Janesville: GM Ghost Town

The Progressive July, 2009

 

By Roger Bybee

 

Janesville is a placid southwestern Wisconsin community of tastefully colored Victorian “painted ladies” and weather-beaten frame homes. The picturesque Rock River winds through the heart of this city of 62,000.

 

But in the last year, Janesville’s tranquility has been shattered by the shutdown of GM’s sprawling assembly plant. And the Obama Administration’s purported efforts to revive the auto industry, rather than instilling hope, are generating fear among UAW workers and retirees alike.

 

“Everyone is kind of in a state of depression,” says Chuck Huhn, a soft-spoken fifty-one-year-old United Auto Workers Local 95 member who last year retired after thirty-two years at GM. “I guess what bothers me most is the waiting, not knowing what is going to happen. It’s the waiting and the thinking about it all the time.” 

 

The GM plant in Janesville died a slow death. In the early 1990s, when SUVs were booming, it employed as many as 7,100 production workers. GM shuttered its Janesville plant right before Christmas last year, throwing the remaining 2,800 employees out on the street.

 

The Obama Administration’s auto task force rejected General Motors’ most recent restructuring plan submitted on February 17, which called for more plant closings, more mass layoffs, and an increased reliance on cars built in Mexico, China and Korea. The task force demanded “more drastic restructuring.” The Obama Administration seems intent on either forcing GM to go into bankruptcy and win court-imposed concessions on retiree benefits, or by squeezing the UAW to accede to such sacrifices by a June 1 deadline, according to auto-industry expert Dan Luria, research director of the Michigan Manufacturing Technical Center.

 

For GM retirees in Janesville and elsewhere, that could translate into reduced benefits.

“I’m very concerned about the possibility of losing pension and health benefits,” says Huhn. If that happens, he and his wife would have a hard time paying for their daughter’s education at the University of Wisconsin.  Huhn supplements his early-retirement pension by working a temporary job with the U.S. Census Bureau. He’s been actively looking for full-time work in both Janesville and Madison, forty-five minutes away, but has found nothing.

 

“The job market is just dead,” he says ruefully.

 

The UAW is deeply concerned about the fate of retirees. “Cutbacks in retiree health care would fly in the face of President Obama’s program about health care,” says UAW Region 4 Director Dennis Williams. “This would not benefit the nation by taking away health care benefits or leaving people under-insured.”

 

The union is also distressed by the Obama Administration’s call for more cutbacks at General Motors rather than finding a way to restart plants like Janesville’s with high-mileage vehicles and public transport. Williams says taxpayers want to see a revitalized GM in exchange for public loans, not just keeping GM alive as a marginal player in the auto industry.

 

“I know a lot of citizens want to see the GM plants re-tooled, and not de-tooled,” Williams says emphatically. “Closings don’t help the communities or the workers.”

The Obama Administration is pushing for cuts far deeper than those already proposed by GM.

 

The reductions in the rejected GM plan were themselves breathtaking: Fourteen of fifty-nine remaining plants would be closed, 46,000 production jobs would be cut, and the firm would become reliant on the import of GM vehicles from low-wage countries, says labor relations Prof. Harley Shaiken ff Uc-Berkeley, writing in Dissent.

 

“It should be our number one priority in this crisis to counter the outsourcing of jobs,” says Williams. “It affects everything, our tax base, our economic base.”

 

Janesville is already seeing its economic base erode SEVERELY. In February, unemployment jumped to 14.6 percent, up from 13.2 percent the month before and about 8 percent a year ago. In nearby Beloit, where some GM workers also lived, the jobless rate now stands at 16.9 percent.

 

Home values in Janesville have fallen sharply, with the median sale price dropping from $122,500 in the first quarter of 2008 to $111,100 in the fourth quarter.

 

“You can’t give a house away here,” says Andy Richardson, the mustachioed president of UAW Local 95.

 

The number of home foreclosure filings in Rock County (separate figures for Janesville were not available) has nearly tripled, from 317 in 2000 to 911 in 2008.

 

“Each 1 percent increase in the unemployment rate means a 6 percent percent increase in foreclosures,” says University of Wisconsin-Whitewater economics Professor Russell Kashian. “So when unemployment goes up 3 percent in Janesville, foreclosures go up 18 percent.”

 

Poverty is spreading rapidly. The percentage of schoolchildren eligible for free or reduced-cost lunches climbed from 29 percent in the 2006-07 school year to 37 percent in 2008-09.

