THE UNITED AUTO WORKERS “RACE TO THE BOTTOM” – giving up the fruits of 72 years of workers struggle, to save the auto bosses

from the WORLD SOCIALIST WEB SITE:

 

UAW pledges to impose further job losses and concessions on auto workers

By Joe Kishore
2 December 2008

 

United Auto Workers president Ron Gettelfinger gave his most open pledge yet Sunday that the union would work to impose further sharp concessions on US auto workers.

Speaking to CNN’s Wolf Blitzer on “Late Edition,” Gettelfinger said the union is “prepared to go back to the bargaining table” and reopen the four-year labor agreements signed in 2007.

The UAW president’s remarks came as Detroit’s Big Three automakers were readying proposals to present to Congress on Tuesday that will include outlines for further downsizing and cost-cutting in the attempt to return the companies to profitability. According to a report in the New York Times Monday, these plans include a “significant shrinking” of GM’s North American operations, including shutting more factories, eliminating brands and delaying or reneging on billions the company pledged to pay into a newly-established union-controlled fund for retiree health care benefits.

Both Democrats and Republicans have demanded concessions in return for any government loan to avert bankruptcy. The UAW bureaucracy completely accepts the consensus of the American political and media establishment, and is working behind the backs of its membership to negotiate cuts.

The contracts signed by the union last year imposed historic concessions on auto workers, including a fifty percent cut in wages for new-hires and so-called non-assembly workers, and the ending of employer-paid retiree health care benefits. But this was considered inadequate by the most powerful financial and political interests, which are using the crisis in the auto industry to destroy the conditions of auto workers and set a precedent for an attack on the entire working class.

In questioning Gettelfinger, Blitzer relied on the statements of prominent Democrats, including President-Elect Barack Obama, demanding “change” in the auto industry. He cited Obama’s statement, “We can’t just write a blank check to the auto industry. Taxpayers can’t be expected to pony up more money for an auto industry that has been resistant to change.”

Blitzer also cited a joint statement from House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid demanding that the auto companies present a plan for “long-term viability” and “a restructuring in the industry” in return for a loan.

In response, Gettelfinger pointed to the major concessions the union has already accepted in its 2005 and 2007 contracts. He made clear that the UAW would consider additional concessions, but asked for company management to accept nominal cuts as well. “We need the board members, the management, the suppliers, the dealers, the creditors and the equity holders to all come at the table to make sure that one group doesn’t have to accept all the sacrifice.” The UAW bureaucracy hopes such bogus claims of “equal sacrifice” will help it sell concessions to a skeptical and largely hostile membership.

Gettelfinger’s pledge to “go back to the table” comes only one year after bitter contract disputes that pitted auto workers against the companies and the UAW. The contracts with GM, Ford and Chrysler included new two-tier wage and benefit structures that included starting pay for new workers of $14 an hour.

In exchange for pushing through concessions, the union secured control of a multi-billion dollar retiree health-care trust—a voluntary employees’ beneficiary association (VEBA)—to which auto companies pledged to contribute less than half of their health-care liabilities.

Gettelfinger did not go into any details on his discussion with the Big Three management, but media reports have reported the jobs bank—which subsidizes laid off workers for a period of time—will be eliminated. An article in the Wall Street Journal on Monday (”Big Three Discuss Ending Idle-Workers Plan” by Matthew Dolan), reported, “The United Auto Workers union is in talks with some of Detroit’s Big Three auto makers to stop a program that pays idled workers, people familiar with the matter said.”

Earlier concessions have already substantially reduced the number of workers receiving benefits through the jobs bank. “The size of the revamped program … has dropped to about 3,000 hourly employees” according to the Big Three. “That’s down from 15,000 workers just two years ago, a trend largely driven by time restrictions put in place as part of current union contracts.”

The elimination of the jobs bank is largely symbolic, however, and is seen as a down-payment from the union for far more sweeping concessions. The newspaper continued, “UAW officials, including its president Ron Gettelfinger, are said to understand that they are under pressure to deliver cost concessions. Mr. Gettelfinger ‘understands the UAW is part of the solution here,’ a person close to the UAW president said. ‘He doesn’t want to be characterized as the problem.’”

