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Jobs and Health Care Benefits to Be Slashed in the Auto
Industry
by Andrew
Pollack / July 2005 issue of Socialist Action newspaper
General Motors bosses hit the United Auto Workers with a
double-whammy in early June. First they announced they were cutting 25,000
jobs, then they demanded billions in health-care cost savings from both
active and retired workers by the end of June—savings which they threatened
to implement unilaterally if an agreement wasn’t reached.
They claim they could slash retirees’ benefits without reopening the
contract, which the UAW denies. But UAW leaders are promising to give
concessions on health care that they believe are permitted by the contract.
In an industry where plant closings, layoffs, outsourcing, and job combinations
have flourished for decades, the companies have been saving billions on
health care all along by relying on overtime rather than hiring new
employees for whom they would have to provide benefits. But now that
corporate America has latched on to health-care costs as its new
all-purpose excuse for squeezing more out of workers to rescue its failing
profits, even that isn’t enough for the Big Three (GM, Ford, and
Daimler-Chrysler).
Early indications are that UAW President Ron Gettelfinger is ready to
throw in the towel on health care. But he’s no dummy: he—and the local
officials
he’s primed for this maneuver—are combining “reasonable” rhetoric about
understanding the need to help GM, with “tough talk” warning GM against
unilateral moves, including implied threats to strike. All of this is designed to come up at
the last minute with health-care concessions that will be just enough to
stop GM from demanding that the contract be reopened before 2007.
The UAW VP in charge of GM, Richard Shoemaker, is also talking out
of both sides of his mouth. He has already come forward with his own
helpful suggestions for retiree health-care cuts totaling about $12.7
billion. Yet he told local officers
at a June 9 meeting laying out the line to take back to members: “If GM
does anything unilaterally, they’ll have a very hard time
making automobiles in this country. You can go back and tell your
membership that.”
Autoworkers are resentful at being asked to give back benefits that
they rightly feel they’ve earned by decades of foregoing wage increases in
return,
supposedly, for more secure retirement and better health-care benefits.
Even the much-bandied-about claim that it costs GM $1500 per car to provide
health care is based on questionable calculations. UAW dissident Greg
Shotwell points out that the supposed health care cost of $1500, based on
dividing the number people covered into the value of vehicles sold, does
not take into account the fact that “retirement benefits are covered by a
trust fund, not vehicle sales. What’s more, the size of that trust fund decreased
dramatically not because of increased health care cost, but because it was
used [by GM, unilaterally] for capital investments.”
GM is not just stealing already-earned money; it’s playing with
people’s lives. One retiree told the media that if benefits are cut, he and
his wife might have to skip medications for high-blood pressure, arthritis,
and allergies.
But instead of mobilizing the members’ anger, UAW leaders are
calling for management and investors to “share the pain” by taking reduced
salaries and dividends. Plus they’re questioning whether GM needs as many givebacks
as it’s demanding.
Gettelfinger said GM had not presented him with enough information
to convince him of the severity of the financial situation. While its debt
is in the hundreds of billions, and is rated at junk levels, that debt comes
due over several decades.
Gettelfinger and others also point to management’s responsibility
for poor product choice and design and costs from recalls. “To us, product
is No. 1, first and foremost,” he said.
What’s more, he said of GM, “they are paying out dividends; their
equity in their stock is up a lot; they have a lot of cash on hand; they’ve
stated that
they have no intentions of going into bankruptcy … that means they
will expose us to a lot of internal information that we normally would not
have access to. … If somebody makes a claim about how bad things are, then
I’m assuming they want to support that and back it up, and we’ve got experts
in place that are taking a look at those kinds of issues.”
Open the books!
Of course what’s really needed is the ranks’ expertise; the bureaucracy’s
“experts” are used to coming up with the numbers Gettelfinger wants to
justify concessions. The union should be demanding that all company
ledgers be opened—and that the members have a chance to do their own
analysis of
where GM’s hiding the money.
But despite their discounting GM’s claims of need, Gettelfinger and
Shoemaker still said they were prepared to work with the company to find
“mutually agreeable ways to reduce costs in health care and other areas.”
In fact, talks on health-care cuts began weeks before the company board
meeting at which the media claims that GM’s top manager, Wagoner, was told to
attack the union.
