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GM declares war on auto workers

Threatens to slash retirees’ health benefits

Published Jul 5, 2005 10:27 PM

As tens of thousands of General Motors employees clocked out at the end of their shifts on July 1--to begin an annual two-week nationwide shutdown for inventory and maintenance--questions about their job security, health-care costs and pensions remained unanswered.

At a June 7 stockholders' meeting in New York, GM Chair and Chief Executive Officer Rick Wagoner had announced that the giant corporation would cut 25,000 hourly jobs by 2008. Hit with falling stock prices and car sales, the auto boss blamed health-care costs, especially for the company's almost 500,000 retirees, as the source of GM's financial woes.

Claiming that $1,550 of each vehicle's cost goes to pay for medical benefits, Wagoner threatened to unilaterally abandon sections of the union contract. He told the United Auto Workers that it had until June 30 to figure out ways to pare down health-care expenses.

Within days the union convened an emergency meeting of local  presidents and shop committee chairs in Detroit. UAW President Ron Gettelfinger rejected any notion of reopening the contract to alter health-care benefits. But he said the union would continue to talk with GM management, looking for a "win-win" solution.

War on workers' benefits

GM spokespeople soon stated that there is "no deadline." But it is clear that the corporation has declared war on hard-won benefits that have provided current and retired auto workers a sense of security.

For many years, UAW contracts have provided health coverage with no monthly premium or deductible for GM's hourly employees and retirees. Only with the last contract in 2003 were modest co-pays for doctor visits and prescriptions instituted.

In the late 1970s, GM had an hourly work force of almost half a million. Now, after three decades of plant closings, outsourcing and high-tech automation, there are 111,000 active employees in the North American division and almost 500,000 retirees. According to GM, some 70 percent of its total 2004 health-care costs were for retirees.

In Wagoner's address to GM stockholders, he complained that companies such as Toyota, Honda, Mitsubishi and Nissan have an unfair advantage over GM in the U.S. market because their production facilities aren't saddled with union-mandated health insurance and pension costs. Likewise, even vehicles imported from Europe generate higher profits because of national health-care programs and government-backed pensions there.

At the Doraville, Ga., GM plant, some 3,100 workers produce the mini-vans known as "crossover vehicles." Here, the announcement that 25,000 jobs would be cut by the year 2008 caused a wide range of emotions--from anxiety to anger, from resignation to resolve.

Doraville, built in 1947, is one of the oldest production plants still operating. It occupies 157 acres of valuable land on the I-285 perimeter interstate that encircles Atlanta. This area is undergoing upscale development. The facility is always high on the list of potential closings.

Local 10's elected leaders have long resisted GM's attempts to replace work rules with a form of "team concept" that destroys seniority rights and increases work load. High-ranking GM bosses have openly threatened to shut down production of the crossover van with the 2008 model unless the Doraville workers conform to this developing national program.

The current national contract expires in the fall of 2007. Under its terms GM cannot permanently close a plant. However, it can temporarily stop production if inventories are too high. Or it can implement a "de-rate," reducing the number of vehicles produced per hour, which would cause layoffs.

Doraville management has announced a "de-rate" program, reducing the number of vans produced per hour to 54, to take effect on Sept. 6. Exactly how many layoffs will result has not yet been announced. But for workers with under five years' seniority, this is most unsettling news. Their futures are filled with uncertainty.

Likewise, workers with 30 years of service who can retire are unsure what to do, given that the pension benefits they had counted on might be reduced in 2007.

Great pressure is being brought on the union, both nationally and locally, to make concessions to save jobs. Every day there is another announcement of major corporations declaring bankruptcy or closing plants and stores. So far, labor unions, including the UAW, have not responded with a united fight-back program designed to galvanize workers and their families into an organized, energizing resistance.

Such a campaign could demand national health-care insurance, fully funded pension programs and a viable Social Security system.

Local and state governments across the country are responding to GM's announcement of looming job cuts by scrambling to offer tax breaks and other inducements to keep their GM facilities open. It is estimated that for every auto production job, 10 additional jobs are created in a community. By announcing now that it will cut 25,000 jobs in 2008, GM will be able to whipsaw competing offers and extort even more money from localities before making its final decisions.

It is clear from Wagoner's June 7 speech that GM seeks to bolster its  profits at the expense of its workers, retirees and the tax-paying public at large.

Ironically, just days after the auto boss declared war on the GM work force, the company appealed to its employees to lobby Congress not to raise gas mileage standards because that would cause job losses.

Although GM bemoans its high medical costs, it has not used its tremendous influence to push for national health-care insurance. Instead it spends millions of dollars to advertise gas-guzzling but high-profit sports utility vehicles and heavy trucks, and to keep mandated fuel-efficiency standards to a minimum.

Wagoner placed all the blame for GM's recent financial losses on its employees. Assembly line workers at Doraville don't buy that. They currently build over 900 vans a day, starting from the rolls of raw metal and ending with a finished vehicle. For the last three years the Doraville workers have placed first or second in rankings for the most efficient van production plant in the United States.

Multi-million-dollar bonuses and obscenely extravagant pension plans for top management are a slap in the face to the hundreds of thousands of workers who have labored in the past and continue now to labor in the heat and noise and fumes of auto plants.

Since the June 7 stockholders' meeting, GM has announced a new sales promotion. The public would receive the same discount as employees on GM dealers' stock. June sales figures skyrocketed, up some 42 percent over last year's numbers. The all-important market-share percentage claimed by GM rose to 30 percent.

Some 17 million vehicles have been sold during this promotion, which proclaims that "everyone will be treated like a GM employee." With GM employees looking at the loss of 25,000 jobs, reduced health-care benefits, loss of pensions and increased work loads, that's no bargain.