Feb 5, 2007
The following is excerpted from a talk given at the January, 2007 SPARK public meeting in Detroit.
The U.S. auto companies claim to be in crisis. They claim they may go bankrupt. But this is nothing but a big public relations production, calculated to flim-flam the workers. A scam. The companies are trying to create a mind-set that the industry is failing and the only thing workers can do is get out now with whatever they can. It’s a big ongoing corporate swindle, a con job. Workers need to blow the whistle.
The Delphi Corporation has been in its phony bankruptcy for two years and some now. Well, Fraud #1, that’s not Delphi – it’s a part of General Motors which changed its legal name. If YOU change YOUR legal name, do you get to walk away from those credit cards with your OLD name on them? Well, of course not. But then, you aren’t the world’s largest manufacturing corporation. GM does what it wants.
Delphi in bad shape? Nonsense!
There’s a bidding war going on for it, a bidding war over how much money different financial groups will invest in this supposedly out-of-date, uncompetitive Delphi! Actually a fight to give Delphi money! But get this. The supposedly bankrupt Delphi told the judge it wanted only the SMALLER amount! Highland Capital had offered to hand over 4.7 billion dollars to this broke company, but Delphi told the judge it only needed the much smaller offer from Appaloosa and Cerberus, 3.4 billion dollars. The size of these investment offers means that the big financial players know Delphi is not, and never was, going out of business. That’s why Delphi stock started 2006 at 12 cents and today is $4.00.
What is this Cerberus Capital Management group? A so-called private investment company with not much more than a name on the door of some fancy Wall Street office. It makes nothing and runs no plant or equipment. GM is worth 26 times what Cerberus is worth. But behind Cerberus is Citigroup, the big Wall Street bank that provides capital – and marching orders – to GM. This deal is a legal cover to guard GM’s assets for as long as it takes to finish screwing the workers to the wall.
GM and Delphi made it look like the workers have no option but to take buyouts. They threatened plant closings – so workers had better take the buyout now or they’ll get nothing. They managed to chop off about 51,000 workers who used to get $28 per hour and real benefits.
And then a strange thing happened. Only a few of the many threatened plants actually closed. New workers were hired to do the old jobs. But the new workers are paid only $14 or $16 an hour and NO benefits!
This was the original GM plan when it got Steve Miller out of retirement to be Delphi’s CEO. Steve Miller knows nothing about producing auto parts for GM. But Steve Miller does know how to steer a phony bankruptcy, in order to dump workers’ wages, pensions and benefits, and then make a bonanza re-selling the company’s assets. That’s what Steve Miller did with Bethlehem Steel. That’s what Miller intends to do with Delphi. When the bankruptcy began, Miller said Delphi’s bankruptcy was “well planned, well structured and well financed.” Yes, a well planned legal swindle of the workers!
GM plays the Delphi card
GM itself tried the bankruptcy scam all during 2005 and 2006. It claimed to be losing l0.6 billion dollars a year and was near bankruptcy. “Bleeding” cash, losing market share, because of ... their workers’ health care costs! GM mounted a huge media campaign to convince the workers that giant GM wouldn’t last much longer. GM got top union leaders and the federal court to break the contract in mid-term and take a dollar an hour away from active workers, and take health insurance premiums away from retirees.
Workers weren’t supposed to hear the inside comments like those made by Jerry York, a GM board member. He said that GM’s CEO Rick Wagoner had done a “great job warehousing cash.” Yes, more than 50 billion dollars in cash and marketable securities at the time.
Anyway the scam played on, workers were taken by surprise, a vote was hustled through and narrowly passed. GM got rich off the workers’ concessions.
But it’s never enough. GM is laying out plans to get still more concessions. This month at the Auto Show, GM Vice President Bob Lutz told reporters that GM was not the kind of company to be satisfied with only a few billion dollars of profits.
That’s the first truth GM has told: big companies will not be satisfied with any amount of billions of profits. They will take, and take, and take, until they are stopped.
Ford is well under way with its own copy of GM’s tricky script. Ford is pretending financial trouble even though it has nearly 34 billion dollars in ready cash. Ford made a big show of “mortgaging” its assets for loans. 25 billion in loans. Actually Ford Motor Co. has much more money than that. It’s just in other places. The company makes the money, and then they take it out. For instance, in 2000 Ford Motor Company paid out a special dividend of 24 billion dollars in cash and stock to the Ford family and other major stockholders. Milking the company is a regular thing that they do.
