GM's decline impact

[ellives]

There's more of this coming as GM continues to decline:

ANDERSON, Ind., Feb. 16 — General Motors once had so many plants here that it had to stagger their schedules so that the streets would not be clogged with traffic when the workday ended. At the city's peak, 35 years ago, one of every three people in Anderson worked for G.M.

Now there is not a single G.M. plant left, and just two parts plants that G.M. once owned still survive. Anderson, about 50 miles northeast of Indianapolis, had 70,000 people in 1970 and now has fewer than 58,000.

But in many ways, Anderson is still just as dependent on G.M. as it once was. Only now, rather than being dependent on General Motors, the corporation, it is dependent on General Motors, the welfare state.

The company's generous medical plans, prescription drug coverage, dental care and pension checks are a lifeline for the 10,000 G.M. retirees and an untold number of surviving spouses and other family members who still live in the Anderson area.

They in turn help to prop up the doctor's offices, hospitals, buffet restaurants and shopping centers that might otherwise vanish along with the G.M. plants around the city that are fast becoming rubble. Anderson's G.M. retirees outnumber its remaining auto manufacturing workers by nearly four to one.

"When we all die off, this city will die," Jesse Lollar, 83, said last week, as he finished an early dinner of lima beans and macaroni and cheese at the MCL Cafeteria in the Mounds Mall.

Other communities will start to look more like Anderson as G.M. carries out its plan to close a dozen factories and cut 30,000 blue-collar jobs by the end of 2008, in part by offering buyouts and early retirement packages. And Anderson will in all probability begin to look even grimmer as the company cuts back on its vaunted benefits.

"General Motors is more than just a symbol of American industry," said Gary N. Chaison, professor of industrial relations at Clark University in Worcester, Mass. "It envelops the towns where it operates, and people become dependent on it in those towns."

Three of those people are Mr. Lollar, a retired G.M. engineer, and his two brothers, Charles, 72, and John, 74, who are also retired from G.M.

Together, they share 112 years of collective G.M. experience, years that have been made comfortable by one of the richest retirement plans offered to working Americans.

But earlier this month, G.M. told its retired salaried employees and their family members that it planned to cap its health care expenses at the same level as in 2005.

It told them that if costs rise, as they are now at a rate of 9 to 10 percent a year, they could expect to pay more for everything from dental and vision care to prescription drugs and doctors' visits, with the full details to come later this year. Medicare could make up some of the difference for older retirees. (G.M. reached an agreement last year with the U.A.W. on a plan that would make modest cuts in hourly workers' medical coverage. The plan still requires court approval.)

"You just take it day by day," John Lollar said. "I just hope my benefits last longer than I do."

In Anderson, St. John's Medical Center, the city's biggest hospital, is already bracing for the impact of the changes. Over the past two years, 15 to 20 percent of its patients at any one time were G.M. retirees, a spokeswoman said last week.

At Community Medical Center, the other major hospital, 14 percent of the patients last year were retired from G.M.

Iva Hazelbaker, 96, who retired from her job on an assembly line 35 years ago, said that without G.M., "we'd be in a heck of a mess."

Ms. Hazelbaker, who walks with a cane but has a sprightly manner, does not see a very bright future for Anderson, her home for 40 years. "Young people don't stand a chance," she said.

Anderson's unemployment rate is 6.7 percent, near its peak for the last ten years and well above the national average of 4.7 percent. Even so, the figure is misleading, said Patrick Barkey, the director of economic and policy studies at Ball State University in Muncie, Ind., because many people here stopped looking for work long ago and are not captured in the numbers.

"I think it masks the state of the economy and understates the degree to which the job picture has worsened," Mr. Barkey said.

Across the country, about 80 other communities have lost more than a third of their auto manufacturing jobs in the last ten years.

A visit to Anderson, now a stripped-down shell of its former self, offers perhaps the starkest example of the damage that plant closings can do. Reminders of the once-mighty auto industry are everywhere: abandoned plants, a ghostly downtown and residents who speak with bewilderment and frustration about what has happened to the auto business.

Sharon Boone, 60, followed in her father's footsteps and started working at G.M. when she was 23, building ignition parts on an assembly line. She was eligible for a full retirement package after 30 years with the company, so she left in 1999.

