What happened to GM’s $25-B cash fund?
By
Jerry Goldberg
Detroit
Published Jul 7, 2005 1:43 AM
In the face of $1.3 billion
in losses the first quarter of this year, General Motors has demanded that the
United Auto Workers either negotiate massive cuts in health benefits for its
retirees or the corporation will unilaterally impose the cuts.
The UAW has
been in the forefront among major unions in negotiating significant benefits
that have set the precedent for the entire labor movement. About 40 years ago,
the union won “30 and out.” This means that autoworkers who work 30
years in the plants can retire with their full pensions, regardless of age. The
idea of this benefit was to open up jobs for younger workers to enter the
factories. The key to 30 and out is that UAW retirees not only receive a fairly
decent income, but also are entitled to almost all the benefits of active
workers, and most significantly free health care.
Unfortunately, despite
this benefit, due to GM’s relentless restructuring, today there are only
111,000 UAW GM workers, compared to 225,000 20 years ago, and over 400,000 in
the 1960s. GM is crying crocodile tears that with only 111,000 active workers,
it no longer can afford to pay health benefits to nearly half a million
retirees.
However, seldom reported in the media is that these 111,000
workers produced 4.6 million cars and trucks last year, only 400,000 less than
the 5 million cars and trucks produced by 225,000 workers 20 years ago. In other
words, productivity has virtually doubled.
GM accumulated huge cash
fund
In fact, over the last few years General Motors was enjoying huge
profits that allowed it to put away a $25-billion cash fund. The losses today
have a lot more to do with GM’s choice to continue making high-profit SUVs
and trucks at a time when gas prices are climbing and the public is clamoring
for fuel-efficient cars like the hybrid Toyota Prius, which has propelled that
corporation to the top of the automotive world.
In the face of United
Airlines’ successfully using bankruptcy to stop paying the pensions it
owes the workers, and in the face of corporation after corporation successfully
eliminating health benefits for salaried retirees—the auto supplier
Visteon just made such an announcement—GM wants to take advantage of its
temporary losses to bluster the UAW into accepting a fundamental reduction in
retiree benefits.
Thus far, the UAW leadership has not caved in. The union
is refusing to reopen the contract which is in effect until 2007, and is
demanding that General Motors essentially open its books and prove that these
health benefits are behind GM’s losses before the union negotiates any
fundamental cuts in benefits. Naturally, that is not what the company has in
mind.
The entire ruling class understands the stakes in this struggle, and
significant sectors are pushing GM to unilaterally take away the UAW retiree
health benefits. Articles are appearing in newspapers across the country quoting
so-called auto industry experts like Brian Johnson of the New York investment
firm of Sanford and Bernstein, who argues that under bourgeois law “GM can
unilaterally and immediately terminate health benefits for most retirees without
the fear of a legal battle.”
Benefits are deferred
wages
In so arguing, Johnson notes that while under ERISA (the
Employee Retirement Income Security Act), pension benefits are vested and thus
guaranteed (except when the corporation goes bankrupt a la United Airlines),
ERISA explicitly excludes letting health benefits for retirees be vested. They
are called “welfare benefits” under the law.
The fact that
health benefits are not vested under ERISA was the basis for the Sixth Circuit
Court of Appeals decision in Sprague versus General Motors, in which the court
upheld GM’s eliminating fully paid health benefits to 84,000 GM salaried
retirees in 1998, including 50,000 who took early retirement relying on this
promise.
However, in another important decision by the Sixth Circuit, UAW
versus Yard-Man, the court upheld the right of union retirees to their health
benefits. In that decision the court got it right, holding that retiree benefits
are typically understood as a form of delayed compensation or reward for past
services. In other words, pensions are owed to the workers for the labor they
produced and should not be capriciously stolen by the corporations.
It
goes without saying that no union can rely on the courts to protect the pensions
of its members. Only by asserting the power of the workers to shut down the
corporation can the pensions be protected. That’s how they were won in the
first place. And it is precisely the fear of unleashing such a struggle that is
causing General Motors to proceed somewhat cautiously in the current period,
though the attack could come at any time.
In the meantime, it’s up
to the union movement as a whole to take on the struggle to protect and
guarantee the pensions of the workers as the workers’ property.
It’s time to demand that ERISA be changed so that retiree health
benefits are protected and vested under the law.
It’s time to
demand that the bankruptcy laws be immediately changed so that the
workers’ pensions are off limits.
Incredibly, just a couple of
months ago, the bankruptcy law WAS changed to virtually eliminate the right of
an average worker to use bankruptcy to escape massive and onerous debts, which
usually result from a health-care crisis. Well, why shouldn’t the law be
changed to take pensions off the chopping block of the corporate
vultures?
What’s needed more than ever is a massive mobilization of
the workers, a Solidarity Day III, where the union movement, by bringing out
millions to Washington, D.C., can reassert a workers’ agenda for a living
wage, health care for all, money for the cities and not the Pentagon’s
wars, and protecting the workers’ hard-earned pensions.
At a time
when there is a debate over how to reinvigorate the labor movement, nothing
would do so more than the unions hitting the streets in massive numbers on
behalf of the entire working class.
Goldberg worked for many years
at Ford’s Michigan Truck Plant.
Articles copyright 1995-2012 Workers World.
Verbatim copying and distribution of this entire article is permitted in any medium without royalty provided this notice is preserved.
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