•  HOME 
  •  ARCHIVES 
  •  BOOKS 
  •  PDF ARCHIVE 
  •  WWP 
  •  SUBSCRIBE 
  •  DONATE 
  •  MUNDOOBRERO.ORG
  • Loading


Follow workers.org on
Twitter Facebook iGoogle




What happened to GM’s $25-B cash fund?

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.