EDITORIAL
Don’t Let Companies Scam Us with the Threat of Bankruptcy!

Aug 15, 2005

Delphi is threatening bankruptcy if it doesn’t get the concessions it wants out of its workers. Northwest is threatening a lock-out and then bankruptcy if it doesn’t get a 25% wage cut from its mechanics. Delta Airlines is talking about bankruptcy if it doesn’t get its way. US Airways already declared bankruptcy in 2002, followed a few months later by United Airlines.

Not to mention the steel industry. In the six years running from 1998 through 2003, 44 steel companies declared bankruptcy, including Bethlehem Steel, the second biggest integrated steel company in the country–as well as Weirton, LTV, National Steel, Wheeling-Pitt and Republic.

Then there was Kmart, WorldCom and Federal Mogul, only a few of the other big "bankrupt" companies still making money.

Hardly any of these bankruptcies led to the closure of the companies involved. No, they continued in business, in one way or another–either under their old name, or as part of a merged company, or under a new name. And most of them quickly began to show big profits.

Today the steel industry includes some of the most profitable companies in the country–built out of the ones that declared bankruptcy. Moreover, the executives involved made out like bandits. W.L. Ross, a Wall Street banker who bought up a number of these companies only to sell them off a couple years later, made a tidy four billion dollars from his speculative venture.

Or look at Kmart–not only did it continue in business, it came up with enough money to buy Sears, which was bigger than Kmart.

Or check out the money paid to executives at these companies. United’s CEO, for example, made 6.5 million dollars compensation in the first two years of United’s bankruptcy. In addition, he got a 4.5 million-dollar trust for his retirement, money that couldn’t be touched by anyone but him, no matter how many times United declared bankruptcy. Or look at two of the big honchos at Northwest, who just cleared 43 million dollars by selling stock given to them by the company.

No, these bankruptcies are not the old-fashioned kind, spelling the end of a company going out of business. These bankruptcies are simply the newest way of doing business, aimed at making still greater profits for the companies involved, as well as tremendous income for the executives.

And oh, yes, they are aimed at one other thing: dumping contract protections and gains negotiated by unions that had once been some of the strongest in the country.

Across the board, retirees at these "bankrupt" companies lost their medical benefits. Most pensions, which were handed over to a government agency, were reduced or even eliminated. Active workers found themselves saddled with new premiums and large co-pays on medical care. Wages were cut–almost 25% at United, for example. In most steel plants, income was cut 15%–assuming that workers got the biggest possible profit-sharing and incentive bonuses allowed for. If bonuses don’t pan out, the wage cut is even worse. Job classifications were eliminated, seniority rights done away with. And jobs were cut wholesale: United has already cut 40% of its jobs, and it continues to cut more. The whole steel industry has lost 41,000 jobs since the bankruptcy scam began. Holidays and vacations were reduced or eliminated.

It’s a scam, a dirty filthy scam. Every one of these companies produced account books to show they were losing money–tons of it. And every one of them was a liar.

These "bankruptcy" attacks aren’t about losing money–they’re about making still more stupendous profits for the whole capitalist class.

The biggest companies in the country are coming after their workers simply because they think they can get away with it. They have been pushing the working class back for so long, they think there is no resistance left in any part of the working class.

Well, they are surely wrong. Workers are angry. We all feel it.

Maybe most top union leaders say there is nothing workers can do to stop the onslaught. Many even say that workers should give up concessions in order to stave off bankruptcy.

But there still are some local union leaders ready to lead a fight. And there are certainly rank and file activists, unionized or not, who want to make a fight.

The working class needs more such people. They can lead the way out of this morass the working class is stuck in today.