The Spark

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

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To End Concessions, Prepare to Fight

Jul 30, 2011

“Don’t expect to get back any of the concession you gave up in 2005, 2007 and 2009!” That’s the message the three Detroit auto companies sent to workers as contract negotiations began. Chrysler let the Detroit News know that it will “draw a line in the sand,” over any cost-of-living adjustments. A GM spokesperson told the Detroit Free Press that it wants a further “reduction in labor costs,” along with more “flexibility” in its factories – perhaps like the “experiment” it has been carrying out at Lake Orion, where employees are working under four different wage tiers, and where workers with 10 years’ seniority were given the “choice” of taking a 50% wage cut or transferring to a plant 250 miles away. And Mark Fields, Ford’s president for the Americas, lectured workers that “they shouldn’t expect to get any pay raises while their neighbors are unemployed” – as though the workers were the ones who created the unemployment!

Faced with this arrogance, UAW President Bob King toadied right along behind the auto bosses, pledging: “we’re not going to have our companies have additional fixed costs that make them non-competitive.”

OUR companies!

King can tout “partnership” all he wants, but on the shop floor workers are fed up with concessions that froze their wages for almost a decade – and fed up with conditions in the plants, another deadly result of the concessions. Even the bosses’ media recognizes there’s unrest in the plants. The Detroit Free Press wrote of “concerns that the UAW leadership is not in tune with members who are expecting to win back concessions such as annual cost-of-living increases.” And the Detroit News reported that “labor experts wonder if King can deliver the votes necessary to ratify a contract that does not roll back concessions made over the past four years and put more money in the members’ pockets permanently.”

But whether or not King can deliver the votes, the auto bosses have another ace up their sleeves: the no-strike arbitration clause included in the 2009 agreement the UAW made with GM and Chrysler.

The following is the Chrysler version, written by Fiat-Chrysler CEO Sergio Marchionne himself in 2009: “Unresolved issues remaining at the end of negotiations on the 2011 renewal of the 2007 Agreement shall be resolved through binding arbitration with wage and benefit improvements to be based upon Chrysler maintaining an all-in hourly labor cost comparable to its U.S. competitors, including transplant automotive manufacturers.” (The GM wording is essentially the same.)

King also tried to get this clause attached to a second set of concessions the union wanted to push on Ford workers in the fall of 2009, but Ford workers saw the trap and refused to ratify the deal.

Nonetheless, the arbitration clause looms large in the background at Ford also. King and UAW Vice-President Jimmy Settles have already warned Ford workers that the union can’t get a better deal with Ford than with GM or Chrysler because that would “disadvantage” Ford, making it non-competitive, costing Ford workers their jobs!

In one way or another, this no-strike/arbitration clause will play a big role in the 2011 auto negotiations. If GM or Chrysler workers respect it, they lose. If Ford workers respect the “pattern”, they lose. Workers who want to refuse concessions will have to bypass both these traps.

Concessions – Another Word for Poverty

King once admitted that auto workers lost between $7,000 and $30,000 from the three concessions deals. You bet!

Most workers hired in before 2007 lost close to the $30,000, if not more. They had only one lousy 2% wage-rate increase in eight years’ time; and most cost-of-living payments were diverted (that is, handed right back to the company) before the whole COLA arrangement was finally eliminated altogether in 2009. Adding injury to injury, the 2009 concessions took back four bonuses that were supposed to make up for the lost wage-rate increases!

Workers hired in since 2007 – the so-called “two-tier” workers who came in under wage rates less than half the established rates – are shorted about $27,000 in one year’s time, not counting what they lose in benefits! And the tiers don’t stop there. The auto bosses have other hiring schemes: “third-tier” long-term temporaries, and “fourth-tier” employees working for subcontractors; not to mention “fifth-tier” working for the subcontractors of subcontractors.