Standing in the kitchen of the United Automobile Workers Local 662 hall, she pointed out an aerial photograph of Anderson from 1973. Parking lots around a dozen factories were jammed with hundreds of cars, creating a vibrant city within a city.

G.M.'s operations were "so big we even had our own water-treatment plant," Ms. Boone said. "Now the jobs aren't here, and the money isn't here."

Along with once being the country's biggest employer until it was passed by Wal-Mart in the 1990's, G.M. was a powerhouse when it came to benefits.

And even though G.M. stopped offering retiree health care coverage to new workers 13 years ago, it still covers 679,000 retirees, their spouses and eligible dependents — on top of the coverage it gives to 435,000 active workers. This costs the company an average of $5,000 a year per recipient.

Given the sheer number of people who will be affected, the impact of the company's health care changes will run far beyond those of steel makers, retailers, railroads and airlines that have already eliminated or trimmed the benefits that their workers enjoyed.

Earlier this month, G.M.'s chief executive, Rick Wagoner, expressed sympathy for those faced with paying more for their coverage. "When these benefits were conceived decades ago, no one could have foreseen the explosive cost inflation that we have been experiencing in recent years," Mr. Wagoner said.

Anderson once ranked right behind Flint, Mich., where one out of every two people worked for G.M. at the company's peak in 1978, as the city with the largest concentration of G.M. operations.

Back then, G.M. employed 22,000 people in Anderson making everything from headlights to horns; now only 2,600 jobs are left at a pair of auto parts plants, one of them owned by Delphi, which is operating in bankruptcy protection. The other is the Guide Corporation, a headlight and tail light maker that was once a unit of G.M. and is now for sale. Analysts have said the Delphi plant could soon be closed or sold.

Across the street from what was once a vast G.M. manufacturing complex on Anderson's industrial east side is the former White Corner bar, one of Anderson's most storied factory taverns. Now called Stanley's, it is still open for business, but patrons are hard to come by.

"You used to have to wait for someone to get up to get a seat," Naomi Scales, the 69-year-old daytime bartender, said one recent afternoon as a lone customer sat in the back of the bar, sipping a soda. "It's just not fun anymore."

The city's dependence on retiree income is a major concern for the mayor, Kevin S. Smith, who said Anderson must attract new jobs if it is to survive. That is why he has gone as far as Japan and is planning a trip to China to look for investors, armed with multilingual business cards.

"We realize those retiree pensions will not be here in the coming years," Mr. Smith said. "That's why it's important that we are involved in new job creation that will employ the younger people now, too, and keep them in our community."

Yet there were few young people at the tables of the MCL Cafeteria last week. Its manager, Dan Cantrell, said about a third of his business came from G.M. retirees like the Lollar brothers.

With specials like a $4.49 all-you-care-to-eat fish fry on Fridays, the MCL is a favorite of Anderson's elderly, who receive a 10 percent discount in the afternoon.

Their spending is "still a lot of the economy," Mr. Cantrell said, referring to the retirees.

And Anderson can never hope to find anything as big, or as generous, as G.M. to provide its economic backbone. "There's not really another major manufacturing plant, anything, that could supplement a city's income the way G.M. did — and still does," Mr. Cantrell said.

Eventually, the retirees whose G.M. benefits are helping to prop up this place will be gone as well. As Jesse Lollar, the retired G.M. engineer, put it: "We're going to turn the lights off when we leave."

link: http://www.nytimes.com/2006/02/20/business...=th&oref=slogin

[CARBIZ]

Interesting read. I hope people think about this when they buy their shiny new Toyota.

[Ghost Dog]

I hope people think about this, when they say pensions and Healthcare should be cut. It's not the retirees Fault that the U.S. gov sold them out for free trade. and GM's Management was'nt competent enough to maintain market share.

These people, the retirees are more important then the Corporation. Hopefully part of the Pension reform will be asset disolution of underfunded corporations. To make up the Difference.

