NEWS & LETTERS, June - July 2009
Capitalism restructures GM at workers' expense
Detroit--The most massive attack against the working class in the U.S. moved full speed ahead with the bankruptcy filings by General Motors and Chrysler. Under the threat of bankruptcy, the United Auto Workers, under President Ron Gettelfinger, made many concessions including reductions in pension and healthcare benefits, cutting payments to the Voluntary Employee Beneficiary Association (VEBA) that pays healthcare benefits, and a variety of workplace changes that will increase speedup and reduce relief time and days off.
This was in addition to previous concessions that included a two-tier wage scale that slashed the pay for new employees from $27 to $14 an hour. The most stunning concessions were a wage freeze and a no-strike provision until 2015! Not only did the union bureaucracy betray the workers by taking away their strongest negotiating weapon, it also assured a decline in the standard of living of the remaining auto workers.
At GM, at least 17,000 more workers are to be laid off under the plan with the closing of 14 plants and while 2,100 auto dealerships. What the final decisions will be will not be known until GM emerges from bankruptcy, which is expected to be in July or August.
Whatever comes out of these hearings, the damage has been done to U.S. workers. The UAW was one of the largest and strongest unions in the country. While its history of concessions has been decades in the making, nothing has been as crushing as the raft of concessions made since the meltdown of the economy. This has totally altered the world of U.S. workers, creating ominous implications for both unemployed and employed.
For the unemployed, the crisis is total. No job now, and no job in sight, often means loss of home and can extend to the dissolution of families and physical and mental illness. Newspapers, magazines, TV and the internet are increasingly full of such reports. For the employed, there is more speedup, little prospect of future improvement and mounting despair also leading to mental and physical distress.
At the same time, there is growing resentment and revolt. This is an historic opportunity to make truly transformative changes in society. Instead of pointing to the obvious inability of this economic system to provide even the bare necessities of life and calling for a societal reorganization to meet human needs, labor leaders capitulate to maintain existing conditions that cry out for abolition.
Those who look to the Obama administration for answers are doomed to failure. Some reforms may indeed be made, along with pronouncements of "progress," but Obama has assembled an administration to save this failed capitalist system.
Their way of thinking is totally conditioned by capitalist principles guided by the bottom line—profitability. That is the objective of the trillions of dollars being devoted to try to rescue the failed banks, financial institutions, industries and crumbling societal infrastructure. This is the kind of thinking these experts must practice because it is all they know, and is why they cannot solve the problems of simple human needs. That requires a totally different way of both thinking and doing.
--Andy Phillips
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Roots of GM decline
Flint, Mich.--General Motors officially sought bankruptcy protection on June 1 by filing what is known as a "Chapter 11" bankruptcy petition. That means that it will emerge from bankruptcy by selling its "viable" assets to a new corporation. GM has declared that it had $82.3 billion in assets and $172.8 billion in liabilities. The bankruptcy court schedule requires the sale of the viable assets to the new corporation by July 10.
The new corporation will be owned 60.8% by the U.S. government, 11.7% by the Canadian government, and 17.5% by the VEBA (Voluntary Employee Beneficiary Association) trust fund set up to cover healthcare expenses of GM hourly retirees (not by the UAW as is erroneously reported), with the balance of the common stock going mostly to existing bondholders.
A VEBA establishes a trust fund to provide for life, sickness, accident and other benefits. GM will have no obligation to provide healthcare benefits for retirees beginning Jan. 1, 2010.
The VEBA trust fund is also getting $6.5 billion in preferred stock and an IOU for $2.5 billion. The VEBA trust fund has the right to designate a member of the GM board of directors with the consent of the UAW. However, the VEBA-designated member must vote as directed by the "Independent Directors" on the board.
Although the VEBA has no real control, this arrangement pits current workers against retirees because continued payments to the VEBA trust fund only come from the surplus value extracted from the current workers. Pension benefits are not in danger, but retiree healthcare benefits will, beginning next year, depend entirely on the health of the VEBA healthcare fund.
The presence of the government is far more of a burden than a benefit to GM workers. To get the first bailout money, GM signed a "Loan and Security Agreement" with the Bush administration last Dec. 31 that required "labor modifications" in the form of "compensation reductions" and "work rule modifications" by March 31, 2009. The agreement also provided that the loan would be canceled if there was a strike.
The Obama administration did not change those conditions. On March 30 it issued a report claiming that GM had not done enough to meet the terms of the loan agreement. Among other things, GM "legacy liabilities" (pension and retiree healthcare costs) would become a serious burden in 2013. It was under this pressure that GM forced the UAW to reopen the 2007 four-year collective bargaining agreement for further concessions.
As recently as June of 2008, the Auto Spectator reported that GM had improved productivity consistently over 15 years, based on "The Harbour Report North America 2008." At that time total labor hours per vehicle had been reduced to 32.29, including assembly, stamping, engine and transmission manufacturing.
The perspective governing the UAW has been that of restoring GM to viability. That may not be possible, and there is no reason to believe that the relentless attack on labor will abate when GM emerges from bankruptcy. The rate of profit for all manufacturing in the U.S. has declined for many years, despite productivity gains. More accurately, it has declined because of productivity gains, since an ever smaller work force has to produce more and more surplus value.
--Dan
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