This one was in the WSJ yesterday, they headlined it as
"Detroit's Symbol of Dysfunction", it outlines just one of the egregious way's America's automakers have shot themselves in the foot in terms of being competetive in the world market. Can't fit the entire article, the rest is availble online here:
Automakers Pay Thousands of Idled Workers in Jobs Bank Automakers pay thousands of idled workers in Jobs Bank
Program, which began as a stopgap, now adds to competitive burden that U.S. companies must bear
The Wall Street JournalFLINT, Mich. - In his 34 years working for General Motors Corp., one of Jerry Mellon's toughest assignments came in January. He spent a week in what workers call the "rubber room." The room is a windowless old storage shed for engine parts. It is filled with long tables, Mellon said, and has space for about 400 employees. They must arrive at 6 a.m. each day and stay until 2:30 p.m., with 45 minutes off for lunch. A supervisor roams the aisles, signing people out when they want to use the restroom.
This is the "Jobs Bank," a 20-year-old program under which nearly 15,000 autoworkers continue to get paid after their companies stop needing them. To earn wages and benefits that often top $100,000 a year, the workers must perform some company-approved activity. Many do volunteer jobs or go back to school. The rest must clock time in the rubber room or something like it.
It is called the rubber room, Mellon said, because "a few days in there makes you go crazy."
The Jobs Bank at GM and other U.S. auto companies, including Ford Motor Co., is likely to cost about $1.4 billion to $2 billion this year. The programs, which are up for renewal next year when union contracts expire, have become a symbol of why Detroit struggles even as Japanese automakers with big U.S. operations prosper.
Though GM often blames "legacy costs" such as retiree health care and pensions for its troubles, its Job Bank shows that the company has inflicted some wounds on itself. Documents show that GM itself helped originate the Jobs Bank idea in 1984 and agreed to expand it in 1990, seeing it as a stopgap until times got better and workers could go back to the factories.
"The bank was designed for a different time, a time when we were growing," said Pete Pestillo, a former Ford executive who oversaw union talks.
Mellon, 55, the father of two, was born in Flint. He joined GM in 1972, following his grandfather and his father, a plant foreman who spent 37 years at GM. Through the 1980s and 1990s, Mellon held jobs designing electronic systems for vehicle prototypes. In 2000, GM merged two engineering divisions, and he wasn't needed anymore.
Since then, except for a period in 2001 when he worked on a military-truck project, GM has paid him his full salary for not working. That is $31 an hour, or about $64,500 a year, plus health care and other benefits.
About 7,500 GM workers are in the Jobs Bank, more than double the figure a year ago. Each one costs GM $100,000 to $130,000 in wages and benefits, according to internal union and company figures, meaning that GM's total cost this year is likely to be between $750 million and $900 million.
One way that employees in the Jobs Bank can fulfill their requirements is to attend eight- or 12-week classes offered by GM. In these classes, Mellon has studied crossword puzzles, watched Civil War movies and learned about "man-made marvels like the Brooklyn Bridge," he said. One class taught him how to play Trivial Pursuit.
More recently, he attended an institute in Flint called the Royal Flush Academy. It is designed for those looking for work in casinos - the Detroit area has several - and teaches students to deal blackjack and poker. Mellon said he isn't interested in casino work and left the academy after they docked his pay because he was 10 minutes late coming back from lunch. With that he arrived at the rubber room.
Every day for a week Mellon got up at 4:30 a.m. to make the 45-minute commute to the rubber room from his home in Otisville. At first he read the newspaper or magazines lying around. He talked some with acquaintances. After conversation dried up, he said he spent hours staring at the wall, hoping that time would move faster.
The waiting "makes you want to bang your head against the wall," Mellon said. "I couldn't take it. I need to be doing something. And there is a supervisor who walks around staring at everyone. It's worse than high-school detention."
Mellon said he thinks that a "line-worker mentality" keeps people going back to the rubber room. "A lot of guys sit in that room and just collect their paycheck because they don't know what else to do," he said. "They've spent 20 years tightening a nut as it came down the line. They are faced with this harsh reality, and they are just happy the paycheck still comes so they can put their kid through college."
Mellon soon found a way to escape the room, through volunteering. That is what many of his fellow workers do. Dean Braid, 50, worked at GM as an engine and transmission tester for 21 years. Today, GM pays him $30 an hour as he helps a high-school friend, Doug Kahn, who is confined to a wheelchair.
GM employees constitute slightly more than half of the 14,700 autoworkers in the Jobs Bank. In second place with 3,000 Jobs Bank workers is Delphi, the auto-parts maker that filed for bankruptcy-court protection in October. The Chrysler unit of DaimlerChrysler AG has 2,500, and Ford has 1,100. Executives expect the total to rise to more than 17,000 next year, as the Detroit companies prepare to shed more than 60,000 jobs.
Pestillo, the former Ford executive, and others see the Jobs Bank as a corrosive influence with significant indirect costs because it encourages automakers to build more vehicles than consumers want. Companies figure that it is better to build cars with little or no profit margin than to pay people not to work, he said. They also may keep rote work in-house even though it would be cheaper to outsource.
The system gives older union workers little incentive to move to other plants, find jobs at other companies or retire. There is no limit on how long a worker can stay in the Jobs Bank. They don't have to look for work at their company. Contracts allow workers to turn down any job offer at a site farther than 50 miles from their home plant.
The Jobs Bank has its origins in the tough times that Detroit faced in the late 1970s and early 1980s. A spike in oil prices, a harsh recession and the first major assault from fuel-efficient Japanese cars hammered the Big Three and cost tens of thousands of union jobs. The UAW agreed to its first concessionary contracts in 1982 with the Big Three, which then made three out of every four vehicles sold in America.
That was the backdrop when the UAW contract at GM came up for renewal in 1984. GM put forward a one-paragraph memo proposing the creation of an "employee-development bank". The idea was to help train or find jobs for senior UAW workers who would "otherwise be permanently laid off" because of better technology or higher productivity.
Once the idea was on the table, GM agreed to expand it as the UAW ratcheted up pressure for a deal. A strike at a few locals was gradually spreading to engulf more than half the company.
The two sides reached a deal to end the strike Sept. 21, 1984. The UAW told its workers that their jobs were "more secure than ever in history." The UAW view, which continues to this day, was that the Jobs Bank would force GM and other automakers to find work for union members because no company would keep paying people not to work.
Ford made a similar deal shortly afterward. John Slosar, a former Ford executive in labor relations, recalls: "We just focused on matching each other back then, not 'Hey, this will disadvantage us to the Asian automakers.'"
Workers whose plants shut down don't immediately go into the Jobs Bank. They first receive unemployment benefits supplemented by the company. When the cumulative length of shutdowns during a contract reaches 48 weeks, they switch to the bank.
The car companies sometimes recommend volunteer projects for people in the bank to work on, although workers are welcome to submit their own projects for company approval. Workers at the Jobs Bank site in Lansing, the state capital, spent last summer fixing up a county park.
Others in the Jobs Bank go to school. Electronics technician Tom Adams is working toward a doctorate in history at Michigan State University and is writing a dissertation. He has been in the bank since 2001, except for an 18-month stint working on a truck project.
Those who can't find an outside activity - or don't want to - end up in rubber rooms and the like.
Rick Wagoner, GM's chief executive, said recently that the Jobs Bank "obviously is an area of competitive disadvantage for us." Union officials realize that the bank is tough to explain to the public but see an effect on communities if it is curtailed.
cont'd at article home...
