n the 1980s Chevrolet proclaimed itself the "Heartbeat of America." Today, many would say that the American auto industry barely has a pulse. Last November, General Motors (owner of the Chevy brand) announced that it was cutting 25,000 jobs and closing up to 12 factories by 2008. The news came one month after auto-parts giant Delphi declared bankruptcy, threatening to shutter at least a dozen plants and cut 24,000 jobs within three years. Ford completed the grim hat trick in January, revealing a plan to cut 30,000 jobs by 2012.

Just months before, GM and Ford had convinced Solidarity House, headquarters of the once-mighty United Auto Workers (UAW), to make $1 billion in concessions to help pay for retired auto workers' health benefits. Detroit is abuzz over the additional give-backs the Big Three auto makers (GM, Ford, and DaimlerChrysler) are likely to wrest from the union in next year's contract talks.

The industry's problems seem almost insurmountable. Collectively, U.S. car makers are billions of dollars in the red and foreign competitors continue to gobble up market share. America's auto giants boost their bottom line only by selling gas-guzzling trucks and SUVs, and cars would be moving off the lots even more slowly were it not for thousands of dollars in incentives that sweeten each sale. It's no surprise that analysts from the Motor City to Wall Street are convinced that this is the end of an era. The auto industry helped create a middle-class life for millions of working-class people. Is Detroit about to call an end to the American dream?

WHAT'S GOOD FOR GM—At the end of World War II America's auto manufacturers were the undisputed titans of industry. Although UAW president Walter Reuther began his tenure with visions of government-provided pensions and health care for all Americans, that drive was blunted when the union achieved at the bargaining table a private welfare state for its members. Besides private insurance and 30-years-and-out retirement, they also won "supplemental unemployment benefits" to cushion the blow when the cyclical nature of the industry caused layoffs; annual cost-of-living increases; and, over the decades, tuition and legal services. Health care was top of the line.

Unions in steel and rubber followed suit with similar contracts, and, to a lesser extent, other blue-collar workers such as miners, telephone workers, truckers, and electrical workers all attempted to follow the UAW's lead. The pattern of steady wage increases together with health and retirement benefits set a high standard for all the nation's employers, union and non-union alike.

The ratcheting productivity that allowed for these benefits was good for the bottom line, but it meant that the factories continued to be, in Reuther's words, "gold-plated sweatshops." The work remained an inhuman way to make a living. The common pattern was for workers to sign on, thinking to stay just a few years, but to be seduced by the benefits—and say to themselves, "It's only 30 years."

Removed as they were from the daily grind of factory life, however, UAW officials became far more attuned to the gold-plating in the shops than to the sweat. They sought gains they could measure in dollars, and Reuther's belief in the benefits of technology and productivity kept him from protesting either automation or speedup. Officials repudiated the tactics that had given birth to the union in the 1930s and came to see themselves as partners with management, truly convinced that "what's good for GM is good for America"—and for UAW members.