[Marxism] UAW at the Crossroads

J Rothermel jayroth6 at cox.net
Mon Mar 2 21:51:03 MST 2009


UAW at the crossroads

By Martha Grevatt

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?

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 

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: mgrevatt at workers.org.

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*j a y r o t h e r m e l
jayroth6 at cox.net

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