The Spark

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

2011 Auto Contracts:
Pushing Workers Back to 1940

Aug 1, 2011

Wall Street certainly approves of the 2011 UAW contracts with GM, Ford and Chrysler. Standard and Poor’s upgraded GM by one notch, and Ford by two – just two days after each contract was ratified. Almost every business writer noted that labor costs increased by less than 1% a year – which in fact is much too high an estimate, given that all the companies expect by the end of this contact to have a much bigger proportion of their workers chained into the two-tier pay structure. GM’s CEO Dan Akerson couldn’t help but brag: “Productivity gains should more than cover the additional labor expense in the new contract.” Ford’s president for the Americas, Mark Fields, said the same thing, only in a more obscure way: “Having plants produce at their highest efficiency represents substantial profit opportunity.” And Sergio Marchionne used the very good contract he got for Chrysler to threaten Fiat workers in Italy.

An analyst for Morgan Stanley explained that the Detroit 3 companies have “locked into an hourly wage agreement that should not only be competitive with the Japanese but will be materially lower. We think they got extremely good deals.”

It was obvious from the beginning that workers were not happy with the proposed contracts. The first important votes at all three companies were NO votes – despite the bonus money thrown at workers at the front end of the contracts, despite bonuses of up to $100,000 at Ford and $75,000 at GM for skilled trades to take immediate retirement, and despite claims by the UAW hierarchy that jobs were coming back. Supposedly, 20,500 “new” jobs could be “created” – after a decade of job losses that had reduced the number of Detroit 3 jobs from 277,000 in 2001 to 112,000 today.

In fact, it was only through a combination of bullying, rumors, lies, media stunts, questionable vote-counting and arm-twisting that the 2011 contracts were pushed through. And it took a tug-of-war between the union apparatus, which tried to hide vote totals behind percentages, and local union activists, especially at Ford and Chrysler, who tried to get the actual vote numbers made public – an important “detail” because the contract is ratified by the actual vote numbers coming from dozens of locals, totaled together. Obviously, that total cannot be verified, when the information from the locals is given out only in percentage. With all that, the bureaucracy was able to announce that each of the three contracts had passed, but by scores much lower than usual in most past auto contracts: 65% yes at GM, 63% yes at Ford; 55% yes at Chrysler, although the apparatus had to admit that the skilled trades at Chrysler voted NO.

When the GM contract came in, a writer for Automotive News characterized it this way: “Pundits have called the new UAW and General Motors contract a win/win. I’ll amend that to win/win/lose. I agree that GM and the international union won. They met their goals. But the contract is a loser for GM’s 49,000 rank-and-file.”

That pretty much sums it up.

A Contract Pushed through by Hook or by Crooks

The first settlement came in at GM, where the new UAW leadership, breaking with tradition, bragging about its commitment to “transparency,” posted all the contract changes on line: all 391 pages of changes to the basic contract, plus another 270 pages of the changes in the “letters of understanding, published and unpublished,” plus more than a thousand other pages of changes to the pension plan, the SUB plan, the life and disability benefits program, and the sickness and accident program – all wrapped up in legalese.

“Transparent”? No – the only thing “transparent” was the bureaucracy’s wish to make this whole procedure as opaque as possible.

Just let someone try to find those “gems” buried in the thousands of pages. Take the example of Gregg Shotwell, a GM retiree who has been active for years in the UAW, knowing its contracts and procedures frontwards and backwards. He warned before the contracts came in that the companies were aiming at the pension plan. And he searched – but it took him a week to find a provision that gives GM management and the union hierarchy the right to negotiate future changes in the existing pension agreement, without a new ratification vote. But by that time, most of the GM plants had already voted!

When the focus shifted to Ford, where there was a much more organized opposition, they had the advantage of having seen the GM contract. The first plant to vote, a traditional base of support for the bureaucracy in Wayne Michigan, rejected it by a small margin. Then two plants in the Chicago area voted NO by a big margin.

