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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 security.”

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 “leadership.”

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 leadership.”

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 different “leadership.”

“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 Eighties.”

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 in profits.

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 more.

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. Not so.

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 billion.

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]