GM cries poverty to cut benefits

Is General Motors, the largest automaker in the world, being reduced to a second-rate empire? Will this giant transnational corporation go the way of the dinosaurs?

Not likely, for now. Its combined assets total $479 billion and it operates in over 32 countries. Yet slick, high-paid GM managers cried poverty to the United Auto Workers in recent negotiations over health coverage.

They claimed not to be able to afford the full medical coverage that some retirees have been receiving at no charge. In a tentative agreement between GM and UAW, announced on Oct. 17, retirees would now have to pay $752 per family or $370 per individual each year in deductibles, co-payments and premiums. Currently employed GM workers would have to forgo $1 an hour out of their cost-of-living and wage increases in 2006. Starting in December 2006, additional cost-of-living adjustments would be deferred.

GM built its empire on decades of exploitation of the sweat and skills of hundreds of thousands of UAW members, many now retired. Years of strikes and other forms of struggle forced GM to cover health care for 750,000 U.S. hourly employees, retirees and their families and offer the highest wages in the industry. Auto workers paid dearly for this by adjusting their lives to intense productivity and new and changing technology.

Eliminating these wages and benefits is GM’s real target. This new agreement is just the first bite out of the apple. And Wall Street and Corporate America are loving it.

It’s all about profits: “From a financial perspective, it will cut health-care liabilities for unionized retirees by about $15 billion, or about 25 percent of the liability related to those retirees. Its total retiree health-care liabilities were $77.5 billion at the end of 2004. The cuts will reduce retiree health-care expenses by about $3 billion annually on a pre-tax basis, GM said.” (Wall Street Journal, Oct. 18)

UAW President Ron Gettelfinger and his top negotiator, Vice President Richard Shoemaker, cooperated with GM’s demands and reopened the contract. Out of fear and weakness, they agreed to the tentative settlement. They said in a joint statement that the decision was reached after “in-depth analysis of GM’S financial situation and intense discussions with GM.”

What financial situation? GM had announced earlier that it would distribute $2 billion this year to its investors. But on March 16 of this year, the company announced that instead it had a $2 billion deficit—a $4 billion discrepancy.

The company has plenty of cash flow—otherwise it would have threatened the union with bankruptcy. It plans to sell GMAC, its money-making financial arm. That will bring in billions.

This manipulation of the statistics should have sent up the red flag to the UAW that the books were cooked. This is nothing new for Wall Street and Corporate America’s wheelers and dealers.

The top bond agencies knew what to do to protect investors. Standard & Poor’s cut the credit ratings of both GM and Ford to junk status, sending its borrowing costs through the roof.

The UAW leaders should have protected their members. Instead they bought into GM’s slick-talking cries of “we’re all one big family in trouble.” GM posted a loss of $1.63 billion for the third quarter. So the union leaders gave them over $1 billion in concessions at the expense of active members and retirees.

It didn’t have to be. They could have exposed the lies of GM. They could have said no and mobilized the retirees, their families and communities, along with the active members, to plan a fightback strategy. The existing contract was in force until 2007. The givebacks in health-care benefits and cost-of-living raises are a cut in real wages.

UAW President Ron Gettelfinger and VP Shoemaker are playing it cagey. No date has been announced for the members to ratify the tentative agreement. They want to sell it to the regional and local presidents.

The economy worsens

In September, inflation rose to its highest monthly rate in more than 25 years. It reflected the sky-rocketing costs of gasoline and natural gas after Hurricane Katrina hit New Orleans and the Gulf Coast. According to a Labor Department report, the overall consumer price index surged 1.2 percent last month, the highest monthly rate increase since March 1980. Another report from the same agency showed that average weekly earnings for about 80 percent of the nation’s labor force—people in manufacturing or non-supervisory jobs—fell 1.2 percent from August to September, when adjusted for inflation.

Unemployment among workers of color and youth, primarily Black, is already at an alarming level. The markets are glutted from overproduction. Workers, the poor and oppressed nationalities can’t buy the goods and services they produce.

Add to this the government’s racist, criminal neglect of the working poor, unemployed and overwhelmingly Black population in New Orleans and the Gulf Coast.

All these widespread attacks should have been a wakeup call for the UAW leaders, the AFL-CIO and the Change to Win Federation, which split from the AFL-CIO. The message: there is a war going on, not only in Iraq and Afghanistan but against the workers, organized and unorganized, and the oppressed nationalities in this country. Business as usual is no longer an option.

The U.S. industrial empire is shrinking. The auto Big Three—GM, Ford and Daimler Chrysler—are losing their share of the world market. They have plans to reduce benefits, close plants and lay off thousands of workers.

Delphi, the global giant auto parts dealer spun off by GM in 1999, is in bankruptcy and leading the anti-union chorus. At great cost to millions of industrial workers, the auto giants are in a bitter struggle to survive.

GM, which only two years ago employed around 400,000 workers, will soon be down to 84,000. It plans to lay off 25,000 members in the future.

The magnitude of the fallout is incalculable, especially for workers in industries that are an integral part of the auto industry: steel, glass, chemicals, aluminum, rubber, paint and a substantial section of the service-oriented work force, which is linked to the industrial workers in a myriad of ways.

The crisis in the auto industry is following in the footsteps of bankruptcies in airlines and steel and, before that, in textiles and apparel. It is a capitalist crisis gathering momentum.

Racism and national oppression are on the rise. The strategy of class war rather than class collaboration will move to center stage.

Katrina, Iraq and Afghanistan are indivisible in presenting the urgency to build anti-imperialist, anti-racist unity. These catastrophes have laid bare both the problems and the perspective to build a united front.

This united front will emerge from the disunity of the past. There is the beginning of movement from below, from the more militant and class-conscious sectors of the workers. Leaders of the most oppressed nationalities will be in the forefront of this movement. The struggle in solidarity with the poor and nationally oppressed people of New Orleans and the Gulf Coast is key and primary. A victory for their cause will confirm the birth of a united front movement.