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November 28, 2008

Help for U.S. auto industry isn't a bailout - it's a bargain

Trades' stay nearing end at new Greektown hotel

Same-old, same-old funding 'not an option' for MI roads, report says

Employee Free Choice Act: Largely unknown, labor's top priority needs P.R. - and a plan

'If you can't be safe for you, do it for your loved ones' Take personal responsibility, accident victim urges

News Briefs


Help for U.S. auto industry isn't a bailout - it's a bargain

Editor's note: the collapse of any of the Detroit Three automakers would have an appalling effect on the U.S. economy and of course, especially Michigan. In addition to all the employment they provide in other sectors of the economy, U.S. automakers are unabashed supporters of union building trades labor for their plant and office renovations and new construction.

The following was written in advance of the visit to Congressional leaders to Washington by top executives of the Detroit Three, who failed in their attempt to seek federal loans to tide over the domestic auto industry. The rescue package is expected to be taken up again early next year, when a more receptive president, Barack Obama and a bigger majority of Democratic lawmakers who are expected be more sympathetic to Detroit's plight will be sworn into office.

That is, if GM can survive that long.

By Robert Scott

With the U.S. Senate prepared to take up the question of a $25 billion rescue package for automakers as early as Nov. 17), partisans are loudly debating the merits of another bailout. But given current economic conditions, the answer should be clear. Government intervention in the form of a bridge loan will allow the industry to survive until the economy stabilizes, new fuel efficient models are introduced, and recently negotiated changes to United Auto Worker (UAW) contracts kick in.

That means saving millions jobs - not only in auto factories, but also at component suppliers, dealers, and elsewhere - when employment is desperately needed.
Other circumstances strengthen the argument for this loan:

  • Although domestic automakers made strategic blunders in the past, they have recently made tremendous strides in restructuring. But many of those changes won't kick in until 2010, when new models such as GM's plug-in hybrid, the Chevy Volt, and a new model getting 45 mpg are introduced. New union contracts will also take effect in 2010, which will greatly reduce automakers' many legacy costs.
  • The current industry collapse is a direct result of the financial crisis rather than past industry decisions. Nervous consumers are delaying large purchases, sending vehicle sales in the United States to their lowest level in decades. More than 16 million light vehicles were sold in 2006 and 2007. Sales fell to 10.6 million units in October, a 35% decline from 2007 and the lowest absolute level since February 1983. The collapse in light vehicle sales has hit both import and domestic companies. GM sales fell 47% in October, but Suzuki (-48%) and Isuzu (-49%) were equally hard hit. While Chrysler sales fell 38%, Kia's fell 40%. Ford's sales were off 33%, but Nissan's fell 36%. Overall, domestic sales fell 41%, and Asian producers dropped 29%. Every company experienced a sharp drop in sales in October. These declines are particularly troubling because the auto industry is one of the most capital-intensive sectors of the U.S. economy.
  • Unionized U.S. automakers are highly productive. The top two most productive auto assembly plants in the United States in 2005 were UAW plants (in terms of hours per vehicle assembled). In fact, six of the top 10 plants were UAW shops. Product reliability for U.S. manufacturers is now approaching that of Japanese producers in some cases. This high productivity has allowed domestic manufacturers to compete with foreign companies that benefit from government subsidies, including manipulated currencies in Korea and Japan that reduce costs by 10% to 20%, and national health insurance systems in most competitive countries that remove the burden of covering costs for existing workers and retirees. Such high-productivity industries are exactly what is needed to ensure future economic growth.
  • Union auto workers have already taken substantial hits on pay and benefits. For example, contracts negotiated in 2007 slashed wages for new workers by 50%. In addition, new workers will not be guaranteed any retiree health care benefits, and will not participate in the traditional defined-benefit pension plan. On top of that, the UAW agreed that the responsibility for health care benefits for existing retirees would be transferred from the auto companies to an independent trust, called a Voluntary Employee Benefits Association. Analysts now believe that the labor cost gap between the Detroit-based auto companies and the foreign transplants will be largely or completely eliminated by the end of the current contracts.
  • A collapse of the Detroit-based auto manufacturers would result in the loss of 2.5 to 3 million jobs, according to a 2008 study by the Center for Automotive Research (CAR). There would also be a ripple effect throughout the local economies of auto communities across the United States. Furthermore, liquidation of the auto companies would put at risk the pension and health benefits of 1 million retirees and dependents, and could saddle the federal pension guarantee program with enormous liabilities. Under current law, the federal government would also be required to pay for part of the retiree health care costs for pre-65 retirees from the auto companies.
  • The automotive industry represents almost 4% of U.S. gross domestic product and 10% of U.S. industrial production by value. The failure of the Detroit-based auto companies would severely aggravate the current economic downturn, compounding the difficulties facing working families and businesses. Revenues to the federal, state, and local governments would drop, forcing cuts in vital social services at a time when they are most needed.
  • An airline-style (Chapter 11) bankruptcy re-organization is not an option for U.S.-based automakers. They have already extensively restructured product lines and labor contracts. They would be unable to get debtor-in-possession refinancing to continue operations, and consumers would be unwilling to buy cars from bankrupt companies. Hence, a Chapter 7 bankruptcy liquidation is the only alternative for domestic automakers. The bankruptcy of one or more of the "Big-3" automakers would endanger thousands of large and small parts and services suppliers. Massive job loss and community disruption would result. Increased government payments and tax losses alone would exceed $150 billion in the first three years following bankruptcy of all three domestic auto companies, according to the CAR report. The $25 billion rescue plan is a bargain by comparison.

