In Michigan's auto belt, it's nail-biting time

Workers and residents worry that one of the Big Three might not make it.

Melanie Stetson Freeman/Staff
Decades in the industry: Ghana Goodwin-Dye, president of UAW Local 909, is an electrician who has worked in GM's powertrain plant in Warren, Mich., for 23 years.
Melanie Stetson Freeman/The Christian Science Monitor
Mouths to feed: Jontae Wright of Warren, Mich., has worked at the local General Motors powertrain plant for two years. With three children to support, including Jontae Wright Jr., he worries he will lose his job if GM goes into bankruptcy.
Melanie Stetson Freeman/staff
Foreign competition and falling consumer demand has led car dealerships, including this one, to close.
Melanie Stetson Freeman/staff
End of the line? Concerns are mounting in Warren, Mich., that a failure to rescue the big auto manufactures could devastate the area.
Rich Clabaugh/STAFF

For Jackie Kelly-Smith, the General Motors pensions that support her and her husband, and pay for their healthcare, are on the line.

Dan Dostine, a furnace repairman at Chrysler, is worried he may lose his $33-an-hour job, with few prospects for other decent-paying work in the area.

The mayor of Warren, Mich., is on pins and needles, wondering if his city's already-strapped budget will take a hit in the event that revenues from automakers – which make up 15 percent or more of the total – slide precipitously.

Much of America is watching to see if the ailing US auto industry will get the bailout it says it needs. But nowhere is the outcome more personal than in the factory towns of southeast Michigan, where nearly every job seems linked in one way or another to the auto industry, and where auto workers, suppliers, and retirees are biting their nails and assessing their options.

They're acutely aware of the negative perceptions of their industry – and in some cases are themselves critical, especially of top management. But many workers here harbor hope that, in the end, the rest of the country will come to sympathize with their plight or, at the least, decide that all the jobs on the line and the economic costs to America are too much to risk.

"If these companies go out of business, we'll lose a lot of the important jobs that give people a decent living and allow them to go to work with a smile on their face," says Warren Mayor James Fouts, whose city is home to the General Motors tech center, a GM powertrain plant, and two Chrysler plants, along with dozens of suppliers to the auto industry. "It's the little people who are going to be paying for this."

Tough economic times are hardly new to Michigan. The state has long been stuck in recession, has one of the highest foreclosure rates in the nation, and currently has an unemployment rate above 9 percent. But auto workers, even those who were around to see the previous tough times for the industry in the 1980s, say this is worse than previous downturns. And it's the first time they've seriously questioned if one of the Big Three might not make it.

Many wonder if the model they always counted on – where employment at an auto company and membership in the United Auto Workers Union was a ticket to a middle-class lifestyle and a secure future and retirement – is finally coming to an end.

"In the 31 years I've put in, this is the worst I've seen," says Ms. Kelly-Smith, a third-generation GM worker who retired a year ago, along with her husband. Together, the two earn about $70,000 from their pension, and Kelly-Smith isn't sure what she'll do if that disappears. Her husband recently had a stroke, and their home isn't yet paid off.

"I'd have to go back on the job market and compete with the young folks," she says. "I thought I was secure if I stayed there, and did a decent job, and kept my health – that when I did retire that's when the good years would begin…. It's so frightening to think that all the time you've put in can just be washed away."

Right now, GM is in the worst shape of the three automakers and appears unlikely to make it to January without help. Ford is the most likely to make it on its own, while Chrysler is the hardest to gauge, since it is owned largely by Cerberus, a private-equity firm, says Don Grimes, an economist at the University of Michigan.

Any viable plan would probably mean cost-cutting and restructuring of labor agreements – one advantage that bankruptcy might hold. But there is concern that consumers wouldn't buy cars from a company in bankruptcy. "If the federal government were to guarantee the warranty of any car company in bankruptcy, that might alleviate the fear," Professor Grimes says.

If GM, Chrysler, and Ford were to go under, nearly 3 million jobs nationally would be lost, estimates one recent study by the Center for Automotive Research, a research group based in Ann Arbor and with ties to the auto industry.

Few expect such a dire scenario, but the consequences appear very tangible in this part of Michigan, where the centers of towns are the large factories and where most of the economy depends either on the auto companies directly or on the money spent by their workers.

"We'd be out of work if they go under," says John Teipel, a driver for a furniture company based in Warren, sharing a drink in Malone's with some friends. "We're scared. I don't want to lose my house. I've got a family."

While just about everyone in Warren wants the auto companies to be rescued, many share in America's anger at top executives who they believe mismanaged the firms, earn too much money, and sent the wrong message when they flew to Washington in private jets. "You don't get off your private Learjet with a tin cup," says John Cicala, a longtime Chrysler worker, expressing a common sentiment.

Still, one of the hardest things for people here to understand is the anger they see from the rest of the US that is directed at the workers themselves. Many are bitter about the quick bailout provided to Wall Street firms, while the auto companies are put under scrutiny and kept waiting.

"I saw a poll saying 57 percent believe the Big Three shouldn't be bailed out," says Ghana Goodwin-Dye, president of UAW Local 909, which represents workers at GM's powertrain plant in Warren. "AIG gets money and they go party. We ask for a loan, and they say, 'No, the UAW has to give up something.' "

Already, she notes, the UAW has renegotiated contracts allowing new workers to start at about $14 an hour and receive a 401(k) instead of pension benefits. "If we give up any more," she says, "there's nothing left."

Ms. Goodwin-Dye, a single mother of three grown children, says she's been through tough times before and has been laid off five or six times, when she got second jobs to help her pay bills. During those times, the Jobs Bank – one of the most criticized UAW programs, in which laid-off workers continue to get paid most of their salary – helped her out and gave her the security to know she'd eventually be hired back when the companies rehired.

"I hate that the public believes we don't earn what we make," she says, adding that the fights the UAW has won have helped improve conditions for all workers. "This work is grueling on your body. I wish they could stand in our shoes just one day."

• Staff writer Mark Trumbull contributed to this report.

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