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GM’s ‘quick rinse’ bankruptcy

Dirty deal for workers and retirees

Published Jul 17, 2009 7:25 PM

A 100-year-old towering structure was razed to the ground July 10. From its wreckage a new General Motors Company—miniature by comparison—has emerged.

GM’s Chapter 11 filing, and its exit a record-breaking 40 days later, has been called a “surgical” or “quick rinse” bankruptcy. For workers and retirees, however, the damage can hardly be compared to having an appendix removed or to cleaning soiled linens.

The Pontiac brand is gone. The Saab, Opel, Vauxhall, Hummer and Saturn brands are in the process of being sold. By the end of this year GM’s total U.S. employment will stand at 67,000—down from 91,000 at this year’s start. This includes another wave of job cuts for 4,000 non-unionized salaried employees on top of the 20,000-plus union jobs on the chopping block as part of the government-ordered restructuring. Between now and December 2011, 13 plants will close.

Workers suffer heavy cuts

Workers represented by the United Auto Workers took huge wage and benefit cuts. Wages for newly hired workers are frozen at $14 an hour—one-and-a-half times the poverty level for a family of four—for the next six years. Retirees lost vision and dental coverage.

For the next contract, which will run from 2011 to 2016, the UAW agreed to allow an arbitrator to impose a “competitive wage.” Under the terms of the U.S. Treasury loan to GM, workers are forbidden to strike.

The attack on the UAW membership is just the tip of the iceberg. GM plans to close at least 1,300 dealerships next year employing around 60,000 mechanics, salespeople and other workers. New York Bankruptcy Court Judge Robert Gerber overruled dealer objections, allowing the sale of GM’s remaining assets to proceed.

Objections were also raised in bankruptcy court by the International Union of Electrical Workers-Communication Workers of America. The IUE-CWA represents just less than 10 percent of GM’s 550,000 union retirees, while a few thousand more belong to the Steelworkers or the Operating Engineers. The costs of their health benefits are not being transferred to the UAW-administered Voluntary Employee Beneficiary Association.

The Treasury had demanded that the UAW VEBA take half of GM’s contractual obligations in company stock. The other unions were not part of this deal, so their retired members will soon be losing most of their health care coverage. The IUE-CWA retirees demonstrated outside the bankruptcy court, but their objections too were overruled.

Also left behind in “Old Motor Co.” were potential liabilities in a class-action asbestos exposure lawsuit and individual defective product lawsuits. The plaintiffs may have no means of holding GM accountable for their suffering.

Moreover, because the auto industry is considered a “multiplier” industry, the drastic cuts in auto production are already hurting workers in steel, rubber, glass and a host of related industries. A number of major auto parts companies have filed or are expected to file for Chapter 11 bankruptcy. Whole communities are affected by plant closings.

For 40 days and 40 nights workers and their families watched their futures drown. This was not a “quick rinse” but a flood of economic destruction.

Bosses happy

Not everyone is hurting, however. If one catches GM CEO Fritz Henderson or the new chairman, Edward Whitacre Jr., cracking a smile, it’s for good reason. The new company has erased $40 billion in private debt, and now only owes the government $11 billion. Now that wages, benefits and the workforce itself have been reduced, Henderson gleefully announced, “We have the important parts of the business necessary to make the company great again.” (Detroit Free Press, July 14)

The so-called industry analysts are feigning astonishment at the speed with which GM completed the sale of its assets to the new company. Even the Chrysler bankruptcy took two days longer.

In the past, the process of using Chapter 11 bankruptcy to break union contracts and force huge concessions—as in steel, airlines and auto parts—lasted several years. It was the intervention by the capitalist state, beginning with the Bush administration, which sped up the process here. By threatening to deny bailout funding and forcing GM—and also Chrysler—into liquidation, the government illegally interfered with collective bargaining and scared the workers into granting givebacks that the bosses were all too happy to accept.

The U.S. government at present holds a 60-percent stake in the new GM. The UAW VEBA, the governments of Canada and Ontario, and GM bondholders hold the other 40 percent.

Government aids big capital

The White House Auto Task Force—which orchestrated this massive transfer of wealth out of the hands of the workers and retirees who created it—was drawn entirely from the ranks of finance capital and their think tanks. Now that he’s done his dirty work, Task Force Chair Stephen Rattner plans to quit and go back to Wall Street. When GM Co. is returned to private hands—which Rattner claimed will occur without much delay—stockholders will be able to extract bigger profits from a smaller and lower-paid workforce.

Between GM and Chrysler, more than 30,000 union jobs in the plants are disappearing. Even given the unprecedented role of the state, this devastating attack on the working class seems incomprehensible. The other factor was the acquiescence of the top leadership of the UAW.

When UAW President Ron Gettelfinger spoke out over GM’s plans to import a new small car to be produced in China, GM then agreed to instead keep a Michigan plant open and build the subcompact there. That’s one fewer plant closing, which is good, but why didn’t he demand that no plants be closed? Why the silence over the dealer closings affecting tens of thousands of unionized mechanics, such as those around New York City who belong to UAW Local 259? What about the IUE-CWA retirees who are getting a raw deal?

What happened to the old union principle, that an injury to one is an injury to all?

Rank-and-file workers need to organize themselves at the grassroots level. Some way we must map out a strategy to fight to overturn these rotten contracts and demand our right to our jobs.

Martha Grevatt has worked at the Chrysler stamping plant in Twinsburg, Ohio, for 22 years and is an active member of UAW Local 122.