Plant, union officials say layoff doesn’t mean Leeds will be closed
The Kansas City Times
By Rod Perlmutter of the Business Staff
Tuesday, January 13, 1987
Despite the biggest layoff at the General Motors Corp.’s Leeds assembly plant since 1982, union and management spokesmen said Monday that they were optimistic about the survival of the 58-year-old plant.
They said the layoff, in which GM will indefinitely suspend 2,000 second-shift workers Feb. 13, should be temporary and did not mean that GM had decided to close the plant.
The second-shift layoff will effectively halve production and employment at the plant. It will affect 1,870 hourly and 130 salaried employees. Some plant workers and industry analysts said the layoff was the first step in shutting down the plant, which GM officials in Detroit said last month was being considered for closure.
But Michael Spitzley, Leeds plant manager, said negotiations over the next two months could help resolve issues that cast a much larger shadow over the plant than the February layoff.
Those issues, he said, are revisions in work rules, which could help make the plant more competitive and a possible suspension of federal air emission standards that could close the plant at the end of this year.
The revision of work ropes could be “the complete revamping of the way the plant operates,” Spitzley said.
The February layoff will be the third time since 1980 that the Leeds second shift has been laid off indefinitely.
Each time the cause of the layoff was inventory problems caused by slow sales, and each time the plant eventually recalled the second shift, said Claude Thornton, president of United Auto Workers Local 93, which represents about 4,000 workers at Leeds.
Thornton and Spitzley said they were optimistic that Leeds would again recall the second shift.
“I’m not happy about losing the second shift, but the plant’s not closing is a good sign ” Thornton said. “It means people will be coming back to work in the near future.”
Spitzley said: “As long as the plant is open, we have the opportunity to show what we can do. We have to be as optimistic as we can.”
However, if the two previous shift suspensions are any indication, workers on the second shift won’t be returning for a long time.
The shift was suspended for about 23 weeks in 1980 and for about 15 months starting in July 1982.
The 1982-1983 layoff was due to the poor sales of the J-car. The J- car, which is produced at Leeds and two other plants, sold slowly again last year, analysts said.
Automakers generally prefer that dealers have a 60-day supply of each model, said John McNeil, an auto analyst for Data Resources of Lexington, Mass. However, the national average supplies of the Oldsmobile Firenza and Buick Skyhawk, which are made exclusively at Leeds, were more than twice that at the end of December. Leeds is also one of the three auto plants that assembles the Chevrolet Cavalier, for which dealer supplies averaged 92 days at the end of December.
Over the last two years, GM responded to such inventory problems by using low-cost financing incentives or rebates to spark sales, said David Andrea, a research associate for the office for the study of automotive transportation at the University of Michigan at Ann Arbor, Mich.
But GM, stung by low profits after sweeping low-cost financing incentives in the third quarter of last year, seems to have changed course, he said.
For 1987, Andrea said, GM will apparently cut its bloated inventory in the same way as it did in the 1970s and early 1980s: by reducing production.
Ronald Glantz, an auto analyst for Montgomery Securities in San Francisco, noting that the J-car is made at three GM plants, said it was significant that GM chose to suspend the second shift at Leeds.
Glantz said the February layoff, and comments by a top GM official Dec. 23 that Leeds was a candidate for closing, were proof that the end is near for Leeds.
“Whenever GM specifically mentions the closing of a plant, it usually ends up closing it,” Glantz said. “Over the next three years, there is no question it’s going to close.”
But other analysts, such as Harley Shaiken, an associate professor of technology and work at the University of San Diego at California, disagreed. The February layoff makes the plant “more vulnerable” to a permanent shutdown, but Leeds isn’t automatically doomed by any means, Shaiken said.
But Glantz said GM’s decision last year to stop building a new multimillion-dollar paint system at Leeds was “the writing on the wall” that GM was going to retire the plant.
The paint system was originally proposed to allow the plant to meet federal limits on air emissions of volatile organic compounds. Under federal law, failure to meet the Dec. 31, 1987, deadline could result in a reduction or stoppage of production at the plant and fines of up to $25,000 a day.
GM officials are to meet with Environmental Protection Agency officials in St. Louis next week to discuss the air pollution standards, Spitzley said.
Missouri Gov. John Ashcroft said the state would offer tax incentives, such as investment tax credits, to coax GM to revive the paint shop project.