GM may also seek to alter the funding schedule for the VEBA program, which would threaten the health care benefits for hundreds of thousands of retirees and their dependents. Earlier this year, the union agreed to GM deferring a payment of $1.7 billion. Another payment of $4 billion is due in December 2009 and GM is reportedly seeking another delay.

As the number of unionized workers has declined—and with it the dues base of the UAW—the union bureaucracy sought out the VEBA as a new source of income. The VEBA is set to take over funding of retiree health benefits in 2010. If auto company funding for the VEBA is delayed or cut back, it will fall on the union to impose further cuts on retirees, or eliminate some benefits altogether.

The Big Three, including General Motors, are still considering bankruptcy as a possible option if a government loan is not secured. GM CEO Richard Wagoner is said to be opposed to the option, but according to a Wall Street Journal article on Monday (”GM and Board Race to Craft Convincing Viability Plan” by John Stoll), individuals on the board of directors are actively considering the possibility.

“‘Everything is on the table,’ according to one person familiar with the board’s thinking,” the newspaper reported. “Following Mr. Wagoner’s poor performance in Washington last month, the board began meeting more and taking more seriously its obligation to investigate other options,” including Chapter 11 and the replacement of Wagoner.

Bankruptcy will mean concessions for auto workers as well, but in a different form. Existing contracts would be ripped up and concessions imposed by a bankruptcy judge

 

In bid for loans, Detroit auto makers outline plans for drastic downsizing

By Jerry White
4 December 2008

 

The CEOs of Detroit’s Big Three auto companies are appearing before the Senate Banking Committee today to present plans for the restructuring of the US auto industry as they seek federal loans to avert bankruptcy. The plans involve the destruction of the jobs and living standards of tens of thousands of auto workers and factory closures that will devastate communities across the country.

Last month the Democratic congressional leadership rejected the auto companies’ appeal for a bridge loan of $25 billion, insisting that they present plans to return to profitability. General Motors, Ford and Chrysler CEOs have returned to Washington, this time requesting $34 billion in loans. GM and Chrysler have acknowledged that they will run out of money in a matter of weeks without federal support.

At a news conference yesterday announcing his pick of Bill Richardson for commerce secretary, President-elect Barack Obama said, “Congress did the right thing” in rejecting the companies’ previous request. “They weren’t offering a clear plan for viability over the long term… This time out, the executives from the automakers are putting forward a more serious set of plans.”

Obama and other leading Democrats, including Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi, had no such reservations about using taxpayer money when they handed over $700 billion, with no strings attached, to the Wall Street bankers whose recklessness and avarice have brought the world economy to the brink of collapse.

Over the last two weeks, congressional Democrats, working closely with the Obama transition team, have collaborated with the auto bosses and the United Auto Workers union to work out a “bailout” plan that will be contingent upon a massive assault on auto workers.

On Wednesday, the UAW announced it would reopen its contracts with the Big Three and accept the elimination of the Jobs Bank—which provided income protection for laid-off workers—and allow the auto companies to delay or reduce billions of dollars in payments to provide health care for more than one million retirees and their dependents.

UAW President Ron Gettelfinger announced the agreement after a meeting with local union presidents and bargaining officials that was timed to precede the congressional testimony by the auto executives.

Far from protecting the jobs and living standards of UAW members, Gettelfinger was shameless in making clear that the union leadership is willing to hand back the gains won by previous generations of auto workers in return for government loans to the companies. “We’re in a race to the bottom,” Gettelfinger told reporters. “I used to cringe at the word ‘concessions.’ Now I say, why hide from it? That’s what we did in ‘03, ‘05 and ‘07.”

In its submission to Congress, General Motors said it needs $4 billion before the end of December and another $4 billion by the end January as part of an $18 billion loan. “Absent such assistance, the company will default in the near term,” GM said, “very likely precipitating a total collapse of the domestic industry and its extensive supply chain, with a ripple effect that will have severe, long-term consequences to the US economy.”

The company will eliminate up to 31,500 jobs, dropping its total number of hourly and salaried workers to as few as 65,000 by 2012. By contrast, at the time of the last major national strike against GM, in 1970, there were 350,000 union members at the company.

