General Motors Introduces Team Concept

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General Motors Introduces Team Concept

United States 1987

Synopsis

General Motors (GM) introduced the team concept of labor management into the Van Nuys, California, Camaro and Fire-bird assembly plant in May 1987 in the hopes it would boost production. At the time, GM was facing triple troubles: (1) sagging sales due to foreign and domestic competition; (2) a mobilized Van Nuys United Auto Workers (UAW) Local union with a mission to keep the plant open and a threatened boycott of GM in the Los Angeles market if it did not—plus the Local was hotly divided on the team concept as the solution; and (3) the threat of a general UAW strike if GM did not agree to a new three-year contract that included job guarantees and other benefits that the UAW had just won from Ford. In the end, GM and the UAW did sign a three-year contract, during which time the plant operated under the team concept. The plant was eventually closed in 1992.

Timeline

1967: The Beatles' Sgt. Pepper's Lonely Hearts Club Band tops the list of releases for a year that will long be remembered as a high point of rock history. Among the other great musical events of the year are releases by the Jimi Hendrix Experience, the Doors, and Jefferson Airplane; also, the Monterey Pop Festival marks the debut of Hendrix and Janis Joplin.
1972: In June police apprehend five men attempting to burglarize Democratic Party headquarters at the Watergate Hotel in Washington, D.C.
1977: Newly inaugurated U.S. President Jimmy Carter pardons Vietnam draft dodgers.
1980: In protest of the Soviet invasion of Afghanistan, President Carter keeps U.S. athletes out of the Moscow Olympics. Earlier, at the Winter Games in Lake Placid, New York, the U.S. hockey team scored a historic—and, in the view of many, a symbolic—victory over the Soviets.
1983: Sally Ride becomes the first female U.S. astronaut (the Soviets were ahead by two decades, with Valentina Tereshkova) when she goes into space aboard the shuttle Challenger.
1986: In November, the scandal variously known as Iran Contra, Irangate, and Contragate breaks, when it is revealed that the Reagan administration agreed to sell arms to Iran in exchange for hostages, and to divert the funds from the arms sales to support the anti-Sandinista Contras in Nicaragua.
1987: Iran-Contra hearings continue for much of the year, making a household name of such figures as Oliver North and his secretary, Fawn Hall.
1987: By a narrow margin, the Senate votes to reject Robert H. Bork, Reagan's nominee to take the recently vacated seat of Lewis Powell on the U.S. Supreme Court.
1990: Though the Internet (originally the Arpanet) has existed for twenty-one years, it has not been very user-friendly, and has remained the province of defense personnel and other specialists. This year, however, sees the beginnings of the World Wide Web, which will make the Net accessible to a broad range of users over the coming years.
1992: Trouble begins after the Yugoslav Federation breaks up in January. Soon Yugoslavia, now dominated by Serbia, is at war in several former Yugoslav republics, and in September, the United Nations expels Yugoslavia.
1997: On 31 August, Princess Diana is killed in a Paris car crash along with two others. Her state funeral is as much a public event, watched by millions of mourners the world over, as her wedding to Prince Charles sixteen years earlier had been. The day after her funeral, another beloved figure, 87-year-old Mother Teresa, dies.
2000: In the most disputed presidential election in U.S. history, Democrats demand a recount after initial tabulation of votes in Florida shows a narrow victory for Republican candidate George W. Bush. The battle goes on for five weeks, and involves numerous recounts and court injunctions, until the U.S. Supreme Court puts an end to recounts and declares Bush the winner.

Event and Its Context

Background of the Van Nuys GM Plant

To understand how GM got into the difficulties it faced in 1987, one has to look at the history of the Van Nuys plant. GM opened the Van Nuys plant on a vacant piece of land in 1947. At the time, the largely white San Fernando Valley suburb north of Los Angeles had a relatively small available workforce, but by 1982, when an organized campaign formed to prevent the plant from closing, an entire working class, with new ethnic demographics, had grown up around the plant. There were 5,000 workers at the GM Van Nuys assembly plant; 2,500 were Latino and 750 were African American.

The auto assembly industry in California went through a period of growth, followed by rapid decline, between the opening of the Van Nuys plant in 1947 and the threatened closing of it in 1982. At peak production in 1978, between GM, Ford, and Mack Truck there were six assembly plants in California employing nearly 25,000 workers. By the next year, the oil crisis in the United States had taken its toll on the American auto industry. California, one of the largest centers for production outside of Detroit, was hit hard.

