cover intr day1 - uaw chrysleruaw-chrysler.com/training/pics/pelmanualv5.pdf · the swot analysis...

Participant’s Guide

U A W - D A I M L E R C H R Y S L E R N T C

The photography on the front cover was created by a UAW-DAIMLERCHRYSLERemployee for the National Training Center’s Artists at Work Program. To see moreart and learn more about the Artists at Work Program visit the UAW-DAIMLERCHRYSLER NTC Web site at: www.uawdcx.org

Artists Credits:

PhotographyFront cover:Title: Details, Kenosha Engine Line 4.0 Liter

Artist: Paul Brnak, Stock Handler, Kenosha Engine. UAW Local 72

PhotographyDay 3, page 51, 1934 Chrysler Airflow

Artist: Gordon M. Heidacker, Director, Corporate Strategy Chrysler GroupDaimlerChrysler Technology Center.

A Message of Welcome and Program Overview........................................................1

Introduction ....................................................................3

Day One:The History of the Automotive Industry and the Rise of the Union...................................................................5

Day Two:The Pie Gets Bigger: The Evolution of the........................29 American Economy

Day Three:The Automotive Marketplace..............................................53

Day Four:How Well Will We Do: The Political Process....................71

Day Five:SWOT worksheets..................................................................88

TABLE OF CONTENTS

Welcome

1

A Message of Welcome and Program OverviewFocusing on the Future with the Leaders of Today

Welcome to the Paid Educational Leave Program. PEL is designed to equip you aslocal plant leaders with the necessary tools to understand and meet the challengesof our rapidly changing auto industry.

PEL provides nontraditional training by experts who explore the economic, political and technological forces affecting the future of the auto manufacturing.

This remarkable program has moved into the forefront of labor-management relations in the U.S. It further demonstrates a commitment by the UAW andDaimlerChrysler to create an environment most conducive to achieving our sharedvision for the future.

General Holiefield John Franciosi

Vice President & DirectorUAW-DaimlerChrysler

Senior Vice PresidentEmployee RelationsDaimlerChrysler Corporation

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The UAW-DaimlerChrysler National Training Center

Objectives

Introduction

3

The United Auto Workers and theChrysler Corporation negotiated thePaid Educational Leave program(PEL) in 1987. The company and theunion agreed at the bargaining tablethat both would benefit if all employ-ees understood the forces driving ourindustry to continuously change. Tosucceed in a changing marketplaceworkers need accurate information tomake proper decisions. The national, regional, and local PEL programs arean educational resource designed toprovide this information.

The PEL program's success dependson your active participation. Theinstructors will challenge you to think about theauto industry in new ways and mayeven encourage you to continue youreducation beyond this room. Yourinstructors are not employees of eitherthe company or the union. They havebeen carefully chosen and are regard-ed as experienced authorities in theirfields. Their outsider status enablesthem to bring a fresh perspective toour problems.

Introduction to Paid Educational Leave

PEL is about action and change. It isdesigned to give all employees theinformation they need to have a largervoice in the future of the company and the union.

Review the history of the industry,company, and the union.

Gain a better understanding of the economy as it affects working families.

Try to understand how politicalchoices are made that address our future.

Analyze the current status of thecompany and its place in the automobile industry.

Examine changes in work organization and industrial relations on an internationalbasis.

Discover how workers in othercountries bargain for change intheir workplaces and communities.

Develop strategies so workers can protect their families' economic and political future.

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Strategy: Framing the Week

The auto industry is now over one hundred years old. Unfortunately there is noshortage of debate and controversy concerning industry problems. In PEL we try toget beyond these controversies. To do this we introduce the concept of strategy.Strategy is a term that enables us to be more objective. Some strategies work others fail. All strategies have up sides and down sides.

A successful strategy starts with a clear mission statement. A mission statement focuses the mind. It enables one to set goals and measure progress. A mission willnot succeed unless it takes into account the environment, the environment will alsoaffect the resources available for pursuing the goals and accomplishing the mission.These variables are interdependent and interconnected.

We can summarize these relationships with the STRATEGY TRIANGLE:

The planning tool used to help people develop affective strategies it is called aSWOT analysis. You will be asked to do a SWOT analysis for your plant and localunion. The SWOT analysis involves listing strengths, weaknesses, opportunities,and threats. A successful strategy usually builds on strengths, eliminates weakness-es, takes advantage of opportunities, and works to neutralize threats. The SWOTwill serve as a starting point for a discussion with union and plant leadership whenthey return on Friday.

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DAY 1

Walter Chrysler borrowed $4300 from an investment banker friendto purchase a 1908 seven passenger Locomobile. He spent threemonths examining every part before driving it.

Check out the PEL Website for quarterly updates on marketplace information: www.ntcpel.com

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THE ERA OF CRAFT PRODUCTION“The fun I had experienced in making things as a boy was magnified a hundred-fold when I began making things as a man.There is in manufacturing a creative joy only poets are supposedto know. Some day I’d like to show a poet how it feels to designand build a railroad locomotive.”

-Walter Percy Chrysler

Early Craft Production

In the auto industry’s early stages, the horseless carriage was a thing of beauty,crafted by a highly skilled workman. But these early horseless carriages were veryexpensive.