Another plea of the bureaucracy is for more time to put the
concessions over on the members. Oscar Bunch, president of a Toledo local,
told the press that “the [GM] board was mandating things that he couldn’t
do” within the time frame specified by the company. Eldon J. Renaud, the
president of a union local in Kentucky said, “It’s hard enough for us to
agree to concessions without forcing something down our throat. It takes time
to do this.” Time to force it down the members’ throats, that is.
And finally, union officials are pleading with management to be reasonable,
saying a strike would only hurt both the union and the company.
GM’s claimed weakness in the face of competition could be turned
into a leverage point for the union. Wall Street analysts say unilateral cuts
by GM are unlikely since it could result in a strike at a time when GM is preparing
to launch important new additions to its vehicle lineup. This may or may
not be an accurate prediction of GM’s willingness to attack; but certainly
the possibility of losing billions won’t help their “competitive” standing
much.
(Of course, the talk about the Big Three’s “competitive” woes in the
U.S. ignores their global reach. GM, for instance, has 388,000 employees in
50
countries, and its parts spin-off Delphi has 211,000 employees in 42
countries. In 2003, GM reported profits of $437 million from China, the
world’s fastest-growing market.)
The official UAW goal is to help “our” companies, proven most
recently in the health-care sphere with concessions in March to Chrysler,
which won tens of
millions in savings when the union allowed it to exercise a little-known
and never-used contract provision negotiated in 1982 that lets the company raise
deductibles and co-payments if it can prove health-care costs have risen
substantially. When this happened it was predicted that GM and Ford would
make similar demands, but after the union officials had rolled over at Chrysler,
it was never in the cards that they would prepare union members at GM and
Ford to defend their health-care rights.
One Wall Street analyst says investors are wondering how to profit
from GM’s troubles. Possible scenarios include someone like super-rich
investor Kirk
Kerkorian buying GM, terminating UAW retiree benefits—and selling
GMAC Mortgage, or even all of GMAC, and thus acquiring GM and the core of GMAC
for a bargain-basement price of a few hundred million. In this scenario the
stockholders would get huge dividends from the cash garnered in the
sale—and a stripped-down GM could demand more concessions because
its most profitable arm was gone.
But this corporate swashbuckling is countered by union pleas for
reason and understanding. “Right now, we’re doing everything possible to
help GM, because it helps us too. We don’t want GM to go under,” said Don Swegman,
president of an Indiana local. “As long as what they want to do is laid out
within our agreement, it’s quite all right to do.”
Troubles at Delphi, Visteon
After GM made its demands, GM spin-off Delphi demanded its own
concessions. In late June UAW leaders from 22 plants met with top Delphi
officials to discuss measures such as closing or selling plants, offering
buyout packages, and shifting more health costs. Cited as proof of need were not only
GM’s demands but the recent acceptance by the UAW of the Ford-Visteon restructuring.
A local union president said, “I’m sure whatever they do for General
Motors, they’ll turn around and do for Delphi.”
In fact, union officials at Delphi plants had been invited to the
earlier meeting of UAW GM reps precisely because Gettelfinger knew similar
demands
would be made. But rather than use that meeting to plan company-wide
(much less industry-wide) resistance, it was designed to strategize about
how to prepare members for givebacks.
Shoemaker said: “Delphi’s problems were just as significant (as
GM’s) and at some point would have to be addressed as well.” Delphi has
already said it plans to cut 8500 jobs this year and idle some U.S. plants.
In May the UAW agreed to let Visteon, a Ford parts spin-off,
restructure by sending workers and plants back to Ford. Most of those
plants will then be closed and buyouts offered to 5000 autoworkers, with
the result that Visteon’s North American manufacturing operations will be
even more concentrated abroad. As
at GM, union officials accept it stoically:
“Obviously, we’re all very apprehensive about what’s going to take
place,” said Eugene Morey, the president of an Ypsilanti local. “I think we
did pretty well when you consider that Visteon was on the brink of going
bankrupt.”
But workers transferring back to Ford are going to a company that an
industry analyst says “is in no position to absorb additional labor costs.
