IN THIS MESSAGE: Downsizing Comes Back; Hoffa & Future of IBT
December 7, 1998
Downsizing Comes Back, but the Outcry Is Muted
By LOUIS UCHITELLE
INDIANAPOLIS -- When Rhoda Wright learned that the television assembly plant where she had
worked for 27 years would close, she did all the right things. She helped to counsel fellow workers through their shock. She used her $13,000 in severance to pay off a car loan. And once the plant shut in April, she enrolled as an accounting student -- hoping to one day get back to her old wage of $10.60 an hour.
But for all her energy and determination, a bleakness creeps into Mrs. Wright's story. Her unemployment insurance will run out by next December, six months before she graduates. She expects to land an accounting job quickly enough, even at age 49, but only at $8 an hour. "I don't have a clue anymore what our income is going to be," she said, "but we'll get by. We always have."
She has told her two grown daughters not to come to her for help anymore. Her big concern is that her husband, Ronald, who is 53 and just back at work as a metal worker after suffering a mild stroke, will fall ill again. "I would probably have to quit school and take one of those $6-an-hour jobs," she said.
Mrs. Wright is hardly alone in the difficult choices she must make after losing a job she had counted on to sustain her until retirement. Plant closings, layoffs and forced early retirements are rising sharply again. The cutbacks announced last week at Bankers Trust, Boeing and Johnson & Johnson, and threatened at Exxon and Mobil, are only the latest examples. But the outcries and conflict that accompanied downsizing in the 1980s and early 1990s are largely gone.
Rather than protest, unions are more likely to help laid-off members move on to other jobs, often working in tandem with the very managers who did the laying off. For their part, corporate executives no longer call attention to downsizing as healthy for profits and stock prices. Much more often they express regrets, blame global forces beyond their control, fatten severance packages for workers and announce layoffs well in advance of the final day.
The downsizing is coming just when a strong job market, mainly in the service sector, offers new jobs more quickly than in the past, and that softens the blow considerably. Unemployment has fallen to 4.4 percent nationally and less than 3 percent in central Indiana. The layoffs are concentrated in manufacturing, both nationally (245,000 jobs have disappeared since March) and here in central Indiana. More than three dozen companies have announced or carried out layoffs here in recent months.
"You would see a more militant and adversarial relationship come back if the unemployment rate were two or three percentage points higher than it is today," said Larry Gigerich, president of the Indianapolis Economic Development Corp. "There are plenty of unfilled jobs, and although they are at lower pay, people feel they can take them and work back up to their old wage, or they feel that another job will soon open up like the one they lost. Such expectations are not necessarily realistic."
Certainly, Mrs. Wright is far from regaining her old wage, and so are most of her former colleagues at Thomson Consumer Electronics. Thomson gave 14 months' notice to 1,100 workers that its television plant in nearby Bloomington would be closed in April, and the operation moved to Mexico. Since then, only 100 have matched or bettered their old pay -- at a General Electric Co. plant in Bloomington that makes a popular double-door refrigerator and has been adding staff at $10 to $12 an hour. Thomson had paid $10.50 to $11 an hour.
Still, labor unions and workers seem more willing than in the past to accept, as beyond anyone's control, the reasons offered by corporate America for a plant closing or a layoff. Lately, the main reason given is the Asian crisis, which has killed demand for American merchandise in that once-vibrant region and stepped up the flow of inexpensive foreign merchandise to this country.
"Let's be realistic," said George Becker, president of the United Steelworkers of America. "If it is inevitable that a place is going to go down and there is nothing that can be done to save it, if there is no way to compete or there is no market for the product -- if that is going to happen, we are going to negotiate with the company."
Federal subsidies, channeled through the states, also ease the pain. The money goes not only for retraining but increasingly for counseling, often on the shop floor right after a layoff is announced. Some of the federal money pays the wages of labor union staff members involved in retraining. Despite all the help, regaining the old wage rarely happens.
