Dodging the Ditches at GM

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It’s kind of sad that it had to happen,” says Enrique Flores Jr., union president at the General Motors assembly plant in Arlington, of GM’s bankruptcy filing this month. “I mean, it’s one of the biggest companies—at one time the biggest company in the world—and it’s come to this. But we’re ready to go ahead and do it, and go through the process, and get to being a profitable company so we’ll continue to be around. It has to be done.”

Flores has worked for GM for 28 years. He’s worked in just about every department. He’s welded floorboards. He’s installed transmissions. He’s started up vehicles and driven them off the line. His commitment is probably one reason he was elected full-time union head, which in turn is probably one reason he’s speaking with the Observer, despite a memo instructing plant employees to direct all media inquiries to a designated flack.

Flores and his brothers and sisters in Local 276 of the United Auto Workers are collectively one of several major Arlington stakeholders in GM. Others include suppliers and service providers like the seat-assembly company Lear; dealerships like Vandergriff Chevrolet, whose original owners played a vital role in bringing the plant to Arlington; and the city of Arlington, which benefits to the tune of $393 million annually through payroll, taxes and charitable contributions derived from the plant and its sundry vendors, by Flores’ estimation.

The Arlington plant is in the middle of an eight-week furlough. Flores calls the idling—May 18 through July 13—a “routine inventory reduction.” In other words, there are too many vehicles sitting on dealers’ lots to justify making more.

During the furlough, Flores says, most plant employees will file claims for a slice of the dwindling Texas unemployment insurance fund. Senior union members should receive an unemployment benefit of about 70 percent of their gross pay. Whether the temporary displacement of jobs is genuinely “routine” depends on whom you talk to.

Even with a set return-to-work date, union members are worried about their jobs.

“Everybody’s holding their breath,” Flores had said before the bankruptcy filing. “Anytime you’re on a layoff, you worry that you’re not going to come back on the day they tell you to come back.”

Now that bankruptcy court is a reality, and restructuring is under way, the Arlington plant’s long-term future is even more uncertain. The only GM assembly plants now slated for shuttering are in Pontiac and Orion, Michigan; Wilmington, Delaware; and Spring Hill, Tennessee. But if the Arlington plant were to close for good it would maroon a work force that Flores says is about 85 percent transfers from GM plants that have already shut down elsewhere.

And what about the city of Arlington?

“It really isn’t as simple as just thinking that you might lose a General Motors plant,” says Wes Jurey, president and CEO of the Arlington Chamber of Commerce. “It’s all the other related jobs that are tied to that General Motors plant, and all those other suppliers—many of whom are located here in Arlington.”

No matter how you slice it, GM’s troubles are not just a Detroit problem.

The Arlington assembly plant occupies several long blocks just south of Division Street and west of Texas 360, about midway between Dallas and Fort Worth. Its endless, windowless metal siding seems designed to shield workers from outside distractions—in this case, a plant periphery dotted with watering holes, strip clubs and any number of rim shops and car-alarm installers.

I drove through the plant’s parking lots over Memorial Day weekend, a week into the furlough. An empty bottle of Moët & Chandon sat inside a paper bag on the concrete. The shell of a black SUV was abandoned behind a chain-link fence.

To the north, on the other side of the Union Pacific tracks, lies an entertainment district that includes Six Flags (itself a recent bankruptcy filer); the Ballpark in Arlington, home of the Texas Rangers baseball team; and the new billion-dollar Cowboys Stadium, where the NFL franchise will kick off for the first time this fall.

“GM was the key to the town of Arlington becoming the city of Arlington,” former longtime mayor and county judge Tom Vandergriff said in a 2004 GM news release commemorating the plant’s 50th anniversary.

Tom grew up in the car business, under the tutelage of his dad Hooker, who founded Vandergriff Chevrolet more than 70 years ago. When Tom became mayor of Arlington in 1951, he helped bring the GM plant to town. (He was also instrumental in the Washington Senators’ move to Arlington, where they became the Rangers.)

“The town of 7,500 has become the city of over 300,000,” he said in the release. “We owe so much of that development and growth to GM.”

The Arlington plant has likewise been important to the development and growth of GM. The diversity and flexibility of its operations are reflected in the array of vehicles it has produced. Sedans were the rage in the first couple of decades, starting with the Star Chief and later the Monte Carlo and the Impala. By the end of the 1990s, trucks and SUVs were the plant’s bread and butter.

“We’ve built everything,” Flores says. “We’ve built Chevrolet, Buick, Cadillac, Oldsmobile, Pontiac. We’ve built cars. We’ve built trucks. We’ve built SUVs and station wagons. We’ve built it all for them.”

The Arlington plant now stakes its reputation on its gas guzzlers: Escalades, Tahoes and Suburbans. And there’s a good chance that production of those beasts could come to a screeching halt, now that the U.S. government is the majority owner of GM and President Obama is tightening federal emissions and efficiency standards. Flores says those new standards will threaten the viability of his plant’s full-size SUVs.

The rub, Flores insists, is that people still want full-size SUVs. He says their roominess and towing capacity—the characteristics that differentiate them from smaller, more efficient SUVs like the Honda CRV—are conveniences not easily sacrificed, even in a climate of inconsistent gas prices, a sour economy and the growing green movement, he says.

That may be hard to believe—there are waiting lists for Smart cars, not for Suburbans—but Flores is steadfast in his assertion. He’s not the only one.

“General Motors was guilty of building something that people wanted to buy,” says Rick Cantalini, a 33-year veteran of the car business who, along with Cecil Van Tuyl, bought Vandergriff Chevrolet in 1998.

But if GM was building something people wanted to buy, why did the company have to file for bankruptcy?

Cantalini blames last year’s $4-a-gallon gas prices for setting off GM’s demise. Now that gas prices are lower, he says, sales of full-size SUVs are on the rise. His sales of compact cars (he also sells Hyundais) are flatlining.

But Cantalini realizes there’s a lot more to GM’s bankruptcy than the price of gas.

“GM had high fixed costs,” he says, “with too many models, dealers, factories, employees, benefits, et cetera. That’s why they need this reorg and money.”

Regardless of root causes, Cantalini was upbeat the morning of June 1, right after GM’s bankruptcy filing.

“Bankruptcy is nothing we hadn’t expected,” he said. “But it is official, and that’s a relief that we’re moving forward. All the indecision and waiting for things to happen, that’s what’s bad for any kind of market.”

Cantalini’s optimism is driven in part by the business he stands to gain from the dealerships whose contracts won’t be renewed under GM’s restructuring. (Texas Attorney General Greg Abbott has challenged that restructuring in court, contending that the new franchise agreements GM wants its 415 Texas dealerships to sign violate state law designed to protect them.)

Cantalini says he’s not worried about his own dealership, though. He says he scores high on GM’S quarterly metrics: sales, customer satisfaction, capitalization and market coverage.

“I think they would want us to be part of the new General Motors,” he says.

What that new General Motors will look like is the $64,000 question. A brave-new-world commercial tells us this much: “GM isn’t going out of business. GM is getting into business. Because the only chapter we’re focused on is Chapter 1.”

If only it were that easy to restart a car company from scratch. In Arlington, as in other cities where GM does business, the corporate behemoth arrives at this new beginning with a whole lot of baggage. It’s just going to have to cram it into a smaller trunk.

Austin freelancer Michael Hoinski writes for the Austin American-Statesman, Rolling Stone and The Village Voice.