Knowledge and skill emphasized

Custom-made products

Work organized by craftsmen

Quantity and pace of work wascontrolled by craftsmen

Craftsmen and helpers worked inteams

Quality of production emphasized

Elements of Craft Production are:

Day 1

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High production costs

Low production rate

Highly Competitive Marketplace

Inefficient of industry infrastructure

Lack of principal technology

Challenges Faced By Early Craftsmen and Entrepreneurs

“In our fist assembly we simply started to put a car together at a spot on the floor and workersbrought the parts as they were needed in exactly the same way as one builds a house”

- Henry Ford

8

The Era of Craft Production

Below: Oldsmobile production rose to4000 units in 1903. The popularCurved Dash Runabout featured atiller, a seatside crank and the 4 1/2-horse engine.

Above: Walter Chrysler’s machinist toolbox

Day 1

9

The Problem

“As was usual then the shop was real-ly run by the workmen and not thebosses. The workmen together hadplanned just how fast each job shouldbe done… (For the) foreman of theshop, the combined knowledge of theworkmen who were under him wascertainly ten-times as great as hisown.”

-Frederick Taylor: management consultant

“Employers had no more control thanif they were in no way connected withthe shop. The proprietors were merelythe financial agent… It was for them tofind out the cost of production asarranged by organized labor and thenmake the selling price sufficient toleave them a profit.”

-John Whirl: Employer's Association of

Detroit

As the market grew in the early part of the century Frederick Taylor an early manufacturing engineer, identified a new problem.

Early craftsmen at work in early auto industry

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The Era of Craft Production

The Solution Was . . .

“All possible brain work should be removed from the shop and centered in the plan-ning department… The work of each workman is fully planned out by the manage-ment…not only what is to be done, but how it is to be done and the exact time fordoing it.”

-Frederick Taylor: management consultant

Early assembly line

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The Ten Commandments of Scientific Managements

1. Remove “all possible brain work” from the shop floor. Skilled workerslose authority, and foremen become disciplinarians.

2. Centralize authority in Planning/Engineering Department that definesmethods and issues orders down a chain of command.

3. Sub-divide complex work into many classifications, each performing simplified repetitive tasks.

4. Conduct time motion studies to determine allowable standard time foreach job element.

5. Hire unskilled workers to fill standardized and repetitive jobs.

6. Provide minimum training necessary for each sub-divided task.

7. Define the “One Best Way” to perform each task and prohibit any deviation from standardized methods.

8. Mechanize jobs to reduce variance, and introduce assembly-line methods to pace work.

9. Pay incentive wages for output above standard.

10. No union.

Wayne State University's Steve Babson combines the ideas of Frederick Taylor,Henry Leland, Henry Ford and the Dodge brothers into what Babson calls “TheTen Commandments of Scientific Management.”

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The Era of Mass Production

The Ten Commandments became the religion of American manufacturing management.

Why?

These ideas work. They made American manufacturing the low-cost producer of nearly every manufactured item in the world.

Early production under scientific management

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Mass production has many parents but most people only see “Father Ford”:

“I will build a car for every man. It will be large enough for the family,but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after thesimplest designs that modern engineering can devise. But it will be low inprice that no man making a good salary will be unable to own one andenjoy with his family the blessing of hours of pleasure in God's great openspaces.”

Mass Production Included:

Moving assembly line

Minimally trained workforce

Vertical integration

Significant economies ofscale

Large volume

Low per-unit cost

Standardization

Interchangeable parts

Single-use machinery

Mr. Ford's commitment to his strategy was total. “Mass production pre-cedes mass consumption and makes it possible by reducing costs, to per-mit both greater use convenience and price convenience.”

“The customer can have any color he wants - as long as it's black.”

-Henry Ford


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Evolution of Ford’s scientific Management

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Product delineation and market segmentation

Yearly model change

Offering financing of new cars

Vertical and horizontal assimilation

Instituting corporate financialand production management

Managing of scale and scope

Sloanism included:

Unfortunately this commitment blinded Ford to changing market condi-tions in the 1920’s. Alfred Sloan and General Motors developed a newstrategy for the growing market of the 1920’s. Sloan emphasized style andits importance for the creation of demand.

“The changes in new models should be so novel and attractive as to create dissatisfaction with past models”.

-Alfred Sloan

Sloan’s strategy offered customers what the Model T lacked: speed, comfort, convenience and variety.

Alfred Sloan

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Day 1

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A Third Way: Walter Chrysler

America’s rapid economic growth in the “Roaring Twenties” provided an opportu-nity for Walter Chrysler. Chrysler was a multi-millionaire General Motors retireeand a production genius. His work with General Motors and his friendship withAlfred Sloan saved Chrysler from the inflexible Ford strategy. By the early thirties,Chrysler was offering a full line of vehicles and surpassed Ford in sales.

“I am building the Chrysler because I have been convinced for years thatthe public has a definite idea of what a real quality lightweight car is – one not extravagantly large and heavy for one or two people, but adequately roomy for five and economical to own and operate”.

-Walter Chrysler

Dodge Brother’s test track Hamtramck Plant, circa 1915

A Third Way

18

Chrysler Engineering

A key element in Walter Chrysler’s successwas quality engineering. Carl Breer, FredZeder and Owen Skelton were nicknamedthe “Three Musketeers” They fatheredadvanced high compression engines,“floating power” engine mounts, and manyother Chrysler firsts. Unlike Ford andGeneral Motors, Chrysler engineers madekey business decisions.

