Bosses, gov’t behind auto crisis
Why should workers have to pay?
Published Apr 26, 2009 8:38 PM
“Absolutely we are prepared to walk. There is no doubt in my
Those aren’t the words of a union leader preparing for a strike. No, they
come from a capitalist bully—Fiat CEO Sergio Marchionne—threatening
to pull out of a planned alliance with Chrysler. Speaking of the United Auto
Workers and the Canadian Auto Workers, Marchionne, the likely CEO of a
reorganized Chrysler, said, “No one wants to remove the UAW or the CAW
from the table. But it will happen if a bankruptcy process drags on.”
(Detroit News, April 15)
The White House’s Auto Task Force has declared that Chrysler is
“not viable” as a stand-alone company. If Fiat and Chrysler do not
consummate the alliance by April 30, there will be no more government aid from
the U.S. or Canada, forcing Chrysler into bankruptcy.
Aid is also contingent on Chrysler eliminating most of its $6.9 billion in
secured debt, a majority of which is owed to JPMorgan Chase, Morgan Stanley,
Goldman Sachs and Citigroup. These Wall Street powerhouses have received $95
billion in U.S. bailout funds but have denied government requests that they
reduce Chrysler’s debt.
The U.S. and Canadian governments are insisting that the auto unions
“make painful sacrifices.” Up against this powerful array of
forces—their bosses, the government and the big banks—the UAW and
CAW are “negotiating” a new round of concessions. The Delphi
experience leaves no doubt that bankruptcy would result in massive job losses
and be used to break the UAW. It is in this atmosphere of fear that union
members will be asked to vote to give up what was won through decades of
Chrysler President Tom LaSorda has threatened to shut down Canadian operations
altogether if the CAW doesn’t reduce labor costs by $19 an hour. The CAW
was willing to grant Chrysler the same concessions it gave to General Motors,
which reduced labor costs by over $5 an hour. CAW President Ken Lewenza charged
Chrysler, Fiat and the two governments with launching “an unprecedented
and outrageous series of attacks on Canadian autoworkers and their
Meanwhile, lower seniority rank-and-file UAW workers are facing what may be the
most difficult decision of their lives: to take $100,000 and quit a good-paying
union job or stay and take the chance they’ll be laid off permanently.
Those who meet the criteria for retirement—a combination of age and years
of service—must weigh whether to retire and risk losing their pension or
keep working and risk losing their job. They have until April 27 to decide!
The situation is hardly more hopeful for UAW members at GM. The new CEO, Fritz
Henderson, has stated: “I felt several weeks ago that it would be more
probable that we would need to go through a bankruptcy process. That continues
today. But I wouldn’t be able to hazard a guess as to what the
probabilities would be.” (Detroit News, April 15)
With or without bankruptcy, GM plans additional job cuts on top of the 47,000
included in the initial plan submitted to Washington. GM has until June 1 to
develop a more drastic restructuring—based on the most pessimistic car
sales projection—and to win big union concessions and get bondholders to
These bondholders consist of large investors and hedge funds—often called
“vulture capitalists.” They likely bought GM bonds at bargain
basement prices, but are crying “no fair” at suggestions that GM
compensate them at the going market rate.
The still nameless “committee” of bondholders has had the nerve to
suggest that the UAW members—who are being asked to give up performance
bonuses, cost-of-living-allowance raises, the eight-hour day, paid holidays,
income protection and more—are getting preferential treatment.
With both GM and Chrysler the lenders are stalling negotiations, forcing the
unions to make concessions first. The more cost reductions they squeeze from
the workers, the less the banks and bondholders will be held accountable
Why are they broke?
The question no one in the capitalist media is asking is this: How did the auto
companies become so mired in debt to begin with? In August 2007, when Wall
Street equity firm Cerberus was in the process of buying Chrysler, we
“The sale of Chrysler to Wall Street private equity firm Cerberus faces
new, unanticipated difficulties. Since the subprime meltdown, which has now
infected the entire credit industry, investors are shying away from the bond
market. ‘A group of six banks acting for Cerberus Capital Management LP,
the buyer of Chrysler, cancelled plans to sell $12 billion in loans for
Chrysler’s auto business after failing to interest investors,’
explained the July 26 Detroit News. ... ‘Depending on how the agreement
is structured, the firm might end up having to pay higher interest rates than
“The whole purpose of the $12-billion loan is to finance a new level of
restructuring at the workers’ expense. The billions are to be used in the
power-train division to build new plants that ... will build more
fuel-efficient engines and transmissions with less than half the workforce
In the midst of a credit crisis, Chrysler LLC borrowed billions, at less than
ideal terms, for a restructuring that has put tens of thousands out of work.
With the 2007 contract negotiations the company attempted to shift the cost
burden onto the workers, through a two-tier wage structure. When car sales
collapsed, however, the new hires making $14 an hour were laid off. Thus the
company could not benefit from the regressive wage structure. The company
burned through its cash reserves, finally borrowing money from the federal
government to keep paying, among other obligations, cash owed to the
In the case of GM, the $28 billion owed to bondholders stems from a massive
restructuring that included the building of new, super-high-tech plants in
India, China, Russia, Uzbekistan and Brazil. Like Chrysler, GM has been unable
to reap the benefits of the two-tier wage. Yet the “poor”
company’s global expansion continues unabated. Speaking at the Shanghai
Auto Show on April 19, Nick Reilly, president of GM’s Asia-Pacific
division, stated, “We will continue to invest in new products for China,
in new facilities and the latest in technology.” (Detroit News, April
The “deeper” restructuring the ruling class insists on is forcing
workers to pay the cost of eliminating jobs—with yet another round of
By demanding further job cuts, the government is in violation of the Full
Employment Act of 1978, under which it is mandated to take every possible
measure to minimize unemployment.
Since the Bush administration made the initial loans to Chrysler and GM, the
government has brazenly interfered in the collective bargaining process, in
violation of the 1935 National Labor Relations Act.
The UAW leadership has issued no statement challenging the illegal attacks on
the union and its members’ jobs or the blackmailing tactics of big
capital. Silence is the voice of complicity.
Whose jobs? Our jobs!
From 1936 to 1937 the young UAW grew by leaps and bounds, building on the
success of the sit-down strikes. Every time the union was accused of violating
a company’s property right, the answer would be the same: a worker has a
property right to a job. The top leaders as well as the rank and file
articulated this right. It was the chief legal argument in defense of the
sit-downs by the union’s attorneys. Secretary of Labor Frances Perkins,
who was under pressure to declare the occupations illegal, recognized the
This property right concept has never been more relevant. The unemployment rate
in Michigan is officially approaching 13 percent and Ohio is not far behind.
For the real people behind the statistics, asserting the right to a job is the
best defense against foreclosures, layoffs, school closings, lack of health
care and all the ravages of capitalist overproduction.
The sit-down at the Belfast plant of Ford spinoff Visteon is now in its third
week. Last week a Belgian boss at a Fiat sales office was the latest to be
“boss-napped.” All over the world workers are fighting for their
Marchionne could not get away with making his arrogant threats against the
militant Federation of Italian Metalworkers. He shouldn’t get away with
Whose jobs? Our jobs!
E-mail: [email protected]
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.
Workers World, 55 W. 17 St., NY, NY 10011
Email: [email protected]
Subscribe [email protected]
Support independent news DONATE