(The author is with the labor-backed Economic Policy Institute).


Trades' stay nearing end at new Greektown hotel

By Marty Mulcahy
Managing Editor

DETROIT - Towering 30 stories over Monroe Street, the Greektown Casino Hotel is nearing completion, and will add another 400 rooms to the city's growing retinue of hotel space.

About 380 Hardhats are currently on the project, making the hotel ready for its first guests on Jan. 23, when 200 rooms will be available. The rest of the hotel will open Feb. 12.

"It's been a difficult project, but we've had an excellent workforce," said Dave Pettijohn, general superintendent for the construction management team of Jenkins/Skanska. "The majority of trades have helped us work through any issues that we've had."

Built atop a demolished parking deck, the new hotel and its adjacent new 13-level, 3,100-space parking deck - which opened a year ago - connects to Greektown Casino via a skyramp on the third floor.

Activity from restaurants in Greektown and the nearby Wayne County Jail and Frank Murphy Hall of Justice on the area's tight city streets have made building the hotel logistically difficult. Two buckhoists attached to the building have been removed in recent weeks, and now everything goes up and down in the building's internal elevators. "Moving people and materials around can make the site very congested," Pettijohn said.

In addition to the new hotel and parking garage, the permanent Greektown Casino complex will include a 25,000-square-foot gaming floor expansion (increasing the gaming floor to 100,000 square feet), a 1,500-seat entertainment theater, meeting and convention room space, a spa and additional restaurants. Total cost: about $475 million.

The Greektown Casino, which opened Nov. 10, 2000, is majority owned by the Sault Ste. Marie Tribe of Chippewa Indians. It features nearly 2,400 slot machines and 92 table games in 75,000 square feet of Mediterranean-themed gaming space.

Pettijohn said 3,220 tradespeople have undergone safety training at the project, and there have only been two lost-time accidents: from a hernia and slip-and-fall.

"Our safety record has been very, very good," he said.

THE 30-STORY Greektown Casino Hotel looms over Monroe Street in Detroit. A Chapter 11 bankruptcy filing by the casino and hotel has complicated the construction process, and court proceedings this week will dictate the future of the casino and hotel.

SETTING UP A BASE for tile work in the Greektown hotel lobby is Mike Fry of Bricklayers and Allied Craftworkers Local 1, working for Architectural Southwest Stone.


Same-old, same-old funding 'not an option' for MI roads, report says

LANSING - In a state that is in no condition to hear more bad economic news, out comes a Nov. 10 report that says Michigan's transportation routes will continue to deteriorate without doubling our state's investment in roads and bridge repair.

The 13-member Michigan Transportation Funding Task Force - a bipartisan group appointed by the governor and legislature that included labor, political and business representatives - reviewed the state of the state's transportation system for 10 months and concluded that if current funding levels continue, "The financial and practical impacts of this inadequate level of investment are so profound that this is clearly not an option for Michigan."