[balthazar]

Article is fairly vauge & fractured. "a dozen factories" is mentioned as is 'GM is closing 12 plants", then a few paragraphs later it is finally clarified that there were recently only 2 GM facilities in Anderson- neither an assembly plant. What were the other 10 factories from other corporations that are no longer there? Ooops, must've been an oversight.

And another thing. We've been getting, and will continue to get, a steady trickle of 'hard luck/boo-hoo' stories about plant closings and the good old days, yet at the very same time we have whiners & weepers bemoaning segregated parking lots. How blindingly stupid can some people be???

Edited February 21, 2006 by balthazar

[Dsuupr]

With all the baby boomers retiring I think these type of stories will be more common for American companies. They are a big liability for our country and short of killing them or kicking them out of the country it's going to be a tough 20 years on the retirement front.

[Guest buickman]

GENERAL WATCH NEWS

The Cause

Imagine...As the Rothschilds financed both sides of the Civil War, master capitalists, after giving their backing to the Japanese, use the invisible hand to guide GM softly down the stairs of diminished share. As GM becomes weaker, the foreigners invade our shores, setting up their fortresses of non-unionized production. Meanwhile, the ever-increasing costs of organized labor are halted by fierce competition, and a massive media campaign against their portrayed unrealistic demands. The tide of improving standard of living for the masses is halted, and through the might of popular opinion, concessions are wrought. As unionism is weakened, the purse string holders win on both sides of the game. Record profits for the invaders, and lessened expenses for the domestics. The demise of old time factory towns, who suffer setbacks in jobs and tax revenue, is a minor side effect of the intended outcome. The remaining relics of the battle for recognition are forever eliminated from the landscape...

Buickman

Founder

www.GeneralWatch.com

[Chicagoland]

Interesting read.  I hope people think about this when they buy their shiny new Toyota.

And when you buy a USED domestic because, "They $$ when you drive them off the lot".

[regfootball]

With all the baby boomers retiring I think these type of stories will be more common for American companies.  They are a big liability for our country and short of killing them or kicking them out of the country it's going to be a tough 20 years on the retirement front.

the chosen and self important baby boomer generation single handedly ruined a lot of our economic and social structures so maybe this is adequate payback for as much as they've f'ed up our country

Edited February 21, 2006 by regfootball

[regfootball]

my response

'things change'

[FUTURE_OF_GM]

L.O.L. @ regfootball

Beautiful!!!

No one cares about sob stories like this... If they did then they would've stopped being anti-GM/anti-america years ago...

I couldn't care less about the boomers or any other 'americans' You reap what you sow and unfortunately it's MY generation that is getting screwed because of these selfish, self-righteous screw ups.

[Polish_Kris]

the chosen and self important baby boomer generation single handedly ruined a lot of our economic and social structures so maybe this is adequate payback for as much as they've f'ed up our country

Hey, if it wasn't for THEM, then none of us would have been born on this earth.

[The O.C.]

Article is fairly vauge & fractured. "a dozen factories" is mentioned as is 'GM is closing 12 plants", then a few paragraphs later it is finally clarified that there were recently only 2 GM facilities in Anderson- neither an assembly plant. What were the other 10 factories from other corporations that are no longer there? Ooops, must've been an oversight.

And another thing. We've been getting, and will continue to get, a steady trickle of 'hard luck/boo-hoo' stories about plant closings and the good old days, yet at the very same time we have whiners & weepers bemoaning segregated parking lots. How blindingly stupid can some people be???

I think it's interesting that automotive "Industry Towns" such as Flint, Anderson, (and Detroit on a much larger scale) and others tend to just wither and crumble in the wake of GM's cutbacks, plant closings, and layoffs.

I spent 5 years in the Flint area while attending GMI and I've NEVER been to a more depressed, downtrodden, and simply ugly city ever before.....filled with the most bitter people that do nothing but sit on their asses....blaming GM for their lives.....

What happened with diversifying your industry and attracting new businesses? Why can't Flint and Anderson remake themselves much like Bethlehem, PA did after the demise of the steel industry?

Bethlehem is a similarly-sized city to Flint (adjacent to Allentown) and when I last lived in Philadelphia, Bethlehem was well on its way to a renaissance......considering it's one industry, steel, up and died. People started moving there and commuting to Philadelphia and NYC (thanks to lower housing costs,) Lehigh University has thrived....and unique new stores and restaurants started popping back up downtown.

