HOOKED ON TANKS
Moberg, David
HOOKED ON TANKS BY DAVID MOBERG They used to make the hulls and turrets for the Army's M-60 tank at the cavernous Blaw-Knox foundries in East Chicago, Indiana. But not any more. The tank orders...
...Management was lulled to sleep by the flow of Pentagon dollars...
...What commercial applications are there...
...But the committee did nothing for months...
...And the ideal of conversion to civilian work, while not abandoned entirely, was deferred and diluted...
...United Steelworkers Local 1026 swung into action...
...The Little report, released in the summer of 1985, recommended that a public development corporation purchase the plant, act as a conduit for public and private investment, and manage the operations...
...Management decided to play hardball with the union...
...Griebel blames the company for depending so heavily on the Pentagon...
...In order to protect the interests of the workers and the community," it also recommended that the steering committee play a prominent role in the transfer of ownership...
...Pentagon profits provide an easy fix, but they habituate companies to cost-maximization and endless orders...
...As the plant deteriorated, workers were left in the dark...
...Employment slipped...
...For many years, workers at Blaw-Knox were happy with their steady paychecks...
...It would invest roughly $3 million, and it wanted the committee to help raise an additional $ 13 million from such Federal programs as the Economic Development Administration and the Urban Development Action Grants...
...In May 1984, a researcher for the Midwest Center for Labor Research noticed in a trade journal that the owners were thinking of selling Blaw-Knox...
...If the plant closed, almost 1,100 jobs would be eliminated, with an annual loss of $35 million in spending and income...
...It was news to the workers...
...That was profitable...
...Even after the company was sold for an undisclosed sum in September 1985 to five investors led by Robert J. Tomsich, chairman of Nesco, a Cleveland holding company, the committee did not meet with the new owners or do anything to discover their intentions...
...What is the alternative...
...For Patterson, more military contracts are not the answer...
...Although Little's report had warned that tank orders would dry up by the summer of 1986, the new owners projected orders through 1988...
...Blaw-Knox management had used the unique character of the plant to "scrounge up another order for thirty-five, fifty, ninety tanks and keep operations going another year or so," says Griebel...
...I found to my surprise and dismay there was nothing like that...
...the tax drain, in terms of lost revenue and increased social-service expenditures, would be considerable...
...Companies profit from Government contracts a lot, and as they do, workers get a little more, but they're subject to being canceled any time...
...The proportion of private versus public funding was the reverse of what the Little report had recommended...
...When workers criticize Pentagon contracts, they often do so for reasons different from those peace activists cite...
...Conversion is a necessary part of any plan to cut military spending, Blaw-Knox suggests, but it is not a viable strategy simply on its own to attack the arms buildup...
...They haven't done anything about changing over to commercial work or looking for additional investments...
...It deferred too much to management...
...Such shortsightedness has crippled the company...
...At the same time, the slumping steel industry was buying less equipment, and foreign competitors were making inroads in supplying the U.S...
...Patterson doesn't think the company is serious about converting to nonmilitary uses...
...without pouring more money into the plant, they profited handsomely from its massive scale...
...Union officials named a steering committee which included not only union members but also representatives from the community and government sectors...
...But this can't go on forever, and it just delays adjustment...
...The steering committee also must share part of the blame, says Griebel...
...They're still just seeking Government work...
...The local, finding the process it initiated now being used as a club against it, withdrew from the steering-committee meetings and held the line against givebacks, eventually agreeing to a wage freeze in exchange for some improvements in seniority protection...
...That's just more lucrative...
...And many of the local economic development officials were anxious to defer to the owners, doing only what management requested of them...
...White was letting the plant go downhill," says Jim Morey, a member of the union's first conversion committee...
...If the company is lucky and succeeds in getting new orders, Griebel adds, "it will only put things off a year...
...What alternative military applications are there...
...We kept hoping they'd tell us something," says union member Vern Felton...
...Blaw-Knox started out as a promising example of how—with labor and public involvement—a factory could be saved by moving it away from military production and towards civilian work...
...He demanded $6-an-hour concessions...
...They haven't looked to other product lines," he says...
...The company suggested trimming the work force from 800 to 100 or 150...
...It was put on hold...
...The steering committee was not impressed...
...Blaw-Knox holds lessons for many in the peace movement as well, who think that economic conversion—in this case, more like reversion—to civilian production can help win workers' and union support for cutting Pentagon spending...
...It organized to save the plant and its jobs, find a new owner, and convert the shop back to commercial work—away from the 85 per cent to 95 per cent dependence on military contracts...
...Military contracting permitted high profits without much investment or managerial initiative...
...They found out, but not from the owners...
...There is no business plan there...
...The company now wanted the committee to help it get more tank orders...
...Workers began to wonder about the plant's future...
...The original vision of the local union members, the Midwest Center for Labor Research, and the United Citizens Organization has largely been lost—to the detriment of the workers, the community, and even the company...
...The committee decided to raise $50,000 to conduct a feasibility study of the plant, with all three participating groups chipping in Differences soon surfaced within the steering committee...
...The steering committee has become a way for the company to manipulate political people and clout in the steering committee to their own use and has lost sight of what the intent was," new local union president Tom Patterson says...
...Other contracts had expired, and the last orders were in the pipeline...
...industry...
...Contract negotiations were under way, and Stanklus argued that the union's participation on the steering committee implied it had accepted Little's recommendation of wage cuts...
...What we found ourselves with at the end of the armor," Stanklus says, "is a need to put $12 million into a new machine-tool center...
...But once that involvement dwindled, the promise faded, and management returned to its drug habit...
