General Motors ‘comeback story’ leaves workers behind
Published Nov 28, 2010 10:15 PM
“Americans love a comeback story.” General Motors CEO Daniel
Akerson was referring to his company’s Nov. 18 Initial Public Offering of
preferred and common stock on the New York Stock Exchange. (Detroit News, Nov.
19) Akerson’s “Americans” — wealthy investors —
showed their love by purchasing 451 million GM shares by the end of the
The day began with Akerson ringing the bell to signal the start of trading. The
confident CEO revved the engine of a sporty new Chevrolet Camaro. The opening
price was $33 per share. The price closed at $34.19 and rose another seven
cents the next day.
At the time of the 2009 bailout, GM stock sold at a 75-year low of 75 cents a
share. What would cause a nearly fifty-fold increase in value in such a short
time? Did GM suddenly acquire new assets that would increase the worth of its
holdings? On the contrary, 11 plants and a number of warehouses, along with
some 1,500 dealerships, have been closed as part of the post-bankruptcy
Stock prices have little to do with the real value of a company’s assets.
They are a reflection of how much an investor is willing to gamble that a
company will make profits. In the first three quarters of this year GM has made
$4.2 billion in net profit. Profits are made by exploiting labor.
When the bosses are able to cut wages or to make more products with fewer
workers, what they keep for themselves in the form of profit goes up. During
the bankruptcy process the United Auto Workers union made huge concessions. Now
GM’s North American unit has made $4.9 billion in profit in the first
three quarters of this year. Per-vehicle profits are estimated to be around
$2,000. The UAW-represented workforce, who once numbered 500,000, now hovers
around 50,000. It takes about 30 hours of labor to build a vehicle. Even
if we take the grossly inflated cost of labor that GM claims — $75 per
hour — the bosses still get almost as much in profit per vehicle ($2,000)
as the workers earn in wages and other compensation ($2,250).
Gov’t colludes to shed jobs, slash wages
With 2007 and 2009 concessions, shedding tens of thousands of higher-paid
workers and hiring 7,000 new workers at half the pay of
“traditional” employees, labor costs have fallen dramatically.
Workers are seeing more of the value they produce go to profits than to their
own wages and benefits.
That high rate of exploitation was the major selling point in a two-week
“road show” in which GM Vice Chairperson Steve Girsky and North
American President Mark Reuss gave 85 presentations to potential investors. The
company’s prospectus stated, “We have substantially completed the
restructuring of our North American operations, which has reduced our cost base
and improved our capacity utilization and product line profitability”
through “salaried and hourly headcount reductions” and “labor
To “save” GM the federal government loaned the company almost $50
billion. The U.S. Department of Treasury demanded major contract changes from
UAW members. Voting “no,” workers were told, would mean no loan and
thus Chapter Seven liquidation. UAW workers voted to allow GM to close a
significant number of facilities, but weren’t told which ones would close
until after the vote.
Much of the work has shifted to low-wage countries. The prospectus even
bragged, “Approximately 43 percent of our vehicles are manufactured in
regions we believe to be low-cost locations, such as China, Mexico, Eastern
Europe, India and Russia.”
Wages of future U.S. employees are frozen at $14 per hour until 2015. Now the
UAW leadership has allowed GM to recall some laid-off workers at the lower wage
in a Michigan assembly plant. It’s reasonable to assume that the Treasury
put pressure on the union to go along with the 50 percent pay cut.
It was to effectuate a rapid and drastic streamlining of operations —
President Barack Obama used the phrase “lean and mean” — that
the capitalist state temporarily took control of GM. Now that the task is
“substantially completed,” the government is in the process of
returning the company to private hands. In two days the federal
government’s share of GM was reduced from 61 percent to 33 percent.
Through the stock sale and payments on the loan GM has repaid $23 billion to
The state orchestrated a “comeback” on the backs of the workers,
and this is the reason for the bosses’ bravado. In the days leading up to
the IPO, Akerson boasted that in an improved economy, increased sales volume
would allow GM’s net profits to rise to $13 billion a year. By the second
day of trading that estimate had jumped to $19 billion. (Detroit News, Nov.
Union must break with capitalists
Akerson is assuming that, despite negotiating vague language on “equity
of sacrifice,” the UAW will not get back what it gave up. When the CEO
rang the bell, UAW International President Bob King was standing right behind
him. “We’ve made a lot of sacrifices,” King told the Detroit
News. “This IPO shows that was the right decision.”
In fact what the IPO shows is that GM has increased the rate of exploitation,
and done so with UAW leadership’s cooperation. On the shop floor, the
expansion of the two-tier wage scale has led to the erosion of worker
solidarity. Until King breaks up the decades-old partnership with the bosses,
the prevalent mood among the rank-and-file will be one of frustration and
demoralization. To make that break, however, what is needed is rejection of
increased wage exploitation and profits. The entire capitalist system must be
Despite the orientation of the union leadership, some autoworkers are trying to
figure out how to reverse the givebacks that GM — and Ford and Chrysler
— have taken from them. At a Nov. 14 meeting in Toledo, Ohio, a group of
anti-concession activists began planning a demonstration outside the North
American International Auto Show in Detroit next year. There, and at the
national Bargaining Convention in the spring, they will focus on the fight to
overturn the two-tier wage scale and bring back equal pay for equal work.
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