Can auto workers make the system work for them?
Published Jun 12, 2007 11:07 PM
On June 4 a group of Chrysler workers from Ohio and Michigan demonstrated
outside corporate headquarters near Detroit. While the group was small, a large
number of honks greeted signs that read “No Cerberus.” Cerberus is
the Wall Street private equity firm poised to purchase Chrysler.
The sponsoring group, Chrysler Employee Ownership Buyout Committee, had put out
a call on its web site. “Attention All Chrysler Workers And
Retirees,” the group appealed, “STAND UP FOR YOURSELVES AND BE
HEARD!!! Act NOW To Save Jobs and Pension Fund!” The Buyout Committee
rightly pointed out that “the employees are vested assets of 30 plus
years and have everything to lose” as opposed to Cerberus, which is
“trying to speed the signing of this sale with Daimler before
negotiations this fall; they want to finalize it in July.”
Then the Buyout Committee, whose offer to buy Chrysler was purportedly higher
than that of Cerberus, goes on to claim that “employee ownership helps
guarantee job security, wages, health care, and pension fund
In fact employee ownership is illusory.
As United Airlines flight attendant Michelle Quintus explained to Workers
World, “Two things happened that underscored the fallacy of the ESOP.
First, United Airlines made $8 billion in net profit during the economic boom
of the late 1990s while employees struggled to survive under concessions. And
second, overcapacity in the airlines industry left workers carrying the burden
when the industry collapsed. In fact, 20,000 jobs had been cut at United by the
end of 2001.” When UAL emerged from bankruptcy, the union pension plan
had been gutted.
The Committee envisions Daimler maintaining a 20 percent stake in the new
Chrysler, with multi-billionaire Kirk Kerkorian’s Tracinda Corporation
holding another 20 percent while employees would “own” the
remaining 60 percent.
These workers may feel some affinity with Kerkorian, stemming from his lawsuit
attempting to block the Daimler-Chrysler merger. Kerkorian’s bid to buy
Chrysler was also rejected by Daimler. Yet as a major shareholder in Chrysler
and later General Motors, Kerkorian had no qualms about pushing for worker
concessions. The only real difference between the Las Vegas-based Tracinda and
New York-based Cerberus is geographical.
A crisis of leadership?
While some autoworkers hope to solve the crisis through ESOP, others cling to
the illusion that what is needed is a different style of
Former Chrysler CEO Lee Iacocca has popularized this notion with a best seller,
“Where Have All the Leaders Gone?” In an article in the May 17
edition of Business Week, “Daimler Screwed Chrysler,” Iacocca asks,
“Has the sale to Cerberus rescued Chrysler or doomed it to the
junkyard?” His answer is that “in the end, it will all come down to
Some workers, like Iacocca, blame the current Daimler leadership for the
massive job cuts and the coming threats to wages and benefits. In online
comments they voice nostalgia for their old boss.
The former CEO dispels any illusions that workers would fare better under a
“It would be naive to think that cost-cutting and even downsizing are not
necessary when a company is struggling,” argues Iacocca, in a voice that
could be Ford’s Mulally, GM’s Wagoner, or Chrysler’s LaSorda.
“I had to do that myself when we turned Chrysler around in the early
Workers who look to different leaders, like those proposing the ESOP, are
acting on the given assumption that there is some inherent “right”
or “need” to earn a profit.
Auto workers need to understand that profit represents theft of their labor.
Workers are not paid the full value of the product they produce. The unpaid
portion is pocketed by the capitalist owners of the means of production as
profit. The labor of today’s auto workers generates billions and billions
Executive salaries and bonuses—such as the $4.5 million going-away
present Daimler is giving Chrysler CEO Tom LaSorda—are just the tip of
the iceberg of this exploitation
Of course, companies try to suggest otherwise. For example, Chrysler’s
small car—the Dodge Caliber—is said to only generate $109 in profit
per vehicle. However, a car consists of many, many parts. More and more parts
production continues to be outsourced. So besides the profit directly to the
car manufacturer, there are profits to the suppliers of steel, tires, wheels,
glass (Chrysler stopped producing glass a few years ago), carpeting, acoustics
(Chrysler closed its electronics plant also), nuts and bolts,
plastics—and there are also profits to the oil companies—and
The sale of products workers make also pays to construct new, more modern
plants requiring fewer workers, thus increasing profit. Later, the car
companies sell off certain “non-core” aspects of the business, such
as parts plants, pocketing the cash and benefiting from the lower labor costs
of the new, often non-union, enterprises.
More profits are made when a worker cannot pay cash for the vehicle. The
lender—often the financial services division of the car
company—makes thousands of dollars in interest on its loans. More profit
is made by periodically selling off the financial arm of the company. Selling
debt—or the opportunity to realize profit off our labor in the form of
interest—generates additional profit.
It may seem that no one will make a profit on the near-giveaway of Chrysler.
Seven lenders—JPMorgan Chase, Goldman Sachs Group Inc., Citigroup Inc.,
Morgan Stanley, Bear Stearns Cos., Toronto-Dominion Bank and the Royal Bank of
Canada—are financing the Cerberus buyout to the record tune of $62
Back on May 20 the Detroit News explained: “Some $50 billion of proceeds
will be used to refinance debt at Chrysler’s financing unit. The amount
will be the largest refinanced by a private equity firm, according to financial
data tracker Dealogic.
“DaimlerChrysler Chief Financial Officer Bodo Uebber said during a
conference call on Monday that the new Chrysler would likely carry a
‘BB’ junk rating after it splits from DaimlerChrysler, which has a
‘BBB’ investment-grade rating. The lower rating would equate to
higher borrowing costs.
“As part of the $62 billion financing, the banks have agreed to secure
$12 billion in loans that Cerberus can draw from to help in the
restructuring.” In other words, the lenders—who will also receive
hundreds of millions of dollars in consultant fees, and doubly so for
Daimler’s financial advisor, also JPMorgan Chase—are profiting by
financing the destruction of workers’ living standards, all for the
purpose of realizing bigger profits for the car companies!
For UAW members, the capitalist drive for profit is at the root of the problems
they face in the upcoming negotiations. Workers who try to accommodate this
unyielding pressure on their wages and benefits will be disappointed every
time. Plant closings will go on and concessions will never be enough.
Understanding that profit is only what the bosses steal from us will help
prepare class-conscious workers for the difficult battles ahead.
Grevatt has worked for 20 years at Chrysler’s Twinsburg, Ohio,
stamping plant and serves on the executive board of her local union.
E-mail: [email protected]
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