If you want to imagine the potential hazards of the United Auto Workers unionizing foreign automakers’ factories in the American south, consider the following episode from the history of General Motors. It provides a glimpse of how bad things can get in a Wagner Act world where businesses are forced to deal with unions. (I am drawing my information from Paul Ingrassia’s Crash Course: The American Automobile Industry’s Road From Glory to Disaster.)
In early June 1998, then-current UAW-GM working arrangements allowed GM employees to go home once they met their daily production quotas. But employees at GM’s two Flint, Michigan, body plants were regularly meeting these quotas after four to five hours worth of work, and then heading home with a full eight hours’ worth of pay. If GM wanted employees to work in the afternoon, it needed to pay overtime. If GM wanted to stay competitive with its non-unionized Japanese rivals, then this kind of institutionalized inefficiency needed to go.
GM executives anticipated that directly fighting UAW representatives to end this long-standing practice would be too costly. So they instead relocated some of the Flint stamping equipment to other facilities where it could be used for eight hours worth of daily production. Equipment reallocation is commonly done at GM and at other large manufacturers. But, in this case, the UAW leadership perceived this move as a direct threat to their cushy working arrangement and more broadly feared what such a move could mean for job security down the line.
So they launched a strike.
Within one week, 9,200 GM employees walked out of two metal-processing plants in Flint. By abandoning their paid posts, these striking employees stopped production of vital car body parts. This sent shockwaves throughout GM’s entire supply chain, halting production at many assembly plants that depended on body parts produced at Flint. As a result, the strike idled 175,000 GM workers and tens of thousands more at plants owned by other companies that supplied parts for GM.
The strike was devastating. It lasted fifty-four days and cost GM roughly $2.2 billion. By one reckoning, because of the strike, the entire industrial production of the United States dropped by 1 percent for the month of June, the sharpest monthly decrease in five years. For GM, this was the costliest strike that they suffered in twenty-eight years. Once the strike ended, GM reluctantly returned the equipment to the Flint metal-stamping plant. While this happened in broad daylight, UAW members stood by cheering for what was basically a celebration of willful inefficiency.
Events like the 1998 GM strike remind us about the dangers of laws that force businesses to deal with unions.