The banks know that Ford’s has the resources and so there’s no problem getting these monster loans – and publicizing them, just one more part of setting up the scam.
Here’s a loan Ford Motor Company took out in 2002, for five billion dollars, from who? – from the Ford Capital Fund Trust Number 2. How much is in that fund? What about Fund # 1 and Fund # 3 and how many others? Then there’s Ford Motor Credit Company, where Ford sticks its profits, pretending it makes no money from producing and selling cars – only from loaning money to those who buy them.
Big companies stash money in places that aren’t reported and aren’t open to public examination. They have many ways to adjust the books as they wish – to show a profit, when Wall Street wants a profit, to show a loss when they’re scamming the workers.
Ford in trouble? It had no trouble putting its private fleet of jets at the disposal of Executive Vice President Mark Fields to commute to his Florida home every weekend. Estimated cost about 3½ million a year! When a local TV reporter wouldn’t get off the story, Fields said – for the sake of window dressing – he would fly commercial. Sure, for a minute or two. Forget the propaganda. The Fords aren’t selling their yachts and mansions and multiple vacation homes any time soon.
But if Ford isn’t in trouble, why is there this drumbeat of doom and gloom?
First, if you pay for as much advertising as an auto company does, the media will say what you want them to say. Notice how they quote the same three analysts all the time? Two of the three come from the Center for Automotive Research, which is run by the son of a former GM CEO. Who, incidentally, saw nothing wrong in Mark Fields’ 3.5 million dollar commuting expense! Even if a few reporters try to give the workers’ side or just information, the reporters have bosses – editors. The editors know what will make their advertisers happy.
Second, what, above all else, are these companies good at? MASS MARKETING! They know how to get you interested in that new Edge when really you could care less. That same know-how, they put into faking workers out of their jobs and benefits. One paper actually printed an account of how Ford hired marketing specialists and did focus-group research, the whole nine yards. It figured out the most effective ways to manipulate workers into taking buy-outs, costing most workers hundreds of thousands of dollars. (The paper was careful, though, not to print this until AFTER the buyout deadline.)
Chrysler had only 12 straight quarters of profits. The Chrysler Group had MORE sales in 2006 than in 2005. It’s a tougher sell to the Chrysler workers, to make the company look like it’s failing.
More to the point: after Ford and GM workers nearly voted down the concessions – or even actually did – the companies and top union leaders knew they couldn’t bring that vote in at Chrysler.
So Chrysler chairman Dieter Zetsche pouted and told reporters, “It’s a very strange position that we should first lose 10 billion dollars before we have the same as Ford and GM ... We will not stop before we get the results we need.” And sure enough, the next quarter, Chrysler’s books were arranged to show a very unexpected 1.2 billion dollar loss! And threats about cutbacks and sell-offs and restructuring started flying. And are still flying.
The companies are manipulating the workers into giving up good jobs, trading a little money for uncertain lives in a poverty environment, and the worker’s kids will make little more than burger flippers. Why? So that the highest of financiers, the Morgans, Rockefellers, Mellons, the tiny few of the very richest families on earth, can book more enormous profits. The manufacturing companies are only conduits for those billions of dollars. The dollars flow up to the banks and super-rich investors who own millions of shares.
But in high finance, the returns are never big enough, the milk from their cash cows is never rich enough. If it’s not a record year for profits then it’s a lousy year. Finance wants more. And MORE can only come from driving down the standards of living of the millions of us in the working class.
The attack on auto workers is important because of the pattern that auto sets. The companies think if they make auto settle for less then they can make all workers settle for less. It’s a corporate campaign against all workers.
This is not the first time that workers have been scammed and flim-flammed and backed so far in the corner there was no other choice but to fight. What was the Great Depression? Big financiers protecting their wealth by closing plants and throwing workers on the streets to starve. What ended the workers’ Great Depression? They got organized, they fought back, little and big fights, until finally they could sit in, take over the profit-making machinery, take possession of it and make it stop. Hold it until the companies gave in. If there is a difference today, it is mainly that the financiers have ever so much more money to meet our needs! But they only understand force. We are that force, we, the working class of this world, and it’s long past time we start using our force, in our own behalf.