GM uses buyouts to eliminate jobs

General Motors announced on March 22 a historic “buyout” plan available to every one of its over 100,000 hourly workers, as well as thousands of Delphi workers. Delphi Automotive was formerly part of General Motors and was spun off in 1999. Approximately 50 percent of Delphi’s business is supplying parts for GM auto production.

The GM plan is a key element in the company’s designs to cut its U.S. hourly workforce by 30,000 jobs and for Delphi to reduce its hourly workforce from 34,000 workers to about 14,000.

It would offer $35,000 to every GM worker currently eligible to retire under the UAW/GM “30 and out” plan, under which workers receive full pensions after 30 years, regardless of age.

It would pay 60 percent of their wages to workers within three years of retirement who opted to leave the company now and who would be eligible to receive full retirement when they reached 30 years.

The plan also includes a $140,000 buyout for workers with over 10 years’ seniority who choose to leave the company now and who would forgo all benefits, except for their vested pension benefits. Workers with less than 10 years’ seniority who chose to sever ties with the corporation would get $70,000.

This plan would also apply to Delphi workers currently eligible for retirement. An additional 5,000 of Delphi’s 24,000 UAW members would be offered the opportunity to return to the GM workforce.

What is behind this unprecedented buyout plan? How should it be viewed by class-conscious workers?

The announcement of this plan comes about one week before the March 31 deadline that Delphi Automotive announced for asking the bankruptcy court to overturn its contract with the Auto Workers union. Delphi went into bankruptcy in October 2005 after the UAW rejected its arrogant demands for a 63 percent wage cut for its hourly workforce and the right to eliminate jobs wholesale, close plants and fundamentally reduce the benefits the workers received.

Delphi uses bankruptcy to cut pay, benefits

The Delphi announcement galvanized a struggle against this blatant attempt to use the bankruptcy court to destroy the livelihoods of its 34,000 union members. The six Delphi unions formed a coalition called Mobilizing At Delphi that led significant demonstrations across the country.

Most important, a rank-and-file organization, Soldiers of Solidarity (SOS), was formed. SOS began organizing rank-and-file meetings in every city where Delphi had plants. It led a “work to rule” campaign in the shops, encouraging workers on the shop floor to hold the companies to every work and safety rule, which had the effect of slowing production. A well-publicized demonstration was held at the Detroit International Auto show in January.

This dynamic organizing by the Delphi workers and their supporters got the message across to Delphi: the workers were not going to sit back and allow their wages and living standards to be devastated without a fight. The message was out that if Delphi tried to impose a contract, the rank and file were prepared to strike.

The Delphi workers were actually in a good position for a strike, unlike many workers in a bankruptcy situation. A strike at Delphi would almost immediately shut down GM production. General Motors had just launched several new car models in a desperate attempt to regain market share, which had fallen to historic lows, in large part because GM had continued to produce almost nothing but gas-guzzling SUVs and trucks. General Motors feared that a strike at Delphi would cripple its new model launch and further weaken the competitive position of the corporation.

It was in this context that GM entered the negotiations between Delphi and the UAW and that the buyout agreement was reached. Significantly, there still is no agreement between Delphi and the UAW on a new contract, and Delphi has announced that it still plans to go forward with asking the bankruptcy court to throw out its current contract with the UAW.

On the one hand, this buyout agreement is a significant concession by GM to auto workers. GM is spending over $2 billion to try to avoid what it viewed as a very real prospect of a strike that could have devastated the company. GM took the strike threat seriously, saw the rank-and-file anger that was brewing, and decided to cough up significant dollars to try to stem the tide. And certainly, for many workers who were already contemplating retirement, the extra dollars will be welcome.

But there is another side to this agreement between GM, Delphi and the UAW. It appears that rather than fight GM and Delphi’s plans for massive job cuts, the UAW leadership has accepted the inevitability of wholesale job elimination by the two companies and opted to negotiate to soften the blow for the current workers rather than fight back. This amounts to a historic reversal for the union that could have devastating consequences for the future.

