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UAW at the crossroads

Published Feb 28, 2009 8:45 AM

Last year the U.S. Treasury Department ordered Chrysler and General Motors to reopen their contracts with the United Auto Workers. In order for them to receive $25 billion in government loans, the two companies would have to show by Feb. 17 that they could get the union to agree to a “competitive” wage and benefit structure. With only hours to spare before the deadline, they submitted their plans for “viability,” along with requests for additional funding.

For workers, the entire scenario raises more questions than it answers. Union workers are being told they must lower their compensation to that of nonunion workers at Honda, Toyota and Nissan plants in the U.S. Doesn’t that deny the union a basic legal right, for which many workers gave their lives, which is the right to bargain for a bigger share of the wealth they create?


On Feb. 16, members of the Canadian Auto Workers union picketed the Toronto Auto Show to oppose any contract concessions to the Detroit Three automakers. GM and Chrysler have asked the Canadian government for financial assistance, which the government and companies are using to press for concessions from the CAW. “We don't want to lose any more gains that it took 60 years to make,” stated Lindsay Hishelwood, a member of CAW Local 707. “Over in Europe, when there’s a problem, they shut it down,” added Armenio Correia, member of CAW Local 1285.
Photos: XPDNC Labour Directory

Nevertheless, the UAW last week reached a tentative agreement on new wage and benefit concessions. If news reports are correct, workers will be asked to give up cost-of-living-allowance raises and annual bonuses, work more than eight hours a day for straight time, and lose all income security after two years of layoff. This is a precedent-setting rollback of 70 years’ worth of hard-fought gains.

The fact is that concessions have never saved jobs. As early as 1954, workers at Studebaker were pressured by the company and the UAW leadership to take a pay cut so their company could compete with the Big Three. On the first vote they rejected the cut, but it was narrowly approved in a second vote. What happened? Studebaker merged with Packard in 1954 and ceased producing vehicles altogether in 1966.

Now GM’s “viability” plan includes cutting 47,000 jobs worldwide and closing 14 plants. Chrysler called attention to its having eliminated 32,000 positions since 2007, with 3,000 more hourly and 10,000 more salaried jobs on the chopping block. This may or may not satisfy the government’s Auto Task Force, led by Treasury secretary Timothy Geithner and National Economic Council chair Lawrence Summers, whose goal is fundamental restructuring.

Meanwhile, union retirees are worried about losing their health care coverage if there are changes in the way the Voluntary Employee Beneficiary Association is funded. Under the 2007 contract the three automakers were to make a one-time lump sum payment, after which they would be relieved of future obligations for retiree health benefits. The terms of the government loan, through the Troubled Assets Recovery Program, call for half of the payment to be made in company stock. An agreement along those lines was reached Feb. 23 between Ford and the UAW, with the expectation that Chrysler and GM will follow that pattern.

David Tyler, a Ford retiree in Ypsilanti, Mich., told the Detroit Free Press, “It’s not good to tie the stock market in the VEBA plan. The volatility of the stock market is not in anybody’s control.”

Right now the Treasury’s guidelines are mathematically impossible. Initially, GM was to pay $24.1 billion into the plan, Ford $13.2 billion and Chrysler $8.8 billion. Half of GM’s obligations would be $12.05 billion. Yet the company is not even worth one-tenth of that, based on current stock prices which on Feb. 20 hit a 74-year low of $1.55 a share. How would the stock value of Chrysler, owned by a private equity firm, even be determined?

GM wanted the union to go along with a deal even worse than what the loan terms called for, by not only reducing the VEBA contributions further but also spreading them out over 20 years. No wonder the UAW walked out on negotiations on Feb. 13.

This should dispel all illusions that there can be a united front of the UAW and the automakers to “save the industry.”

UAW bargainers charged Chrysler and GM with trying to shortchange workers while favoring bondholders, with whom the companies are supposed to negotiate debt for equity. The bondholders were refusing to work out an agreement with the automakers until concessions from the UAW are finalized.