The number one US car maker will retain only four core brands—Chevrolet, Cadillac, Buick and GMC—and will sell, eliminate or consolidate its Saturn, Saab, Hummer and Pontiac brands. Its North American factories will be reduced from 47 to 36, and the number of dealers will be cut from 6,450 to 4,700, eliminating thousands of jobs in towns, small and large, across America.

Chrysler is asking for $7 billion and has indicated it will run out of money by the end of the year. The company, owned by private equity firm Cerberus, has already eliminated brands, disposed of a large number of industrial assets and slashed 32,000 jobs over the last two years, including 5,000 salaried workers who were forced out of their jobs the day before Thanksgiving. Chrysler, which has held merger talks with GM, Nissan and other companies, is widely expected to be absorbed by another auto maker, leading to thousands more layoffs.

Ford, which claims it has enough money to last through 2009, is requesting a $9 billion “standby loan.” The company, which has closed 17 plants since 2003 and wiped out 45,000 hourly and 12,000 salaried jobs in North America over the last three years, promises to shrink its operations further, selling off divisions such as Volvo and pushing through other cost-cutting measures.

There are sharp differences within the financial and political establishment over the bailout, with a significant section advocating bankruptcy as a means of tearing up labor contracts or simply liquidating the operations of one or more of the Big Three firms. This is the position of the Wall Street Journal, which declared in its lead editorial Monday, “There’s no natural law that America must have a Detroit automotive industry, any more than steel had to be made for all time in Bethlehem, Pennsylvania or textiles in New England.”

Various politicians opposing the bailout, including Alabama Republican Senator Richard Shelby, are, not coincidently, from southern US states where the Big Three’s Asian and European competitors operate non-union plants.

Those backing some form of bailout are insisting that it be contingent on the permanent shrinking of the industry and the destruction of the modest living standards for which generations of auto workers have fought. In a similar manner to the 1979-80 Chrysler bailout—but on a much larger scale—they are using the threat of mass unemployment to wrench concessions from auto workers and set a precedent for imposing the cost of the economic crisis on the backs of the entire working class.

The further gutting of wages and benefits and contraction of the industry, however, will do nothing to reverse the underlying crisis of American and world capitalism, which is at the heart of the collapse of the industry. It will only intensify the crisis as millions of working people are stripped of the means to purchase a car.

BusinessWeek magazine recently noted that the contracts signed by the UAW in 2007, which will cut new auto workers’ wages in half—to $14 an hour—mean that “for the first time since World War I we will have people building automobiles in America who won’t be able to afford the vehicles they build.”

The immediate cause of the collapse of the US auto makers is the global financial crisis precipitated by the frenzied speculation and financial manipulation of Wall Street over a period of decades, which has been accompanied by the dismantling of large sections of American industry. This immense growth of economic parasitism is itself an expression of the historic decline and internal decay of American capitalism.

The resulting credit crunch has made it increasingly difficult for consumers to obtain auto loans and has more generally depressed consumer spending, leading to further declines in production and a worsening of the financial crisis.

This was underscored by this week’s reports on US auto sales, which fell to their lowest level in 26 years in November, with Detroit manufacturers suffering a 40 percent decline and even top-selling Toyota suffering a drop of 33 percent. Analysts predict that total 2008 US sales will be less than 11 million, down from 16 million the year before and a peak of 17 million. European and Japanese carmakers are also cutting production to meet declining global demand.

The auto companies’ plans for revival are based on thoroughly unrealistic expectations of an economic stabilization and rising sales in the near future. Ford acknowledged, however, that its plan would have to be revised in the event that “industry volumes decline to per capita levels not seen since the great depression era, or if there is a global economic collapse, creating additional cash demands.”

The crisis in the auto industry is an expression of the collapse of the entire profit system. It is not possible to reverse this catastrophe—and the devastating social consequences it entails—outside of a fundamental restructuring of the US and world economy on socialist principles of social ownership and democratic control of the major levers of economic life, including basic industry and the banks.