The largest group of former Thomson workers, more than 500, has taken early retirement, accepting lump-sum pension payments of $80,000 or less instead of the $90,000 or more they would have received at full retirement. Mrs. Wright is among 200 men and women who are either unemployed or going to school to qualify for new careers, according to the company and the union, the International Brotherhood of Electrical Workers. Two hundred ex-Thomson workers have found jobs at lower pay.
Many in this group joined Cook Inc., a nonunion shop that makes medical catheters in Bloomington, and pays $6 to $8 an hour. But some, like Martie Hammer, a 46-year-old divorced woman with no children, were more adventuresome.
Ms. Hammer, who drove a forklift at Thomson for 17 years, took a four-month course in truck driving, and now drives a tractor-trailer cross-country for the Celedon Corp., one of numerous truckers here, all of which seem constantly short of drivers.
Her life has changed. Instead of being home every evening, she is on the road for 10 days, sleeping in a bunk in her tractor cab, then at home for two days. That is a disruption, she says, to her social life. And her pay is less: Not quite $400 a week, compared with her Thomson wage of $424, excluding overtime, which in her case averaged 15 hours a week.
"I don't mind driving a truck," she said. "A lot of people would not do it, but I am trying to get back to where I was at Thomson. It takes away from your self-esteem until you find something as good, or better. You know there has to be something better."
Maybe. Thomson's ex-employees have been engaged in this odyssey to regain their old wages for only eight months. Six hundred former Maytag Corp. employees have been struggling for two years, with little more to show for it. Their Maytag jobs ended in December 1996, when the company closed a stove factory in Indianapolis and moved the operation to a nonunion factory in Tennessee.
"We had 400 of the 600 workers placed in jobs in less than a year; we were happy about that," said Gigerich, who worked with the Private Industry Council, a local group of union and corporate representatives that lent a hand. But today few of the former Maytag workers earn the $34,000 annually they averaged at Maytag.
The best paid, roughly a third of the old work force, earn about $25,000, mostly at the numerous machine tool shops in this area, Gigerich said. Another group found work at about $22,000 in warehouses and distribution centers, as forklift drivers or loading trucks. And a third group earns about $20,000 in retail stores or at the telephone customer service centers and data processing operations that have proliferated in this area.
The Maytag layoff -- announced in February 1996, nine months before the plant closed -- was a turning point, the first significant example in greater Indianapolis of the softer approach to downsizing. A year earlier, the First Data Corp., which employed 1,000 people at a telephone service center here, had closed the operation on short notice without first notifying the local government. Downsized workers told hardship stories in television interviews, and city officials were publicly critical.
The officials wanted less confrontation. And Maytag obliged. Apart from the nine-month lead time, Maytag sweetened the severance package beyond what the contract with the Sheet Metal Workers Union required. The company also piled on overtime in the final months, mainly to stockpile stoves but also to give workers extra money to pay off debts and build up nest eggs -- an opportunity most took. Finally, the company participated in a worker-management committee that supervised retraining and counseling. A $1 million federal grant financed the endeavor.
"We were trying to tell that work force that you could not have done anything to prevent the move," said Thomas Schwartz, a Maytag spokesman. "That plant closing, and the way we worked with the city, and the employee group, that is as close to a model as I can come up with."
That still leaves Margaret Edens and her husband, Clifford, struggling. Both had worked at Maytag, she assembling stove counters at $12.50 an hour, he repairing stoves at $13.13 an hour. They finished up in a marathon of overtime and then, when the end came, they used some of the accumulated pay to finance a week's vacation in the Southwest -- the Grand Canyon, Las Vegas, Nev., Monument Valley -- before facing their new, diminished life.
Margaret Edens, who is 44, is the sort of worker who corporate managers and union officials point to as ideal in a downsizing situation. She is among a minority, they say, with the self-discipline and focus to benefit from job training, and also among a minority with the emotional fortitude to overcome the trauma of losing a pay package she cannot easily replace.
