Lies, Damn Lies, and Auto Company Books

Jul 23, 2007

The auto companies say they are “bleeding cash” and are near bankruptcy.

But they’re not going to allow workers a close look at the books! Because books can be made to say anything, as Enron’s thieves proved. For instance:

The companies say they have unfunded pension liabilities. What they don’t say is that this figure includes the multimillion-dollar pensions promised to their executives. The workers’ part of the pension funds is funded and in fact over-funded! It’s the executives’ part that is kept unfunded for tax purposes. They want workers to sacrifice to pay for executives’ pensions!

The companies say they are losing money every quarter. What they don’t say is that more than half those “book” losses are from estimated–not real–costs they pretend they will have in the future, from closing plants and restructuring. What they also don’t say is that by moving their actual profits to other accounts, they can show “book” losses in manufacturing. For example, the profits they make on selling or leasing cars can be shown in the books of Ford Credit or GMAC or Chrysler Financial accounts!

The companies also use their cash to establish mountains of debt from periodically buying and selling other companies. GM will buy Daewoo for a while and then sell it off. Ford will buy Aston Martin and Land Rover for a while and then sell them off. Daimler will buy Chrysler for a while and then try to sell it off. Each step creates many millions of dollars in fees and interest for bankers, executives and lawyers–not to mention stock splits, stock buy-ups and extra dividends for high-roller investors. But the debt drains resources from the core companies, appearing as massive liabilities on the books. The manufacturing companies are used as mere funnels to skim every possible dollar–and then claim poverty, particularly before contract negotiations.

The companies say their health-care obligations for retirees are too high. What they don’t say is that instead of keeping up with the investments needed year by year to keep these insurance funds healthy, the companies deliberately took the money and paid oversize dividends to big stockholders. Between 1994 and 1999, for example, the Big 3 made 92 BILLION DOLLARS in profit. Much of this was then paid out in stock repurchase programs, extra dividends and other means of conveying this money to Wall Street and other investors–instead of using a small part of that money to guarantee their contract with workers and retirees.

The companies say their labor costs are too high. Whatpercentage of a car’s price is labor? Only 8.4% and that includes white collar labor! The companies want us to believe that 91.6% of the rest of the car’s price is completely necessary, completely without waste, completely without room to cut, and completely without any fault on the part of the bosses!

Or consider that profits on a $35,000 vehicle can run between $10,000 and $15,000. That’s over 30% profit right there! The companies could settle for 20% and fully fund the workers’ wages and insurances and still have money left over.

Finally, the UAW itself calculates that the average auto worker is now working so hard that he or she creates $206 of additional value every single hour worked! The companies claim they pay $75 an hour in wages and benefits–and that’s a lie–but even if it were true still it would mean they have $131 an hour left for themselves and wealthy investors.

No, the companies are not poor, neither are workers’ wages and benefits too high. The fact is that the companies want to take still more money from the workers’ labor to hand it over to wealthy executives, bankers and stockholders.

There’s no reason for workers to give them one cent of that money. We work too hard for it, to give it away!