USA - Against the threat of job cuts, union leaders want.. closer partnership

Sept/Oct 2001

The long series of large-scale job cuts which has been announced in Britain over the past few months has been blamed on a threatening recession in the USA. And indeed, in the United States itself, the redundancy programmes announced are even more extensive. Whether these announcements will be carried out fully or not remains to be seen. But whatever may be the case, we should expect the bosses to use the atmosphere of uncertainty they have created with these announcements, to try to force down our throats more attacks against the wages and conditions of the remaining workforce.

In such a context, the working class would need an offensive policy, aimed at defending jobs as well as wages and conditions, so as to unite its ranks around common objectives against the attacks of the bosses. And if defending our interests means forcing the bosses and shareholders to abandon some of the fat profits they made over the past years, we should certainly have no qualms about proclaiming it clearly.

But instead, on both sides of the Atlantic, we can see union leaders proposing to "help out" the bosses in finding ways to make "savings" - that is to maintain their profits and, inevitably, on our backs - under the pretext that companies "need" to be competitive. On this subject we reproduce below extracts of an article from the American journal Class Struggle (issue #32 - July-Sept 2001) published by The Spark, a Trotskyist organisation with whom we share political agreement.

Starting in November 2000, many of the biggest companies in the US stepped forward, one after the other, to announce massive job cuts. Beginning with such recently celebrated high tech companies as Cisco Systems, Lucent Technologies, Xerox, Motorola, Gateway and Intel, these announcements spread to heavy industry, led by GM, Ford, Daimler-Chrysler, General Electric and Whirlpool. Finally many retail giants, including Sears, JC Penneys, Home Depot and Montgomery Ward joined the crowd.

The announcements began around the time of the Winter break, when ordinarily companies refrain from talking about cutting the workforce. This contributed to a sense of impending crisis. In January this year, the pace was stepped up. According to Challenger and Gray, the private consulting firm which tracks such things, companies announced job cuts totalling 200,000 during the month of January, a peak. They continued to announce 100,000 or more job cuts every month thereafter.

The sense of crisis grew with the announcements from DaimlerChrysler and General Electric headquarters. At the very end of January, Chrysler said it would eliminate 26,000 jobs - that is, one-third of its total US workforce. That sounded like a company on the verge of collapse or, at the very least, one which was preparing to close a good many plants. Less than a week later, General Electric announced that it was cutting 50,000 jobs - one-sixth of its workforce. Business Week reported an even higher number, intimating that GE was about to dump one-quarter of its workforce.

These were not little "dot-com" companies. They were two of the most important companies in the country, and they represented the heart of US industry. If they were cutting on that scale, so would every other company, starting with those which depended on them, either directly or indirectly. The sense grew that we were surely headed for a new recession and a very deep one, at that.

Corporate spokespersons all repeated the same refrain: they had no choice but to cut jobs; business was slowing, competition was fierce, profits were tumbling and the stock market was dropping precipitously. In sombre tones, economists spoke about a profits recession while journalists poured out never-ending headlines proclaiming that "earnings hit a steep decline."

One might have inferred from this that companies were actually losing money. But no, they were only talking about making a little bit less money than they had the year before. And even with their income trimmed, what they took in was enormous: close to $1,000bn in 2000. The average ratio of profit compared to shareholders' equity for all manufacturing companies was about 16% - after taxes. But this was only the average. General Electric made $12.8bn, a record, last year; General Motors made $4.6bn; Ford made $5.4bn. Many of the high tech companies - supposedly in such trouble - were rolling in profits, including Intel with over $10bn, Cisco with over $3bn, and Lucent with over $1bn.

Chrysler, the company which seemed to be on the verge of collapse, posted a $1bn loss in the fourth quarter of last year, with predictions of further losses in the first and second quarters of 2001. But it had made a profit for the year 2000 as a whole. That was forgotten - as was the $7.5bn in cash which Chrysler was still sitting on, a small remnant of the enormous profits that it had built up during the 1990s. Also "forgotten" was the $2bn it had paid out buying back stock from shareholders to give them an extra gift over and above high dividends. As for the large losses Chrysler was predicting for the beginning of 2001 - these were due mostly to "special charges," that is, a book-keeping sleight of hand, justified by the claim that it costs money to cut jobs!

These companies are not cutting jobs because they are "in trouble." They are demanding job cuts in order to increase the exploitation of their workforce, and thus overcome the slight dip their profits may have taken last year - and even that dip is not so certain, given their book-keeping. That is why, when the companies announced job cuts, their share prices rose: speculators were attracted to these shares in the expectation of getting in on those future profit increases.

Nothing could have shown the absurdity of corporate claims more clearly than Microsoft's announcement of its second quarter results toward the end of July. The company led off with a prediction that the PC business will worsen "further." This was the statement repeated in all the headlines. But what were Microsoft's actual results, buried toward the end of the story? It made "only" $2.75bn in operating profits on sales of $6.58bn - that is, a 42% profit margin in this quarter from which it expected a "further worsening"! And you had to read even further to discover that this company, which pretends to be so worried, today has accumulated cash and liquid assets to the sum of $32bn!