Or on a larger scale (similar to Detroit) look at what happened in San Diego 15-20 years ago. When the country made huge cutbacks in military and defense, San Diego was in turmoil. Military and defense WAS to San Diego what the "Big3" are to Detroit. (It's not DIRECTLY compared to Detroit's challenge....but a good enough point to be made.)

What did San Diego do? Well, military and defense still have a small presence there....but the San Diego area's major economic viability has come from high-tech and high-education. Call it kindof a west coast "Boston."

And for any of you that have been to San Diego lately know that the city has done nothing but become a major boomtown with a lively downtown littered with more new highrise condo towers than you can count. It's also now the 7th largest city in the U.S. with about 1.3 million residents in just the city alone (not counting suburbs.) Meanwhile, Detroit has slipped to UNDER a million people....and OUT of the top-ten in population (replaced with San Jose, CA.....)

Of course I'm sure San Diego's beautiful setting and stunning weather help to attract workers and so forth....but it's a dauntingly high-priced place to live too...which works against it.

[FUTURE_OF_GM]

Hey, if it wasn't for THEM, then none of us would have been born on this earth.

Nothing lost... Nothing gained.

:twocents:

(Okay, I was being at LEAST 50% sarcastic with that one)

[ellives]

Only half?

Nothing lost... Nothing gained.

:twocents:

(Okay, I was being at LEAST 50% sarcastic with that one)

[ellives]

I love this attitude. How the hell do you think these pensions and healthcare costs get paid? Who do you think the US government works for? If these people were smart enough and concerned enough they'd chase after their representatives in congress and get something done. (Not sure what they'd do but you have all the answers so can explain what to do.) Instead they sit back and say "woe is me" the big bad corporation is "stickin' it" to the little guy again.

So yes, it certainly IS the retirees fault the US goverment "sold them out..."

Oh and I'm sure "asset disolution" [sic] is going to solve a lot. Do you realize how many corporations have underfunded pensions? I'm sure closing them all down because they need to fund their pensions is an intelligent, viable strategy. Not.

I hope people think about this, when they say pensions and Healthcare should be cut. It's not the retirees Fault that the U.S. gov sold them out for free trade. and GM's Management was'nt competent enough to maintain market share.

  These people, the retirees are more important then the Corporation. Hopefully part of the Pension reform will be asset disolution of underfunded corporations. To make up the Difference.

[Ghost Dog]

GM is going to have to Fully Fund thier pensions. They are'nt getting out of it. They only way to do it it is selling assets. When the FASB gets the accounting loophole closed. GM will be showing 30 + Billion dollars of Unfunded pensions on the books. How will they make it up? booking 3 or 4 Billion Dollar loss a year on to Infinity? Making the stock value what 25 Cents a share? ( Not that I care in the least about stock value )

They Need to sell GMAC entirely and bank all of the proceeds for pensions.

[I hope GMRULES again]

A sad read. The same thing happened to lots of manufacturing towns not just auto towns. A lot of the blame goes to people on the 14th floor in the 70's and 80's because of their pig headed attutudes and refusal to take imports seriously.

[ellives]

Bull$h!. Why would they and why should they? That game is over which is why they've capped the pensions..... finally. The idea of pensions has died. If, as you say, they end of the $30B+ of unfunded pensions, they should and would immediately file for bankrupcy and immediately shed any responsibility for pensions.

GM is in business to make money. It's not there to fulfill some sort of nostaglic dream of the way things used to be. They need to survive somehow and if shedding financial obligations like the union contract and pensions will help them survive and should and would do it in a heartbeat.

GM is going to have to Fully Fund thier pensions. They are'nt getting out of it.  They only way to do it it is selling assets. When the FASB gets the accounting loophole closed. GM will be showing 30 + Billion dollars of Unfunded pensions on the books.  How will they make it up? booking 3 or 4 Billion Dollar loss a year on to Infinity? Making the stock value what 25 Cents a share? ( Not that I care in the least about stock value )

They Need to sell GMAC entirely and bank all of the proceeds for pensions.