UAW concessions don’t save jobs
By Martha Grevatt, Workers World, June 3, 2009
On June 1 General Motors—a hundred-year-old company that for decades was the world’s largest—filed for Chapter 11 bankruptcy. This follows months of speculation, where “possible” became “50-50,” which then became “more probable than not.” Now the world is witnessing the downfall of a giant that still employs a quarter-million workers.
Knowing that Chapter 11 was all but inevitable, members of the United Auto Workers nevertheless voted three-to-one in favor of drastic contract concessions. The fear was put in their heads that if the concessions were rejected, GM would instead file a Chapter 13 bankruptcy and liquidate the company, eliminating everybody’s jobs. The contract modifications for GM mirror those at Chrysler; workers have given up in wages and benefits what it took decades of struggle to achieve.
Workers voted knowing that GM would be closing or idling 14 plants and cutting 21,000 jobs by the end of next year. None of them knew then, however, if the 14 plants to be shut included theirs. Michigan will take a beating with seven plants going down; the other seven include two in Ohio and one each in Tennessee, Delaware, Indiana, Virginia and New York. Three parts warehouses in Massachusetts, Ohio and Florida will also close.
These 14 plants are among the “bad assets” to be left behind when a new GM emerges from bankruptcy. They are covered by the 2007 contract between the UAW and GM in which major concessions were traded for a bogus promise of job security. To close all these plants violates the current contract, even with the recent modifications.
UAW international president, Ron Gettelfinger, did not condemn the closings or even the secrecy around which ones. He only criticized GM’s plans to increase the number of vehicles imported from Mexico and Asia. GM then agreed to build a subcompact vehicle at an idled U.S. plant, but this will barely begin to offset the impact of 14 plants closing.
In Canada, members of the Canadian Auto Workers just voted on the second round of givebacks this year. After Chrysler bullied the CAW into giving up bigger concessions than GM initially demanded, GM insisted on parity. GM is still closing plants in Canada.
The Chrysler bankruptcy process—which is expected to be completed before the end of June—was for the ruling class a dress rehearsal for this brutal, state-managed restructuring of GM.
The breakup of GM, however, has worldwide ramifications. GM is shedding six brands: Hummer, Pontiac, Saturn, Opel, Saab, and Vauxhall. British Vauxhall was purchased by GM in 1925 and German-based Opel has been wholly owned by GM since 1929.
The Italian car company Fiat, which is about to take control of Chrysler, attempted to buy Opel, Saab, and Vauxhall as well as GM’s Latin American operations. The German government rejected Fiat’s bid in favor of the big Canadian auto-parts company Magna in alliance with the Russian company Sberbank. GM will retain a minority stake in Opel/Vauxhall. Whether Fiat now attempts to buy a smaller piece of GM remains to be seen.
Magna has already stated that it “needs” to cut 2,600 of Opel’s 25,000 German workers. Layoffs are hitting workers everywhere, including low-paid autoworkers in Mexico, China and India.
Who’s the boss?
While in bankruptcy GM will have access to tens of billions of dollars in debtor-in-possession financing from the federal government. In exchange, the U.S. Treasury plans to take a 60 percent share of the reorganized GM. The Canadian government will get a 12 percent share.
The bondholders holding $27 billion in unsecured debt will get a 10 percent stake with the option to acquire another 15 percent.
The fund to cover UAW retirees’ health care—the Voluntary Employee Beneficiary Association—will hold the remaining 17.5 percent of GM stock. GM stock prices fell on May 29 to a hundred-year low of 75 cents a share. For this junk stock the UAW agreed to accept only half of GM’s contractual obligations to the VEBA in cash. This further endangers retiree health benefits.
No credence should be given to the right-wing protests of disgruntled bondholders claiming the UAW got special treatment.
Who is getting special treatment? The six billion dollars in secured debt held by big banks will be repaid almost in full—after all the interest they’ve collected, Wall Street will probably come out ahead.
The disassembling of GM—once a world monopoly—is taking place with an unprecedented level of state intervention. Some say the auto industry is being nationalized—Republican lawmakers have already coined the phrase “Government Motors.” Others think, given the economic and environmental damage from private capitalist ownership, the industry should be nationalized and retooled for green jobs.
What needs to be understood is that the capitalist state is re-engineering a sector of the economy in the interest of the capitalist class as a whole. The Auto Task Force is stacked with finance capitalists. The workers who actually build the cars are worse off. What they spent seven decades fighting for has been taken away, their plants are closing, and all they got was a lousy reassurance that there won’t be a Chapter 13 liquidation—yet. When this accelerated and drastic streamlining is complete, the industry will go back to private capitalist ownership under conditions more favorable to exploitation of the workers for greater profit.
Calling for less state control or more state control is no solution when you are dealing with a capitalist state. Yet the new situation at both GM and Chrysler—falsely portrayed as “ownership” by the workers and “the taxpayers”—ought to provoke discussion among workers.
We need to ask questions, not only about who is in control but who should be. Capitalist ownership of the auto industry has destroyed our jobs, our families, our schools and our communities—taxpayers who will not profit one penny from the state’s role in the restructuring. We should demand that all of our plants be kept open and our shut plants reopened under real workers’ control. Given the sorry treatment we’ve received at the hands of capital, this would not be “special treatment,” but a simple matter of justice.
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