America's 'other' auto industry

In the South, host to foreign-owned plants, there is little sympathy held for Detroit.

The US auto industry is throwing bolts, but here in Georgia's Chattahoochee Valley a South Korean car company is building a massive new manufacturing plant along the new Kia Parkway, replacing abandoned textile mills. The recently opened Korean BBQ House now vies for customers with Roger's Pit-Cooked Bar-B-Que. And in an indication of just how welcome Kia's nonunion jobs are, some 43,000 people applied for 2,600 positions – with starting wages of $17 an hour – as the plant gears up to turn out its first model next November.

The expansion of this "other" auto industry – one that's foreign-owned, nonunion, and based largely in the South – stands in stark contrast to this week's dire reports from America's own Big Three, whose CEOs laid out plans for a dramatic downsizing before traveling to Washington to plead for $34 billion in federal aid.

Two-thirds of "foreign imports" are, in fact, built in the United States in nonunion shops, where it costs at least $2,000 less in labor to build each vehicle.

Critics charge that the Japanese, Korean, and German auto companies are taking advantage of desperate communities and a longstanding distrust of unions in the South. But among people in West Point, Ga., the vision of a foreign-owned Southern car industry standing on its own two feet while Detroit teeters comes down to this: the worth of a day's work, and the role – or nonrole – of unions like the United Auto Workers (UAW).

"Workers [in the South] understand that in order for them to have a job these companies have got to make money, because if they don't, they're not going to have a job," says Rep. Lynn Westmoreland (R), who represents this river city in Congress and who could be asked as soon as next week to vote on a bailout to keep Chrysler and General Motors afloat. "That's the first issue [Detroit auto executives] need to address before they come to Congress asking for a bailout or a loan or whatever it is," he says in a phone interview.

Around the South and especially here on Interstate 85 – nicknamed the "autobahn" for the prevalence of foreign-owned car plants along its stretch – the manufacture of foreign vehicles has jumped 450 percent since 1986. While the Big Three have shed more than 600,000 jobs since 1980, foreign automakers have created about 35,000 jobs in the same period.

The gap between union and nonunion compensation is big: Total benefits put union workers at $36.34 per hour compared with $25.65 per hour. The Big Three's "legacy costs," some economists say, push UAW members' total compensation much higher. That gap, moreover, figures into Southern residents' views on Detroit's worthiness to be rescued from the brink of bankruptcy.

"If you're making $60 or $70 an hour, I can see how you don't want to work for $20," says West Point barber Dewey Rayley, who reports that most of his customers look unfavorably on a federal bailout for the American auto companies. "But that's the thing: What makes you think it's worth so much just to build a car?"

The UAW, for its part, has tried to unionize the international plants in the South, to no avail. Its membership is down 17 percent from 2007, to 464,910 – the lowest since the Great Depression.

With the stakes rising, the once tough-minded union is now "a shadow of its former self," says Nelson Lichtenstein, director of the Center for the Study of Work, Labor and Democracy in Santa Barbara, Calif.

On Wednesday, UAW head Ron Gettelfinger said the union will discontinue a controversial jobs bank – a kind of private unemployment program – and allow the Big Three to postpone payments into a healthcare trust for workers. It's the second offer to reopen contract negotiations in three years.

The UAW concession "is significant and unprecedented," says Harley Shaiken, an expert on labor and the global economy at the University of California, Berkeley. "The fact that the union is willing to jettison [the job bank] shows that they want to clear the political air for a reasoned discussion on why the industry survival is important to the entire economy."

A prevalent right-to-work philosophy isn't the only reason foreign companies like Toyota have located plants in the South. There's also the proximity to a car-loving region with little mass transit and a population that totals that of the Midwest and New England combined. Moreover, the Southern autoworkers are fairly young, meaning few qualify for pensions. General Motors, for instance, supports 400,000 retirees; Toyota supports 700.

While Detroit and the UAW are locked in what Mr. Lichtenstein calls a "failed marriage," the Asian firms, in particular, have flirted effectively with a South big on states' rights and individual liberties. With different work styles and no union rules with which to comply, foreign-car companies can be more flexible and responsive to customers – though union shops get top marks on seven of eight quality and productivity standards. Unlike in the Detroit-owned plants, workers at foreign-owned facilities eat in the same cafeterias as the brass – a kind of egalitarian mind-set that fits well with Southern social graces, leaving workers few incentives to unionize.

"The auto industry has for the most part transformed the South's economy, and it's because you're empowering [workers]," says Mike Randle, editor of Southern Business and Development magazine in Mountain Brook, Ala. "If you go to any of these foreign auto plants in the South, it looks like a rural high school parking lot – just a bunch of kids. Where are these young men or women going to get a job with a year of community college [experience]? Wal-Mart? Now they're starting at $17 an hour, and we're talking about thousands and thousands of jobs."

But there are troubling implications, too. Like some of the old textile-mill magnates, a Honda plant in Alabama has resisted unionization efforts, telling workers that if they joined a union the plant's operations would radically change - a comment some workers interpreted (wrongly, says a Honda spokesman) as a veiled threat to close up shop. Last year, Toyota in Georgetown, Ky., fired two workers for releasing an internal document that discussed lowering wages. The demise of one or more of the big US automakers stands to benefit the foreign companies, as would the continued weakening of the UAW, whose existence indirectly boosts nonunion wages. [Editor's note: The original text miscast Honda's actual statements to workers.]

Labor historians note that President Franklin Roosevelt helped to raise wages across the board to get the US out of the Great Depression. Today, they say, many conservative Democrats and Republicans from the South, like Representative Westmoreland, are lobbying for the opposite to rescue Detroit.

"If and when the UAW is destroyed, what will happen to the transplants, like the Toyota plant in Kentucky and this new Kia plant, is that these companies will start offering Wal-Mart wages," says Lichtenstein.

Even here in West Point, where a new interstate exchange the state built for Kia opens Dec. 10, not all is well. Retired textile worker Jim McKee frets that "some of the cultural changes like the [Korean] restaurants are shocking and worrying to a lot of people."

What's more, Detroit may be a competitor, but most people in West Point drive Buicks, Chevys, and Fords. "I'm a Buick man, but, who knows, I might be buying a Kia soon," says Harris Nader, who owns an "old-time" music shop in West Point.

And not everyone blames the unions. The problem is "that the executives with these companies made mistakes down through the years in not producing fuel-efficient cars, not what the union was being paid," says Don Gilliam, a West Point city councilor. "Now it's essential that you give them help, not because of their mistakes, but for the sake of the general economy."