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GM's Smith won't retreat
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June 19, 1998: 7:12 p.m. ET
CEO takes hard-line stance pushing for efficiency as well as quick resolution
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NEW YORK (CNNfn) - General Motors Corp. Chairman Jack Smith Friday said the company would like to settle a UAW walkout as quickly as possible, but he declined to retreat from his hard-line stance of pushing for efficiency gains.
"While General Motors (GM) has made significant strides to become more efficient and move faster, we have to continue to make progress to ensure that we keep our company strong and our people working," Smith said.
Smith made the comments at Friday's commencement ceremony at Kettering University in Flint, Mich., his first public appearance since the strike by United Auto Workers Local 659 began June 5.
"We must have an agreement that allows us to meet the demands of this changing marketplace," Smith said.
His comments came as nearly all of the automaker's production capacity ground to a halt, reviving concern over the strikes' imminent economic impact.
Clinton remarks
But the work stoppage wasn't considered detrimental enough for the Clinton administration to invoke the Taft-Harley act, which grants the federal government the right to intervene in the interest of national security.
"I would like to encourage the parties to work it out," President Clinton said.
"Under the governing laws of the United States, the role of the federal government in a strike like this is limited," Clinton told reporters during a meeting with his Cabinet.
But he conceded that the economy remains strong, as does the auto industry.
"They have some, apparently, very legitimate and substantial differences, but we've got a collective bargaining system which I support and I think they can work it out and I hope they do it in a timely fashion," he said.
Still, with the U.S. economy already affected by the slowdown throughout Asia, an increasing number of economists believe the labor disputes are bound to further slow growth, as was the case in 1996.
"Both sides seem to be pretty well entrenched in their positions, which would mean the economic effects could be rather appreciable," said Richard Berner, chief economist at Mellon Bank in Pittsburgh.
In 1996, the Commerce Department estimated that GM strikes in Dayton, Ohio, shaved about three-tenths of a percentage point off gross domestic product in the first quarter.
And this week's report on initial jobless claims already has started to reflect the latest work stoppages. But a few economists believe the United States is well-positioned to withstand the full impact.
"The effect of the strike will be to short-circuit momentum in the U.S. economy, but we are well positioned to absorb it," said Diane Swonk, economist at First Chicago/NBD.
Talks continue; no progress
Meanwhile, with 22 out of GM's 29 assembly plants and 91 parts plants now affected by the walkouts, negotiators for both sides made little progress Friday. Talks are scheduled to resume on Saturday.
The talks come ahead of the UAW's national convention, which is set to convene this weekend in Las Vegas.
GM's largest assembly plant, in Lordstown, Ohio, shut down mid-shift Friday morning when parts ran out, bringing the number of idled workers to115,000.
Observers said if no settlement is reached this weekend, GM may decide not to restart assembly lines Monday.
General Motors said Thursday it was losing approximately $60 million a day in pretax profits because of the strikes.
All laid off workers must apply for state unemployment benefits and get no supplemental income from GM. When layoffs result from a slow down in sales, GM workers can get supplemental income up to 90 percent of their regular pay. When layoffs result from a strike, no supplemental income is provided. Workers on strike get minimal strike pay from the UAW.
The issue is the efficiency of plants and General Motors' decision to send work outside the United States to plants where labor costs are cheaper.
-- from staff and wire reports
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