After Maytag announced the closing, she became a union representative on the transition committee. For a while, she drew a federally subsidized salary as a case manager, counseling laid-off workers, including some from Maytag -- work she loved. Now she has a part-time job as a claims taker in the state employment office, earning $8.05 an hour, without benefits. Her goal is to work full time in the employment office, with benefits, although the pay, she says, will probably be less than what she earned at Maytag.
"We used to make money and our life style just rose," Margaret Edens said. "Now when I get up, it is, 'How much do we have to earn to get by?' And that is $8 or $9 an hour for each of us just to maintain a middle-of-the-road life. We are just managing to do that."
Clifford Edens, also 44, reacted to the downsizing the way many workers do. He shunned job training or counseling, and did not accept, until months later, that he would probably never match his Maytag earnings and company-paid health insurance. "You work so long for a company, you lose touch with the job market," he said. He had entered the factory in 1972, right out of high school.
Clifford Edens had hoped to shift into social work, but without more schooling, he said, the pay was an "unrealistic" $7.50 an hour at best. He took a job at a Goodwill Industries factory, as a group leader at $9 an hour, helping disabled workers keep an assembly line going. But the work was too stressful and he soon left.
Finally, he learned from a friend of an opening at Flexalloy Inc., as an inspector and tester of the giant bolts and other fasteners the company supplies for bridge and building construction. There was an on-the-job training requirement, and a federal training grant helped for a while to pay his starting wage of $9.25 an hour. That was in September of last year; he now earns just over $10, and pays $12 a week for health insurance.
"I am treated very well at this company," he said, allowing himself a little optimism. "There are positions there that pay $13 an hour or more that I could possibly attain."
Copyright 1998 The New York Times Company
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December 7, 1998
NEWS ANALYSIS
For Hoffa, the Challenge Is Getting Beyond the Name
By STEVEN GREENHOUSE
WASHINGTON -- By electing James P. Hoffa its president, the Teamsters union showed
that it was willing to re-embrace the Hoffa name. Now the question for the rest of the labor movement is whether it is ready to do so as well.
While publicly, at least, labor leaders on Sunday hailed Hoffa's victory and pledged to work with him, leaders and rank-and-file alike remember his father's mob ties and fear that Hoffa will allow corruption to flourish again in the Teamsters, setting back the whole labor movement.
But many experts say that Hoffa's potential upside may be as big as his potential downside, noting that if the man with the most famous last name in labor proves to be an honest, dynamic leader as promised, he will give the movement a much-needed shot in the arm.
While Hoffa's path remains unclear, one thing is certain: overnight he has become one of labor's two most prominent spokesmen, sharing the spotlight with -- some would say stealing it from -- the AFL-CIO's president, John J. Sweeney.
Hoffa captured the presidency on Saturday when his main opponent, Tom Leedham, conceded defeat. In declaring victory Sunday on the NBC News program "Meet the Press," Hoffa said it was time to get past the legacy of his father, James Riddle Hoffa, who led the union from 1957 to 1971, and who disappeared in 1975 after being released from prison.
"It's 1998," Hoffa said. "People want to start over."
Some labor experts say that friction could develop between Hoffa and Sweeney and other AFL-CIO leaders over some of the old-style union barons who were key to his victory.
"There might be some uneasiness in the relationship between Hoffa and the AFL-CIO leadership," said Richard Hurd, a professor of labor relations at Cornell University. "The AFL-CIO's leaders came into power talking about the need to change very dramatically from the past, and to some people Hoffa represents the old way of doing things."
One issue that may prove divisive is labor's involvement in politics. Hoffa has repeatedly criticized his predecessor, Ron Carey, and the Sweeney-led AFL-CIO for overwhelmingly backing Democrats. He has said that the Teamsters will make sure to support labor-friendly Republicans.
"We're going to be bipartisan," Hoffa said on "Meet the Press." "We're going to try to find people on both sides of the aisle who support our agenda."
Some labor experts say this new political tilt stems partly from the fact that Hoffa's father was hounded by the Democratic Kennedys, while it was a Republican, President Richard M. Nixon, who eventually commuted his father's prison sentence after he was convicted of fraud and jury tampering.