Right off the bat, the task force said, without the immediate commitment of additional state money, Michigan stands to lose up to $1 billion a year in federal matching funds. The report said a total of $3.2 billion was invested in Michigan roads in 2008.

Under the "do-nothing" strategy, the task force said, the result would be the loss of 13,000 jobs, the vast majority in construction. The state trunkline system would deteriorate from today's 90 percent in good condition to about 65 percent in good condition by 2015; and the local road system and local bridge condition would be expected to deteriorate even more quickly. The "do-nothing" plan does not allow for new or expanded road work.

"Michigan needs to take action to stimulate economic activity and keep the personal
mobility we enjoy today," said Rich Studley, co-chair of the task force and president and CEO of the Michigan Chamber of Commerce.

Added co-chair Dennis Gillow of Operating Engineers Local 324: "One of the best ways government can help improve the economy and create jobs is to invest in infrastructure."

The group said a future "good" investment level would about double the current investment highways, roads and bridges to a total investment of $6.1 billion, which would include the federal match of $1 billion. An additional 74,000 jobs would be created.

A "good" investment level, as defined by the task force, would allow the state to match anticipated federal aid, and would preserve 85 percent of state trunk-line pavements and 90 percent of state trunk-line bridges in good condition. At the local level, it also would be sufficient to allow resurfacing, pavement repairs, paving of some gravel roads, intersections improvements, modest road widenings, and would preserve 85 percent of local bridges in good condition. It would also address congestion, particularly in urban areas, with funds for the highest-priority capacity improvements.

And the task force's "Better" investment would produce $12.7 billion annually, providing
" a world-class system of highways, roads, and bridges throughout the state" and could potentially sustain some 179,000 jobs.

The task force found that Michigan's road funding mechanism is woefully inadequate. A typical Michigan auto driver pays 2½ cents per each mile driven; a typical semi-truck driver, 8 1/3 cents. Transit investment in Michigan is half to one-tenth the investment made by other populated, economically diverse states like New York, New Jersey, Maryland, Illinois, Massachusetts, California, even Minnesota and Delaware.

Michigan gets road repair money from gasoline taxes, which have declined in recent years in conjunction with lower consumption brought on by higher gas prices and fewer miles driven. "Compounding this historic under-investment," the task force said, is continued inflation in materials costs which reduces the total amount of money in the pot for projects.

Where to go from here? The task force first recommended increasing "efficiencies" around the state: more purchasing and labor cooperation between jurisdictions that share roads, better mass transit, and improved use of technology to reduce congestion, such as in the area of better traffic signals.

But the big money will have to come from elsewhere. For example, a 10 percent increase in Michigan vehicle registration fees would provide about $86 million in additional revenue per year.

Michigan's per-gallon motor fuel taxes (19 cents per gallon for gasoline and 15 cents for diesel fuel) currently provide about half the revenue to the state Transportation Fund. Michigan's per-gallon motor fuel taxes have not increased in ten years, and were not increased for ten years prior. "This helps explain why under-investment in transportation is an ongoing problem in Michigan," the group said.

The Task Force suggested several options, including increasing motor fuel taxes over time, or converting the cents per gallon motor fuel tax to a percent of sales price.

Other options include designating a portion of all state sales tax receipts to transportation. Public-private partnerships could be enabled for road-building. Toll roads could be established.

"Based on the information at their disposal," the Task Force said, "it could reach only one conclusion. More investment in transportation is absolutely needed. Much more."

Now comes the hard part, finding the money.


Employee Free Choice Act: Largely unknown, labor's top priority needs P.R. - and a plan

The nation's labor leaders expect the Employee Free Choice Act (EFCA) to be passed by the Democratic Congress and signed by President Barack Obama, hopefully, in his first 100 days in office. They claim that passage of EFCA would give workers an opportunity to join unions without fear of intimidation or loss of job. In the past three years, union organizing has been mostly "on hold," because of fierce employer opposition. But today, they can echo President-elect Obama's mantra: "Now is the time. Now is the moment."

Certainly, the Obama-Biden ticket should be grateful for the extraordinary support it received from both the AFL-CIO and Change to Win. In the final week of the campaign, the unions sent out 250,000 volunteers, made millions of phone calls and home visits, reaching out to more than 13 million voters in 24 states. Their efforts helped Obama win crucial working class votes in such battleground states as Ohio, Pennsylvania, Indiana, Florida, Nevada and Wisconsin. The two labor federations spent a total of nearly $450 million to support the Obama-Biden ticket - an impressive record in a changing time.

