The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Auto Annex:
Spinning off the Parts Plants Led to Two-Tier in Assembly

Nov 1, 2008

The following article is based on large excerpts from “A Bitter Example of the Bosses’ War on the Working Class”, CS # 60, Nov—Dec 2008


Ever since the Chrysler concessions of 1979, the UAW leadership has been peddling the lie that the only way for workers to save their jobs is to sacrifice to keep the company alive. The workers have sacrificed, then sacrificed again. And again. But Ford, GM and Chrysler—which were once called the Big 3—continued to hemorrhage jobs.

In 1978, there were about 760,000 hourly workers at GM, Ford and Chrysler. In 2007, there were only 180,000. The shift to imports and to the transplants played a role in this drastic reduction in jobs. And speed-up played an even bigger role. But the biggest change has come from moving production out of plants owned by the big companies into those run by contractors, sub-contractors or “independent parts suppliers” inside the U.S. And with this shift has come a huge decrease in wages.

Chopping Up the Companies

The independents existed long before 1979. In fact, in a much earlier period, many of them had simply been gobbled up by the Big 3, and turned into “in-house” producers in the GM, Ford and Chrysler empires. Fisher Body was only the most well-known example. Most of the companies that remained independent paid lower wages, but the gap in the 1970s was not nearly so big as today. And the independent parts suppliers put out a much smaller share of parts production than they do today, only about 25%.

Starting in the late 1970s, the Big 3 began seriously to shift production out of their own parts-making operations into the so-called “independent” parts-makers. Chrysler started it, shifting some of its stamping operations to existing companies or even helping to set them up, providing them with its own presses. Over a number of years, Chrysler gradually farmed out its glass-making operations to low-wage companies, many of which were anti-union companies like Guardian Glass. UAW officials didn’t oppose the shift, argued that it was necessary to “save” Chrysler. The new stamping and glass plants paid wages about half those earned at a Chrysler plant which did essentially, or even exactly, the same work.

In 1982, Ford transferred its steel-making operation into a wholly-owned subsidiary, Rouge Steel, only to threaten repeatedly to get rid of it. Finally, in 1989, Ford spun it off into an independent company—in which Ford retained an equity position and Ford executives were investors. Rouge Steel declared bankruptcy in 2003, only to be bought up still again. With each and every twist, the UAW leadership used the threats and changes to help the company exact more concessions from the workers.

The big change came when Chrysler moved its parts operations into Acustar, calling it an “independent” subsidiary, which it then prepared to sell. Faced with a lot of opposition in its plants, the UAW announced in 1988 that the company would sell only four plants. But Chrysler continued quietly to sell off or close almost all the Acustar plants over the next five year period, and Acustar died a slow and unnoticed death.

GM and Ford moved to catch up with Chrysler. In 1992, GM proposed to sell 18 of its parts plants. Some were sold off, some shut down. Then in 1994, five GM plants were bought up by a group of investors, headed by a former Chrysler vice president, and renamed American Axle Manufacturing. In 1994, GM formed its own parts subsidiary, Delphi, keeping Delphi as a unit of GM for five years, during which time it sold off or closed the majority of the Delphi plants, finally spinning off the remnants as an independent company in 1999, with 55,000 workers.

In the mid-1990s, Ford carried out similar operations, pushing some of its work over to Lear, which then quickly reorganized production to become a company specializing in all the parts of a vehicle interior, letting Ford effectively eliminate most of that production from its own plants. In 1997, Ford grouped most of its remaining parts plants into Visteon, an internal Ford division, spinning it off as an independent company in 2000, with 24,000 workers. “Independent” they may have been, but Visteon and Lear both built new headquarters buildings right in Ford’s own corner of Dearborn, Michigan, adjacent to all the Ford headquarters buildings.

As soon as Delphi and Visteon were spun off and Lear got all that vehicle interior work, all three acted to get rid of plants and workers. They were to become conduits for moving work out of the Big 3 plants.

The union leaders, feebly protesting these moves, got promises from the companies to restrict “outsourcing,” as well as promises to use suppliers which were “good corporate citizens,” that is, had a “positive relationship with the UAW.” None of this stopped the draining of jobs from GM, Ford and Chrysler, nor the rapid decrease in union membership. To give just a rough idea of that decline: the UAW lost over 2/3 of its members between 1979 and 2007, going from 1,528,000 down to 465,000.

A Manic Merry-Go-Round Spinning off Plants and Workers


To see what the tidal wave gushing through the parts industry was like, look at the Machining and Forge plant in New Castle, Indiana. For 62 years, from 1925 to 1987, it belonged to Chrysler. In 1987, it became an Acustar plant; went back to Chrysler in 1989, and then became part of a joint venture with Metaldyne in 2002, which itself had been formed out of a joint venture between Masco Tech, Simpson Industries and Global Metal Technologies—which itself had been separated from Dana Corporation when Dana went bankrupt. With every change in ownership, the workers faced new wage and/or benefit cuts.