The working class is not responsible for this crisis. Auto workers have absolutely no say in the financial, investment and production decisions of the firms for which they work. On the contrary, the root cause of the crisis is private ownership of the auto industry and the means of production as a whole, the subordination of social needs to private profit, and the economic dictatorship exercised by the corporate and financial elite. Their incompetence, greed and single-minded drive to increase the “shareholder value” of the big investors and banks have played a major role in driving the auto industry and the entire economy into the ground. Now they turn on the workers, blame them for the crisis and demand that they pay the cost through the destruction of their jobs, wages, pensions and health benefits.

The precondition for solving the crisis in auto on a progressive basis and defending the interests of auto workers is a fight for the nationalization of the industry under workers’ control and its transformation into a publicly owned utility. Auto manufacturing in the US should then be incorporated into a global auto industry based on a socialist program of rational planning and democratic control.

Nor can the jobs and conditions of auto workers be defended outside of the nationalization under public ownership and democratic control by the working class of the banking system. The big financial institutions must serve the needs of society, not the drive of the financial aristocracy to enhance their personal fortunes. All decisions concerning the allocation of financial resources must be made democratically, based on a plan to meet human need, not private profit.

To fight for this, auto workers must oppose the gang-up of the big business politicians, the corporate elite and the UAW and mobilize their strength in their own interests and those of the working class as a whole. This requires a political break with the Democrats and the building of an independent political party of the working class, based on a socialist and internationalist program.

This is what the Socialist Equality Party fights for. Auto workers who are looking for a new means of struggle and see the need for a socialist alternative to the profit system should join the SEP and help build it as the mass party of the working class.

 

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from the NEW YORK TIMES:

 

U.A.W. Makes Concessions in Bid to Help Automakers

 

 

By BILL VLASIC

Published: December 3, 2008

WASHINGTON — The United Automobile Workers union said Wednesday that it would make major concessions in its contracts with the three Detroit auto companies to help them lobby Congress for $34 billion in federal aid.

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Gerald Herbert/Associated Press

NO JET THIS TIME Rick Wagoner, G.M. chairman, on the passenger side of a Chevy Malibu hybrid Wednesday en route to Washington.

 

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Fabrizio Costantini for The New York Times

A United Auto Workers representative arrived Wednesday for a meeting at General Motors headquarters in Detroit.

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Fabrizio Costantini for The New York Times

Ron Gettelfinger, president of the United Auto Workers.

The surprising move by the U.A.W. could be a critical factor in the automakers’ bid not only to get government assistance, but also to become competitive with the cost structure of nonunion plants operated by foreign automakers in the United States.

At a news conference in Detroit, the U.A.W.’s president, Ron Gettelfinger, said that his members were willing to sacrifice job security provisions and financing for retiree health care to keep the two most troubled car companies of the Big Three, General Motors and Chrysler, out of bankruptcy.

“Concessions, I used to cringe at that word,” Mr. Gettelfinger said. “But now, why hide it? That’s what we did.”

Labor experts said the ground given by the union underscored the precarious condition of the Detroit companies, as the U.A.W.’s own prospects for survival are also in doubt. “It is an historic and awfully difficult moment for the U.A.W.,” said Harley Shaiken, professor of labor studies at the University of California, Berkeley.

The union’s willingness to modify its 2007 contract came a day after G.M., Chrysler and the Ford Motor Company submitted business plans to Congress in support of their loan requests.

Those efforts won praise from President-elect Barack Obama, who said the automakers had offered “a more serious set of plans” to save the industry.

G.M. and Chrysler have both said they are dangerously close to running out of cash to run their operations by the end of the year. Ford is somewhat healthier, but is also seeking government loans.

The chief executives of the Big Three, along with Mr. Gettelfinger, are to appear before Congress on Thursday and Friday in hopes of building support for emergency assistance.

Democratic Congressional leaders have said that they want to help the automakers and that they were heartened by the gesture of contrition that the executives made by driving to Washington — rather than flying on corporate jets, as they did two weeks ago — and by the more comprehensive plans submitted by the companies.

But the political climate on Capitol Hill is still doubtful for the automakers, and only seemed to worsen on Wednesday with a new CNN poll showing a majority of Americans opposing a taxpayer rescue.