By 1982 the GM Van Nuys plant was the only one of the six assembly plants that remained in operation, and GM was hinting that it also might be closed. The UAW Local 645 union hall, located across the street from the plant, was in November 1982 the birthplace of the campaign to keep GM Van Nuys open. The strategy for the movement was based on a broad united front between the workers and the community aimed at getting a long-term commitment from GM to keep the Van Nuys plant open. Its chief tactic was the threat of a boycott of GM throughout Los Angeles, a major GM market, if the plant closed.

One of GM's arguments against the California plant was the high cost of shipping parts to that location. GM was looking to cost cutting and consolidation to become more competitive in a tight market. Placing assembly operations close to parts manufacturing in the Midwest would allow reduction of inventories. GM figured to save tens of millions of dollars with such a move. An effective boycott in California, on the other hand, would certainly, at least in part, offset those savings.

The Campaign and GM's Response

At the start, the campaign organizers clashed with the union ranks. Organizers had to overcome dissent among some of the union members, who challenged them to declare whether they were communists, socialists, or "Americans." Also, throughout the action, its leaders were in conflict with the leadership of the UAW International, which generally saw as inevitable that plants would be closed to make American-made automobiles competitive with imports.

To be effective, the organizers had to get the attention of the media. On 14 May 1983 famed labor leader Cesar Chavez appeared as a speaker at a rally in Los Angeles. The Los Angeles Times Metro section headline the next day read, "Boycott by UAW of GM Threatened." Chavez, president of the United Farm Workers, had run a successful boycott against California grape growers a decade earlier.

For a boycott to be effective, the campaign would have to include a diverse coalition of leaders and groups representing all the communities within the greater Los Angeles area. The 40,000 African American residents of the area were an important population to the campaign. The Latino groups were not a single homogenous entity in the region, but Latinos comprised 50 percent of the local union and thus represented another important faction. Campaign leaders approached the Los Angeles Chamber of Commerce to represent the business community. A Chamber of Commerce report cited the GM plant as a "vital and integral part of the San Fernando community since its opening in 1947." If the plant closed, 5,000 jobs at GM would be lost; moreover, some observers estimated that the closure would also result in the loss of 35,000 nonmanufacturing jobs and closure of 514 retail establishments.

The campaign became a coalition by the end of 1983. The local union enlisted the support of religious, political, and business leaders who agreed that GM had an obligation to the community and noted that the plant had generated a good profit for GM over the years of its operation. The coalition would target GM's $2.3 billion in sales a year in Los Angeles County for a boycott, if necessary.

GM's president, F. James McDonald, agreed to a face-to-face meeting with the leaders of the coalition in January 1984. The factions had established ground rules for the meeting: a half hour for GM's presentation, a half hour for the coalition leaders, and a half hour for free discussion. It did not work that way. McDonald made a long prepared slide presentation, then concluded: "If the local leadership of the union cooperates with us, tries to cut down absenteeism, raises quality and productivity and creates a more positive labor-relations climate there is still hope."

The coalition members were not happy. A succession of speakers that included college professors, legislators, and clergy expressed their disappointment at the "canned" presentation that went too long and provided for no free discussion. McDonald was caught off guard. He agreed when pressed that the plant would be kept open for two years, but he would not promise three years.

Shortly after the meeting with McDonald, GM brought a new manager, Ernest Schaefer, to the Van Nuys plant. Schaefer started his own campaign to open up dialog with the workers. By December 1985 he was spreading the word that a Japanese-style management system called team concept would help to save the plant. A good example of team concept was available at the GM/Toyota joint venture, known as New United Motor Manufacturing, Inc. (NUMMI), operating in Fremont, California.

The Team Concept Comes to Van Nuys

The team concept had been advocated years earlier by Walter Reuther, then UAW chairman, as a way to improve job satisfaction. In the team concept, workers—four to seven or more, depending on the specifics of the particular assembly—operate together in groups on entire sections of a car under one leader instead of doing a single repetitive task. The team is expected to handle problems such as defects as they arise. If necessary, they can even stop the assembly line to correct a problem.

Introduction of the team concept at the Van Nuys plant was a challenge. The local UAW members were split on the idea, and very heated contests resulted. The split was evident in the election of a union president in favor of the team concept, while the chairman of bargaining lobbied against it. Schaefer, however, pressed on and met with small groups to advocate for the concept. He hinted that the team concept was the only answer to keeping the plant open. In May 1987 the team concept officially started at Van Nuys.