The apparatus went to work, stirring up a disinformation campaign. The UAW Facebook page attributed a phony quote to a well-known opponent of UAW concession contracts, Gary Walkowicz – an attempt to make it seem he approved of the contract. Maybe this particular lie didn’t disorient many people because Walkowicz and the activists linked to him publicly went on opposing the contract and organizing against it, but it gives a flavor of the kind of tricks the bureaucracy engaged in. All local leaders were ordered to push for the contract – and almost all of them fell in line. Local officials and reps who had expressed opposition to concessions were threatened and morally, if not physically, strong-armed. Most of them eventually signed statements approving the contract.

Perhaps the biggest impact came when the following notice was placed on the UAW’s Facebook page: “[UAW] Vice-President Settles has advised the membership during informational meetings that if the agreement is not ratified, he will ask the International Executive Board to authorize a strike. If so, he will then give 72 hours notice to the company that we intend to strike.” The UAW added: “If we strike, they [Ford] will use whatever resources necessary to continue operating their plants, including the use of scab labor.” The rumor spread rapidly through the plants.

The next day, the UAW retracted Settles’ statement, and then the next day retracted part of the retraction!!! Didn’t matter, because the damage had been done, the rumors continued to spread. And UAW President Bob King stirred up the pot, predicting if he went back to renegotiate the contract, he might get “a less generous contract”! He explained: “If the union doesn’t ratify and we had to go back to the table, it could very well be a much more difficult economic situation.”

The carefully calculated statements of the national leadership were repeated by local officials and wildly exaggerated – predicting that workers would still be on strike after Christmas; that they would start to face eviction and repossession of their cars, unable to keep up the payments; that they would lose medical coverage for their kids; that even if a new contract was brought in, all the bonuses would be gone.

In other words, the UAW bureaucracy, from the top on down, was brandishing the strike as a weapon – not against the companies, but as a weapon to punish the workers. And many workers saw it as exactly that.

And, oh yes, the voting, carried on differently from plant to plant as a way to respond to particular problems the apparatus had. At some plants, the vote was only on Sunday, which can serve to keep the vote down. At others, it was carried on for nine days in the plant, with union officials standing in the hallway with open plastic buckets to get the votes: in other words, blocking the possibility for workers to control the voting – meaning that the count afterwards was questionable, at best.

The UAW apparatus used the media to emphasize how much money Ford workers would get up front: $10,000 plus $1,500 and a second installment of profit-sharing in March. Overall, Ford workers got somewhat more than GM workers, with much more of it pushed to the front – and a lot more than Chrysler workers, whose contract came in during the Ford voting. At Chrysler, there was only $1750 up front. As a Ford exec told reporters after the vote, “we always knew we’d have to pay our workers a little bit more to ratify it.” They “knew” it because Ford workers had voted down the second round of concessions in 2009, and remained much more organized from one plant to another than were workers at GM or Chrysler.

Ford workers clearly did not want this contract, but there was a growing ambivalence in the plants over the threat of a strike. The workers’ unease was obviously reinforced by the fear that King and Settles would use the strike against them. In some plants, workers also felt betrayed, watching local leaders and representatives who seemed to oppose the concessions then switch sides.

Ironically, the media’s emphasis on how much more money Ford workers won created a big problem for the UAW bureaucracy when it went to sell the contract at Chrysler. Chrysler workers got no money guaranteed other than the $1750. There were no retirement bonuses for skilled trades workers. And Chrysler even held back on anything specific about new jobs, speaking only about investment in certain plants. As the result of earlier concessions, there was no right to strike in the Chrysler and GM contracts. The UAW apparatus tried to use that fact to argue that a NO vote would send the contract to an arbitrator. Many Chrysler workers said, “Go ahead – what could an arbitrator do worse than what Bob King did?” And a few militants who were active, particularly Alex Wassell and Martha Grevatt who helped organize the NO vote at the Warren Stamping Plant, put out information that was circulated in other Chrysler plants, and was posted on the Soldiers of Solidarity and the Autoworker Caravan websites.

When more NO votes began to come in, the UAW apparatus switched gears, refusing to let the results be posted on the Facebook page, deleting any that managed to appear there. And, of course, there was all the same trickery with percentages.

