Answers to Big Three's "Black October" Are People, Says Pat Carrigan

Sage of Management Theory, the Late Peter Drucker, Likely Would Have Agreed

November 13, 2005
By: Dave Rogers

The Detroit News calls last month the "Black October" of the "Big Three" of the U.S. auto industry.

October, 2005, was marred by the bankruptcy of Delphi Corp., a $1.6 billion third quarter loss by General Motors, a purge of executives by Fordand the worst month in seven years for U.S. vehicle sales.

Thousands of working families in Bay City, Saginaw, Flint and the area not only fear their way of life is about to change for the worst, they know it's coming.

The financialreverberations will be felt everywhere, in stores, shops, government offices. Predictions are that everyone will feel the pain in some way, intense or moderate. (See "Likely Impact of Delphi Bankruptcy," www.andersoneconomicgroup.com).

The enveloping darkness was caused by a catastrophic series of events last month that devastated the U.S. auto industry.

This month GM revealed that it would be restating finances from 2001, drastically lowering revenues and profits. Bankruptcy talk is being whispered for the onetime industrial giant known locally as "Generous Motors."


The bankruptcy of Delphi Corp. alone, and market share losses by the Big Three automaker have vast negative implications especially for the Bay City area and the Saginaw Valley as well as Michigan.

U.S. Rep. Dale E. Kildee, D-Michigan, has written President Bush asking for a meeting at the White House or at Delphi Flint East to discuss addressing problems of auto industry workers.

"The policies of your Administration and the Congress have forced them to compete on an uneven playing field," Rep. Kildee charged in a letter.

Meanwhile, Delphi's six unions have combined to launch a coalition caled Mobilizing@Delphi to fight massive wage and benefit cuts. Workers may be asked to work for about a third of present wages, according to reports, if they even have a job.

While conventional wisdom is to blame the $27 an hour workers at Delphi and the automakers, some industry observers see the blame as primarily a management obligation.

The UAW contends that neither the workers nor business taxes are the problem. The coalition blames corporate mismanagement and points the finger at Delphi's accounting practices, under investigation by the U.S. Securities and Exchange Commission (SEC).

Financial analyst Robert Kleine, one of the principal authors of Michigan's single business tax (SBT)cites studies showing Michigan business taxes 9 percent below the national average and 33rd lowest in the nation in 2004.

The people factor seems to be lost in the labor bashing and cost cutting caused by international competition in the auto industry, says former General Motors executive Dr. Patricia M. Carrigan.

Dr. Carrigan, 77, of Bay City, holds a doctorate in Clinical Psychology from Michigan State University. She headed the local GM plant two decades ago when it was known as Chevrolet-Pontiac-Canada Group and had 1,300 employees.

And, in cooperation with the United Auto Workers, she probably "saved" the local plant by gaining cooperation for cost-cutting and finding new business.

Her management tactics followed those advocated by the late Peter F. Drucker, an Austrian-born political economist and author, who pioneered social and management theories in the 1940s and 1950s.

Dr. Drucker, who died last week in Claremont, California, became internationally renowned for advising corporate leaders to agree on goals and objectives with subordinates and allow them to succeed.He advocated giving workers more control over work environments and formation of teams to exploit the rise of technology-wise "knowledge workers."

He became known as a business oracle by preaching that employees were a resource, not a cost, and foresaw the rise of Japanese manufacturing and the decline of unions.

GM for years ignored almost all of his recommendations published in his book "The Concept of the Corporation," summarizing an 18-month study he conducted under commission by GM itself in 1946.

Dr. Carrigan in 1982 became GM's first female plant manager at an Atlanta, Georgia, assembly facility. She scored other firsts: first woman elected to the Michigan State University Board of Trustees and first woman to serve as chair.

After coming to Bay City in 1988, she became a media star: books, magazines and Public Television lionized her and business lecturers the likes of best-selling author Tom Peters sought interviews.

Bay City was on the lips of the top movers and shakers in industry and the media; this was where labor and management cooperated (wonder of wonders) to everybody's benefit.

Congress heard of Bay City's labor-management cooperation in extended remarks Jan. 20, 1989 by U.S. Rep. J. Bob Traxler, D-Bay City. The remarks celebrated a historic "living agreement" in 1984 between UAW Local 362 and the GM plant leading to productivity and quality increases and lower costs. "Time and time again, better ways of doing the job have been initiated through suggestions of workers on the line," Rep. Traxler enthused.

Rep. Traxler pointed to a "Quality of Work Life" program started in the mid-1970s "that has encouraged the talents of both hourly and management personnel in forging a well trained and well-informed work force, whose ideas and feelings are recognized and valued."

Are those halcyon days of cooperation gone in a blizzard of talk about cutting"legacy costs," those benefits promised to generations of workers when things were going well?

Attitudes apparently have changed in some plants, says Dr. Carrigan. Partnerships have come undone. Non-GM cars have improved quality. Internationalcompetition is fierce.

She recalls fondly walking through the Bay City plant on second shift to find a first shift group, off the clock, huddled with chalkboard and calculators, trying to cut costs of a part to keep the business -- and succeeding. It was a high point of her time here.

"There is no short-term solution," says Dr. Carrigan. "The crunch has been coming for a long time. If I had the answers other people would have them, too. Maybe a sharp knife wielding..."

However, she added: "Happily some cooperative moves have been made; the unions have stepped up to the plate." She talks encouragingly about "strengthening motivation in people's hearts today, if we could separate that from anxiety about the future."

In the game of "us versus them," she commented, "them should be left outside the plant. Everybody needs to pull in the same direction. Sometimes you can turn it around."

Dr. Carrigan made news again six years ago with a $1 million endowmentof the Pat Carrigan Chair in Feline Health in the College of Veterinary Medicine at her alma mater, MSU. Recently her donation helped the college rescue animals of all kinds in New Orleans. And, she has endowed the Pat Carrigan Woodwind Scholarship in the MSU School of Music.

She now writes children's booklets featuring a character named J-Cat and his companion Missy, a stuffed kitty. The booklets are published five times a year by Chadwick Designs of Caro. She has two "retired" Maine coon show cats, Annie and Julie.###