Earlier Auto Concessions Led to Huge Job Losses

Dec 15, 2008

The demand that auto workers must make concessions or lose their jobs is nothing new.

In 1979, there was some scare talk that Chrysler, the smallest of the Big 3 auto companies might go bankrupt. Banks refused to extend further loans.

The Carter administration stepped in. In August 1979, just when the new auto contracts were being negotiated, Carter’s secretary of the treasury, G. William Miller, announced that the U.S. would provide 750 million dollars in loan guarantees. However, he stipulated that sacrifices would have to be made by the Chrysler workers.

The UAW had never given up open concessions before. But faced with a chorus of government demands and bank threats to call Chrysler’s loans, UAW leaders agreed to give back a series of things won earlier. The first concession was the smallest, amounting to 203 million dollars in wage and benefit cuts in the 1979 contract.

But the threats of dire consequences only increased. Most politicians proclaimed that the government shouldn’t give loan guarantees. A parade of federal, state and local officials threatened that hundreds of thousands of jobs, not only at Chrysler, but all the other places that depended on Chrysler’s business, would be lost. UAW leaders agreed to push concessions on workers.

A final agreement was worked out in the House and Senate banking committees. A Loan Guarantee Board was set up to administer the plan. An actual federal law spelled out the sacrifices that Chrysler workers were to make: 462 million dollars in wages and benefits from union employees and 125 million dollars from non-union staff. The new contract was ratified three months after the first, in January 1980. Twelve months later, the Loan Guarantee Board came back and demanded a third round of concessions: 673 million dollars, including a $1.15-an-hour cut in wages. These new concessions were ratified in January 1981. All of these concessions were strong-armed through by UAW leaders.

The rapid collapse of what had seemed to be the most powerful union in the country proved that union leaders, who had become deeply integrated into the leading layers of capitalist society, would serve as the bosses’ fist against the workers.

Other bosses could not wait for labor contracts to expire. They lined up to demand contract reopeners, and similar concessions to those given at Chrysler.

First Ford, then GM forced an early negotiated contract, both of which gained major concessions (two billion to Ford; three billion to GM). Ford argued that when Chrysler got concessions, it gained an unfair advantage; GM argued that when Ford got concessions, it gained an unfair advantage over GM.

The workers finally agreed to give up concessions because they were promised that once companies recovered, the workers would be repaid. This never materialized. And the workers gave concessions in the hopes of saving jobs. But when Chrysler recovered from the sharp downturn, more than half the Chrysler jobs were gone. Chrysler farmed out parts production to low-wage companies. The rest of the jobs were lost to a vicious speed-up.

The money the auto companies made from concessions went to the wealthy. The companies paid out fat dividends to shareholders and fat bonuses to their executives.

What happened in auto then spiraled all through the economy, with workers in one industry after another finding themselves under the same kind of attack.

And no one but the bosses won.