Jul 21, 2001
Starting last November, many of the biggest companies in the U.S. stepped up to the plate one after the other to make dramatic announcements of massive job cuts. Beginning with such formerly celebrated high tech companies like Cisco Systems, Lucent Technologies, Xerox, Motorola, Gateway and Intel, these announcements spread to heavy industry, led by GM, Ford, Daimler-Chrysler, GE and Whirlpool. Finally many retail giants, including Sears, JC Penneys, Home Depot and Montgomery Ward joined the crowd.
The announcements began to hit around the time of the holidays, when ordinarily corporations refrain from talking about cutting the workforce, lending a sense of impending crisis. In January, the pace was stepped up. According to Challenger and Gray, the private consulting firm which tracks such things, companies announced job cuts totaling 200,000 during the month of January, a peak. Companies continued to announce 100,000 or more job cuts every month since then.
The sense of crisis grew with the announcements which came from DaimlerChrysler and GE headquarters. At the very end of January, Chrysler said it would eliminate 26,000 jobs that is, one-third of its total U.S. workforce. That sounded like a company on the verge of collapse or, at least, preparing to close a good many plants, reduce shifts, etc. Less than a week later, General Electric announced that it was cutting 50,000 jobs, one-sixth of its workforce, and Business Week reported an even higher number, indicating that GE was about to dump one-quarter of its workforce.
These were not little dot-com companies. They were two of the most important companies in the country, and they represented the heart of U.S. industry and business. If they were cutting on that scale, so would every other company, starting with the ones which depended on them, either directly or indirectly. The sense grew that we were surely headed for a new recession, and even a very deep one, with rising unemployment and grave uncertainty.
Corporate spokespersons all repeated the same refrain: they had no choice but to cut jobs; business was slowing, competition was fierce, profits were tumbling. And the stock market was dropping precipitously. In somber tones, economists spoke about a profits recession while journalists poured out never-ending headlines proclaiming that "earnings hit a steep decline."
It was enough to make you think the big companies were actually losing money.
But, no, they were only talking about making a little bit less money than they had the year before. And even with their income trimmed, what they took in was enormous: close to one trillion dollars in 2000. The average rate of profit for all manufacturing companies compared to shareholders' equity was about 16% after taxes. But this was only the average. General Electric made 12.8 billion dollars, a record, last year; General Motors made 4.6 billion dollars; Ford made 5.4 billion dollars. Many of the high tech companies supposedly in such trouble were rolling in profits, including Intel with over 10 billion dollars, Cisco with over three billion dollars, and Lucent with over one billion dollars.
From the headlines and the sound bites you'd have never known it.
Even look at Chrysler, the company which seemed to be on the verge of collapse. It posted a billion dollar loss in the fourth quarter of last year, with predictions of further losses in the first and second quarters of 2001. But Chrysler, nonetheless, made profit for the year 2000 as a whole. That was forgotten as was the 7.5 billion dollars in cash Chrysler was still sitting on, a small remnant of the enormous profits that it had built up during the 1990s, or the two billion dollars it had paid out buying back stock from stockholders to give them an extra gift over and above high dividends. As for the large losses Chrysler was predicting for the beginning of 2001 these were made up mostly of "special charges," that is, book-keeping sleight of hand, justified by the claim that it costs money to cut jobs! So why cut them?
These companies are not cutting jobs because they are "in trouble." They are demanding job cuts in order to increase the exploitation of their workforce, and thus overcome the slight dip their profits may have taken last year and even that dip is not so sure, given their book-keeping. That's why so often, when the companies announced job cuts, their stock prices rose. Investors were drawn to the stock in the expectation of getting in on those future profit increases.
Nothing could have shown the absurdity of corporate claims more clearly than Microsoft's announcement of its second quarter results toward the end of July. The company led off with a prediction that the PC business will worsen "further." This statement was the one repeated in all the headlines and sound bites. But what were Microsoft's actual results, buried toward the end of the story? It made "only" 2.75 billion dollars in operating profits on sales of 6.58 billion dollars that is, a 42% rate of profit in this quarter from which it expected a "further worsening"! And you had to read even further to discover that this company, which pretends to be so worried, today has accumulated cash and liquid assets in the amount of 32 billion dollars!
The official unemployment rate had begun to rise last autumn. Standing at 3.9% in October, by this June it was up to 4.5%. Undoubtedly, the real figure is significantly worse, accounted for by all the categories of unemployed or underemployed who are ignored in officials statistics. According to the New York Times (June 24, 2001), if all the people who did not have work or who were underemployed were included, the real jobless rate today would be 9.9%.
Nonetheless, the increase in unemployment is not as great as one would have expected, given the number of announced job cuts. Whatever the big companies intend, they do not yet appear to be carrying out massive layoffs. Some economists have even predicted that they don't expect many layoffs.