There’s no real place for them to transfer in Ford.” Ford will sell most of
the repossessed plants—which surely means that most of those workers will
either be laid off or have their wages and benefits slashed drastically.
And the entire remaining workforce at Visteon will be in the lower tier
negotiated in 2003.
When Delphi and Visteon were spun off (in 1999 and 2000
respectively), the union maintained the wage parity that had existed among
all Big Three plants, whether assembly, components, or parts. The auto industry
has always had a multi-tier structure, with non-Big Three supplier
companies at lower wage rates. But
in the 1980s and 1990s the Big Three closed some
of their own parts plants and increased outsourcing from nonunion
suppliers here and abroad, and the union did virtually nothing to organize
those nonunion plants. Instead they gave back more of their own members’
money in the hope that this would protect existing members’ jobs and wages.
Meanwhile, the union was allowing management to play off assembly
plants against each other in a “whipsawing” process whereby locals fought
each other over who would get to produce a given line by proving they could
give more concessions to the company. The net result of this failed
strategy was to let Delphi and Visteon management claim that their wage
rates were “uncompetitive” with other suppliers.
Finally, in the 2003
contract UAW officials obliged them with a drastically lower wage tier for
new hires of $14 to $16 an hour—compared to the $24 to $26 range for
current workers (and new hires will never reach the top tier). Although
assembly and parts workers voted on the same contract, lower-tier wage
rates weren’t agreed on till after ratification and those affected had no
vote on them.
Ironically the shuttling of workers from Ford to Visteon and back is
actually proof that the bosses’ claims about individual corporations’ needs
are never
as set in stone as they claim. In some industries spin-offs mean
total separation between the parent and offspring. In others—such as the
“double-breasted,” nonunion subsidiaries in trucking—ownership remains the
same even if corporate boundaries are erected.
At Ford/Visteon, the ties remained even closer: the UAW insisted
that workers have the right to go back to Ford if necessary (and Ford all
along subsidized Visteon financially). So there’s nothing inherent in auto
industry structure preventing the union from making even broader,
cross-company demands for job protection, portability of benefits, etc.
Also included in the 2003 pact were givebacks from members in core
assembly plants, such as more “team concept,” more combined job
classifications, “flexible work schedules,” etc. Most of these givebacks
were
left out of the scanty contract summaries provided to members. The
contract also furthered the whipsawing trend by encouraging locals to make
work-rule changes if new production is moved into the plant.
This defeat at Delphi and Visteon was prepared by decades of failure
to organize nonunion parts plants. Instead
of aggressive organizing, the union has sought management “neutrality,” and
has done so by proving it willingness to be a “reasonable” partner.
UAW Organizing Director Bob King said that when Gettelfinger gave him
the post he was instructed to make sure suppliers “were a value-add”—that
is, that unionization would make the plants more profitable.
“If we want to keep manufacturing jobs in the United States, which
is a major objective of the UAW, then we can’t be fighting management. If
we have an
adversarial relationship, then we’ll see more work go overseas.”
Needless to say, this logic lets management play the union for a sap
and provides potential members with little incentive to sign up: why join a
union that wants to give away wages, benefits, and jobs? And in the end
jobs go overseas anyway.
The union’s dismal organizing record was combined with betrayal of
struggles at existing plants. At Accuride the union abandoned workers after
a four-year lockout, voluntarily giving up its right to represent members after
earlier trying (and failing) to force them to return to work. Throughout,
scab parts made at Accuride fed union-organized assembly plants.
And at American Axle and Manufacturing, another company spun off from
GM, the UAW “International” leadership helped management impose a
three-tier system (using one of their favorite tactics: “vote till you get
it right”). Nor, despite the growing internationalization of production and
sales, did the
bureaucracy establish effective ties with autoworkers in other countries.
So UAW members at GM face this June’s job and health-care cutbacks
with a divided workforce and a union bureaucracy that has fostered that
division by its collaborate-with-management strategy. A worker in one UAW
parts plant in Alabama summed it up best, telling reporters that he has
“had enough of the union agreeing to cuts under the banner of protecting
jobs.
‘The only thing (the UAW has) done for us members is give
concessions to the automakers under the auspices that it’s going to make
them competitive. And it hasn’t worked.’”
