Econ-Atrocity: Blowout: “Good Pay or Bum Work!”

Adapted from Understanding Capitalism: Competition, Command, and Change, 3rd Edition by Samuel Bowles, Richard Edwards, and Frank Roosevelt, 2005

Firestone recalled 14.4 million of its tires in August 2000 due to construction flaws resulting in “tread separations” likely to cause blowouts. A month later the National Highway Traffic and Safety Administration announced that Firestone tires were under investigation in cases involving 271 fatalities and more than 800 injuries. As the extent of the public relations debacle became clear, the world’s largest tire manufacturer—officially Breakstone/Firestone since its purchase in 1988 by a giant Japanese tire producer—considered dropping the Firestone name. But this was more than an embarrassment to the company. It was a mystery worthy of a modern day Sherlock Holmes: how had Firestone put on the road so many blowouts waiting to happen?

Two economists (associated, ironically, with the industrial relations section of the Firestone Library at Princeton University) have uncovered clues leading them to a single plant during a two-year period in the mid-1990s. The apparent “scene of the crime,” a Firestone plant in Decatur, Illinois, was one of three plants making the type of tires that were recalled (the others were in Wilson, North Carolina, and Joliette, Quebec). Tread separations on tires built at the Decatur plant during 1994 to 1996 were much more likely than on tires built at that plant during other years or on tires built in any year at the Joliette or Wilson plants.

What was special about Decatur during the mid-1990s? The answer, it appears, is labor strife.

Early in 1994 the company proposed increasing shifts from 8 to 12 hours and operating the plant 24 hours a day, with workers alternating night and day shifts. Firestone also wanted to pay new workers 30 percent less and to reduce pension and other benefits. In April 1994 the 4,200 employees went on strike. Firestone replaced the striking workers at much lower pay, subsequently announcing that the replacements would be permanent and that the strikers could seek reemployment at reduced pay when the need for additional work arose.

Over the next year many took up the offer, but under highly difficult conditions. According to a union account: “Forced to work alongside scabs who had taken their jobs . . . the strikers were assigned to the hardest jobs on the worst machines, rather than the jobs they had held for 10, 20 and even 30 years. The company supervisors had a field day harassing, intimidating and firing union members for the smallest infractions.” Building quality tires may not have been the top priority for workers—or, it seems, for supervisors either.

The economists conclude their study: “Unless another factor can be found that explains the sudden rises in defects in tires when Breakstone Firestone demanded contract concessions . . . and again when replacement workers and recalled strikers worked side by side, we think the weight of the evidence points to labor strife as being at the root of many of the defective tires.” They estimate that faulty tires produced at the Decatur plant during the years of strife accounted for at least 40 deaths, and the number would have been twice that had it not been for the recall.

A century ago the International Workers of the World (IWW), a radical American labor group, demanded, “A fair day’s pay for a fair day’s work” and pointedly warned, “good pay or bum work!” Firestone would have saved lots of money (and lives) had they recognized the force of these demands.

Source:

Alan Krueger and Alexandre Mas, “Strikes, Scabs, and Tread Separation: Labor Strife and the Production of Defective Bridgestone/Firestone Tires” (Industrial Relations Section, Firestone Library, Princeton University, 2002) http://www.irs.princeton.edu/pubs/pdfs/461_revisedB.pdf.

(c) 2005 Center for Popular Economics

Econ-Atrocities are a periodic publication of the Center for Popular Economics. They are the work of their authors and reflect their author’s opinions and analyses. CPE does not necessarily endorse any particular idea expressed in these articles.