Walter Chrysler and the Three Musketeers of Chrysler engineering

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1920 Walter P Chrysler retires at 45 as GeneralMotors Production Chief

1920 Chrysler asked by bankers to take over management of troubled Willy-Overland

1921 Chrysler also takes over as Chairman of theMaxwell and Chalmers Motor Companies

1924 Chrysler introduces their first car-- the Chrysler 6

1925 Maxwell adopts the Chrysler Corporation name

1928 Chrysler purchases the Dodge Brothers company and the Desoto and Plymouth modelsare produced

1929 Chrysler achieves Number Two in sales

Chrysler’s Evolution

The interlocking triangles ofthe Dodge Marque representedthe close working relationshipthe Dodge brothers enjoyed. Itwas said that the Dodge didn’tneed a horn because theemblem already conveyed thewarning “ Dodge Brothers”

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A Third Way

The Role of the Dodge Brothers

“Whether manufacturing bicycles or automobiles, the Dodge Brothersmade their marketing decisions in a simple way – they manufactured theproducts they themselves wanted to own.”

-Carl Breer

The Dodge Brothers died in theinfluenza epidemic of 1920. Theylacked Mr. Ford’s penchant for self-promotion, but their knowledge of production techniques and productengineering was rarely surpassed. The following statement from the Michigan Manufacturer andFinancial Record is more truth thanhype according to Chrysler historianCharles Hyde:

“The Dodge brothers are the two bestmechanics in Michigan. There is nooperation in their own shop from dropforging to machining, from tool mak-ing to micrometric measurement thatthey can’t do with their own hands….as a matter of fact, when the DodgeBrothers’ new car comes out, there is

The purchase expanded Chrysler’sproduction capacity five-fold. Theforging and stamping operations atDodge made Chrysler less dependenton outside suppliers. Walter Chryslerdescribed the move as the “best busi-ness decision I ever made.”

no question that it will be the bestthing on the market for the money.”When Chrysler bought the DodgeBrothers from their widows, Chryslerwas a smaller company than theDodge Brothers.

John and Horace Dodge

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Day 1

Union StrategiesUnions are a principle mechanism for the redistribution of the nation’swealth from those who manage it to those who play a significant role increating it – the workers. Union strategies are closely tied to market conditions and production strategies.

Victory in Chrysler Sit Down

Union Strategies

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Protection of skill levels with a long apprenticeship.

Clear lines of demarcation between crafts.

Protection of quality. “Look for the Union Label” means quality.

A pecking order based on knowledge and skill. Unskilled helpers,apprentices, Journeymen and Master Craftsmen.

Skill and knowledge withheld from non-members. Women, formerslaves, recent immigrants and non-family members wererarely invited to join this “aristocracy of labor.”

Craft unionism includes:

Early craftsmen emphasize knowledge, skilland quality

Day 1

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Anti-Union Influences

In the United States, there was ashortage of skilled labor in theearly days. This shortage gavecraft unions power as demand forlabor drove wages up. Higherwages created new consumption.Higher wages also led managers tosee new machines and newprocesses as key to increased pro-duction cost saving.

It is no accident that the tenthcommandment of scientific man-agement is “no union.” FortuneMagazine published a union bust-ing plan and wrapped it in theflag. They called it the “AmericanPlan.” By the 1920’s, Detroit wasan open shop town.

From a worker and union perspec-tive, things got significantlyworse with the onset of the GreatDepression. The official unem-ployment rate was 25%.Management built scientificallymanaged factories and craftunions were in serious trouble.

John L Lewis of the Miner’sUnion, Sidney Hillman of theNeedle Trades, and their support-ers argued for a new union strate-gy. They called it industrialunionism.

John L. Lewis

Union Strategies

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Rather than excluding people as thecraft unions did, industrial unionismtook an inclusive approach.

The new unions would organize every-body in an industry and have themstand together. Critics of the old craftapproach referred to the AmericanFederation of Labor as the “AmericanSeparation of Labor.” Solidarity wasthe key to the new strategy.

Scientifically managed factories weak-ened craft unions, but the new industrial unions would hold these cientifically managed factorieshostage. The weapon used by industrial unions was the sit-downstrike.

Early CIO organizing

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The Role of Politics

In a democracy, the governmentsets the tone of the country bymaking the rules. The GreatDepression led to a new politicalstrategy and new rules. The newstrategie’s champion was FranklinD. Roosevelt. He called it the NewDeal.

From a union perspective, themost important piece of New Deallegislation was the Wagner Act,also known as the National LaborRelations Act. It conveyed theright to organize and bargain col-lectively. Employers could notinterfere with that right.

“The inequality of bargainingpower between employees…andemployers…burdens and affectsthe flow of commerce and tends toaggravate recurrent businessdepressions, by depressing wagerates and the purchasing power ofwage earner's…

It is hereby declared to be the policy of the U.S. to eliminate thecauses of certain substantialobstructions to the free flow ofcommerce…by encouraging thepractice and procedure of collec-tive bargaining and by protectingexercise by workers of full freedom of association, self-organization, and designation of representatives.”

- From the National LaborRelations (Wagner) Act, 1935

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Union Strategies

“Congress has given labor thegreatest opportunity it has everhad to work out its own destiny.”

-United Mine Workers Journal

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The Rise of the UAW

August 26, 1935 American Federation of Labor(AFL) organizes InternationalUnion, Francis Dillon becomesPresident of the UAW.

1935 Congress of IndustrialOrganizations (CIO) formed byAFL-allied unions begins toorganize unions in the steel, automotive, and rubber industries.

May 1, 1936 Following the 2nd Convention,President Homer Martin, estab-lishes autonomy from the AFL,and establishes an organizingfund of quarter million dollars.

December, 1936 The Kelsey-Hayes WheelCompany, wins UAW recognitionafter workers strike

December 30, 1936 – February 11, 1937 General Motors recognizes UAWand agrees to negotiate followinga sit-down strike in FlintMichigan

March, 1937Chrysler is recognized by theUAW after a sit-down.

