Auto bosses rebound on backs of workers

For over a year now, the ruling-class press has been rejoicing over the return to profitability of Ford and General Motors. Record profits are being made even as vehicle sales still hover at well below pre-recession levels. GM and Ford netted $4.7 billion and $6.6 billion respectively after taxes and interest in 2010.

The spotlight recently shifted to Chrysler and the payback — six years ahead of schedule — of the 2009 U.S. Treasury loans that financed the “leaner and meaner” reinvention of the 86-year-old corporation. Led by Goldman Sachs, lenders and bondholders refinanced most of Chrysler’s $7.4 billion debt to the U.S. and Canadian national governments and the Ontario provincial governments at a substantially lower interest rate. A sum of $1.27 billion was paid by Fiat, whose CEO, Sergio Marchionne, is also CEO of Chrysler. Fiat acquired an additional 16 percent stake in Chrysler, giving the Italian company 46 percent ownership.

Why are the executives of Goldman Sachs and their cohorts optimistic about Chrysler’s rebound? In the first quarter of this year Chrysler actually posted a net profit of more than $100 million. Chrysler posted an “operating profit” — profit before taxes and interest — in all four quarters of 2010. In other words, after labor and other costs were covered, there was enough left over for the financiers — in this case the U.S. Treasury — to get their cut. The Treasury, which charged Chrysler 20 percent interest, is beholden to Wall Street and world banks.

While often referred to, “the taxpayers” won’t see one penny of the early loan repayment.

The lenders’ confidence in a company whose future was in doubt two years ago means that they anticipate a rise in profits. And why not? Chrysler has the same “success formula” as Ford and GM — take it from workers.

The White House Auto Task Force, drawn from Wall Street and capitalist think tanks, demanded huge concessions from the United Auto Workers in 2009 — cuts in pay and paid time off worth $10,000 or more per worker. These givebacks were on top of sacrifices made in the 2007 contracts. If the workers said no, the company would be liquidated, and they would all be out of a job. These scare tactics by the capitalist state were in open violation of the workers’ right to “free collective bargaining” under the 1935 Wagner Act.

Two-tier wages create ‘culture of poverty’

One of the worst concessions was the expansion of the two-tier wage structure. Chrysler now has thousands of recently hired workers being paid half the “traditional” wage of around $28 per hour. Many are temporary employees who receive no benefits and can be fired for any excuse if they complain. For workers to be doing similar work and be paid at different rates erodes union solidarity. The drastic cut in wages, along with reduced or nonexistent benefits, represents a huge transfer of wealth from the workers to the company — and to whoever owns its debt.

Chrysler closed six plants — including this writer’s former plant — in Ohio, Wisconsin, Delaware, Missouri and Michigan. Thousands of workers, unable to relocate to a plant out of state or worried about the company’s future, took buyouts. This process created the vacancies that are being filled by low-wage autoworkers.

CEO Marchionne is portrayed favorably in the media — apparently the bankers like his attitude. Former government “car czar,” Stephen Rattner, once quoted him as saying that the United Auto Workers union “had to get used to a culture of poverty.” The second tier wage of $14 an hour is close to the federal poverty rate for a family of four.

For all their sacrifices, which got Chrysler on sound financial footing, workers were given buttons celebrating the loan payback.

In September, the contracts between the UAW and Chrysler, Ford and GM will expire. Now is the time to mobilize the rank and file to demand, at a minimum, equal pay for equal work. Instead, the UAW leadership insists that the companies need the second tier to be “competitive.” “It is no good making $28, $38 or $48 an hour if you don’t have a job,” argued UAW Vice President Joe Ashton. (Detroit News, May 26)

What Ashton could have said is that low wages do not create jobs and that the workers who really run these highly productive plants should all be paid union wages. The UAW should reject the culture of poverty!

Martha Grevatt has been a UAW Chrysler worker for 23 years. Email: [email protected]