Coercion in the Tire Industry
Maybe it is not a good idea to coerce tire workers. Here is a short section from my new book — The Next Great Depression — the title is still in flux — regarding the work of Krueger and Mas on the bitter Firestone strike:
Krueger and Mas traced the consequences of the Firestone strike, which the company initiated by making harsh demands on its workers:
Bridgestone/Firestone proposed deviating from the industrywide pattern bargain by moving from an eight‑ to a 12‑hour shift that would rotate between days and nights, as well as cutting pay for new hires by 30 percent. Almost immediately after 4,200 workers walked out on strike, the company hired replacement workers. A final contract, which included provisions to recall all strikers, was not settled until December 1996. [Krueger and Mas 2004, p. 254]
Following a rash of highway fatalities, the company recalled 15 million tires. These economists cleverly pieced together the effects of the strike with the subsequent deaths from defective Firestone tires. The economists were able to take advantage of a particular circumstance:
Almost all the P235 tires were produced in three plants: Decatur, Illinois; Joliette, Quebec; and Wilson, North Carolina. For nearly three years‑from April 1994 to December 1996 ‑‑ union workers at the Decatur plant either were on strike or were working without a contract; tires were produced by 1,048 replacement workers, union members who crossed the picket line, management, and recalled strikers in this period. The Wilson plant was nonunion, so it did not experience a strike. A Canadian union represents the Joliette plant, but labor relations there were much less contentious. Joliette had a six‑month strike over fringe benefits at the end of 1995, but the plant did not hire replacement workers (which are illegal in Quebec). [Krueger and Mas 2004, pp. 255‑56]
Based on claims for compensation for property damage or personal injuries due to faulty tires, Krueger and Mas discovered that tires from Decatur produced during the labor strife were 15 times more likely to have a defect than tires from the company’s other plants. This large discrepancy in failure rates does not appear in other years, although the rate for the 1993 was about double that of the other two plants (Krueger and Mas 1994, p. 265). They estimate that 40 people died in crashes as a result of a strike with which they had no direct connection.
Krueger and Mas observed that just about everybody came out a loser in this battle:
The stock market valuation of Bridgestone/Firestone fell from $16.7 billion to $7.5 billion in the four months after the recall was announced, and the top management of Bridgestone/Firestone has been replaced. The company also closed the Decatur plant in December 2001 and considered abandoning the Firestone brand name. If antagonistic labor relations were responsible for many of the defects, even indirectly, this episode would serve as a useful reminder that a good relationship between labor and management can be in both the company’s and the union’s interests. [Krueger and Mas 2004, p. 287]
Because of the availability of the data on the defective tires, as well as the insight of Krueger and Mas in splicing together the strike and the highway fatalities, some of the costs of the Decatur incident became public. Surely, other negative consequences occurred as well, even if they were not as dramatic as the accidents in which defective tires killed or maimed victims.
I believe that this incident may have a larger lesson. The Decatur tire factory represents a microcosm of the shortsighted, often vindictive efforts on the part of capital to win a victory at the expense of others.
Again, the logic of these strikes flowed directly out of the right‑wing revolution. Not long after he assumed the presidency, Ronald Reagan broke the air‑traffic controllers union, signaling that attacking labor was a respectable way of doing business. The courts, administrative agencies, and legislatures at both the state and federal levels all began to work overtime in an effort to undermine labor’s bargaining power. After all, doing so was expected to increase the rate of profit. In many cases, this expectation was borne out ‑‑ at least in the short run.
At the same time, this belligerent attitude toward labor must have taken a serious toll on productivity. Yes, of course, business can squeeze out greater productive efforts by pushing labor harder. But if business drives labor too hard by resorting to antagonistic policies, business will deny itself the potential collaborative creativity of its workers, a loss that will prove costly in the long run, even if the consequences are not as dramatic as the Bridgestone/Firestone case.