May 27, 1937 Ford “Battle of the Overpass”

November 14, 1938CIO established

October, 1939 Union wins right to negotiatearbitration and production stan-dards after UAW strikes Chryslerfollowing the Dodge Main lockout.

June 20, 1941 During the first contract withFord, the UAW establishes unionshop dues check off and grievance procedures.

Quotes from: We Make Our Own History:A Portrait of the UAW, 1986

Early UAW organizing

The Era of Industrial Unionism

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Government interventions in economic affairs.

Public investment.

Income policies (minimum wage, unemployment insurance, social security).

Regulation of finance and banking.

Workers’ rights and the rise of industrial unionism.

Creation of an economic safety net.

The New Deal’s Transformation of the American Economy included:

The New Deal – The CIO and the UAW

The Committee for Industrial Organization, later the Congress of IndustrialOrganizations (CIO) of which the UAW was an important part, was a broad socialmovement involving millions of people. Such mobilizations rarely occur, except inresponse to crisis.

The CIO organized in virtually every industry, bringing millions of workers into arevitalized labor movement. CIO unions supported Franklin D. Roosevelt and hisfellow Democrats to actions that transformed the economy and changed Americadramatically.

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DAY 2

Advertisement for Plymouth “Floating Power” 1931. ThePlymouth was Chrysler's profit center during the Depression.


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PROFIT STRATEGIESIn periods of rapid economic growth, corporations expand the total revenue side ofthe profit equation by growing the company in times of slower growth.Corporations often shift their emphasis by reducing the total cost side of the equation. These choices often substantially influence strategy.

The Profit Equation

DAY 2

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1. New products/research, developeand launch

2. Build new factories in foreignmarkets

3. Improved technology

4. Sell off divisions/plants

5. Worker training

6. Outsource to low-cost suppliers

7. Wage, benefit, and work ruleconcessions

8. Increase prices

9. Improved work methods

10. Acquisitions and mergers

11. New ad promotions

12. Seek government assistance

Walter Chrysler with new product, 1926

Every corporation pursues all of the strategies listed below, but with moreinvestment in some strategies than others. As an exercise in strategic thinking, read the strategies and follow instructions "A" and "B" listed below:

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Profit Strategies

A. Pick the four profit strategies whichyou think are the most likely toimprove the job security of plant-level employees in any manufacturing enterprise in theU.S. (workers, supervision, and plant engineers).

B. From the same list, pick the fourprofit strategies which you thinkcorporate managers in the U.S.have favored over the last 20 years.

NOTE: You may pick the same fourstrategies for each list, or you maychoose different strategies for each.

(Exercise by Steve Babson, WSU Labor Studies)

Top corporate managers have a large number of variables to consider whenmaking strategic choices. Managers are not just in product markets, they are alsoin capital markets. They are not just looking for customers; they are also lookingfor investors. Management with an economic problem will see that problem exac-erbated if stock holders lose confidence and sell their stock.

1937 Plymouth P4 Deluxe Coupe

DAY 2

Government’s Role in the Economy

No company has the ability to change variables beyond their control. Inthe United States, only the government has the power to change thenation’s economic priorities. Governments do this by a combination ofcarrots and sticks. These carrots and sticks encourage some behaviors anddiscourage others.

Among politicians and economists, there is sharp debate concerning theproper role of government in the economy. Some believe in more govern-ment involvement, some believe in less.

As a nation, we are far from consensus on such matters as tax policy, government spending, business regulation, social investment, the role ofthe Federal Reserve and the role of unions. What the government shouldor should not do will be hotly debated in the next election cycle.

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Profit Strategies

Is the Pie Getting Bigger?

The Gross Domestic Product (GDP) equation measures overall economic activity,namely the amount of goods and services produced inside the U.S. in a year. Inperiods of rapid growth, companies may have more customers and more opportunities. In periods of slow growth, or contraction, companies may placemore attention on cost cutting and retrenchment.

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DAY 2

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Economic Trends

Greatly increased investment inplant and equipment expands output in consumer goods butinvestment becomes increasinglyspeculative as the decade progresses.

Mass production and scientificmanagement make consumergoods increasingly available.

A crisis in the agricultural sectorleads to dislocation of farmers andencourages rapid urbanization.

There is little direct governmentintervention in the economy compared to the decades ahead.

Secretary of the Treasury, AndrewMellon, pushes tax cuts for thewealthy.

It is an extremely anti-labor climate – Detroit is known as anopen shop town.

U.S. economic history

We can use the Gross Domestic Product equation and the changes in its components to take a short tour through the history of the American economy.

The United States is the low cost producer of most manufactured goods there byincreasing exports.

October 24, 1929 – the stock market crashes

Interior of the Anderson Carriage Factory

The Roaring Twenties


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Politics

Women get the right to vote

Attorney General Palmer conducts nationwide “Red Scare.” Who detainand deport “Anarchists, Communists and labor agitators,” destroying offices, printing equipment and seizing membership lists.

Warren Harding (R) elected President in 1920, Calvin Coolidge electedPresident in 1924, Herbert Hoover elected President 1928, is the first woman

electedGovernor, Nellie Ross (Wyoming)

October 24, 1929 – the stock market crashes

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Fun Facts

Prohibition is supported by a coalition of Detroit industrialists including Henry Ford, Henry Leland and the Dodge brothers.

Michigan voters approved Prohibition ahead of the rest of the nation.

Michigan is the first census to show more urban than rural residents in Michigan, (1920).