So what is going on? In the first place, this is undoubtedly more of the same thing that workers have been going through during the last nine years when times were "improving." During all the years of the "recovery," the big corporations continued to announce job cuts despite increasing production. At the biggest corporations, many more workers died, retired, were fired or quit than there were workers hired to take their place. The consequence of letting attrition take its course was an ever increasing pace of work, a lengthening of the hours of work and a real barrier thrown up in the face of young workers just entering the work force looking for a job. They often didn't appear anywhere in the statistics (other than in the rapid increase of the numbers of people in prison) because they never found a job.
The question is, do today's announcements herald more of the same or an even more severe attack on the workers? The pace of the announcements today is faster and the size of the cuts announced is bigger. Are we headed into the recession that some economists say we are already in? No one knows.
But whatever the future months hold, one thing seems clear already. The sense of crisis that so many companies had created by announcing job cuts could go a long way toward smothering recent expectations that the workers might finally enjoy an improvement in their situation. At least, the companies could hope so.
For the better part of the economic "recovery" which began in 1992, there was no recovery for the working class. After continuing to fall in the first half of the recovery, real income then stagnated. It was not until 1997-98, that is, when the economic expansion was more than a half decade old, that wages began to inch up a little and then, not very much. The working class is still a long way from making up all that had been lost over the previous decades. The real hourly wages of service, clerical and blue collar workers continue to be lower today than they were in 1973.
And now we are being treated to the spectacle of businesses which are turning billion dollar profits masquerading as though they were on the verge of collapse, threatening the workers again with loss of jobs while scheming under the hint of bad times to reduce wages and benefits.
Chrysler, of course, is an old hand at this kind of game. In the late 1970s, it pretended to be at death's door in order to extort major concessions from its workforce, opening the door for other corporations and government agencies nationwide to make similar demands. A short time later, Chrysler came back with bigger profits than ever. But its workforce never recovered the losses they had suffered. More than half were already gone, and those who were left continued to undergo many more years of cuts.
Even if there are no massive layoffs, even if the companies continue to cut mainly through attrition, such elimination of jobs can only mean an ongoing increase in the intensity of labor that is, renewed speed-up, with everything which that means, including first of all a bigger risk of injury, disease and death on the job. Job cuts could require still longer hours of work in a country whose workers already put in more hours of work a year than do the workers of any other industrialized nation. Whatever form the corporations' attack takes, there can be no doubt that the working class will be asked to pay a bigger price.
While the corporations took center stage, announcing their intentions to carry on a renewed and intensified attack on the working class, union officials remained remarkably quiet. No denunciations of the con game being played with the announcements of declining profits. No demands that the corporation's open their books. No statement that the unions were not going to accept the attack being prepared. In fact, the AFL-CIO's monthly magazine, America@Work, carried no articles at all for months about the threatened job cuts. And even when it finally did address the issue, in the July 2001 issue, it ignored the very concrete proposals the companies were making to speed up their workers, and spoke only about the threat of "globalization."
In answer to the threat of this job loss, what did the AFL-CIO propose? Enter a "creative partnership" with the boss to make the plants "more productive" that is, to do the very thing which cuts workers' jobs. The July issue of America@Work carried an article about a program set up by the IAM (International Association of Machinists), currently running at 50 IAM-represented plants. To save jobs, the IAM proposes "a high performance work organization" (HPWO). What is this but the same speed-up the companies are today trying to impose... in order to cut jobs! Nonetheless, according to the IAM, HPWO "gives workers and managers practical training in building cooperative work environments." This "cooperative work environment" the union wants to build certainly will serve the companies' interests helping it get more labor out of fewer workers. But it hardly serves the workers.
The UAW was similarly silent after Chrysler's big announcement on January 30. When reporters called for a response, the top leadership at Solidarity House, UAW headquarters, was "unavailable for comment." And they continued to be unavailable all through February as DaimlerChrysler spelled out in ever more stark detail its intentions.
Maybe UAW President Steve Yokich was too busy getting ready to go to Las Vegas, where he turned up just a few weeks later ... in a pace car sitting next to Chrysler Group executive Gary Henson at the start of the "UAW-DaimlerChrysler 400," a jointly sponsored company-union NASCAR Winston Cup race. Touting the Chrysler-UAW partnership and rubbing shoulders with the Chrysler brass, Yokich still had no time to say anything about Chrysler's impending job cuts.
It was not until April 5 that UAW officials got around to holding a press conference on the matter. Neither Yokich nor Nate Gooden, the top UAW official for Chrysler, hinted at the slightest criticism of management. On the contrary, they both insisted that company-union relations remained excellent. Gooden explained that the company had kept union officials fully informed of its restructuring plans. Yokich stressed that he intended to continue sitting on the company's supervisory board.