For one thing, these job cuts weaken the position of the union at the precise time that there is a move led by Delphi to fundamentally lower the wages and living standards of the union members. New hires at Delphi already work under a two-tier system, starting at $14 an hour and maxing out at $18. This compares with the $26 an hour earned by current Delphi workers. The new hires have far fewer benefits as well. By cooperating with Delphi in eliminating the better-paid sector of the workforce, the UAW has weakened its own position of countering Delphi’s attempt to impose these wage cuts on its entire workforce.

In addition, how secure will the retirees’ pensions be when the number of workers contributing to the plan keeps being reduced? Under current law, if the pension funds go bankrupt, the pensions will be reduced and, most importantly, the retirees’ health benefits will be eliminated.

Historically, the UAW leadership has understood that the union must fight not just for benefits for the current workers, but for the future workforce as well. For example, the movement for “30 and out” pensions was seen as a struggle to both shorten the working life for factory workers who perform hard labor and to open up jobs for new workers in the auto industry. The UAW was in the forefront of the movement for a shorter workweek and led strikes in the Big 3 in 1976 that won a once-a-month four-day workweek for five days’ pay. This shorter workweek forced the automakers to hire tens of thousands of workers.

In the 1980s and 1990s, the UAW negotiated important programs to maintain employment levels in the face of corporate restructuring. One plan mandated that, for every two workers who retired, a worker had to be hired. The union also negotiated the Guaranteed Employment Numbers (GENs). This meant that during the course of the contract, a snapshot was taken of the employment level at each plant. The corporation had to maintain at least 95 of that level for the entire contract. The union also negotiated a moratorium on plant closings during the course of the union contract.

Significantly, these elements are still contained in UAW’s contracts with GM, as well as with Ford and Chrysler. Unfortunately, the union leadership has ignored some of these provisions over the last few years and now is in a wholesale retreat from any demands to maintain the workforce levels mandated in the contracts it negotiated.

Jobs as a ‘property right’

Commenting on GM’s buyout announcement, labor relations professor Gary Chaison said that some autoworkers “almost see their job as a property right.” (New York Times, March 22) In fact, this idea, that the workers have a property right to their jobs, was the very principle upon which the union was founded. The UAW was formed when the workers seized and occupied the plants in the famous “sit-in” strikes in Flint, Mich., in 1936-37.

The plants that GM and Delphi want to close are productive and modern facilities, most of which have been retooled in recent years. They are not obsolete and neither are the workers. It is the capitalist drive to maximize the rate of profit, fueled by new technology and globalization, that is behind their wholesale and irrational job elimination and wage cutting.

GM made huge profits until a few years ago, when sales plummeted primarily due to changes in the market brought on by (1) the overproduction of trucks and SUVs and (2) management ignoring the impact of high gas prices on the vehicles people might actually need. Now that sales are down, GM and Delphi management, and the Wall Street sharks behind them, see an opportunity to maximize the rate of profit by gutting the workers.

In this period, rather than buying into the big business ideology that downsizing, wage cutting and benefit elimination are inevitable, unions must advance their own program based on the needs of the workers, not the bosses. That program should assert that a job IS a property right of the workers, and that if the bosses won’t run the plants, the workers must be ready to occupy them and run them ourselves to defend our property.

There is plenty of need for fuel-efficient and ecologically sensible cars, as well as mass transit. The workers should not abandon the jobs and the factories they built and maintained just because the bosses decide they are no longer “useful,” that is, profitable enough.

The struggle between the autoworkers and GM and Delphi is far from over. The rank and file should demand that the UAW leadership enforce the provisions in the current contract to maintain jobs and not allow the wholesale gutting of the workforce. The rank and file must continue to prepare to fight back against Delphi’s attempts to fundamentally lower their wages and benefits, which would be a precursor to similar cutbacks across the auto industry. Every progressive worker must be ready to lend solidarity and assistance in the struggle to come, because it will have consequences not just for autoworkers, but for the entire working class.