By 1925, the price of a Bible falls to $3.00.

WWJ joins Pittsburgh’s KDKA as first commercial radio station (1920).

Detroit Policeman, William Potts, invents the electric red-amber-green traffic light, which is installed at intersection of Woodward and Michigan.

Ford purchases Lincoln Motors from the Lelands for $8 Million (1922).

Walter E. Chrysler placing inspection tag on 1924 Roadster

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There are 500 radio stations nation-wide by 1923.

Chrsyler sells 32.,000 of its new Phaeton Model the best selling new car yet.1929 - Blue Cross offers the nation’s first pre-paid hospital insurance.

Advertisement for the “New Good Maxwell” cars, 1924.

DAY 2

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The Great Depression

Economic Trends

Output as measured by GDP in 1932 – half of what it had been in 1929.

Car sales decline dramatically.

Official unemployment reaches 25% and stays there for much of the decade.

British economist, John Maynard Keynes, theorizes about causes of GreatDepression.

Car Sales

Top Cars – 1929 Ford 1,310,119 Chevrolet 780,053 Essex 191,328 Pontiac 186,626 Buick 172,307 Industry Total 3,848,937

Top Cars – 1933 Chevrolet 474,993 Ford 311,613 Plymouth 249,667 Dodge 86,062 Pontiac 85,348 Industry Total 1,493,794

Consumption is off by 20% between 1929 – 1933.

Investment is off 84% between 1929-1933.

14,000 banks fail in this decade and with them people’s savings and hope forthe future.

Franklin D Roosevelt’s economic policies are partially successful at best. But it will take World War II to pull the nation out of the Great Depression.

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DAY 2

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Politics

Franklin D. Roosevelt (D) is elected President in 1932; re-elected anunprecedented three more times.

Massive social unrest and loss of faith in business leads to countlessprotests, rallies, widespread sit-downs and even general strikes.

Franklin D. Roosevelt’s New Deal Is enacted.It includes:

Federal Emergency Relief Act (1933) Civilian Conservation Corps (1933)Federal Home Loan Corporation (1933)Federal Housing Administration (1933)Tennessee Valley Authority (1933)Federal Deposit Insurance Corporation (1933)National Labor Relations Act (1935)Social Security Act (1935)Fair Labor Standards Act (1938)

The New Deal is more successful at restoring hope than at restoring prosperity.

The Congress of Industrial Organizations (CIO) challenges the power ofbusinessby organizing mass demonstrations, mobilizing for political action andencouraging government oversight of business.

FDR is re-elected in 1936 by carrying every state but Vermont and Maine.

In 1939 the Supreme Court declares sit-down strikes illegal.

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Fun Facts

Germany’s Autobahn – world’s first modern highway system (1932)

Estimated to be 160,000 automobile trailers on road. Speculations that halfof nation will be living in trailers and looking for work (1936)

Benny Goodman first Big Band leader to racially integrate his band by hiringTeddy Wilson and Lionel Hampton.

George and Ira Gershwin write masterpiece opera “Porgy and Bess”

Alcoholics Anonymous organized in New York (1935)

First televised baseball game (1939)

First nylon stocking (1939)

Average wage for auto workers $.76/hour (1935)

Detroit Tigers first World Series victory (1936)

April 30, 1939 – first televised Presidential talk. NBC’s New York World’sFair coverage initiates weekly television programming. Network TVdevelopment thwarted by World War II.

UAW sit-down strike in Hamtramck, Michigan, 1937

DAY 2

Economic Trends

The war generates a nearly 50% jump in Gross Domestic Product.

In 1944 an official unemployment rate is 1.2% compared to 1939’s 17%. This signals the end of the Great Depression.

U.S. production capacity buries the Germans and the Japanese under an avalanche of war products.

Re-focusing the economy for war production means significant pent-updemand for consumer goods in the post-war period.

Between 1941 and 1945, the government debt exceeds $200 billion to financethe war effort. This would be comparable to over $1.5 trillion by today’s standards.

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Workers assembling fuselage sections for the Martin B-26 in Detroit Chrysler Plant

World War II

Politics

FDR is re-elected (1940,1944).

FDR issues an executive order against discrimination in war plants. This creates new opportunities for women and minorities.

Labor and Management Institute becomes the first joint program.

Labor plays a role in managing the wartime economy from Washington; laboralso gains significant prestige with a no-strike pledge to support the wareffort.

Many executives serve the war effort as “dollar-a-year” men, helping to manage the economy.

Bretton Woods agreement is enacted.

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World War II

DAY 2

Chrysler’s Role in the War

Chrysler produced 22,235 tanks for the war effort on five assembly lines. The majority were the M4 Sherman, a 66,500 pound workhorse that carried a75mm gun and cruised at 24 mph.

Chrysler produced hundreds of millions of rounds of ammunition of variouscalibers. Bombs and various projectiles poured out of Chrysler plants like theone in Evansville Indiana where employment went from 650 in 1941 to12,560 in 1943.

Chrysler also produced over 18,000 Wright Cyclone engines, an awesomedevice with 18 cylinders and over 2200 horsepower, for the B-29 super

fortress.

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Chrysler-built engine

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World War II

Dodge Main produced 2,098 sets of radar equipment and the even more complex Sperry Gyro compass.

Chrysler built anti-aircraft guns including 120,000 Bofors gun barrels nearly50,000 of which were assembled at the Plymouth Lynch Road plant in Detroit.

Finally, Chrysler also played a role in production of the atomic bomb, producing very complex nickel-plated metal diffusers used to separate U-235from uranium.