By the end of September 1987 the Van Nuys plant was 1,500 cars behind its production schedule. Schaefer publicly blamed the shortfall on the complicated design of the new 1988 models that the plant had begun manufacturing in August, not on the team concept that he considered essential to survival of the American auto industry. To the workers, however, Schaefer pointed out that GM was losing customers to Ford and other car manufacturers because they were stopping the assembly line too often. This was not a good time for GM to be falling behind. Negotiations had begun earlier in September 1987 in Detroit on a new contract between GM and the UAW.

Ford was also negotiating with the UAW and settled first with the UAW on a three-year contract that included job guarantees. There was much speculation that GM would not be able to meet the same demands from the union because Ford had a competitive advantage over GM in that Ford bought a larger percentage of its parts (which, in general, was less costly than manufacturing them). Many in Van Nuys were expecting a strike. Schaefer admitted that workers were concerned. Evidence of this included the fact that disability leaves were on the increase at the Van Nuys plant. Workers on disability leave are paid during a strike. No strike materialized, however.

General Motors settled with the UAW under terms that were very similar to those negotiated with Ford. The three-year agreement included a commitment not to close any plants during the term of the contract, except for those that had been announced before the agreement. Although there had been suggestions that the Van Nuys plant would be closed, no official announcement of a closure had been made. The plant would remain open and would function under the team concept for three more years. In exchange for the job security program, GM got a commitment from the UAW to join in efforts to improve production output and quality. The Ford contract contained a similar clause.

The GM Van Nuys assembly plant closed on 27 August 1992 after 45 years of operation, during which it had assembled 6.3 million vehicles. The GM/Toyota joint venture continued to operate profitably in Fremont.

Key Players

Chavez, Cesar (1927-1993): Chavez was the founder and president of the National Farm Workers Association, which later became the United Farm Workers of America, AFLCIO. He focused on nonviolent tactics to win better pay and safer conditions for farm workers. He was born in Yuma, Arizona, but spent most of his life working in the fields of California.

Kirkland, J. Lane (1922-1999): Kirkland was president of the American Federation of Labor-Congress of Industrial Organizations (AFL-CIO) from 1979 to1995.

McDonald, F. James: A native of Saginaw, Michigan, Mc-Donald was president of General Motors between February 1981 and August 1987.

Reuther, Walter (1907-1970): Reuther led the first major auto strike in Detroit, Michigan, in 1936. He was elected president of the United Auto Workers (UAW) in 1946. He was elected president of the CIO in 1952 and helped engineer the merger of the AFL and CIO, but in 1968 he led the UAW out of the federation. Reuther died in a plane crash in Michigan in 1970.

Schaefer, Ernest: Schaefer was plant manager of GM's Fiero plant from 1982 to 1985, at which point he became plant manager at GM's Van Nuys plant.

Bibliography

Books

Mann, Eric. Taking on General Motors: A Case Study of the Campaign to Keep GM Van Nuys Open. Los Angeles: Institute of Industrial Relations Publication, University of California, Los Angeles, 1987.

Periodicals

Apodaca, Patrice. "End of Road for GM's Van Nuys Plant."The Los Angeles Times, 28 August 1992.

Crouch, Gregory. "GM Losing Sales to Ford Due to Production Delays at Van Nuys Plant." The Los Angeles Times, 19 September 1987.

"GM's Bootstrap Battle: The Factory-floor View." U.S. News & World Report, 21 September 1987, pp. 52-53.

"GM-UAW Settlement." Developments in Industrial Relations, Monthly Labor Review (December 1987).

Mann, Eric. "L.A. Could Lose Valley Auto Plant GM Drives a Hard Bargain." The Los Angeles Times, 26 January 1986.

"Team Concept: GM Plant Chief Says New Work Rules Will Benefit Company Despite Slow Start." The Los Angeles Times (Valley Edition), 29 September 1987.

Weinstein, Henry. "'Team Concept' Foe Wins UAW VanNuys Vote." The Los Angeles Times, 5 June 1987.

Additional Resources

Books

Katz, Harry C. and Richard W. Hurd. Rekindling the Movement: Labor's Quest for Relevance in the 21st Century. Ithaca, NY: Cornell University Press, 2001.

Lichtenstein, Nelson. State of the Union: A Century of American Labor. Princeton, NJ: Princeton University Press, 2001.