Fightback at Visteon, Flint
In the last few years members have several times shown their
willingness to fight—and have taken advantage of the new “just-in-time”
production process to launch crippling strikes where one plant shuts down
most or all of an entire company. At one Visteon plant (Bedford) just last year
there were pitched battles with local and state cops and private security
guards, cars overturned and set on fire, and blocking of scab buses.
The strikers were members of International Union of Electronic Workers
(IUE-CWA) Local 907. But UAW members in the region, including GM workers,
came to the picket lines to show their support. UAW officials, however,
refused to organize solidarity. This was due in no small part to the fact
that Bedford jobs were slated to be moved to a UAW-organized plant in Michigan
(in fact removal of equipment from Bedford was the spark that touched off
the strike).
Workers, having seen GE, RCA, and other companies shut down plants
even after wage cuts were granted, decided to resist. (In the end the IUE
“International” officialdom stepped in and imposed a settlement.) At GM itself workers vividly remember
the eight-week long strike at Flint in 1998.
Launched over subcontracting and other issues affecting job levels, it
idled as many as 193,000 GM workers, shut down 25 of 29 North American
assembly plants, and cost the company an estimated $2 billion.
The members stood up to GM efforts to get the strike declared
illegal, and attempts to block unemployment benefits and to force the union
into arbitration.
Workers today say “Remember Flint,” by which they mean remember the
union’s ability to inflict pain on the company. But the lesson of Flint for
the bureaucracy was the exact opposite: the need for more communication and
collaboration with the bosses. Shoemaker
believed that the strike created a “new process, with more frequent
discussions with people at the highest level … to be sure we can resolve
things before we reach a crisis.”
This refrain was repeated in June by Gettelfinger and Shoemaker: “It
is in the best interests of all GM stakeholders for the UAW and GM to work
together, to maintain the solid working relationship that we have worked so
hard to build since 1998.”
Wider fightback potential
Since GM has chosen health care as a key battleground, the ranks
have another potential ally on their side: the entire working class.
Virtually all organized workers have seen cutbacks in their own health
care, with higher premiums, deductibles and co-pays, and this has been the
central issue in almost every strike of the last decade. The unorganized
sector of the
working class has keenly felt the cutbacks in Medicaid and
Medicare—or the lack of any health insurance at all (for over 45 million
people).
What’s more, since GM is particularly targeting retirees’
health-care benefits, the union could appeal to millions of retirees
already enraged by, and many
of them mobilized against, recent attacks on Social Security and Medicaid.
The recent termination of pensions in the airlines makes clear the need for
a
class-wide defense of retirees’ rights.
When talking out of the noncollaborative side of his mouth,
Gettelfinger says GM’s health-care cuts won’t solve the broader problem and
that a society-wide health-care fix is needed. But of course, neither he nor
any past UAW president has ever mobilized the membership behind a demand
for a single-payer, universal health-care system (such as the Labor Party’s
“Just Health Care” campaign).
It’s interesting to note that GM bosses in Canada actually support
the single-payer health care system that exists there! On the surface this
is because of
the “competitive advantage” it gives them: “The Canadian
(health-care) plan has been a significant advantage for investing in
Canada,” says GM Canada
spokesman David Patterson—and in fact production has been shifted
from Detroit to Windsor for just that reason.
But the deeper reason is that Canada’s labor movement pushed for and
fought to maintain such a system, which has yet to happen in the U.S.
In the words of Greg Shotwell, “The only legitimate solution is
universal health care. The UAW should take the lead and refuse all
concessions until all
Americans have full and equal access to health care.” Instead of using the lack of
single-payer as an excuse for concessions, as Gettelfinger does, the fight
for it must begin with defense of existing, contractual benefits.
Such a fight could put wind in the sails of the reorganizing UAW dissident
movement. Shotwell says union reformers will soon “introduce a plan calling
for a national pattern contract [at parts companies], portability of
pensions, a national benefits pool and preferential hiring and transfer
rights for UAW
members.”
There’s still time to prepare for a fight, even if GM were to take
unilateral action on June 30, the scheduled date for the two-week summer
shutdown, which normally would mean that plants reopen July 19. Late June
announcements by Ford of possible job cuts make even clearer the need for
industry-wide solidarity and mobilizations.
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