THE RESPONSE OF ORGANIZED LABOR TO PLANT CLOSINGS IN ILLINOIS by KARI J. MOE B.A., Carleton College (1974) Submitted to the Department of Urban Studies and Planning in Partial Fulfillment of the Requirements of the Degree of MASTER IN CITY PLANNING at the MASSACHUSETTS INSTITUTE OF TECHNOLOGY June 1982 Kari J. Moe The author hereby grants to M.I.T. permission to reproduce and to distribute copies of this thesis document in whole or in part. Signature of Author: Deparment of Urban Studies and Planning 24, 1982 I UMay Certified by Bennett Harrison Thesis Supervisor Accepted by: V Langley C. Keyes Chairman, Departmental Graduate Committee Rotch PA S SACHUSETTS INSi T AUO 18 2 ABSTRACT This report examines the problems associated with plant closings in Illinois and various attempts to mitigate the negative consequences of disinvestment and economic dislocation. The study first compares nineteenth and twentieth century industrial development in Illinois to illustrate the areas of continuity and change in the development patterns and structure of the economy. This history demonstrates that plant closings, far from being a recent occurrence, have recurred throughout the past century under similar circumstances as today. Plant closings have received increasing public attention in recent years because of their high incidence and concentration in industries and communities that once constituted the foundation for economic strength of entire regions. An investigation of these plant closings leads directly to underlying structural shifts in the Illinois, U.S. and world economies. These shifts are geographical, with U.S. corporate investment shifting away from the Northeast and Midwest toward the South, West and foreign countries. They are sectoral, or away from manufacturing to services, at least in the U.S. These changes are occurring in terms of corporate structure, from huge, single-industry corporations to even larger, diversified, transnational corporations. They are occurring in terms of occupations, from jobs associated with manufacturing to service jobs. Labor-management relations are on uncertain ground, given the weakened position of organized labor at the bargaining table and a management strategy to establish businesses in less militant or non-union environments. Finally, technological change, symbolized by the computer revolution, has already begun to induce changes in the nature of products and the organization of produc- tion, thus affecting occupations and working conditions. This report reviews collective bargaining, union direct action, plant closing legislation, and social and economic planning in terms of their potential to address the fundamental and particular aspects of problems associated with plant closings. One case of the social and economic olanninq aDproach, the olant closing project of the Man- power Assistance Program (MAP) of the Illinois State AFL-CIO, is examined in detail. The MAP, funded by the Illinois Department of Commerce and Community Affairs, began its plant closing work in 1980 and has since coordinated services and provided te-nnical assistance to displaced workers from more than fifteen different plant shutdowns. At the present time, it is the only project of its kind in the nation operated by a state AFL-CIO. The report finds that the plant closing work of the MAP represents a notable contribution to the development of services for plant closing victims, even though the Program is not in a position to directly combat plant closings. The MAP is also important for the numerous questions it raises about the details of how such orograms should be run; the role of orqanized labor in such programs; the impact of such programs within the labor movement and among organized labor, state 3 government, management and community groups; the relationship of such programs to other responses to the problem; and the benefits and limitations of such programs. The report also finds that all of the responses, while progress is being made, require further development if they are to be more effective in preventing plant closings and minimizing the negative consequences of those that occur. 4 TABLE OF CONTENTS Page Abstract . , . 2 Contents ........ * t * V .t..,. , , 4 List of Tables .. 7 Acknowledgements . ... 8 Note on Field Research . 10 Introduction ...... 12 I. Continuity and Change in the Political Economy of 11linois .. ...... 19 Introduction . .. .. .. .. .. .. 19 The Industrial Development of Illinois . .. 21 Patterns of Early Industrial Development in Illinois . ... .. .. ... .. .. .. 24 The Changing Structure of the Illinois Economy .. .... .... .. .. 30 Shifting Locations of Investment and Production .. .... .... ... .. 32 The Shift from Manufacturing to Services . 36 Shifts in Occupations . ...... ..... 