The UAW union hall in Lordstown, Ohio, is a hive of confusion, anxiety and anger. Mostly anger.
Three weeks after employees at the town’s General Motors Co. compact car plant assembled their last Chevrolet Cruze, employees are filing into the United Auto Workers Local 1112 hall to sign up for unemployment benefits and try to figure out if they should take a transfer to another GM plant, or wait it out in the one factory most have ever worked and see if it survives.
Union workers are livid that they agreed to make $118 million a year in annual concessions to save the plant in mid 2017, only to have GM effectively threaten to close it down a year and a half later. Unless the company changes plans, Lordstown will fall victim to the harsh reality that fewer consumers are buying small cars and that General Motors CEO Mary Barra is hyper focused on doing business only where the automaker can earn big returns.
“Everything they asked us to do, we did,” said Dan Morgan, the shop chairman of Local 1112 and chief negotiator of the agreement, the details of which haven’t previously been reported. “And still, we don’t have a product to build.”
GM idled the plant in March, saying demand for the Cruze was too weak to continue. In an email, GM spokesman Dan Flores said the union agreed to many concessions, but that they didn’t address the realities the company faces.
The problem isn’t high wages, it’s falling sales -- and GM’s post-bankruptcy cash flow discipline. “We didn’t discontinue the Cruze because of something the local union did or didn’t do,” Flores said. “It was a market-driven decision to discontinue the Cruze, and there were no products to allocate to Lordstown.”
The union disagrees the Cruze was a loser and thinks their concessions merit adding another product to the plant, perhaps one being built in Mexico. Of the 38 models GM sold in the U.S., only five did more volume than the roughly 143,000 Cruzes delivered last year. But sedans no longer command much of a premium as car buyers shun them in favor of crossovers, SUVs and trucks. And even at the peak of the Cruze’s popularity, profit margins were thin.
“It’s the reality of the marketplace,” said Ron Harbour, a global automotive manufacturing consultant at Oliver Wyman. “With small cars, margins are razor thin so if you go down to one shift, no one can make money.”
The plant’s future will be decided in talks later this year, when GM and the UAW hammer out a new four-year labor deal. President Donald Trump has weighed in, giving GM heat with a demand to reopen the factory or sell it to someone who will. At a rally Thursday in Grand Rapids, Mich., Trump gave the company kudos for investing in an electric-car plant in the state, but the praise didn’t last long.
“General Motors did just announce a $300 million dollar investment at its Orion assembly plant here in Michigan,” Trump said. “But I’m also fighting with General Motors and the UAW to take swift action on the GM plants at Hamtramck and Warren, Michigan, and Lordstown, Ohio. Get the damn plants open.”
At stake in Lordstown are the livelihoods of more than 1,400 plant workers and thousands more indirect jobs in the surrounding area of northeast Ohio, a key swing state in presidential elections. Married couple Mark and Sherry Pratt are worried about what’s in store for them, as both have been laid off after more than a decade each working at the plant.
Mark may consider an offer to move to another GM factory to save his pension and retiree health care. But it’s unclear if his wife would be able to work at the same plant, and they’re reluctant to relocate away from their eight grandchildren in the Lordstown area. “We want them to know us,” Sherry says. “We don’t want to be a state away.”