The crisis of the auto companies comes after months of booming production while inventories piled up as auto sales slowed. Last month Ford's sales were down 6.2 percent; Nissan Motor's dropped 3.6 percent; Honda Motor's were down 5.6 percent; Toyota Motor's fell 5.7 percent; and DaimlerChrysler slid 8.4 percent. GM was the only company to report an increase in sales but admits this was only due to steep discounting and interest-free financing arrangements for automobile purchases. Even so, GM closed three of its 25 assembly plants in North America for a week or more.

GM also announced plans on December 11 to cut 10,000 jobs in North America and Europe--about 10 percent of the automaker's workforce in each region. GM's Vauxhall plant at Luton in the United Kingdom north of London is slated to be closed with a loss of 2,200 jobs. Production of the Oldsmobile model will also be phased out.

DaimlerChrysler temporarily shut three factories in the Detroit area to reduce their inventory, leaving 13,600 of 128,000 workers at its plants without jobs for a week. The company has shortened workweeks to four days at some plants, and production shifts to six hours at others in an attempt to reduce inventories without halting production completely. Altogether the company closed seven of its 16 factories in North America for at least a week.

These moves by the Big Three have an immediate impact on parts suppliers. Delphi, a parts supplier for Ford, laid off 1,700 of its hourly U.S. workers in Michigan, New York, and Ohio. Dana Corp. has laid off 3,500 workers already this year. Diesel engine maker Navistar International Corp. has put at least 1,100 on the unemployment lines. Textron, a major parts maker, has shut down some departments for a week at a time.

A slowdown in auto can have a big effect on the overall economy. Layoffs in the auto industry, which topped 51,000 in November, accounted for one out of every eight workers laid off last month. GM and Ford, the world's two largest manufacturing companies, each account for more than 1 percent of U.S. economic output. Chrysler adds nearly another percentage point. Auto and related industries account for nearly a quarter of the combined economic output of Michigan, Ohio, and Indiana.  
 
Huge losses at DaimlerChrysler
DaimlerChrysler lost $512 million in the third quarter and is expected to post a steeper loss in the last quarter of 2000. Seeking to stem the red ink, DaimlerChrysler bosses sacked a number of Chrysler executives and ordered sweeping reductions in the cost of parts supplied to the company. DaimlerChrysler told parts manufacturers that they needed a 5 percent savings by the end of this year.

Chrysler has announced it is requiring another 10 percent cost reduction from its suppliers by the end of 2002. The company buys $40 billion in parts and services from its suppliers each year. To reduce prices this much, the auto parts industry will seek to enforce speedup, curtail wages, and carry out other attacks on workers and their union.

Heralding assaults to come on workers at Chrysler, officials at Deutsche Bank--DaimlerChrysler's major stockholder--said DaimlerChrysler's 129,000 workforce is about 30 percent, or 38,000, too large.

The effect of these changes has been rapid. For example, last year, Textron invested millions of dollars in a new plastic molding and assembly department. More than 100 additional workers were hired into the plant. The company set up 12-hour weekend shifts to keep the molding presses running all week long. The company never had a hard time filling the volunteer lists for extra weekend shifts, and there were few complaints about mandatory overtime since for most workers it was the only way to bolster their paychecks. Workers at the company earn about half the hourly wage of production workers in the big assembly plants.

The extensive overtime was part of a cost-cutting campaign by Textron that also included reducing the size of crews and speeding up the presses and assembly lines. The company's goal was to comply with DaimlerChrysler's Supplier Cost Reduction Effort program.

To justify the crew cuts and speedups, Textron organized several three-day workshops composed of both management and workers to give credibility to their plans for "Lean Management." Most workers didn't fall for it, dubbing workshop leaders "the lean meanies."

The overtime at Textron came to a grinding halt two weeks ago with the shutdowns announced by DaimlerChrysler.  
 
Assault on workers at Jeep
At the North Toledo Jeep plant, the bosses have begun to cut both wages and the number of workers. The plant is being replaced by a state-of-the-art facility located across town where a much-reduced workforce faces strict new work rules. A lot of their work is loading parts onto racks that supply robots that assemble the cars.

Workers at the old plant will continue to produce Cherokee and Wrangler jeeps at least until the middle of next year. But the company has cut the wages of some of the assembly workers by as much as a third after reclassifying 350 workers, all hired as temporary part-time workers between 1996 and 2000, as "transitional employees."

These workers all finished 120 days as part-time temporary employees and became full-time employees, members of the United Auto Workers (UAW) Local 12. Most were paid close to top pay before their hourly wages were cut in November from $22 to $14. They were also informed that when they get laid off as production slows they will not have the same recall rights as other union members.

The layoffs in auto are already having an impact on Detroit's economy, which is built around the big assembly plants. The Detroit News published an article titled, "Metro economy falters, Slowing auto sales have a ripple effect on the overall local business climate."

Taking an upbeat attitude, the article stated, "Jobs are still plentiful, inflation remains in check and many consumers and business owners in Metro Detroit continue to live the good life. Take Leather and Fur by Design in Dearborn, for example. The shop at the Fairlane Town Center sold 17 Pershing reversible lamb coats this week at $1,400 each."

Many workers, however, fear the initial layoffs and shutdowns in the auto industry are just the tip of the iceberg. "I was laid off for eight months last time, and I don't want to go through that again," said one production operator at Textron. "This time I might get another job." A maintenance worker who has worked at Textron for several years said, "I've had jobs I could retire from all my life. The problem is that I always get laid off. I feel like I'm always starting a new job."

Ilona Gersh is a member of United Auto Workers Local 157 and works at the Textron Corp. in Westland, Michigan.  
 
 
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