The last plant to vote, the large Warren Truck plant, supposedly would determine the outcome of the vote. The media said it, and the UAW apparatus implied it. Warren Truck has long been controlled tightly by the apparatus, but a lot of opposition to this contract had been expressed. When the results of that vote – supposedly 70% Yes – were announced in the plant, the plant went dead quiet for a minute. Then the angry yelling began. Whatever the vote was, no one believed that 70%.

Real or not, that 70% allowed the UAW to announce that the Chrysler contract had been ratified.

Right up to the end, the result was in doubt. And the apparatus did have to report that the skilled trades, who have the right to reject the parts of the contract that refer specifically to them, voted NO. Unable to completely screw with the vote count, King and the UAW vice-president for Chrysler, General Holiefield, and the UAW Executive Board did the next best thing: they erased the NO vote, ruling that the “reasons were predominantly economic and not unique to skilled trades members.” King and Holiefield deciphered that, they said, by looking on the union’s Facebook page and hearing from local presidents in a hastily called conference call.

This Is the Contract Imposed on Auto Workers

The 2011 labor contracts between the UAW and the Detroit 3 – GM, Ford and Chrysler – incorporate the so-called “temporarily suspended” 2009 concessions, making them permanent. Cost-of-living allowances are permanently eliminated; base rate increases are permanently eliminated; overtime premium after eight hours in a day is permanently eliminated; break time on continuous operations is permanently reduced from 6 minutes an hour worked to 5 minutes; “alternative” work schedules, requiring people to regularly work 10 or even 12 hours a day or rotate between morning, afternoon and night shifts, are widely extended and enforced on every local. The “job security” programs – which gave laid off workers either another job or a check ranging from 70% to 100% of their 40-hour pay for as long as they were laid off – was permanently replaced by the 70% check for 52 weeks. But that’s only if you have more than 20 years seniority; otherwise, it’s 39 weeks with 10 years, 26 weeks with less than 10, and 13 weeks for most two-tier workers.

The 2011 contracts also reaffirmed the two monstrous concessions from 2005 and 2007: the VEBA and two-tier.

Company-paid retiree health care had been palmed off onto a severely underfunded union-run VEBA in 2005, and its liquid funding reduced much further in 2009. The 2011 contract summaries passed out by the UAW especially emphasized that the companies are no longer responsible for retiree health care. And, in fact, the contracts included a provision by which current workers would have 10% of whatever profit-sharing they get diverted into the VEBA – making it perfectly clear that the cost of retiree medical care had been put back on the workers’ own shoulders.

Furthermore, the contracts at GM, Ford and Chrysler introduced two overt attacks on retirees: there is no increase in the basic pension benefits for new retirees, and there is no additional money for existing retirees. Even the Christmas bonus – the one thing retirees had received over the previous four years – was eliminated. It’s no exaggeration to say that after a decade in retirement, auto workers will feel poverty creeping up behind them.

UAW leaders bragged that they reduced the spread between two-tier and the rest of the work force. In a manner of speaking, they did – by freezing the basic wage rate of “traditional” workers. By the end of this contract in 2015, those workers will have had only one base wage increase in 13 years. But the small increases that two-tier workers will get will still leave them at 65% of the frozen traditional wages four years from now. This contract eliminates the “wage formula” increase from the 2007 contract, which would have given two-tier workers a separate and additional automatic wage increase of up to 3.75% every year – permanently.

The second-tier workers aren’t being pulled up to a better standard of living. The “traditional” workers are being pushed down by inflation.

And the companies are not done. The ink was barely dry on the contract before Sergio Marchionne, Chrysler-Fiat CEO, cynically declared: “The two tier wage structure, in and by itself, is not a viable structure upon which to build our industrial footprint. It creates two classes of workers within the plant. Fundamentally, we need to have one set of wage rates....”

Workers know exactly where Marchionne and Mulally and Ford and Akerson want those wage rates to go – down.

