General Motors strike of 1998

The Event An eight-week strike at two General Motors automobile parts factories results in the temporary layoff of thousands of workers and the closing of most of the company’s plants in North America

Date June 5-July 30, 1998

Place Flint, Michigan

The strike, one of the costliest in U.S. history, represented the longest work stoppage by autoworkers since 1970. The strike’s underlying issues, the corporate outsourcing of jobs overseas and outsourcing to nonunion, lower-wage factories within the United States, affected millions of American workers in the 1990’s.

On June 5, 1998, all 3,400 employees at a General Motors (GM) metal parts factory in Flint, Michigan, walked out. This stamping plant produced essential parts for GM factories throughout the United States, Canada, and Mexico, including fenders, hoods, and engine cradles. Workers were outraged when management hired outside contractors to secretly remove essential equipment, thereby breaking its promise to invest $180,000 to upgrade machinery at the factory.

Workers feared that their plant would be closed; thousands of jobs had already been cut. Overall in Flint (GM’s “hometown”), GM jobs had declined from 78,000 in 1980 to 33,000 in 1998. Plans called for more cuts even as GM was building new assembly plants in China, Thailand, Poland, and Argentina.

National Repercussions

Workers saw their local strike in national and international terms. According to United Auto Workers (UAW) national leadership, GM was ignoring its social contract with America by transferring jobs, technology, and capital overseas. The issues of downsizing, outsourcing, speedups, excessive workloads, and the spinning off of union jobs to lower-paid, nonunion suppliers struck a deep chord with the public. With the passage of the North American Free Trade Agreement (NAFTA) in 1993, it was far easier for U.S. corporations to relocate production abroad. Most newspaper coverage and public reaction to the strike was supportive of the workers.

On June 11, another 5,800 workers at a nearby spark plug and speedometer plant also went on strike. GM had cut its workforce in half over the previous decade. In both cases, workers struck over local issues. However, the two strikes quickly gained national attention. They demonstrated that unions still retained significant power to cripple production far beyond their local workplaces. Within the first week, GM laid off 50,900 workers. Because of its new “lean production” model and “just-in-time” inventory system, GM had no stores of the critical parts produced by the two plants. By the end of the bitter, fifty-four-day strike, 9,000 striking workers had shut down 90 percent of GM facilities in North America. For over a month, 189,000 GM workers were laid off, along with tens of thousands of workers at GM’s independent supply companies.

General Motors’ Response

Between 1990 and 1998, twenty-two strikes occurred at GM factories. Although each focused on specific local issues, they reflected common concerns over job security and disinvestment, rather than wages or benefits. In 1996, a seventeen-day strike at two brake parts factories had forced GM to temporarily lay off 178,000 workers.

During the 1998 strike, GM executives insisted that in order to stay competitive, the company had to become more efficient. GM was at a particular disadvantage. Its two main competitors, Ford and Chrysler, faced less foreign competition because they derived most of their profits from the sale of pickups and minivans (which few foreign companies produced). In contrast, GM sold mostly cars and thus faced heavier pressure from imports. GM also produced more of its own parts.

In previous union contracts, GM sought to eliminate jobs gradually through attrition while installing more automated equipment. Both sides had settled for quick compromises, avoiding a nationwide showdown. The UAW was able to slow, but not stop, GM’s push to cut jobs. Although GM could not fire unionized workers outright, it failed to replace them when they retired. Between 1993 and 1996, 30,000 GM workers retired but only 5,000 were hired. GM also delayed investments in its American factories.

In 1998, GM took a harder stance and at first refused to compromise. Serious negotiations did not begin until well into the fourth week of the strike. Initially, the company sought (unsuccessfully) to block unemployment benefits received by laid-off workers and sued the UAW for the first time in fifty years, claiming it was engaged in an illegal strike. The unprecedented fifty-four-day strike quickly developed into a “war of wills.”

Impact

Each side suffered significant losses. The work stoppage cost GM $12 billion in lost production and an estimated $3 billion in profits, while the UAW’s 200,000 members lost paychecks totaling $1 billion (1998 dollars). Never had a local strike shut down so much of an auto company for so long.

Neither side emerged a clear victor. GM agreed to make investments it had previously promised in Flint (including $180,000 at the metal stamping plant) and not to sell any factories there before 1999. The union agreed to help raise productivity by accepting some changes in work rules. Both sides agreed to meet regularly to avert future strikes.

The agreement focused on local grievances at the two striking factories but did not directly address the underlying national issues: job security, disinvestment, outsourcing overseas, the shift to nonunion suppliers, or GM’s efforts to shrink its U.S. workforce. The following month, GM announced its decision to “spin off” its Delphi parts division, and the next year GM closed its last assembly plant in Flint. A depressed city with masses of unemployed, Flint remained best known as the subject of Michael Moore’s 1989 documentary about GM, Roger and Me.

General Motors, once the nation’s premier automobile manufacturer, continued its long-term decline, losing market share to its competitors. For labor, although the strike failed to result in a victory of national significance, it did reflect an upturn in the labor movement. After losing nearly all major strikes in the 1980’s, unions began a slight rebound, winning several key strikes in the 1990’s. The ability of two factories to paralyze one of the largest U.S. corporations demonstrated the power that strategically placed workers continued to wield.

Bibliography

Babson, Steve. The Unfinished Struggle: Turning Points in American Labor, 1877-Present. Lanham, Md.: Rowman & Littlefield, 1999. Chapter 5, “At the Crossroads,” offers a thoughtful examination of the crisis of unions in the 1980’s and 1990’s.

Dubofsky, Melvyn, and Foster Rhea Dulles. Labor in America: A History. 7th ed. Wheeling, Ill.: Harlan Davidson Press, 2004. This vividly written survey concludes with an excellent chapter on the 1990’s, aptly titled “Hope and Despair.”

Milkman, Ruth. Farewell to the Factory: Auto Workers in the Late Twentieth Century. Berkeley: University of California Press, 1997. Exposes the human side of the decline of the U.S. auto industry by allowing workers at a GM factory to speak for themselves.

Murolo, Priscilla, and A. B. Chitty. From the Folks Who Brought You the Weekend: A Short, Illustrated History of Labor in the United States. New York: New Press, 2001. This popular survey devotes a lengthy chapter to the 1990’s titled “Brave New World.”