Auto Negotiations:
Don’t Give in to Lies, Threats & Extortion

Aug 20, 2007

Big 3 claim to be nearly bankrupt

Ford, GM and Chrysler tell us they are losing money. And they threaten they could go bankrupt if they don’t get worker concessions.

It’s a bunch of bull!

The auto business goes in cycles. Stacked up against the few bad years are many good ones. Even if the companies lost money in 2005 and 2006, as they claim, they made tons during 12 years before that. Chrysler reported 10 good years, Ford had 11 and GM had all 12 years profitable. Over 12 years time, the three companies rolled up over 133 billion dollars in profits!

Did the auto companies plow these profits back into design, engineering and modernization? NO! Did they put it into the funds for healthcare they owe the workers? NO, again! "Billions were spent each year in stock repurchase programs... provided liquidity [that is, cash] for institutional investors." So wrote Maryann Keller, analyst and auto-supplier board member.

The companies don’t have financial problems. Their real problem is how to hide their wealth, so they can carve out still more concessions from the workers.

Big 3 threaten to close shop and go overseas

The companies say they will take all production to China or elsewhere, if U.S. workers don’t give up concessions.

Companies build plants in countries in order to market vehicles there. But, as the Wall Street Journal said on July 31, "Overseas profit margins tend to be razor thin, despite low production costs. Why? Because their markets are small.

The Journal quotes an analyst for Standard & Poors: "GM can’t rely on growing outside the U.S. alone. Their key to returning to long-term profitability is the U.S."

Why did the Japanese companies come here? Why are the German companies building plants here? Why are even Russian companies trying to buy up auto parts makers? Because here is where the money is. The vast U.S. consumer market allows automakers to sell over 16 million vehicles per year for up to 10 or 15 thousand dollars’ profit–each.

The threat to move overseas is just a bluff–to extort more concessions from the workers.

Big 3 claim to lose market share to "foreign transplants"

U.S. companies didn’t lose market share to the "transplants’ from Japan and Germany. They deliberately gave it away to the "transplants": first, the lower-profit small-car market; and now, fleet sales, once a staple part of their mid-size car factories. The U.S. companies targeted and tried to monopolize the high-end, luxury car or pick-up and SUV markets, with profits per unit running to $15,000.

They shrunk their own market share so they could take money out of autos and gamble it in financial markets–such as sub-prime mortgages! GMAC, through a subsidiary, gambled heavily in this area. Now it’s losing big time there.

If workers don’t resist the demands for more concessions, the companies will take more of the wealth workers create in production to put it into still more speculation.

Do workers have too much to lose to risk a fight?

Auto workers may have better wages and benefit than other workers–but they are steadily and surely losing them. To sit back and let the companies take things from you, just because someone else is in worse shape, only guarantees that you, too, will soon be in that same bad shape.

Union leaders have been avoiding fights, and where did that get auto workers? Retiree medical care has been cut. Active workers have given up $1.52 an hour in cost-of-living increases and 83 an hour from the 2006 scheduled wage increase. Local agreements have been ripped to shreds, the intensity of production has gone up, and discipline got worse.

Auto workers once gained new ground–better wages, more benefits, shorter work time–and other workers followed after them.

No one got it without a fight. The only thing you do when you don’t fight is lose.

Have the companies become too powerful for workers to make a fight?

The Big 3 would impose 48 hour work weeks with no overtime–if they could. They would get rid of lay-off protection; they would drastically scale back what they owe to retirees; they would cut wages in half and get rid of all benefits for new hires–if they thought they could get away with it.

They don’t do it openly because they know they could lose.

The auto bosses, with the help of top union leaders, may have put big concessions over at Delphi–but they didn’t do it easily. They didn’t get all that they wanted. And they had to give up things they didn’t want to give up–for example, to make the temporary workers permanent, to offer big buy-outs to other workers, etc.

The struggle of workers against the Delphi concessions may not have erupted out into the open. But, carried on plant by plant, line by line, work group by work group, workers demonstrated their unwillingness to just roll over and play dead. GM had to go slow, because of a fight led by a small determined group of militants in Delphi plants.

The same power came out when GM and then Ford attacked retirees’ medical insurance. Even a surprise-attack vote at GM wasn’t enough to prevent two in five workers from voting no–and then spreading the word about the rotten deal. When the UAW took the vote to Ford, it practically lost it–or even maybe did lose it. Even the official count admitted it had passed by only 81 votes.

Why didn’t UAW leaders and Chrysler bring the same concessions vote to the Chrysler workers? Because they knew the concessions would have been defeated. And that defeat would have been in the open, for everyone to see.

Past UAW president Doug Fraser said, "the vote at Ford was scary." Not to someone on the workers’ side, it wasn’t! It was full of hope. But for the bosses’ plans, it was scary, yes, it was.

There are other examples. The rush to put temporary workers into major plants cooled considerably when the Belvidere Chrysler temps rose up and cried "Fraud!"

Every time some group of workers resists, even if they don’t stop every attack, they are letting the companies know they could have a problem.

The auto companies may be powerful. But the workers have already shown a bit of their own muscle. If they decide to really flex their muscles, the power that workers have over production, they can make the companies step back.

There is no reason to give up a single concession to companies rolling in money.