Chrysler tank production

DAY 2

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The Americam Century

The period from 1946-1973 is a period of huge growth for the U.S. economy.Some economists call it the American Century because a century of progress wasmade in less than three decades.

Reasons for American Century

There is tremendous pent-up demand for consumer goods unavailable duringthe war.

The war leaves the U.S. as the only industrial economy untouched by thewar’s devastation.

The U.S. helps Europe rebuild with the Marshall plan.

Significant savings and war profits provide investment capital.

The Cold War keeps military spending high.

The interstate Highway System means tens of thousands of miles of steel-reinforced concrete. These roads mean new parts of the country are opened tobusiness opportunity. Let’s “See the USA in our Chevrolet.”

People and business abroad have little choice: buy American goods or buynothing.

The GI Bill educates a new generation of engineers and entrepreneurs. Theycreate new products and innovative technology which spurs productivity.

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The American Century

The Government creates a social safety net which helps preserve consumerdemand even in periods of downturn.

The proliferation of radio and television advertising pumps up consumerdemand.

Post war prosperity

DAY 2

Union Contributions to Prosperity

High rates of unionization (34% in 1954) lift wages across entireindustries for both union and non-union workers (pattern bargaining).

Wage increases are tied to productivity increases.

Job security through seniority encourages consumption and saving.

Union-negotiated health and pensions benefits create more disposableincome for workers.

Union support for the Civil Rights Movement plays a role in expanding opportunities for women and minorities which also stimulates demand.

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Trade Union Leadership Conference participants in civil rights march

Where do they live?

Home ownership?

What do they drive?

Household appliances?

Health Care?

Pensions?

Job Security?

Children in College?

TV?

Summer Home?

Vacation?

As an example of this new prosperity let's examine the life

of an average worker in theUnited States 1946 - 1973

Chrysler’s Contribution to Prosperity

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Other countries rebuild using newtechnology and new ideas, especially Germany and Japan.

There is a decline in investmentfor plants and equipment.

There is a decline in U.S. productquality and productivity.

Import competition leads to lost market share for U.S. companies.

Rising energy prices and theVietnam War exacerbates inflation.

Chrysler responds to increased demand for car and truck production by buying orbuilding eleven new plants between 1947 and 1950.

The American Century is threatened

DAY 2

The Profit Squeeze

The elements listed on the previous page created a situation between 1965 and 1979in which corporate profits declined by 50%. This led some politicians and businessleaders to conclude a new strategy was needed. This strategy had a role for government and business.

A New Strategy

The Government’s Response?

Reliance on the Federal Reserve and tight monetary policy.

Deregulation.

A declining role for government in economic affairs.

Restricting the rights of workers and unions through the courts,legislation and the National Labor Relations Board.

Cut taxes on business and the wealthy to spur investment

Business’ Response?

Get out of manufacturing.

Automation.

Two-tier wages.

Ask unions for concessions.

Contingent labor.

Invest abroad.

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Results

Profits and income at the top skyrocket.

The stock market booms, meaning if you’re inthe market, you are moving up. If you’re not,you’re moving down.

Wall Street takes a seat in the boardroom.

Union density declines.

Real wages decline.

Unemployment rises.

Consumer confidence declines.

Inequality increases.

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DAY 3

1934 Chrysler Airflow


53

THE AUTOMOTIVE MARKETPLACE

The Global Marketplace

These charts take a look at the world in terms of who builds vehicles and who buysthem. You can see that North America buys more than it builds (which means wehave to import the difference). Asia-Pacific buys significantly fewer than they build(which means they are exporting to the rest of the world).

2003 Global Market SummaryTotal Sales = 59.1 Million Vehicles (+2.2%)

Eastern Europe5.2%, 3.1 million

Asia-Pacific26.1%, 15.4 million

Middle East2.9%, 1.7 million

Africa, 1.6%.93 million

Central/South America, 3.9%2.3 million

North America, 32.7%19.3 million Western Europe

27.6%, 16.3 million

2003 Sales to Production Summary(Net imports have ratio greater than 1.0)

Eastern Europe1.08

Asia-Pacific0.72

Middle East1.38

Africa1.69

Central/South America1.02

North America1.18 Western Europe

0.94

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DAY 3

55

China 1,261,832 $855 88.5

India 1,014,033 $468 113.0

USA 275,562 $36,154 1.3

Indonesia 224,784 $684 70.6

Brazil 172,860 $4,630 12.0

The interesting thing to note about the population chart is this: when per capitaincome in a country gets to around $4000 automotive sales take off. This has happenedagain and again around the world. In some of China's major cities, per capita incomehas reached this point.

Population(1,000’s)

People Per

Vehicle

Per CapitaIncome

POPULATION

*General Motors

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0Millions of units sold

Volkswagen Renault-Nissan

*Toyota

*Ford

DCX

HyundaiHondaMitsubishi

Peugeot-Citroen

*GM sales include Suzuki, Isuzu, Saab, Fiat, Fuji and Daewoo*Ford includes Mazda, Jaguar,Volvo, Land Rover*Toyota includes Daihatsu and Hino Motors

13.9 (23.%)

5.4 (9.1%)

6.8(11.5%)7.6 (12.9%)

2.9 (4.9%)3.0 (5.2%)

3.3 (5.6%)4.4 (7.4%)

5.0 (8.5%)

1.5 (2.6%)

2003 World Motor Vehicle Sales By Company (+ 2.2%) - Toyota Plans for 15%!

BMW

Sales growth from 2002: +5.3%

- 2.5%

+ 9.7%

+ 5.9%

+ 0.4%

- 4.1%

+ 0.6%

+ 4.6%

+ 2.8%

- 11.8%+ 4.5% 1.10 (1.9%)

56


Canada's gas prices are higher than ours, but not by that much. Price differencesaround the world change not only model mix (note the next chart looking atCanada) but more importantly changes the emphasis on technology and design.

