Rover Case Study: A Sign of Things to Come in the U.S.?
By Michelle Krebs November 13, 2008As autoworkers in the U.S. and around the globe lose their jobs in this economic downturn, a new study from the U.K. is worth noting: three years after the collapse of MG Rover, 90 percent of workers who lost their jobs have found new ones, but most have taken significant pay cuts.
The study conducted by the Birmingham Business School and the World Foundation, published by just-auto.com, argues that fast action by local agencies as part of a coordinated response by policymakers to support, inform and retrain the workers who lost their jobs can be called a success story in the large-scale, long-term unemployment in the region of Rover's now-closed Longbridge plant.
The study followed a sample of the 6,300 ex-Rover workers from the Longbridge plant that closed in 2005. By April 2008, about 90 percent had some kind of employment.
About two-thirds of those who got jobs were earning wages roughly $8,500 a year less than they were previously making. Nearly a third of the workers stayed in manufacturing earning about what they had made before but the rest moved into the service sectors earning less.
"The collapse of Rover is rightly termed historic because it marked the closure of the last volume car maker in the UK," the report noted. "The finding that many workers are in what they see as worse jobs may confirm people in the view that the 'newer' jobs in services are just not quite as good as the 'older' jobs in manufacturing they have come to replace - though there are significant numbers now doing rather better than they were."
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A reduction in pay would be quite appropriate for UAW workers who have been making well over $100K in pay and benefits. The finding employment part is much more questionable. We're talking about hundreds of thousands (or possibly millions if CAR is to be believed) of lost jobs in the middle of a global recession. The UK has had its downturns, but what's happening now is unprecedented.
I would hope that the new UAW agreements will help our competitiveness. However, if even one of the Detroit Three closes up, it may well cause a new Dark Age. With an estimated 1 of every 14 jobs in the USA dependent in some way on the auto industry, the rapid ripple effect throughout its competitors and suppliers worldwide would be like a scene from one of those old atomic bomb tests.
In doing some rough calculating from the above "success story":
6300 workers x 90% reemployed = 5670; unemployed = 630. AFTER THREE YEARS.
5670 x 33% = 1871 workers reemployed at or about former pay.
6300 - 1871 = 4429 workers who earn less after the closing, or 29.7% of the original number of workers- "a success story"?
In the USA- 155 million employed x.071(1/14) = 11 million displaced auto industry employees.
11 million x 29.7% = 3,267,000 as above -or- 7,733,000 assisting you at your favorite Big Box plaza.
But you can't go there, can you. If the ripple effect didn't claim your job on the way in, the riptide'll get you on the way out.
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