These moneylenders remain nameless and faceless, represented only by “a person familiar with the committee representing the bondholders” that is “questioning whether the company’s viability plan goes far enough.” (Detroit Free Press, Feb. 19) Any number of high-stakes financial players could be part of this amalgam. Among them might be JPMorgan Chase, Citibank, Goldman Sachs or some other big bank—or perhaps private equity firms such as Cerberus. Jobs, pensions and health benefits are being held hostage by an anonymous “committee.”

Union-haters clamor for bankruptcy

While the terms of the bailout represent a major attack on organized labor, many in the ruling class want to dispense with such democratic niceties as letting workers vote on taking concessions. Their preference is for the automakers to declare Chapter 11 bankruptcy, where a bankruptcy court judge would have the power to scrap union contracts and set terms favorable to the companies. Some even call for a consolidation or liquidation that would reduce the number of Detroit automakers to two.

Those pushing bankruptcy and/or mergers have included Sens. Mitch McConnell of Kentucky, Richard Shelby of Alabama and Bob Corker of Tennessee, as well as Thomas Donahue, president and CEO of the U.S. Chamber of Commerce. These sworn enemies of labor have had no trouble getting air time.

The Democratic “friends of labor,” however, aren’t rushing to denounce the union-busting-by-bankruptcy scheme. Sen. Christopher Dodd and Congressman Barney Frank, on the Senate and House Banking Committees respectively, have both been friendly to the idea of a GM or Chrysler bankruptcy. The Feb. 23 Wall St. Journal reports that “people involved in talks with senior Obama administration officials said that the administration believes that the option of Chapter 11 filings by the two automakers needs to be seriously considered.” Treasury officials are reportedly seeking out private lenders should debtor in possession financing be needed.

Can workers tip the scales in their favor?

To autoworkers on the shop floor the situation has reached a most critical point. Everything and everybody—the company, the government, the media, union leaders, even public opinion—seem poised against them. If they reject concessions the government will not loan out any more money and could call up the loans. The company will declare bankruptcy and possibly go out of business. Then again, bankruptcy could be imminent regardless.

Nothing is certain—except that GM, Ford, Chrysler and the elusive bondholders care only for profit. Out of fear, many autoworkers will go along with more givebacks while others reject them as a form of protest.

This was the case at New Process Gear in Syracuse, N.Y. Although workers had taken pay cuts averaging nine dollars an hour, they were told more reductions were necessary to keep the plant open. But with no guarantee that the plant would not close, UAW members voted the concessions down three to one.

UAW rank-and-filers picketed the Detroit Auto Show in January to oppose more concessions. On Feb. 16 Canadian Auto Workers members did likewise at the Toronto Auto Show.

The primary issue for workers is this: can they stop the restructuring in its tracks? Can they keep their plants open and halt the mass layoffs? How can the militants move their unions from protest to resistance? What can shift the balance of power? A strike now could actually help automakers reduce inventory. Yet not fighting back will only allow business as usual to continue.

There are examples for workers in fighting back, not only from the UAW’s proud past, but also the recent occupations of Republic Windows and Doors in Chicago, Waterford Crystal in Ireland and in 2007 the auto supplier Collins and Aikman in Ontario, Canada. Actually seizing company property can, even with a sluggish economy, give the workers leverage against the bosses.

As Sam Marcy wrote in “High Tech, Low Pay,” such action “can change the form of the struggle, take it out of its narrow confines and impart to it a broader perspective. In truth, it brings to the surface a new working-class perspective on the struggle between the workers and the bosses. It says in so many words that we are not tied to a one-dimensional type of struggle with the bosses at a time when they have the levers of political authority in their hands.”

Martha Grevatt is a 21-year member of UAW Local 122 in Twinsburg, Ohio. E-mail: [email protected]