Did they question what Chrysler claimed that it lost? Did they raise the enormous profits that Chrysler had rolled up in the 1990s? Did they bring up the billions dollars that Chrysler spent buying back its own stock during all these years? No, not at all. "There would be no Chrysler right now without Daimler's deep pockets," lectured Yokich. The furthest that either Yokich or Gooden would go in questioning the job cuts was to say that they thought that Chrysler's estimates of the job cuts "needed" were perhaps a little too high but they offered no challenge to the idea that Chrysler must cut jobs, nor to the idea that the workers would have to buckle down to help Chrysler out.
It is a mark of the unions' incapacity today that they offer no perspective to the workers facing threats of new job cuts; they can do nothing but offer to co-operate, that is, to put the interests of the bosses ahead of the interests of the workers.
The readiness of the unions to co-operate is nothing new, unfortunately.
The UAW has long held up its friendly relationship with Ford as a model of what it wants with all of the companies. According to UAW leaders, Ford has always been the readiest to co-operate with the union a co- operation the union says leads to greater profits for the company AND more job security for the workers. It's just a "win-win situation" to use the phrase which was so much in vogue for awhile in labor-management negotiations.
In fact, the 1999 UAW auto contract, as well as employment figures, give the lie to the claim of job security. Like several contracts before it, the last contract was presented to the workers as "guaranteeing jobs." What it actually did was authorize each of the Big Three auto companies to cut the number of jobs and to cut them drastically. For each two workers who leave, the company is required to replace only one. (Of course, if production is reduced, the company can cut even more.) This is nothing by a formula for drastically reducing the size of the workforce.
For the workers who remain, this kind of job cutting means that the intensity of work is greater. It means greater fatigue, more danger, longer hours. It means the auto companies cut corners on things which do not add to productivity like cleanliness in the plant, or maintenance and safety procedures. The cost of this union-agreed to job-cutting was demonstrated clearly in the February 1999 explosion in the Ford River Rouge Complex power plant that killed six workers and seriously injured 12. For years, workers in the Power House had complained about it being unsafe and had filed numerous grievances on the unsafe conditions including on the very ones which led to the explosion. The union did not pursue the grievances. Why not? Maybe we can't say what was discussed behind closed doors, but we certainly can say that the UAW proved its complete subservience to its "partner" Ford when, on the day of the explosion and in the days afterwards, UAW officials defended Ford's safety record.
The workers have not benefitted from this partnership. Example after example can be found that show the deadly results when a union ignores problems in working conditions, trying to help the company improve its profits. OSHA (the Occupational Safety and Health Administration) cited Chrysler's old Toledo Jeep Assembly Plant 165 times since 1980 for violation of its workplace safety code and included Jeep on a watch list of the factories with the worst safety records in the country. In 1997, after workers, frustrated with no response to safety grievances, filed complaints with OSHA, a surprise inspection resulted in a large number of serious citations. According to OSHA inspectors, it dropped the citations because UAW officials agreed with factory management that the responsibility for the safety violations lay with "employee wrongdoing," and not with the company. (Of course, OSHA itself is not blameless in this matter. It did not need the UAW's approval to cite and penalize Jeep; it had dozens of statements from the workers who made the complaints.) Some of the 1997 citations which OSHA dropped involved violations of lock-out procedures. It was an incorrect lock-out during a repair which led to the death of a Jeep worker last year. Even with all that, when the situation in this plant was made public earlier this year, UAW officials defended the company, saying they believe that top managers were genuinely interested in improving safety. The full-time UAW safety representative in the plant shamelessly put the blame on the workers for the unsafe conditions, saying, "A lot of times the person is the problem. To blame it on the company or union is far from the truth."
These are just examples, and just from one union. But they could be multiplied many thousands of times, from one company to the next, one union to the next. Pushing these partnerships, the unions have nothing to propose to the workers when their partners turn around and attack them, as they are once again preparing to do, and in a very big way, if we can gauge by the continuing flood of job cut announcements.
The working class must start from another perspective, one that recognizes the reality that the corporations' interests are in the most basic way opposed to those of the workers.
It is unthinkable that the corporations are trying to impose more job cuts, forcing the workers who are left to work still harder and faster, under more dangerous and unhealthy working conditions. It is completely outrageous that workers should have to live in fear that at any moment they and their families can be plunged into unemployment and destitution just because some corporate honcho decides to squeeze the workforce for a few more dollars of profit.
The workers do have the strength to respond to these attacks. What is lacking are not the forces to make the fight, but the resolve to do it. And anyone who tells the workers that they can co-operate with the bosses without paying a price is helping to sap the workers' resolve.