Retirees will pay for the concessions with their health and even their lives. Their medical coverage was put in jeopardy when the union hierarchy worked out a deal in 2007 letting the companies dump all their responsibilities for medical care into a union-run VEBA – with the companies paying only about 67% of what they actually owed. The 2009 concessions gave all three companies the right to make most of their payments in stock, stock grants, promissory notes or other IOUs. Almost as soon as this severely underfunded VEBA was established, retirees faced cuts in their coverage and increases in what they have to pay – including, for GM and Chrysler retirees, a loss of $76.20 a month deducted from their pension check when they turn 65.

Every one of these concession deals was pushed with the argument that it would save jobs. And every one was followed by big cuts in jobs – in part because companies never kept their promises about jobs; but also because part of the concessions came in work rules, facilitating greater speed-up in an industry already marked by vicious speed-up. In the first six months of 2011, the three companies put out 810,000 more vehicles than they did in the first six months of 2009. But they did it with 2,500 fewer workers.

Concessions have severely lowered the standard of living of auto workers. In the eight years since the 2003 contract, gasoline prices more than doubled, and fuel oil prices went up almost that much. Food prices went up at least 30%. Utility rates went up by almost 50%. The average price of a new car went up by 20%. BUT auto wages were practically frozen over those eight years. And auto workers, once retired, got no increase in the pension they went out with in the last 12 years – only several lump sum payments that didn’t begin to keep up with inflation.

To continue the same concessions for the next four years means quite simply that auto workers will be pushed that much closer to poverty. Sergio Marchionne said it clearly – he advised auto workers that they must get used to “a culture of poverty”!

UAW leaders often brag that their members have a “middle class” standard of living. In fact, workers, with a few isolated exceptions, have never had an income that would put them “in the middle class” – whatever that term means. Through their struggles, they did win for themselves a standard of living that kept them out of poverty: maybe take a vacation occasionally, maybe go out to eat from time to time, maybe give their kids some help with school costs. They might “own” their own home, which meant to be indebted to the bank for all their working lives, and “own” a car or two, which meant paying on a car note from one car almost up to the next one. But most were still living from paycheck to paycheck, putting only a tiny bit aside for retirement.

Today, as the result of the concessions, even this meager standard of living is rapidly being destroyed. Workers with the second-tier wages earn so little that they are eligible for food stamps if they are supporting a spouse and two children. Workers in the fourth and fifth tiers earn so little that many of them fall below even the government’s tattered poverty line. And retirees are seeing their dreams of a secure and healthy retirement go up in a puff of smoke.

Concessions have impoverished auto workers, and along with them, the rest of the working class. Once the auto bosses succeeded in pushing through concessions in auto, other bosses followed in their trail. The governors of Wisconsin and Michigan, when demanding concessions from public workers, justified the demand by pointing to how much auto workers gave up!

Someone Got the Money – but NOT the Workers

Six years ago, when the Detroit 3 auto companies began openly to demand concessions, they were losing money. More exactly, they produced balance sheets that made it seem they were losing money. We certainly have no reason to believe what they say about their financial health.

If auto companies were running short of money, as they claimed in 2005, that’s because they gave so much away – to stockholders, to the banks, to executives. Between 1996 and 2007, Ford reported total profits of 23.8 billion dollars – BUT it gave away 29.2 billion in dividends or stock buy-backs, rewarding some of the wealthiest people in the country, including first of all, the Ford family. GM actually gave away 2.3 billion dollars in dividends from 2005 to 2007 – during the years they claimed to be losing 16.6 billion dollars. All three companies bought up other companies, including in countries around the world. Ford spent 30 billion dollars buying up or increasing its share in 22 companies – including the largest Japanese supermarket chain! GM bought up more than 20 mortgage companies through its finance arm, and then went all out into the sub-prime mess. Even Chrysler bought up a Chinese auto company, Chery. As for money Chrysler paid out to owners and executives, that was done in secret because Cerberus, which was draining the company dry, was a privately held company.

All three of these companies went into debt – even in the good years – in order to satisfy the greed of their biggest stockholders or owners. That debt came back to haunt them when the market for vehicle sales turned down.

By 2005, did these three companies have a few problems? Perhaps. But if so, none of that was the fault or the responsibility of the workers. And the workers should not have been the ones to pay for problems they didn’t create, and didn’t benefit from. The concessions of 2005, 2007 and 2009 were an outrageous rip-off – robbing the workers so these companies could keep on lavishing money on the wealthy class that owns them.