There has been an enormous transfer of work and employment from higher-wage Big 3 plants to much-lower-wage suppliers. In the early 1970s, only about 25% of parts employment was in plants run by the independent parts suppliers. By the early 1980s, about 40% of U.S. parts production had gone to the independent suppliers, increasing to 50% in the early 1990s and to 60% in 2000, not counting Delphi and Visteon. (These figures come from the UAW’s own research department.) The gap after Delphi and Visteon were spun off has grown larger still, with some estimates putting 70% or more of U.S. parts production now done by lower wage suppliers....

Not only has this manic merry-go-round severely reduced the number of better-paying “Big 3” jobs from year to year; it also put pressure to bear on the speed of work in the parts plants themselves, cutting jobs there. In the Midwest parts plants, 128,000 jobs were lost from 2000 to 2006 alone, 26% of the total workforce. Most of those plants produce for Ford, GM and Chrysler. But even in the South, where much of the production is aimed at the “transplants,” whose production had been growing, 53,000 jobs were lost, 15% of the total.

Using the Threat of Job Loss to Cut Wages

Cutting labor costs by shipping much of their own production out, Delphi, Visteon and Lear then moved to reduce wages in their own plants, often by establishing two-tier wage scales for workers newly hired into the plants. In 2000, American Axle cut new hire wages nearly in half at two of its plants. In 2004, it extended the cuts to its other plants, while Delphi and Visteon imposed two-tier wages for new hires in all of their plants. Union leaders sold these deals as a way that current workers could protect their own wages and jobs—a pretense which soon proved to be a hollow lie. In 2007, Delphi moved to cut the wages of the older workers roughly down to the new hire rate. In 2008, American Axle did the same thing.

Delphi, Visteon and American Axle had barely wedged open the door to lower wage rates before GM, Ford and Chrysler stepped through. In 2007, the UAW leadership helped those three companies impose a contract containing two-tier wages for new hires in all these plants.

There already had been two or even three tiers in some plants, as the union increasingly accepted the “outsourcing” of jobs to low-wage suppliers who carried out the work inside the same plants. For example, Chrysler’s Jeep complex in Toledo was set up with three different suppliers running different sections of the main assembly plant, paying much lower wages. Inside Ford’s Dearborn Truck Plant, there were lower paid “temporary workers” and lower-paid workers hired by a sub-contractor working alongside the regular Ford workers. At Chrysler’s Belvidere Assembly plant, a whole shift was hired, doing exactly the same work as the other two shifts, but at a lower wage rate. And the GEMA plant set up by Chrysler, Mitsubishi and Hyundai in 2004 in Dundee, Michigan, collapsed all classifications into one catch-all classification, paying low wages. The one skilled trade classification paid lower than production rates in the regular plants.

But the 2007 contract made it official: wages and benefits for new hires throughout Ford, GM and Chrysler would be at a much lower rate, reducing the companies’ labor costs for new hires to less than one third the existing cost. A GM spokesperson bragged about this in a phone call to Wall Street right after the contract was signed.

It was obvious that with such an “incentive,” the three companies would try to hire the new lower paid workers—even in the midst of a recession like the one in 2008. And GM did it, putting on a whole third shift, at the lower wages, at Lordstown, Ohio, even while cutting jobs at other Ohio plants....

At the beginning of 2008, all three made a special effort to get workers in their plants to take buyouts or early retirements. GM offered the “deal” to all of its 74,000 UAW-represented workers; Ford offered it to all 54,000; and Chrysler offered it to 21,000 out of its total 45,000 work force. Unable to get a big enough response, they offered the deals again or extended them.... The 2007 contract gave all three companies the means to cut off unemployment coverage to laid-off workers if they refused to move to other plants, no matter how far away—a vicious way to make many of them take a buy-out or quit.

In other words, the decades-long push of jobs out of the Big 3 into the lower-wage “independent” parts plants finally circled back upon the workers at GM, Ford and Chrysler—working to push them out into the street so that the new lower wages could be imposed across the board as quickly as possible. And it didn’t take that long....

The Workers’ Own Survival Is at Stake

The workers have never had a real way to defend their future unless they engage themselves in struggle, a struggle which encompasses broad parts of the working class and which is not afraid to shake capitalist society. Of course, workers in all these little parts plants are at a disadvantage going up against their employer, which is backed by Delphi, for example, which is backed by GM, which is backed by its banks. And it’s also clear that the existence of these little companies can weigh on the possibilities of workers at the big ones. It’s exactly why workers cannot be content to make their fight alone.

In the situation as it is unfolding today, from one crisis to the next, with the real possibility of a collapse that could make the Great Depression seem puny, the workers’ only hope will come through struggles whose aim is to defend their own needs and wants, and let the companies be damned.

In a period equally as dismal as this one is, workers throughout Michigan, Ohio and Indiana found the way when they massed in Flint in 1936—1937 to back off not only GM, not only the city government and police of Flint, but the governor of the state of Michigan and the president of the United States. They didn’t concern themselves with the legality of GM’s property when they sat down and occupied it for 44 days. They didn’t concern themselves with GM’s survival, but with their own.

Workers today can do no less.