20,500 “New” Jobs – Nothing New, and the Biggest Concession of All

The UAW’s contract summary carried this headline: “Work in-sourced from Mexico, China and Japan.” The details, even in the summary, were vague – and in the contract, non-existent. The UAW was even forced to admit that no work was coming back from Mexico – or any other country. Nonetheless, this idea that production was coming “back” from overseas was pushed wildly by local leaders in the plants at all three companies.

And the exaggerations didn’t stop there. In the issue of Solidarity magazine, right after the contracts, the UAW added this estimate: “Together, the UAW, with GM, Ford and Chrysler are helping create nearly 180,000 jobs for Americans.” It went on to explain: “The multiplier effect for auto manufacturing is so large that it makes a true economic engine.”

In fact, jobs may “come back” – but from all the so-called “independent” parts plants and independent “sub-assemblers” that the Detroit 3 have spun off ever since the late 1970s, “independents” who pay much lower wages and few benefits.

By 1996, Chrysler had farmed out over 70% of its former parts production, Ford more than 50%, and GM, 40%, to so-called “independents,” which took over the less essential parts work. But eventually, GM and Ford moved to also group their more essential work, first into subsidiaries of the company, then into independent companies. Delphi was established as an independent, in 1999; and Visteon in 2000. Wages and benefits were pushed down, but in more complicated ways, over longer periods – with the existing workers “grandfathered in” to the parent companies’ wage structure.

Sub-assembly work was shipped out of the assembly plants to so-called “independents,” sometimes producing in a plant right next door; sometimes on the property itself of the “Big 3,” eventually inside some of the “Big 3’s” own plants.

The aim of all this restructuring was to push down wages in the auto industry – which it did. The only ones who maintained somewhat higher wages were workers in the assembly plants and a few of the most essential parts plants. And the severe drop in employment inside Ford, GM and Chrysler was used to keep down wages in the “in-house” plants.

But this spinning off created problems – enormous duplication of management, planning, book-keeping – not to mention real complications in integrating the production. The integrated production system that Henry Ford had once built – a marvel of efficiency in its time – was being progressively exploded.

Today, we seem to be coming full circle. With the two-tier wage structure for new hires firmly implanted, GM, Ford and Chrysler have positioned themselves to bring some of that work back “in-house.” In fact, they already had done it, by bringing in “sub-contractors.”

There well may be more workers drawing a check from GM, Ford and Chrysler at the end of this contract – assuming the economy doesn’t collapse, which is not at all sure. But there won’t be more jobs in the auto industry. The simple difference will be the name of the company signing the paycheck. The wages will be as low. The benefits as meager. The working conditions as atrocious.

But for the companies, it will be more “efficient” – a word which, in the mouths of auto executives, means fewer jobs overall in the auto industry.

And the two-tier wages are not just for new hires – the 2011 contract makes that very clear. The three companies are intending to extend the model that GM imposed at Lake Orion last year. Not only are the new hires to come in at much lower wages; established workers, if they stay with the plant, see their wages and benefits cut down to the second-tier rank. This is spelled out for workers at Ford’s Rawsonville and Sterling plants, as well as for workers at ACH (former Visteon) plants, or GMCH (former Delphi) plants, being brought back into Ford and GM.

All this talk about “new” jobs is nothing but the pretext to impose two-tier across the board – and to impose more “flexibility,” which can only mean more job losses.

This contract gives the companies the possibility to impose flexible, alternative work schedules at every plant – requiring enormously long work days and work weeks, paying very little overtime. A worker at Chrysler’s Trenton Engine Plant – one of those that has such a schedule already – wrote that he is working 46 hours in 4 days, mandatory. Only six of those hours are paid time and a half.

And they want more “flexible” workers. This is the meaning of the big changes imposed on the skilled trades in this contract. Most of the trades classifications are to be suppressed, the work put on other trades – or sent to contractors! And the trades that are left are to be grouped into cross-trades “multi-functional” teams, that will require a pipefitter, for example, to do the work of a millwright, or a welder-repair tradesperson to do electrical work. It obviously means speed-up. And it means much greater likelihood for accidents, involving the trades and involving the production workers whose machines they fix. And under new so-called “autonomous maintenance,” work done by the trades is to be pushed onto production workers – and production work onto the trades. None of this means more jobs – it’s simply the same old speed-up cutting into jobs.