As a result, there is growing concern among the Democratic leadership that they will simply not be able to drum up enough votes to pass an aid package next week, and that to do so will require a major lobbying effort by President Bush and Mr. Obama.

“We don’t have a good sense from our members that this is something they want to do,” a senior House Democratic aide said. “It’s going to take Bush and Obama calling people.”

Many conservative Republicans remain staunchly opposed to any further corporate bailouts by the government, and some are openly calling for Congress to let one or more of the automakers go into bankruptcy.

“Not only should bankruptcy be an option for domestic automakers, but it is considered by most experts to be the best option,” Representative Jeff Flake, Republican of Arizona, said in a statement on Wednesday.

Many lawmakers are reluctant to approve another large expenditure of taxpayer money to prop up private corporations, especially given the mounting criticism of the Treasury’s $700 billion stabilization program for the financial system.

On Wednesday, the Senate majority leader, Harry Reid, said there did not seem to be enough support in Congress to use that fund to help the auto companies. “I just don’t think we have the votes to do that now,” he told The Associated Press.

Two weeks ago, the Detroit executives left Washington empty-handed after skeptical lawmakers refused to approve federal aid until they heard detailed plans on how the companies could be viable in the long term.

Other lawmakers were withholding judgment on the plans until after hearings by the Senate Banking Committee on Thursday and the House Financial Services Committee on Friday.

But the automakers’ hopes for aid were buoyed by the positive comments on Wednesday from Mr. Obama. At a news conference on his latest cabinet appointment, Mr. Obama said the new plans were an indication that the Detroit companies were responsive to earlier concerns raised by lawmakers.

“I’m glad that they recognize the expectations of Congress, certainly my expectations, that we should maintain a viable auto industry,” Mr. Obama said. “But that we should also make sure that any government assistance that’s provided is designed for and is based on realistic assessments of what the auto market is going to be and a realistic plan for how we’re going to make these companies viable over the long term.”

The new plans were also being studied by officials in the Bush administration, which has yet to come to an agreement with lawmakers on how to finance a loan package for Detroit.

In its plan to Congress, G.M. said it would significantly reduce jobs, factories, brands and executive compensation in a broad effort to become more competitive with American plants operated by Toyota, Honda and other foreign auto companies.

But G.M.’s president, Frederick Henderson, said it was also important for the company to get help from the U.A.W. to close the gap with its foreign competition.

Currently, the average U.A.W. member costs G.M. about $74 an hour in a combination of wages, health care and the value of future benefits, like pensions. Toyota, by comparison, spends the equivalent of about $45 an hour for each of its employees in the United States.

Base wages between the Big Three and the foreign companies are roughly comparable, with a veteran U.A.W. member earning $28 an hour at the Big Three compared to about $25 an hour at Toyota’s plant in Georgetown, Ky. (Toyota pays less at its other American factories.)

But the gap in labor costs becomes larger when health care, particularly for thousands of retirees and surviving spouses, and job security provisions are considered.

Mr. Gettelfinger said Wednesday that the union would suspend the much-criticized “jobs bank” program, which allows laid-off workers to continue drawing nearly full wages.

He also said the union would agree to delay the multibillion-dollar payments to a new retiree health care fund that the automakers were scheduled to start making next year.

Beyond those two concessions, Mr. Gettelfinger said the U.A.W. would be open to modifying other terms of its contracts. Changes could include reductions in wages, health care or other benefits, and would require approval from union members.

Suspending the jobs bank program, which supports about 3,600 workers, removes one of the most politically sensitive union perks from the discussions in Washington.

“The jobs bank has become a sound bite that people use to beat us up,” said Mr. Gettelfinger. In the last five years, the U.A.W.’s membership at G.M., Ford and Chrysler has declined to 139,000 workers, from 305,000, because of plant closings and a series of buyout and early-retirement programs.

Both G.M. and Chrysler have said they are not considering bankruptcy as an option to restructure their businesses because of the damage a Chapter 11 filing would do to their reputations with consumers.

Mr. Henderson said that G.M.’s restructuring plan included cutting up to 30,000 more jobs in the next few years, as well as closing another nine factories in North America. He stressed that cooperation from the union would be crucial in the company’s overall efforts to match Toyota in labor costs by 2012.

