a better life."
That’s why Thompson always believed the government would rescue the auto industry. And he was right. Neither President George W. Bush nor President Barack Obama let the industry collapse. They came through with an $80 billion bailout and ushered GM and Chrysler through bankruptcy in less than six weeks.
These days, Adams and Thompson are each working at least 50 hours a week trying to keep up with the pace at the plant that once again never closes. Thompson arrives at 3 a.m. and leaves at 3:30 p.m. each day. He said he has never worked so hard.
‘Takes a toll’
"It takes a toll on you, but what I’m experiencing now is the price we have to pay," Thompson said. "It’s better than the industry being killed off and I’m out of a job."
The speed of Chrysler’s comeback has amazed Adams. Would she have expected this five years ago? "No way in hell," she said, laughing.
Thompson sees it as a testament to the resilience of the American autoworker. "We build the product," he said. "The corporation has engineers and designers and management. But the man on the floor, the woman on the floor, they’re the ones who are actually building the product. It’s not the CEO. It’s not the bean counters. It’s not the engineers. It’s the man and the woman who are getting up early every day.
”When you think about it, isn’t that what America is all about?"
Five scenes of new life
Chrysler CEO Sergio Marchionne drove the first new Jeep Grand Cherokee off the line at a ceremony on May 21, 2010, echoing Bob Lutz’s famous roll-off 18 years earlier.
This time, the breakthrough did not come via a glass wall. Rather, it was what the boss had to say.
"We are anticipating strong market acceptance of the Grand Cherokee," Marchionne said from a stage set up on the factory floor. "And in line with that, beginning on July 19, we will add a second shift, consisting of nearly 1,100 people, to Jefferson North."
The workers rose from their seats and roared.
Scott Garberding, the purchasing chief who had to cut off lawn service to Jefferson North a year earlier, said that was the moment he knew Chrysler would survive.
"Here we were with the company’s first new product after the bankruptcy and we all knew at this point that it was really good," said Garberding, now the highest-ranking former Chrysler executive at Fiat.
"That’s a day that will always stick with me because it was just so electric being in the plant. It was really very satisfying for us to all have gotten that far when it seemed like the whole world was betting against us."
Two months later, on July 30, 2010, it was President Obama’s turn to take the stage at Jefferson North.
He stood before the metal shell of a Jeep Grand Cherokee and declared: "You are proving the naysayers wrong."
Ten months later, Chrysler posted its first quarterly profit in five years, earning $116 million in the first quarter of 2011, thanks in large part to the success of the Grand Cherokee.
This year, Chrysler said it will earn as much as $2.2 billion. And those profits come from more than just SUVs and trucks. Like its Detroit rivals, Chrysler now offers its best lineup of cars in a generation.
When final sales results are in, the Detroit 3 will probably all gain market share in the U.S. for only the second time in the last 20 years. Ford recently raised its pretax profit prediction to more than $8 billion for this year.
On May 24, 2011, Marchionne mounted another factory stage, this time at a Chrysler car plant about 20 miles north of Jefferson North.
By his side was Ron Bloom, then head of the automotive task force Obama had assembled to lead Chrysler and GM through bankruptcy. Behind them hung a red, white and blue banner that read "PAID" in large letters.
Marchionne announced that Chrysler had that day paid back $7.6 billion in government loans it received for its rescue. The payment was made six years early.
The scene was reminiscent of Lee Iacocca’s dramatic early payback of his government bailout in 1983, staged before an enormous check, with the chairman raising a glass of champagne.
Yet Marchionne’s tone was more measured, befitting a company that had faced its own mortality.
"I urge you to never forget the experience we’ve been through," he told a subdued audience.
"We have collectively found the strength to fight against a death sentence put on our company from the very beginning," he said in his sotto voce Italian accent, a "PAID" button affixed to his crewneck sweater. "We found within ourselves the courage to act and to reverse our fate. And now we’re living, day by day, a new life based on what we have learned from that experience."
The experience has changed Mark Harrington. He’s more astute about the business side of his job. He has become acutely aware that the profit the Grand Cherokee generates puts Jefferson North at the top of pecking order.
"If we were running out of transmissions," he said, "they would send them to us first."
These days, Harrington works as many as 60 hours a week, but he has no complaints about the pace. After all, anything over 40 hours a week is time-and-a-half, or about $42 an hour.
So 60-hour weeks translate into annual earnings of more than $100,000.
"You learn from bankruptcy, there’s no such thing as too intense as far as working and getting a paycheck," he said.
The biggest lesson he learned was from his father: that there will always be a Chrysler.
"We’re not going anywhere," he said.
‘Things we make’
For chief designer Ralph Gilles, the moment he became convinced his company had a future came in a darkened conference room at headquarters, when he first was shown the commercial Chrysler crafted to introduce his creation.
The 60-second spot was about more than a new model. It was a manifesto for a company — and an industry — on the crest of taking wing again.
"The things that make us Americans are the things we make. This has always been a nation of builders," the ad’s voice-over intones to the sound of clanging metal, with black and white images of factories, skyscrapers and World War II Jeeps.
"As a people we do well when we make good things and not so well when we don’t. The good news is, this can be put right. We are ready. We are willing. And we are able. We just have to do it.
”And so we did.”
A silver Jeep Grand Cherokee crashes through a raging river and blazes a muddy trail into the deep woods.
”This, our newest son, was imagined, drawn, carved, stamped, hewn and forged here in America. It is well-made and it is designed to work.
”This was once a country where people made things, beautiful things.
”And so it is again.”
When the lights came up, Gilles had tears in his eyes.
About this series:
Tuesday: How U.S. workers rebuilt the U.S. auto industry
Wednesday: For Detroit 3, obstacles were closer than they appeared
Thursday: Recalled — insourcing workers from Detroit
Today: Differential — the divide over wages and 5 scenes of new life in Detroit
Torry Tucker on the line at Jefferson North assembly.
Photo credit: BLOOMBERG
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