January 2003 World Gas Prices per U.S. GallonGas/No Tax Tax

Pric

epe

rU

Sga

llon

USA UKGermanyItalyFranceJapanSpainCanada

0.00

1.00

2.00

3.00

4.00

5.00

6.00

1.070.381.45

1.11

0.741.85

1.29

2.04

3.33

1.47

1.88

3.34

1.15

3.05

4.20

1.41

2.89

4.30

1.22

3.24

4.46

1.17

3.70

4.87

U.S. Versus Canadian Market Share by Segment 2001

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

0.0%

SmCars

MidCars

BigCars

Lux Cars

CUVCSUV

BigSUV

Vans

Pickup

s

29.2

%14

.2%

6.4% 10

.6%

2.8% 6.

7%

16.4

%9.

0%

13.6

%18

.7%

6.0% 5.

9%

2.4% 4.

7%

4.3% 6.

8%

19.5

%23

.6%

Canada US

DAY 3

57

The American Marketplace

The market for light vehicles (this includes cars and light trucks) is down by only 1% for2003 compared to sales in 2002. Car sales, on the other hand, are down 6.1%; BigThree car sales are off a whopping 9.3%.

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DAY 3

59

Light truck sales are up 4.0% Note the significant increase in import and transplant light truck sales. This market is critical to the Big Three.

60


The Big Three are being squeezed from three different directions. The criticalmarket for the Big Three is the middle arrow - this is the market they must defend.

DAY 3

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62


Notice the huge drop-off in car sales for the Big Three. The loss of car sales has beenpartially offset by gains in the light truck/van market.

DAY 3

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64


DAY 3

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Note where these plants are located. Note also which plants are expanding.These charts are critical not only to the Big Three, but to the UAW as well.

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DAY 3

67

IQS refers to initial quality and counts defects per hundred cars. From a statistical standpoint there is no difference between the Big Three and the foreign manufacturers.

68


VDS refers to Vehicle Dependability Survey and it refers to defects per 100 carsafter three years of ownership.

DAY 3

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Day Three of PEL lays out the realities of an intensely competitive marketplace. Thereis really only one question in looking at this data: what will it take for DCX to survive andprosper in this environment?

IT'S ALL ABOUT PRODUCT!

2005 Jeep Cherokee Renegade

2005 Chrysler Grand Voyager Stow 'n Go

2005 Chrysler 300C

2004 Dodge Ram SRT-10

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2005 Dodge Durango Adventurer

2005 Chrysler Sebring Convertible GTC

Dodge Viper SRT-10 and Dodge Sling Shot 'Concept' - 2004 NAIAS

DAY 4

United States Capital, Washington, D.C.


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"Liberty can not be preserved withoutgeneral knowledge among people."

-John Adams, August 1765

"We have the job of making our people realize, as I have said many timesover, the relationship between the bread box and the ballot box. We haveto make our people realize that in the kind of complex economy in whichwe live, the surest way to guarantee that your ice box will be filled withgood food is to see that the ballot box is filled with good votes on elec-tion day."

Walter Reuther spoke these words in 1947 at the UAW-CIO Convention. Littlehas changed in 50 plus years. If anything it is more important today that workers recognize the connection between their financial well being and the politicalprocess.

In looking at the political process today, our focus will not simply be on how thesystem works, but more importantly how we as citizens and workers can be heard.We will begin by examining how a bill becomes law, the different levels of govern-ment (federal, state, and local) and the three branches of government.

Then we will turn our attention to the lobbying process and the critical role thatunion households play in the election process. We wil also study CAP, the union'spolitical arm, and we will offer you tips on how to contact you congressman andsenator.

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DAY 4

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Conference Committee

Conference committees made up of Congressmen and Senators chosen by leadership to iron out differences between House and Senate versions of the bill:The Conference version is then sent back to each chamber for final approval

Once the compromise bill is approved, it is sent to the President. The Presidentsigns or vetoes the bill; vetoed bills return to Congress for possible override. Anoverride takes 2/3's (66.6%) vote in both chambers.

Referred to House Committee

Referred to Subcommittee

Reported by Full Committee

Rules Committee Action

Floor Action

House Debate, Vote

How a Bill Becomes law

House

Referred to Senate Committee

Referred to Subcommittee

Reported by Full Committee

Rules Committee Action

Floor Action

Senate Debate, Vote

Senate

74

Government

Three Branches of Government

When our Constitution was written, the Founding Fathers wisely created three different branches of government that "check and balance" each other.

Executive Branch:

The President heads the Executive Branch. His powers include directing government to carry out federal laws, commanding the Armed Forces, dealing withinternational powers, acting as chief law enforcement officer, and vetoing laws.

We elect the President of the United States through the Electoral College process.Elections are held every four years Candidates for the Presidency must be at least35 years of age and a natural-born American citizen.

Legislative Branch:

The Legislative Branch is the Congress, consisting of the House of Representativesand the Senate. The main task of these two bodies is to pass laws. Its powersinclude passing laws, originating spending bills (House), impeaching officials(Senate), and approving treaties (Senate).

Representatives are elected every two years. There are 435 representatives.

The number of representatives each state has is determined by the census conducted every ten years. Each state has at least one representative.