Most Americans are not familiar with the EFCA or its special importance as labor's top priority. The bill would allow workers to join and be represented by a union when a majority in the workplace signed union authorization cards. Another provision of the bill would compel employers to reach agreement on a first contract with a newly recognized union in 120 days or face binding arbitration of the contract by an appointed arbitrator.

But because organized labor conducted a restricted campaign for EFCA, mainly limited to its own members and based largely on e-mails to Congress, its influence was not as wide as it should have been. It raised a few problems:

(1) While President Obama and Vice President Biden endorsed the Employee Free Choice Act when they were senators, and so did the House by a substantial majority, EFCA never became an issue in the election campaign. Tens of millions of voters never heard of it. It was not mentioned in any of the debates by the candidates or on their television ads. It may call for a lot of explanation to puzzled Obama supporters if this issue is given precedence over more popular and pressing ones.

(2) The U.S. Chamber of Commerce and hundreds of companies, large and small, have given notice that they will wage a full-court press against EFCA, charging that a secret ballot, rather than signing a card is the fairest way to test whether workers want or do not want to join a union. The Obama administration will, almost certainly, be drawn into the controversy at a time when it is trying to stabilize the economy or working on a stimulus package, or taking action on health care or the environment.

(3) While EFCA is designed to rectify a fundamental abuse of the rights of workers, who represent a major segment of our population, it will be seen as legislation for a special interest group. It is undeniable that proponents of the bill are almost exclusively workers who are, and have been, union members, while non-union workers, who would benefit from EFCA have remained largely silent and inactive.

Will EFCA's passage inspire millions of workers to join unions?

Many union leaders predict that with passage of EFCA, the labor movement will organize millions of new members within a few years. However, they don't explain how it will be done. There is no evidence of a national organizing plan. Will passage of EFCA automatically cause workers to rush to join unions?

For the labor movement to grow in numbers and bargaining power, there must be major changes that will make unions more appealing to the nation's unorganized workers. It will require new, aggressive leadership that has the skill and the will to restore labor's former strength and national influence.


'If you can't be safe for you, do it for your loved ones' Take personal responsibility, accident victim urges

By Marty Mulcahy
Managing Editor

A self-described "unremarkable" equipment operator at an Exxon refinery in New Jersey, Charlie Morecraft was working overtime just after midnight on August 8, 1980, in order to make a little extra vacation money.

Asked to drive out to change some manifold "blanks" on an octane-enhancing pipeline, Charlie noticed a leak as he started to open up the pipe. He disregarded safety regulations and continued his work, when a surge of the chemical gushed out of the pipe and into his face. As usual, he wasn't wearing safety glasses, and was temporarily blinded.

As he ran past his still-running truck (another safety violation) to reach a safety shower, the fumes ignited and the area blew up. He eventually found a puddle of water to extinguish his burning clothing and flesh, but not before 50 percent of his body was burned.

"The pain was excruciating," Morecraft told a Michigan audience of construction workers and contractor employees on Nov. 6. "I wish I had a nickel for every time I wished I would die. But it didn't have to happen. It shouldn't have happened. And that's why I'm here today."

Morecraft, now a motivational speaker, was a guest of Skanska USA Building, Centerline Electric and Danboise Mechanical. He spoke at Schoolcraft College in Livonia to an audience of about 270.

"I'm the guy who always thought that safety meetings were for sleeping," he said. "Safety equipment was for wimps. I believed that you could do your job and take shortcuts without any problems. Of course I believed that an accident could never, ever happen to me. And if an accident did ever happen, the only person who would be hurt was me, not my wife or my kids."

Morecraft said he joked with his wife that if an accident ever did happen to him, she would be lucky, because "I was worth a helluva lot more dead than alive. I believed all of that until August 8,1980. All the myths I ever held about safety literally went up in smoke."

The EMT driver who reached him first, a friend of Morecroft's, cried when she saw his burned body. Morecroft went into cardiac arrest several times in the hours after the accident. It took him five years to recover, with thoughts of suicide a constant companion. During his rehabilitation, his daughters, age 10 and 13, lost out on five years of a normal relationship, forced to worry about whether their dad would live or die. One daughter became anorexic and he and his wife eventually divorced.