But some of Sweeney's allies say that Hoffa's strategy is essentially the same as that of the AFL-CIO, which in the past year has moved away from reflexively backing only Democrats.
"His approach and the federation's aren't all that different," said Gerald McEntee, president of the American Federation of State, County and Municipal Employees. "Our union and the federation are not captive to the Democratic Party. This year we supported more Republicans than ever before."
Hoffa, a Detroit labor lawyer, takes over the International Brotherhood of Teamsters, one of the nation's most powerful unions, after it has floundered for more than a year, ever since Carey, the previous president, was sidelined by a campaign-finance scandal. Hoffa promises to make the 1.4 million-member union a powerful player again, vowing that it will throw its weight around in politics, organizing and contract talks.
Many union leaders may be uneasy about his last name and the baggage it carries, but they say it is important for all of labor that the Teamsters are no longer leaderless or rudderless.
"I think he has the potential to be a great leader," Sweeney said in an interview Sunday. "I think that the most important part of all this is that a very strong union that has a long, rich history has finally got a leader again."
A year ago there were bitter tensions between Sweeney and Hoffa, but union officials say they have largely patched up their differences. The tensions stem from 1996, when Sweeney, Richard Trumka, the federation's secretary-treasurer, and some allies heading powerful unions not so subtly backed their friend, Carey, over Hoffa in the 1996 Teamsters race. Carey, who was instrumental in helping Sweeney gain the AFL-CIO's helm, won that race but the victory was overturned and he was expelled from the Teamsters because three aides had steered union money to his campaign.
Hoffa said Sunday that it would be a "challenge" to get along with Sweeney. "You know the AFL-CIO interfered in our elections on behalf of Carey," he said. "Nevertheless, we are willing to turn the page on that."
But another possible source of new tensions is that, in the view of many Sweeney supporters, Hoffa and some of his allies typify old-style, top-down unionism. Sweeney, Carey and other Sweeney backers have embraced a bottom-up style that emphasizes rank-and-file participation as a way to increase a union's power.
"Some of the reaction is, there they go again, the Teamsters are doing their old thing," said Michael Belzer, a professor of labor relations at the University of Michigan and former truck driver who used to support Carey. "For those who support the new bottom-up approach that Sweeney is pushing, Hoffa doesn't represent a hopeful sign."
But Hoffa's supporters say his critics misread him, noting that he promises to unite the members and involve the rank and file more.
Probably the biggest concern that many labor leaders have about Hoffa -- one they do not want to discuss publicly -- is his ties to some questionable figures.
One of Hoffa's closest allies is Larry Brennan, the powerful head of the Teamsters in Michigan. He had a major hand in running a union welfare fund, which federal officials criticized for misappropriating $725,000. And a federal monitor criticized Brennan for giving his subordinates $30,000 in raises and then having them funnel that money into his campaign.
Hoffa received some bad news this weekend when a court-appointed review board charged Tom O'Donnell, a New York Teamster running for vice president on the Hoffa slate, with filing false campaign finance reports.
The Independent Review Board asserted that O'Donnell, who heads a local of movie truck drivers, failed to disclose that the Hoffa campaign was paying an aide, Kevin Currie, who was a convicted felon. To hide Currie's role, the reports stated that the Hoffa treasury was paying Currie's wife, who did not work in the campaign.
O'Donnell could be suspended or expelled as a result of these charges. He could not be reached for comment Sunday.
Hoffa's critics say he must have known about the falsehoods regarding Currie, but a Hoffa spokesman denied that he had any knowledge of it.
But Hurd said he doubted that the allegations of Mr. Hoffa's ties to unsavory characters would stop other union leaders from cooperating with him.
"I really don't think most labor leaders are going to lose any sleep over Jimmy Hoffa's connections with organized crime," Professor Hurd said. "Labor leaders have proved amazingly adept at avoiding these kinds of issues so that they can work together when they want."
Copyright 1998 The New York Times Company