...The conglomerate siphoned off its military profits to underwrite its home-appliance divisions, milking the old metallurgical divisions of Blaw-Knox...
...I don't know of one recommendation that was acted on," a disappointed steering-committee member said...
...In March, the two Indiana Senators and two Pennsylvania Senators (where Blaw-Knox also has facilities) wrote to Army Under Secretary James Ambrose, pleading for additional orders of tanks or anything else...
...The company thought they'd have continual tank contracts," Morey says...
...Sharing this perspective was the United Citizens Organization, a group active on such issues as jobs, housing, and schools in East Chicago...
...Committee members assumed the executives knew best and were content simply to respond to their requests...
...To depart from destructive military spending, more businesses will need to convert to civilian production...
...But the market analysis was hardly reassuring...
...It claimed that with two or three years of Pentagon orders, it could raise enough money to modernize the plant, increase small-casting production, introduce other unspecified new products, and continue large-castings and government work while eventually reducing military contracts to about half of its total volume...
...Since 1911, Blaw-Knox has specialized in casting and machining huge parts for steel mills, mining and heavy-construction equipment, and ships...
...Ultimately, the company would have benefited if the committee had intervened more actively...
...The tank orders have dried up, the work force of 2,500 has shriveled, and the fate of the plant hangs in the balance...
...I would like the company to be reliant on commercial work with a sound base and long-term need," he explains...
...White Consolidated Industries, which purchased Blaw-Knox in 1967, put all its chips on the tank orders and simply neglected commercial steel markets...
...The broad-based committee formed to save the plant became, essentially, a support group for the new owners in dealings with various levels of government...
...In the Blaw-Knox case, the union-initiated effort gradually came to be dominated by the company...
...During World War II and, to a lesser extent, in the immediate postwar years, the factory also forged tank parts...
...It's hard to kick the habit, to readjust to cost-minimization and the civilian market...
...To convert to commercial production and save about 300 jobs, a new owner would have to acquire the old facilities for a nominal cost and then invest $20 to $24 million of its own money plus $4.6 to $7 million of public funds...
...The market for small castings offered some hope, but it was highly competitive...
...They'd put energy and what resources they had into that and stopped putting anything into steel-mill equipment and large castings...
...Most of the commercial outlets for large castings were depressed—agricultural equipment, heavy construction, mining, oil drilling, shipbuilding, and steel...
...Why spend $1 to $2 million every year when" you had a product in here that was generating cash...
...When tank orders ran high, "there was no need to spend money to look beyond the armor," recalls Gary Stanklus, current division president in charge of the East Chicago plant...
...When Congress trimmed foreign military aid, Blaw-Knox lost an order for thirty-five M-60 tanks that had been slated for Egypt...
...The supervision wasn't as good as it was in the past, and the quality of the last couple of jobs we worked on was just terrible...
...I would like it if they never ever get another armor contract...
...But the United Citizens Organization, which had just passed a resolution denouncing wasteful government spending, refused to join the letter campaign...
...Like many Pentagon contractors, Blaw-Knox suffered from riding the military gravy train...
...The Blaw-Knox case shows how difficult it is to break the dependence on the military...
...asks Richard Griebel, president of the Northwest Indiana Forum, who joined the committee this year...
...Finally, we reached a point where we said something had to be done...
...The international union, which was mainly interested in policing the contract, did not actively support a broader initiative...
...Five years ago, a group of Japanese toured the machine shop, and they just shook their heads that we could turn out products as good as we could with the equipment we had in there...
...They weren't keeping the plant up-to-date, buying new equipment, or repairing...
...But when the Army adopted the M-l tank, which did not require the foundries' casting technology, Blaw-Knox began to sputter...
...Only a few worried about the gradual shift David Moberg is a senior editor of In These Times...
...Defense contracts are like a bad drug addiction for many companies...
...Yet the experience at Blaw-Knox shows that conversion is not easy...
...The machinery had been allowed to deteriorate...
...in the plant's orders away from commercial business and toward more lucrative military contracts...
...Workers would have to accept a wage cut from the prevailing level of $11 to $12 an hour...
...The owners also seemed unperturbed...
...Suddenly, the new management panicked...
...The work coming out wasn't going to lead to future orders, and it didn't...
...The workers' efforts to save Blaw-Knox show some of the possibilities—and pitfalls—of attempting to convert facilities from military to civilian production...
...Division president Gary Stanklus, who was acting as chairman, tried to use the steering committee to mobilize a campaign to send letters, which the company had drafted, to the Defense Department...
...The Arthur D. Little Company conducted the feasibility study, which gave a mixed prognosis...
...The letters conjured up the Soviet threat to justify new orders...
...The local union, and especially its rank-and-file members wanted to emphasize worker and community needs...
...There was a case for public investment...
...The company has really taken it over...
...In the short run, management was still pinning its hopes on additional military contracts...
...The new owners did not move to implement the strategy outlined in the feasibility study...
...There may be no other foundry in the United States capable of producing the 200-ton castings that the East Chicago plant has made...
...Layoffs seemed imminent...
...In the 1970s, tank orders gradually picked up—a result of increasing U.S...
...arms sales to the Middle East and elsewhere...
...But Blaw-Knox said it could not go it alone...
...They wanted the committee to take an active role in shaping the future of the plant...
...The steering committee was summoned in February after a long hiatus, and the union was included only after an internal fight...
...What is the business plan...
...Why gamble...
...Workers, unions, community groups, and political officials cannot simply leave management to the managers...
...Its experience signals caution to the politicians, workers, unions, and civic leaders in the industrial belt, many of whom are clamoring for their share of the Pentagon pork barrel as a way to revive gasping economies...
Vol. 50 • September 1986 • No. 9