These changes lay behind the revolt of the trades workers at Chrysler. The changes are just as draconian at Ford and GM, but those companies avoided the strong reaction by offering a large buy-out for workers close to retirement.

Pushing Auto Workers Back Seven Decades

The 2011 contract, in making the 2005, 2007 and 2009 concessions permanent, tears up the basic framework which had determined work and wages in the auto plants, going back to 1938, when the union was recognized at GM, then Chrysler.

Overtime premium after eight hours – something that forced the companies to pay at least grudging respect to the eight-hour day – was established in auto contracts in 1940! Work rules and overtime premiums torn up by the alternative work schedules date back to World War II. COLA and yearly 3% base rate increases had been part of the auto contracts since 1948! Pensions for new retirees had increased every year since they were introduced in 1949; existing retirees had seen their pensions be increased or supplemented every year since 1973.

The commitment to the same wage for everyone dates back to the period when the UAW and, with it, the CIO were organized. The idea that everyone should get the same pay reflected the drive of the workers in mass industry to organize in one big industrial union, breaking down the divisions between them.

Those decent wages – with an index to inflation, plus an automatic annual increase tied to productivity – were not handed to the workers. They were won in hard, sometimes very long, but always determined strikes. There was a tug of war over how much break time ever since GM signed the first two-page agreement with the UAW after the Flint sit-down – a tug of war workers won all during World War II simply by taking what they considered a necessary amount of time or imposing it, usually in wildcat strikes. In 1944 alone, over half a million workers went out on wildcats in Michigan, most in the auto industry, aimed at improving conditions in the plants. In 1943, a hundred thousand auto workers marched in downtown Detroit against the war-time wage freeze, forcing the government to back off a bit, allowing the companies to pay overtime premium much more widely. Just to get a partial catch-up to what they lost to inflation during World War II, GM workers struck for 113 days in 1945-46. That determined strike and the remembrance of the 1941 strike that had shut down the Rouge, pushed Henry Ford to propose automatic wage increases and COLA in 1948. Chrysler workers struck for 104 days to establish pensions in 1950. Ford workers struck for 67 days in 1967 to establish the beginning of what became job and wage protection programs during layoffs. GM workers struck for 67 days in 1970, to establish the right of workers to get a pension when they’d put in their 30 years.

That framework that the UAW leaders have just so carelessly torn up was not given to the workers. Those gains were imposed by the workers’ own determination to make the companies respect, at least in part, their labor.

In fact, as the companies’ drive for further concessions proceeds – and proceed it will until the workers directly take on these monsters – today’s workers are going to find themselves in the same situation as those earlier workers.

Yes, in some ways, it’s a different situation. The plants have been maintained in some kind of quasi-“labor peace” – which is not to say that exploitation has abated. It hasn’t. It’s worse than ever before. The massive amount of cash each of the three companies has accumulated in the midst of very low production years – 33.5 billion dollars at Ford, 32.8 billion at GM, 27 billion at Chrysler/Fiat – testifies to how much has been being wrung from the workers, day after day in these plants. It’s “labor peace” in the midst of a bitter class war – a war carried out by only one side. The workers are “peaceful” while the bosses continue a raging offensive.

So the workers do not have the habits, the reflexes and the experience that comes from participation in struggles. They have not seen a major company-wide strike since the 1976 strike at Ford, and very few wildcat strikes in all those years.

But workers can gain that experience in a hurry. Just like in the ‘30s, a struggle can grow up again, and very fast. The rejection in 2009 by Ford workers of the second set of concessions – a rejection that they forced the union apparatus and the companies to accept without the usual re-vote – shows that workers can find the way to break the control by the union apparatus over them. The rejection this year by Chrysler skilled trades, with everything stacked against them – media, union apparatus, company threats – shows that there are workers who have decided to take on these companies at some level.

Workers today will discover for themselves how to impose that they want – just like their parents and grandparents learned to do. The situation is increasingly putting that in front of the whole working class as a necessity.