To continue a single one of those concessions is especially outrageous today – when these companies admit they are turning over profit as fast as they can count, and when all of them are paying their executives multimillion-dollar salaries and bonuses. Alan Mulally and William Clay Ford actually both got 26 million dollars for 2010. GM paid down its government loan ahead of schedule, and Chrysler paid off its loan six years early. Ford is paying off the loans it took from private banks ahead of schedule. Why this hurry to pay off their debt so early? Because the debt has to be paid down before Chrysler can issue new stock, and before all three companies can start paying dividends again – this was a condition set by the government for its loans to GM and Chrysler and by the private banks for their loans to Ford.

GM, Ford and Chrysler intend to go on draining outrageous amounts of wealth from the workers’ labor for the benefit of wealthy stockholders and executives. That’s why concessions continue at the top of the companies’ agenda.

Workers Will Not Get What They Need – Unless They Are Ready to Fight For It

The auto companies believe they can force concessions through one more time with the aid of the no-strike/arbitration clause at GM and Chrysler. It’s pretty plain what they intend – use the threat of arbitration and talk about “being competitive” with the transplants to push through the contract the companies want.

The arbitration clause is a trap – aimed at convincing the workers they cannot back up their “NO” votes with a strike. Either they accept the contract as written, or it goes to an arbitrator who is supposed to use the wages and benefits of the transplants as his standard for ruling.

Damned if you do, damned if you don’t. That’s how the game has been rigged against the workers. And that’s exactly how it will play out if GM or Chrysler workers respect the 2009 arbitration clause, believing there’s nothing they can do about it.

We can hear Bob King right now, saying as he presents a lousy new contract for a vote, “It’s the best we could get – otherwise it goes to arbitration, which will produce a worse deal.”

And what would he say, if workers had the temerity to vote it down anyway? Would he call for a re-vote, threatening arbitration if they didn’t change their vote? You bet he would – if he thought he could get away with it. And would he send it to arbitration if he couldn’t con them into a “Yes” vote? He sure would – if he thought the workers would accept the arbitration.

But all that finally depends on what the workers do, doesn’t it? Do they make the auto bosses and the UAW bureaucracy understand they aren’t going for it?

Contracts written on a piece of paper have no weight unless all the parties respect them.

Workers know full well how little the bosses respect the contracts they sign. For the past 22 years, GM, Ford and Chrysler have been breaking one promise after another about keeping or increasing jobs.

And workers know how little the UAW top leadership respects the workers’ decisions – overriding them, for example, when workers voted against the old Modern Operating Agreements at some Chrysler plants or the Competitive Operating Agreements at some GM and Ford plants. When Ford workers voted down the second 2009 concessions, UAW leaders immediately indicated they wold push through a re-vote – until they heard the reaction and realized that Ford workers would tear them up!

So why, today, should GM or Chrysler workers respect this lousy piece of paper extorted from them in 2009 while the government held the bogus threat of a fake bankruptcy over their heads? Why should they agree to disarm themselves in the face of their enemy?

Why should Ford workers feel bound by the “pattern”? Why should they wait to see what the “pattern” will be at GM and Chrysler?

They didn’t accept the no-strike/arbitration agreement in 2009. They didn’t accept the UAW leadership’s argument that they had to respect the “pattern.” Ford workers didn’t fall for that lie then. They ran the UAW bureaucrats out of the plants, and the workers forced their own decision on the apparatus and on Ford management. So Ford workers certainly shouldn’t let themselves be trapped by the “pattern” lie now.

The auto companies have made it clear that they intend to continue the concessions. Workers will throw those concessions back only if they prepare for a fight. That’s true at Ford, it’s true at GM, it’s true at Chrysler.

Ford workers may have an advantage because they broke out of the “pattern” trap in 2009. But GM and Chrysler workers can break out of the no-strike/arbitration trap this time. And if Ford workers prepare right now to make a fight, they can influence what happens at GM and Chrysler.