Local nonprofit agencies, which give gave out bus

tokens to low-income people so that they can could search for work, have been faced with such high demand that they were forced to limit the tokens to people holding low-income jobs so that they could get to work. “People have had their cars repossessed or don’t have cash to fill their gas tanks,” says former city council president Amy Loasching, a UAW education official.

 

Food pantries are straining under growing demands. “This is just the tip of the iceberg if things don’t get better,” warns Irene Hall, who runs the pantry at Bethel Baptist Church. “I don’t know what will happen if we don’t get some companies to replace what’s been taken.”

 

Janesville also stands to be hit by a $1.5 million cut in social service funding by the state, which faces its own fiscal crisis. “We have not kept pace with the funding needed for some of those programs over the last ten years,” he says. “I’m not sure that people will get the services they need. Some will become homeless or have to move in with other people.”

 

GM, not its workers, bears an enormous amount of the blame. The company became addicted to highly profitable SUVs even as the mounting demand for fuel-efficient vehicles was becoming more obvious due to concerns about global warming, and more recently, rising fuel prices. But the SUVs produced enormous profits of roughly $10,000 per vehicle for GM throughout the 1990s.

 

Even while GM was rolling in cash, its shortsightedness made the 1990s a lost decade. It hastily shelved its electric-car experiment, lost interest in the drive for health care reform (despite a $4 per hour per worker disadvantage relative to Canada), jacked up executive compensation and its stock price and continued to collect subsidies from states like Wisconsin—from which it has received an estimated $33.5 million—even while downsizing its production workforce. It set up a plant in Mexico that was a duplicate of the Janesville plant, for instance, and more recently, it tripled its capacity in China, where labor costs are about 5  ROUGHLY JUST 6%  percent of those in the United States.

Once the financial crisis began, consumers could not readily get loans to buy cars, and that spelled doom for the GM plant. Its closing then set off a cascading chain of shutdowns at several parts-supplier plants like the Lear Corporation, Logistic Services Inc. in Janesville and Alcoa Wheel in nearby Beloit, throwing approximately 3,000 ADDITIONAL employees out of work.

WHILE UAW MEMBERS ARE INTENT ON GM SURVIVING, THERE ARE BITTER FEELINGS ABOUT ITS TREATMENT OF ITS JANESVILLE WORKERS. The workers saw a huge measure of hypocrisy in GM’S soliciting worker concessions, tax breaks, subsidies, and weaker pollution regulations in the us while simultaneously shutting down American plants and expanding in repressive nations like China and Mexico. this strategy was topped off by the corporation’s short-sighted attachment to low-mileage SUVS.

"Our members jumped through every hoop, but it didn’t count," Amy lLasching said firmly. "It’s disappointing that it doesn’t matter to gm how well the workers did. People came into this plant generation after generation, and they took a lot of pride in what we produced."

 

The Obama Administration’s callous approach to the autoworkers confuses workers and analysts alike.

 

 “There’s no clear public-policy criteria for the Obama Administration’s plans for GM,” observes Frank Emspak, professor emeritus of labor studies at UW-Madison and executive producer of Workers’ Independent News. “The Administration hasn’t come up with anything but a traditional downsizing plan. You can’t just outsource to Mexico and call it a plan for revitalization. It’s the exact opposite of what Obama says what he wants to do in terms of stimulating the U.S. economy.”

 

The unfairness of Obama’s approach appalls Emspak. If the Administration pushes GM toward bankruptcy or succeeds in twisting the UAW’s arm, “then the retirees will bear the brunt of restructuring,” he says. “Those pensions and health care benefits were earned and traded off for wages and other things. They are deferred wages.” Cutting those deferred wages, he says, will lead to “the impoverishment of a generation.”

 

Local 95 President Andy Richardson agrees. The Obama approach “doesn’t make a whole lot of sense, does it? What jobs are going to be left here for our kids in Janesville? If you don’t have any industrial base,” he says, “you have nothing. You can only support so many nurses, so many teachers. You’ve got to have an industrial base.”

Roger Bybee is the former editor of the union weekly Racine Labor and is now a consultant and freelance writer whose work has appeared in Z Magazine, The Progressive, Extra!, The Progressive Populist, In These Times, Commondreams.Org, and other national publications and websites. Visit his webpage At Www.Zmag.Org/Zspace/Rogerdbybee.

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