By Frank Hammer
As the fate of the Detroit auto industry is being debated, the arguments and positions are becoming crystal clear. There is now a chorus of right wing ideologues who are pushing to let GM go into bankruptcy. No argument here about “too big to fail.” No regard for consequences like we heard when the Congress approved the $700 billion stash for the banking and financial industries. The Detroit Three are accused of mismanagement at a crescendo much louder than the financial giants we had to save. Why the double standard?
The reluctance to bail out GM and the other Detroit automakers has everything to do with the UAW, as if the impending collapse is the fault of the workers at the bottom of the heap. The “free market” types want to use the current auto industry crisis to force a “restructuring” of the companies’ “relationships” principally with the UAW. We hear a chorus about “bloated UAW contracts”, contract terms that “GM can’t live with,” or references to “overpaid” autoworkers, etc. Never mind that just one year ago UAW autoworkers agreed to huge concessions in what President Ron Gettelfinger describes as a “transformative agreement” (for which, in the Detroit media, he was heralded “man of the year.”). That agreement, according to Gettelfinger, was designed to make the UAW labor force cheaper than their non-union brethren at Honda, Toyota, etc. This from a once proud union which set the industry standard.
Before the 2007 agreements were negotiated, the average total UAW labor cost per vehicle was $2,400, or a little over 8% of the price of a vehicle. UAW workers then were among the most productive in the world, producing value added worth $206 per worker per hour. This is far more than he or she was earning in wages, even when benefits, statutory contributions and other costs are included. The margin of difference in labor costs with non-union Toyota before the transformative agreement was already then just $250-$300!
The free marketers also complain about the “lavish” costs of autoworker healthcare, obscuring the fact that the UAW accepted all the risk for their retirees’ health care when it agreed - to a “Voluntary Employee Beneficiary Association,” or VEBA at the Big Three’s behest. To the forces which have conspired for many years to establish a “union-free” domestic auto industry, none of these concessions matter.
One of the reasons the free marketers love the non-union auto companies in the Sunbelt is that they have no retiree pensions and healthcare obligations to speak of. They ascribe this to the fact that they are “union-free.”
The UAW in the Bullseye
Here are two quotes from the free marketers which make the real target of the crisis very clear:
It is a mistake to use part of the $700-billion rescue package to reward high-tax, non-right-to-work states such as Michigan, says Peter Flaherty, President of the National Legal and Policy Center (NLPC). The automaker bailout is actually a UAW bailout. The union will not allow companies to deploy capital in ways that the market would dictate, such as closing plants and layoffs.”
The facts demonstrate how preposterous the last line is, considering the absence of any protest by the UAW over the past twenty years of plant closures! Here’s what Colorado’s “Grand Junction Sentinel” had to say:
“But the GM jalopy needs a complete overhaul, and putting taxpayer funds into the company as it now operates would do little but bump the problems down the road while keeping destructive United Auto Workers union contracts in place.”
“Destructive” UAW contracts, indeed!!! The deregulators are not satisfied to dismantle government regulations so the financial market can run wild. They must rid industries of contractual obligations negotiated by that other democratic institution: workers’ unions. The “destructive” contracts of which they speak have protected many lives in the factories, enabled workers to enjoy a good standard of living, and retire with dignity and security. Now this has been made out to be un-American, even un-patriotic. “Joe Six-pack” is back to being the villain. If these capitalists had their way, workers in Detroit will be making the same wages paid in Mexico. That way, the remaining work could stay here.
The financial catastrophe unfolding before our eyes is the means to thrusting a dagger in what’s left of the UAW’s heart, long sought by American capital. From the moment that autoworkers forced GM to sign an agreement in the midst of the last “Great Depression,” the union has been vilified as the interloper in the company’s prerogatives. Except today we in the UAW are now described as interfering with the real wages that the “free market” would and should deliver - as if the “free market” were ordained and ordered by God Himself.
Each time the de-regulators have insisted on more de-regulation, it’s been like a crazy man pouring more gasoline on the already raging fire. It’s only making the financial crisis worse. Credit may flow again, but how many of the working poor will be taking out loans for, say, a new car or a house? What will trashing the UAW contracts get us? Fewer people to purchase the cars we produce? More citizens confronted with foreclosures and being kicked out of their homes? Even fewer sales at the local Mall? We are heading for a second New Orleans (without the flood water) in the place once known as the “Arsenal of Democracy?” This is the same mentality that governed the US military’s conduct in Vietnam: “destroying villages in order to save them.”
UAW Must do More
The union must stand up for itself, or we will all face millions more of so-called “low wage” earners as part of the growing class of the “working poor.” The UAW has done very well by the rest of US workers, even if they don’t know it. The media has pounded the UAW, taking advantage of flaws in its organization and errors by its leadership. Not surprisingly, there’s less sympathy for the UAW than there once was. But it would be a tragic error if working people turned their backs on the UAW now. Even the non-union workers in Kentucky and Tennessee are benefiting from the wage and benefit standards set in Detroit by the UAW. With a UAW diminished whether by (a) the fine print in a bailout agreement or (b) because GM is allowed to file for bankruptcy the devastating consequences will serve to even further undermine the standards enjoyed by all working people.
Alabama Senator Richard Shelby and his friends think it’s quite patriotic to have the foreign brands produce, and make the profits, from the transportation that the USA needs. There is a political subtext to all this, too. President-elect Obama’s victory was due in large part to the crescent of blue states stretching from Minnesota through Indiana, Ohio and Pennsylvania right up to the tip of Maine. Don’t forget Michigan, where autoworkers rejected McCain/Palin and sent their campaign scurrying. Why would Republicans now reward a hostile constituency, when their remaining political base weaves itself through non-union workplaces in America’s “Sunbelt?”
With their younger workforces, the foreign brands manufactured here admittedly enjoy a distinct advantage. The UAW agreed in the ’07 negotiations to help the Detroit automakers be “competitive” by freeing them of the responsibility of the “legacy costs” of retiree healthcare with the VEBA in 2010. It’s not been a year, and it’s already clear that it is a non-starter, as the automakers have yet to pay into the trust fund as had been agreed. Besides, the value of the Detroit Three’s payments into the trust are tied to the value of their stocks. GM’s has plummeted from $42 to $5 in the year since the agreement was made. A $25 billion “bridge loan” for all three companies can’t shore up both the VEBA commitments and the companies’ need for liquidity. It is politically untenable for the union to ask taxpayers to bolster the VEBA when so many workers are doing without health care at all. If we are looking for real, lasting solutions that will also help our economy, the parties must demand that Congress pass HR 676, the single-payer national health insurance bill that would cover not just UAW retirees, but the 45 million Americans who are doing without. GM and the UAW agreed in principle to this approach back in 2005 modeled on the health care system in Canada . Making it happen here and now would level the playing field for the Detroit Three.
Frank Hammer is a retired UAW-GM Dept In ternational Representative & Past President and Chairperson, UAW Local 909, Warren, Michigan