The Hidden Cost Of Labor Strife
TREAT WORKERS WELL, and they'll work harder. Treat them harshly, and they'll get even.
So union leaders, lefties and labor economists preach, hoping to persuade bosses that it's in their interest to keep workers happy. But hard evidence that better-paid, better-treated workers are more productive has been skimpy. Plenty of companies prosper while treating workers as interchangeable parts.
Now a pair of Princeton University economists, taking a new look at detailed data on Firestone's troubled tires, find "circumstantial, but broad and consistent" evidence that a disproportionate number of flawed tires were made at the firm's Decatur, Ill., plant when labor and management were battling. Labor strife, they say, appears to be a major contributor to faulty tires -- though not, as the union argues, because strikebreakers were incompetent.
The consequences were deadly. "We estimate that more than 40 lives were lost as a result of the excessive number of problem tires produced in Decatur during the labor dispute," Alan Krueger and Alexandre Mas conclude.
There is no argument that something bad happened at the Decatur plant, which Firestone's Japanese parent, Bridgestone Corp., closed last month. The issue, now in court, is what that "something bad" was. Was it the tires' design, the Ford Explorers on which the tires were mounted, the tire pressure, a combination? Most analysis so far has been done by Firestone, Ford or lawyers suing them, all of whom have a stake in the answer.
Using numbers on tire sidewalls that pinpoint the date and place of a flawed tire's manufacture, the Princeton economists draw two observations: Tires made at Decatur during a 1994-96 labor dispute were more likely to fail than tires made there earlier or later. They also were more likely to fail than tires made at Firestone's nonunion plant in Wilson, N.C., or its plant in Joliette, Quebec, which had a 1995 strike but didn't use replacement workers.
BREAKING WITH ITS INDUSTRY, Firestone began pressing for wage cuts and 12-hour shifts in January 1994. Workers struck in July. Using replacements, the company imposed 12-hour shifts and kept production going. The workers surrendered in May 1995, returning to work at lower wages and 12-hour shifts alongside the replacements. Union and management reached agreement in December 1996.
Problems with the tires didn't become public until 2000. Finger-pointing by Firestone and Ford Motor Co. paid a dividend: Lots of internal company data were made public. The Princeton analysis, funded by the university, is compelling because three different sets of data point the same way.
The economists use statistical tools to filter out extraneous factors, but you don't need a Ph.D. to see the pattern. Firestone tires made in Decatur during the labor strife were 376% as likely to prompt a complaint to the National Highway Transportation Safety Administration than tires made in Wilson or Joliette. At times of labor peace, Decatur tires were 14% less likely to prompt a complaint.
That's not all. Customers with tires made in Decatur during the dispute were more than 250% as likely to seek compensation from Firestone for property damage or injury blamed on faulty tires than were customers of tires made there during more peaceful times. And tires made in Decatur during the dispute did worse on laboratory stress tests that Firestone conducted when the tires were produced than those made at other times or other plants.
NEITHER FIRESTONE NOR the union has yet examined the research, posted Wednesday night at www.irs.princeton.edu. Both are skeptical. Firestone spokeswoman Jill Bratina says the company continues to believe the problems primarily are tire design, weakness of rubber used to coat the steel cords in Decatur-made tires, tire pressure and the Explorer's design, all factors cited in its analyses of the tire crisis. Could labor strife be a contributing factor? "We don't believe that to be the case," she says.
Roger Gates, who heads the United Steelworkers local in Decatur, says it wasn't his members who caused problems; it was inexperienced strikebreakers. The Krueger-Mas analysis suggests otherwise. There's no surge in problem tires when replacement workers were making them, adjusting for lower production volumes. The problems are with tires made in 1994 following tough company demands on the union and, again, after strikers returned in May 1995 without a contract to work alongside workers who had crossed the picket line.
"It appears likely to us that something about the chemistry between the replacement workers and recalled strikers ... created the conditions that led to the production of many defective tires," they say. Sabotage is a possibility. Crunching numbers can reveal only so much.
No one factor explains the Firestone catastrophe. The new Princeton work strongly suggests that squeezing workers, even in an age of weakened unions, can be bad management, especially when employers abruptly change the rules. A company can shut a plant and successfully hire lower-paid workers elsewhere. And if management convinces workers that the alternative to wage cuts is unemployment, workers may go along. But brute force can backfire, and the consequences can be severe.
-- David Wessel