Bad for the Cruze! Former Obama auto czar (and film investor!) Steve Rattner has pronounced the federal bailout of General Motors an "unambiguous success." A hurry-up IPO is being publicized, and some commentators even think the taxpayers will get most of their money back. I'm not so sure. General Motors is still saddled with an antiquated, adversarial union structure dating from the 1950s. And it remains to be seen whether GM's new cars can compete with cars produced in non-union U.S. plants (like Honda's Ohio facilities)—let alone cheap-labor factories in South Korea, China, and India.
The new Chevy Cruze compact is more than a test case—its success is probably critical to GM's survival. The Cruze is being produced in GM's Ohio factory at Lordstown—not a name synonymous with manufacturing excellence. (The "Lordstown Syndrome" was much talked about when the factory produced the famously crappy Chevy Vega.) You'd think both UAW and management would be on their best behavior in the run-up to the big Cruze launch. You would be wrong. From an Automotive News report by David Barkholz:
Labor trouble at Cruze plant and GM Indianapolis a sign of deeper discontent
... The Lordstown situation was equally telling. Union local leaders there wrote an insult-laced flyer a week ago accusing management of sending Cruzes off-site for underbody repairs by outside workers.
The language and tone were bad enough. The flyer, written by UAW Local 1112 President Jim Graham and Shop Chairman Ben Strickland, said management had acted “sneaky, evasive and dishonest.”
But the timing was even worse. Here is Chevrolet, with so much at stake with the launch of its first legitimate contender in the compact segment in years, dealing with a union disclosure that the vehicles need repairs. The flyer said they were minor repairs to a “switch” and “canister.”
Graham backpedaled furiously this week, saying the subcontracting issue was resolved quickly and the whole event was a “family squabble” precipitated by launch pressures.
But do members of a “family” who really love and respect one another air dirty laundry publicly when so much is riding on the outcome of the bigger matter, in this case, the Cruze launch?
In the short run, the damage to the Cruze comes mainly from the revelation that it needed repairs at all, even after its loving assembly at the Lordstown plant. In the long run, the dispute is a large, glowing sign that the us-vs.-them mentality that helped bankrupt the carmaker is still alive and well. At Honda, do they tarnish the product when they have an argument about outsourcing? (Do they ever even have arguments about outsourcing?) Do the UAW's workers think the taxpayers will bail them out again if the Cruze doesn't sell—or sells only to rental fleets?
Thanks to Obama and Rattner and his co-czar, Ron Bloom, the 2009 bailout was much less painful for the UAW (which didn't take a cut in its hourly wage rate) than for, say, GM's stockholders—so much less painful that apparently there's now not nearly enough fear of a repeat. ... 5:51 p.m.