"I devastated my family. I lived five years in hell, because I didn't understand that the person who was ultimately responsible for my safety and my life wasn't my mother and father, wasn't the safety guy, wasn't the guy working next to me, it was me. I just didn't accept it."

Morecroft acknowledged that the company and the government have a responsibility to provide a safe and secure workspace. "But stuff happens all the time," he said. "People screw up, equipment fails. Somehow we get it into our head that we're covered because we work for a company with very complex safety procedures and all kinds of safety equipment. Somehow we think that because there's a yellow line down the middle of the road, that no one's going to swerve across. Well I'm here to tell you that's wrong. I've got $1.7 million worth of medical bills to tell you, that's dead wrong."

He said the night of his accident "I wasn't a defenseless victim. I could have worn my safety glasses. I could have shut off my truck. I could have followed procedures. Could have. Should have. But I didn't."

He said the work culture disdained safety equipment and procedures. He said listening to the older guys led him down the road to "shortcuts and recklessness. These guys weren't ready to accept responsibility for their own lives, much less mine," he said. "If only I had the guts not to give a damn about what other people thought," Morecraft said. "God helps those who accept responsibility for their own lives."

Morecroft said his life lessons extend beyond the workplace, such as wearing seatbelts in case the other driver does cross the yellow line, and wearing safety glasses when mowing the lawn or using power tools.

"If you won't work safely for you, work safely for your family," Morecroft said. "You don't want to bring people down with you. If you become involved in a major accident, you turn children into premature adults, wives into widows, mothers into weeping old women and fathers into broken down old men. What price will your family pay for your mistake? Please, please, don't destroy the people you love. If you can't be safe for you, do it for your loved ones."

BURNED OVER 50 percent of his body in a refinery accident, Charlie Morecraft shows two body parts that wouldn't have been burned - his arms - if he had rolled down the sleeves of his fireproof shirt.



News Briefs

Pavers to recognize Mighty Mac workers
MACKINAW CITY - In 2007, at the 50th anniversary of the opening of the Mackinac Bridge, a statue of an iron worker was unveiled to honor the work of the men who built the bridge.

Now, five miles south across the Straits of Mackinac, the Village of Mackinaw City is undertaking its own effort to honor iron workers and other tradesmen who built the "Mighty Mac." The village is selling engraved brick pavers that will create a "Walk of Fame" at a planned monument honoring Mackinac Bridge construction workers.

"The idea of putting up our own monument started snowballing after the 50th anniversary celebration," said Marilyn McFarland, formerly of the Mackinaw City Visitors Bureau, who is coordinating the effort. Noting the annual Iron Workers festival held in town, she said, "Mackinac City has always embraced iron workers. So we asked ourselves, 'Why haven't we done this yet?' "

It will be erected along North Huron Ave. between Colonial Michilimackinac and the Old Mackinac Point Lighthouse historic parks, but it has not been determined what the monument will be. McFarland said a committee of iron workers will decide - perhaps a lighted 40-foot beam, or maybe an iron worker statue.

The first phase of the project is selling brick pavers. McFarland said a minimum of 300 pavers need to sold to help determine the project's size and scope. Bricks can be engraved with the names of the men who built the bridge - from any trade. Also invited to have their names engraved are any iron worker from North America. She said families of deceased trades workers are invited to submit the names of loved ones to be engraved.

As part of the effort, Mackinac Bridge workers are also asked to indicate five favorite jobs that they worked on, that will be incorporated into a related website, www.walkof, and possibly a living history display at the site.

Rough going on Michigan roads
Road-wise, how bad are we?

The Michigan Transportation Funding Task Force worked off the following reports in issuing their dire findings about transportation funding in our state:

These rankings are from the 2007 Annual Report on the Performance of State Highway Systems, published by the Reason Foundation:

  • Michigan has the 8th worst road system based on overall performance
  • Michigan is 16th in the nation based on the number of deficient bridges
  • Michigan has the 4th worst rural interstate conditions
  • Michigan has the 8th worst urban interstate conditions.

Overdrive Magazine's 2007 survey of the nation's truckers (published in the Highway Report Card Survey 2007) concluded that Michigan has the third worst road conditions in the nation.


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