40 Shifts in Occupations and Working Conditions from Technology .............. 44 Shifts in Labor-Management Relations . 46 Summary ................... 51 Footnotes .................. 53 II. Plant Closings in Illinois ..... 57 Introduction ........... 57 Overview of the Data .... ... 60 Circumstances of the Closings . .. 62 Relocating Out of Illinois . 64 . Acquisition Prior to Closing .. 68 Product Change .. .. .. .. 70 Labor Disputes ......... 71 Management Practice ....... 72 Industry Wide Closings: The Case of Meatpacking ... .. .. 74 IndustrY Wide Closings: The Case of Steel 81 Summary .............. 83, Footnotes ............. 85 5 TABLE OF CONTENTS (continued) Page III. Responses to Plant Closings . , , . 88 Introduction , , . , , , . , , , 88 Collective Bargaining , , ........ 90 Plant Closing Legislation . ....... ,., .93 Union Direct Action .. .. .. .. ... 96 Union Protest in Canada . .... ..t ... 99 The Corporate Plan of the Lucas Aerospace Workers . ., . .. .. .. ... .100 Social and Economic Planning . .. .. ..105 Social Services and Income Maintenance . 107 Employment Services and Retraining .... 110 Oscar Mayer Pilot Program... .. o.. .117 Waukegan Retraining Program . .0.... ..119 Labor Economy Project Retraining . ..o...120 Economic Development . -.- ..124 Summary .o... ... ... ... ... ...131 Footnotes ... ... .... .. ... ... 133 IV. Manpower Assistance Program, Illinois State AFL-CIO .. ... .. .. ....o. ....135 Introduction . .. 135 Organized Labor and Manpower Policy .. :: 138 History of the CETA/Labor Relationship in Illinois .o.. .. .... o... .... 140 Development of the Concentrated Industrial Outreach Division ... ....... .. 152 Industrial Union Outreach .. .. ..... 155 The Labor Economy Project ... ..... 161 The Great Lakes Regional Council . ... .. 164 The Plant Closing Project of the MAP ..... 167 The Closing of Swift and Co., Rochelle, Illinois . ..... ...... .. .168 Summary .......... .. ....... 177 Footnotes ..... ....... ... ... 179 V. Organized Labor and Planning: Analysis of the MAP Plant Closing Project .. ..... ... .181 Introduction ..... ... ... ......181 Planning in the U.S. ........ ....182 Planning Defined . o...... .. .......... 185 MAP's Involvement in Planning .... ... 186 The Consequences of Participation in Planning . .o............188 Political Issues . .. ... .. ... ...189 Support for Economic Development ...... 203 6 TABLE OF CONTENTS (continued) Page Minimizing Social Costs .......... 208 Linkages Within Organized Labor , ... , . 210 Summary . .... ..... .. ... 215 Footnotes. .... .......... , 217 Conclusion ..... .. .. ..... , .... 219 Appendices ... .... ... ... .... .. 221 Tables 1 - 20 (See List of Tables) . .... ... 222 The Structure of Organized Labor in Illinois , . 253 Illinois Agencies Directly Involved with the MAP 256 List of Individuals Interviewed for Thesis 259 Bibliography .. ... .... ... .... ... 261 7 LIST OF TABLES 1. Total Population Change; 1960-1979, by State and Region 2. Investment by Region and State, 1970's 3. Nonagricultural Employment Change: 1970-80, by State and Region 4. The Federal Balance of Payments: Fiscal 1979 5. Cost of Fuels and Electric Energy for Manufacturing: 1977 6. Natural Gas Retail Prices: 1970-78 7. Average Unemployment Payroll Tax Rates as a Percent of Taxable and Total Wages: 1976-78 8. State and Local Effective Business Tax Rates by State, 1975 9. Employees on Nonagricultural Payrolls by Industry 1950-81. 10. Percentage Distribution of Nonagricultural- Employees by Industry, Illinois, 1950-81 11. Nonfarm Wage and Salary Employment State of Illinois Annual Averages, 1972-80 12. Illinois Manufactured Exports, Production and Employment, 1976 13. Average Pay Scales Full-Time, Illinois, February, 1981 14. Industries and Occupations Potentially to be Affected by Robotics - U.S. 15. Labor Union Membership - Total and Percent of Nonagricultural Employment, 1964-1978 16. Source of Plant Closings Information 17. Plant Closings in Illinois, 1970-1982 18. Illinois Plant Closings by SIC Code 19. Plant Closings in Illinois 20. Rates of Glosure, Birth, In-Migration and Out-Migration of Firms by State in the East North Central Region 8 ACKNOWLEDGEMENTS In keeping with the historical perspective of th.is report, I want to acknowledge some of the key individuals who have supported, inspired and cajoled me over the years. Each person mentioned has contributed to my education in a special way. I must first thank my family -- mother, father, sister -- fortheir patience, faith and encouragement. Next, from my years at Carleton College, thanks to Professor Paul Wellstone and the staff of the ACM Chicago Urban Studies Program who opened doors to the city for me and directed me toward a path of inquiry and commit- ment that I