Turmoil Makes it Tough to Pick Sides

Commentary

Call it an eruption of antidisestablishmentarianism.

The term dates back to 19th century England and refers to opposition to the disestablishment of the Church of England – essentially a group in opposition to the group that was formed in opposition to the established group.

The modern instance occurred this month at a Chrysler assembly plant in Brampton, ON, Canada, where the auto maker (the establishment) sought concessions in exchange for investment for a future product by 2010 and the job security that comes with it.

But the membership of the Canadian Auto Workers union (antiestablishment) voted against it.

That left CAW leadership in the awkward antidisestablishmentarianism position of cajoling its members to reconsider.

Such is the turmoil of the Detroit Big Three today that it is becoming difficult to know what side of an issue to support as thousands worry about job security and the future of Chrysler, Ford and General Motors.

The Canadian workers build the LX family of rear-wheel-drive cars: the Chrysler 300, Dodge Magnum and Charger and will add the ’08 Dodge Challenger next year.

Chrysler dangled the prospect of a fifth vehicle; thought to be a production version of the Chrysler Imperial premium sedan.

In return for the C$700 million ($599 million) investment, workers were asked to give up C$134 ($115) a week in pay and allow the outsourcing of about 40 janitorial jobs.

It is not hard to understand workers with seniority not wanting to lose income – and the plant buzz likely was that a low-volume niche vehicle such as the Imperial, good for an additional 10,000 or so units annually, was not going to make or break the plant.

But these are extraordinary times. Chrysler, with an uncertain future following the Feb. 14 announcement that parent DaimlerChrysler was putting a “For Sale” sign on the lawn in Auburn Hills, MI, showed little patience.

Executives said they would invest instead in a U.S. plant to build “Product X.”

Union brass recognized the long-term danger – a second plant tooled to build LY (the next-generation of LX), ultimately could take over all Brampton’s work, leaving a vacant shell.

The CAW called an emergency vote, agreed to the concessions, and the investment is secure.

Now leadership is working to reconnect with its rank-and-file members and repair a divided workforce.

A similar scenario is occurring with the United Auto Workers union, which last year granted employee-benefit concessions for struggling GM and Ford, but balked at giving Chrysler the same deal because it was profitable through the first half of 2006.

The UAW still refuses to give Chrysler a reprieve, despite posting a full-year loss of $1.4 billion and inviting suitors from private equity firms to pore over the auto maker’s books.

Players in today’s auto industry don’t have to be able to spell antidisestablishmentarianism. But they need an awareness of the seismic changes under way globally – or they won’t need to count to three when it comes to North American auto makers.

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