Senators are elected every six years. Each state has two senators. There are100 senators.

Judicial Branch:

The Supreme Court is at the top of the Judicial Branch. Its powers include inter-preting the Constitution, reviewing laws, and deciding cases involving states' rights.

There are nine justices who sit on the Supreme Court. They are appointed by thePresident, with the approval of the Senate. It is a lifetime appointment.

DAY 4

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Federal, State, and Local Government

As workers and citizens, we are influenced by laws that are passed at various lev-els of government. In some areas all three levels of government have a say overcertain issues; in other areas only one level of government has control.

Look at the issues below. Which of these areas is controlled by which level of gov-ernment?

76

Government

Communicating with Your Legislator

DON'T FORGET THE WHITE HOUSE!!(202) 456-1414

If you send a letter by U.S. Mailor fax:

1. To your Senator:

The Honorable (full name)United States SenateWashington, DC 20515

2. To your Congressman:

The Honorable (full name)United States House of RepresentativesWashington, DC 20515

CALLING IS ALWAYS AN OPTION!CALL YOUR CONGRESSMAN/SEN-ATOR IN YOUR HOMETOWN ORCALL THE CAPITOL SWITCH-BOARD AND ASK TO BE CON-NECTED:

HOUSE SWITCHBOARD: (202) 225-3121

SENATE SWITCHBOARD:(202) 224-3121

If You Send E-Mail:

In the subject line on your e-mail,identify your message by topic or billnumber (bills pending in the House areHR #; the Senate version is S #)

The body of your message should usethis format:

Your NameAddress,City, State

Dear Senator (last name):

Dear Representative (last name):

In the body of the message followthese guidelines:

1. State your purpose for writing in thefirst paragraph.

2. Be courteous, brief, and to the point.3. Stick to one issue.4. If the Congressman/Senator has done

something you agree with, tell him/her.

Everyone appreciates a little positivefeedback.

DAY 4

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Voting:

Issues that motivate people to vote

There are many policy issues that motivate people to vote. Nearly all revolve aroundissues of money ("It's the economy, stupid!").

Three of the issues that will galvanize voters are:

1. The increasing pay gap 2. Social Security 3. Job Safety

Some Pay Gap Facts:

78

The Pay Gap

Social Security

The issues around Social Security are poorly understood by many Americans. Thesheer size of the program, the strength of the program and the number of people lifted out of poverty because of Social Security are often overlooked when the program is discussed or attacked.

Following are a few charts, which offer up an alternative viewpoint on the importance of Social Security, its viability, and a possible motive for the push forprivatization.

DAY 4

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80

Social Security

Two-thirds of union members believe there won’t be any benefits available in2041. The system is in fact fiscally sound until at least 2041.

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82

Social Security

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3. Job Safety

This is an issue of critical importance to all working Americans. The followingchart lays out distressing statistics for all Americans.

Note that the Big Three have excellent safety records.

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Job Safety

Battle of the overpass

DAY 4

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The Role of the Unions in the Process of Government

THE POWER OF THE INDIVIDUAL MATTERS:

Ordinary people and their unions cannot begin to match corporate America in theamount of money they can throw at the political process. VOTES CAN ANDWILL TRUMP MONEY.

Look at the following charts. It is clear that unions have been very successful in thelast decade at bringing out the vote. Given the union's declining percentage of howmany workers they represent, this is a significant accomplishment and a tribute tothe power of grass roots organizing.

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The Role of Unions

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CAP

COMMUNITY ACTION PROGRAM - CAPThe UAW National CAP program was created to help workers stay informed oncritical and oftentimes complex legislative issues.

- CAP goal: "protect UAW interests at the ballot box and in the legislative arena"

the political arm of the UAWtracks legislation that affects workers and their familiesprepares summaries of voting records of elected officialsconducts voter registrationinterviews candidateseducate voters on issues

-CAP does not:

tell anyone how to voteuse dues money for federal candidates

If Walter Reuther was right in 1947 when he tied the interests of thebreadbox to the ballot box, what does this then require

of each UAW member?

BE INFORMED, GET INVOLVED, AND VOTE

88

CAP

How Well Will We Do?

Your "team" will be asked whether to "SELL" (X) or "BUY" (Y) each marketing period.

The corporation keeps track of how well each team is doing.At the end of the year, the corporation will provide a bonus to theteams that did well.

The payoff is as follows:

If all four teams sell (X), each team loses $1 million.

If three teams sell (X) and one buys (Y), the sellers (X) gain $1 million each and the one buyer (Y) loses $3 million.

If two teams sell (X) and two teams buy (Y), the sellers gain $2 million each and the buyers lose $2 million each.

If one team sells (X) and three teams buy (Y), then the seller gains $3million and buyers lose $1 million each.

If all four teams buy (Y), each team gains $1 million.

There will be seven rounds. The payoffs are tripled for round three. The payoffs are multiplied by five for round five. The payoffs are multiplied by ten for round seven.

Assume that the teams are so far away from each other that they cannot communicate with each other.

Each team should elect a representative.

When the facilitator asks you to show your X or Y, our team's representative should hold up the card and keep it there until you are asked to put it down.

Just before rounds three, five, and seven, the teams' representatives will beallowed to discuss selling and investing strategies.We are counting on your wise decisions and hope to reward those

teams that do well!

DAY 4

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S.W.O.T. The Plant

Strengths

Weaknesses

Opportunities

Threats

90

S.W.O.T. The Local Union

Strengths

Weaknesses

Opportunities

Threats

S.W.O.T.

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