Auto bosses cry poverty to wring concessions

“Never before have we faced such a threat.”

Those are pretty strong words, coming from a 99-year-old corporation that has weathered strikes, sit-downs, recessions, depressions (including the Great one), mergers, spinoffs, scandals, management upheavals and even a film parody by Michael Moore.

What on earth could GM spokesperson John Buttermore have been referring to?

You guessed it. The high cost of employee and retiree health care benefits.

The punch line is that Buttermore uttered these words prior to negotiations with the United Auto Workers—in 2003. Four years and numerous concessions later, GM, Ford and Chrysler (soon to be part of Cerberus) are still crying the health care crisis blues.

In reality it is the UAW-represented workers who are facing unparalleled threats. Spurred on by the sale of Chrysler to a powerful Wall Street private equity firm, the Big Three bosses and their financiers are making noises about the “need” for more and bigger concessions than ever before.

While the biggest threat is to health care—a basic necessity and recognized human right—its cost is being used to justify demands for a wide range of concessions. The extent of the planned restructuring was harshly spelled out by auto industry writer Jerry Flint:

“The present contract expires in mid-September, and negotiations for a replacement start this summer. It’s no secret what Detroit needs:

“More contributions from today’s workers to their own health care and pension plans.

“Much smaller company contribution to the over-65 retirees for their health care. Either a modest deferral in cost-of-living pay increases or else a dual-pay system, with new hires getting less.

“There are lots of little things, too: getting custodial workers out of the UAW contract, so janitors aren’t paid like production workers; allowing four-day weeks, meaning 10 hours a day, without overtime; allowing nonunion workers to do some jobs around the factory.” (Forbes, June 4)

Officially negotiations don’t begin until July. Is it not poor protocol for management to make demands on the union via the media before the start of talks?

The program—“what Detroit needs”— is extreme. Consider the demand that workers contribute to their pension plan. Flint, a writer on the auto industry since 1958 and a former editor at Forbes, surely must know that pensions are deferred wages. How can workers be expected to pay part of their own wages?

Why should new hires be paid a substandard wage? Why should cost of living increases be cut? Why shouldn’t janitors, who work as hard for the least pay, get union wages?

How can workers be asked to give up something as precious as the eight-hour day? Yet, sadly, a number of plants already have local agreements allowing 10- or even 11.5-hour days.

Even by the companies’ line of reasoning, these concessions are not justified. The latest statistics show an actual decrease in labor costs.

In 2003 GM complained that, to build a car, a GM worker took 45 hours—compared to 32 hours at Toyota’s non-union U.S. plants, where injuries are routine as a result of the push for productivity.

Claiming wages and benefits cost $52 an hour, GM said its average labor costs per vehicle came to $2,340.

Brand-new figures from the Harbour Report, which tracks industry productivity, show a GM worker now builds a car in 32 hours, compared to 30 at Toyota. Even with GM now claiming costs (including retiree health care) of $70 an hour, labor costs have been actually reduced by $100 per vehicle.

Actually, the company’s claim that labor costs have risen $18 an hour in four years is laughable. There were no raises the first two years of the contract and only a 2 percent raise the third year. A 3 percent raise the fourth year was canceled at Ford and GM—a concession negotiated to pay for costs of health care.

Because of massive buyouts to shed workers, automakers are providing health benefits to more retirees—but to fewer active employees. The overall number of people receiving health care coverage has actually decreased since the buyouts.

Last year GM, Delphi and Ford announced the combined elimination of some 86,000 jobs; in February Chrysler added 13,000 more cuts. At the same time programs negotiated to alleviate unemployment are under attack. A “jobs bank” was initiated when technology made fewer workers necessary. Workers in the bank were guaranteed 40 hours’ pay.

Now the jobs bank is threatened. As early as January of last year, GM CEO Rick Wagoner while at the North American Auto Show in Detroit made the statement: “I don’t think it’s any question the jobs bank is an expense.” Now 400 UAW skilled trades workers in Flint and Lansing are being forced out of the bank—before the negotiations have even started.

Will the Supplemental Unemployment Benefits for laid-off workers also face the axe? How many of the union’s hard-fought gains will be left after these critical negotiations?

The takeover of Delphi, Chrysler and many parts suppliers by private equity firms only elevates the crisis. Private equity profits are derived primarily not from the earnings of the companies they buy, but from their ability to resell companies after drastically reducing labor costs.

New statements from Ford should alert workers to even greater dangers.

“I put a simple question to Ford Motor Co. Executive Chairman Bill Ford Jr. on Thursday: Is Detroit’s auto industry in play?” wrote Detroit News auto columnist Daniel Howes on June 1.

“‘That’s true of the entire business world today—everything is in play,’ he told me in an interview at the Detroit Regional Chamber’s Mackinac Policy Conference. ‘Private equity has almost limitless capital. Almost no deal is too big to be done. ... ‘Everything is always on the table,’ he said.”

In February DaimlerChrysler CEO Dieter Zetsche said basically the same thing. Three months later he announced the sale of Chrysler to Cerberus.

There is no impending crisis. The crisis is here. Workers who see through the bosses’ “poor little rich company” charade must construct a strategy to halt the theft of their wages and benefits.

Grevatt has worked for 20 years at Chrysler’s Twinsburg, Ohio, stamping plant and serves on the executive board of her local union.

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