A G.M. spokesman, Tony Cervone, said Wednesday that the U.A.W.’s offer to make modifications in its contract would help the automaker survive its current financial crisis.

“Clearly the U.A.W. and Ron Gettelfinger have shown a willingness to work with the industry to restructure and make it fully competitive going forward,” Mr. Cervone said.

Ford’s chief executive, Alan R. Mulally, said in an interview Wednesday that Detroit needed the union’s help to speed its transformation, particularly in replacing current workers with entry-level employees who will be making $14 an hour in wages under the terms of the 2007 labor agreement.

He said that suspending the jobs bank program was also important for cutting costs. “That would contribute to us closing the gap,” Mr. Mulally said.

The Detroit companies will remove billions of dollars in financial obligations from their books when the U.A.W. health care trust takes over responsibility for the medical bills of retirees in 2010. But delaying payments to the trust by the companies is a more pressing concern for the automakers.

G.M., for example, is scheduled to make a payment of $7 billion to the health care trust before the end of next year. The U.A.W.’s offer to delay that payment will significantly help G.M.’s cash flow as it tries to recover.

“Taking retiree health care off the books will save the companies billions and billions of dollars,” said Mr. Shaiken. “By not paying into the trust next year, it won’t postpone the trust, but it will save G.M. and the others a lot of money for now.” At the U.A.W. meeting in Detroit, union officials described their members as extremely anxious about the prospect of more concessions but at the same time afraid of what would happen if the union did not aid the automakers.

“We’ve helped them before, but it seems like they always come back to us,” said Shane Colvard, chairman of Local 2164 in Bowling Green, Ky., where G.M. builds the Chevrolet Corvette sports car.

Bill Vlasic reported from Washington and Nick Bunkley from Detroit. Reporting was contributed by David Herszenhorn, Peter Baker, Mary M. Chapman and David Stout

 

from the DETROIT NEWS:

 

Wednesday, December 3, 2008

UAW will suspend jobs bank, make other concessions

Louis Aguilar / The Detroit News

DETROIT – The United Auto Workers will suspend its controversial jobs bank, revise payments to its new health care trust fund and consider modifications to its contracts to help Detroit’s struggling Big Three win approval for emergency loans from Congress and restructure to survive a worldwide economic crisis.

Speaking after an emergency meeting of union local presidents and executives, UAW President Ron Gettelfinger told reporters that the union also will be running ads in Kentucky, Indiana, Maine and Minnesota that will seek to put a face on the need for federal aid, as the automakers renew their requests for a total of $34 billion in emergency federal loans. Gettelfinger also said the union will run ads with the theme, “Don’t let us down. Don’t let America down,” aimed at reaching Congress and rallying support for the loans.

Hundreds of United Auto Workers locals have converged at the Marriott Hotel in the Renaissance Center this morning, one day after each of the Detroit automakers made it clear they intend to ask for modifications to their landmark 2007 labor agreements. The automakers presented business plans to Congress Tuesday, showing how they will use federal loans and lines of credit to rescue the struggling domestic auto industry at a time when tight credit, soaring foreclosures and rising unemployment have cut auto sales in North America to their lowest levels in 50 years.

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A big sticking point in Congressional hearings two weeks ago was the UAW’s jobs bank, which pays workers most of their base salary and benefits when their jobs are eliminated by automakers. Gettelfinger said the jobs bank has become a lightening rod and a sound bite since the Congressional hearings.”But it takes away focus of the real issue: the backbone of America,” he said.

Gettelfinger said the union is engaging its bargaining committees to review the various agreements and consider modifications that will be taken back to members for ratification, but didn’t anticipate reopening the entire contract and putting it toward a new general vote for the union’s 139,000 active workers.

Asked about wage cuts to make GM competitive with foreign auto makers by 2012, Gettelfinger noted the disparity between the long-established Detroit Big Three and transplanted foreign automakers with new plants. “It’s sort of hard for us to be competitive with a plant that just opened and got state subsidies and no retirees,” he said.

You can reach Louis Aguilar at (313) 222-2760 or laguilar@detnews.com.