The start of a new offensive

The official unemployment rate began to rise last autumn. Standing at 3.9% in October 2000, by this June it was up to 4.5%. Undoubtedly, the real figure is significantly worse, given all the categories of unemployed or underemployed who are ignored in official statistics. According to the New York Times (June 24, 2001), if all those who do not have work or who are underemployed are included, the real jobless rate today would be 9.9%.

Nonetheless, the increase in unemployment is not as great as one would have expected, given the number of job cuts which have been announced. Whatever the big companies intend, they do not yet appear to be carrying out massive layoffs. Some economists have even predicted that there will be fewer job cuts than have been announced.

So what is going on? Firstly it should be said that during the last nine years of "recovery" the big companies regularly announced job cuts - despite increasing production. At the biggest corporations, many more workers died, retired, were fired or quit than there were workers hired to take their places. The consequence of letting "natural wastage" take its course was an ever-increasing pace of work and a lengthening of working hours. This threw up a real barrier in the face of young workers who were just entering the job market. They did not appear anywhere in the statistics (other than perhaps in the rapid increase of the prison population) because they never found a job.

The question is, do today's announcements herald more of the same or is this an even more severe attack on workers? The rate of the announcements today is faster and the size of the cuts announced is bigger. Are we headed into the recession that some economists say we are already in? No one can be sure.

But whatever the future months hold, one thing seems clear already. The sense of crisis that so many companies created by announcing such huge job cuts could go a long way towards smothering recent expectations that workers might finally enjoy an improvement in their situation. At least, the companies could hope so.

For the better part of the economic "recovery" which began in 1992, there was no recovery for the working class. After continuing to fall in the first half of the recovery, real income then stagnated. It was not until 1997-98, that is, when the economic expansion was more than a half decade old, that wages began to inch up a little - and then, not very much. The working class is still a long way from making up for all that has been lost over the previous decades. The real hourly wages of service, clerical and blue collar workers continue to be lower today than they were in 1973.

And now we are being treated to the spectacle of businesses which are turning billion dollar profits masquerading as companies on the verge of collapse. They are again threatening the workforce with the loss of jobs while scheming - behind the smokescreen of "bad times" - to reduce wages and benefits.

Chrysler, of course, is an old hand at this kind of game. In the late 1970s, it pretended to be at death's door in order to extort major concessions from its workforce, opening the way for other companies and government agencies nationwide to make similar demands. A short time later, Chrysler came back with bigger profits than ever. But its workforce never recovered the losses they had suffered. More than half their number was already gone, and those who were left continued to undergo many more years of cuts in conditions.

Even if there are no massive layoffs and even if the companies continue to cut mainly through "natural wastage", such elimination of jobs can only mean an incremental increase in the intensity of labour - that is, renewed speed-up, with everything which goes with it, including first and foremost, a higher risk of injury, illness and death on the job. Not to mention even longer hours of work in a country whose workers already put in more hours per year than do the workers of any other industrialised nation. Whatever form these attacks take, this time round, there can be no doubt that the working class will be asked to pay an even higher price.

Looking for a "creative partnership" to save jobs - for the boss!

While the big companies took centre stage, announcing their intention to carry out a renewed and intensified attack on the working class, union officials remained remarkably quiet. There were no denunciations of the con game being played over the announcements of declining profits; no demands that the companies open their books; no statements issued against the attack which was being prepared. In fact, the AFL-CIO's monthly magazine, America@Work, carried no articles at all for months about the threatened job cuts. And even when it finally did address the issue, in the July 2001 issue, it ignored the very concrete proposals the companies were making to speed up their workers, and spoke only about the threat of "globalisation."

In answer to the threat of job losses, what did the AFL-CIO propose? To enter a "creative partnership" with the bosses in order to make the plants "more productive" - that is, to do the very thing which allows bosses to cut jobs. The July issue of America@Work carried an article about a program set up by the IAM (International Association of Machinists), which is currently being run at 50 IAM-represented plants. To "save jobs", the IAM proposes "a high performance work organisation" (HPWO). What is this but the same speed-up the companies are today trying to impose? Nevertheless, according to the IAM, HPWO "gives workers and managers practical training in building cooperative work environments." The kind of "cooperative work environment" the union wants to build certainly would help the companies to get more work out of fewer workers. The "saving" will all be on the companies' side.

The UAW was similarly silent after Chrysler's big announcement on 30 January 2001. When reporters called for a response, the top leadership at Solidarity House, UAW headquarters, was "unavailable for comment." And they continued to be unavailable all through February as DaimlerChrysler spelled out in ever more stark detail its intentions.

Maybe UAW President Steve Yokich was too busy getting ready to go to Las Vegas, where he turned up just a few weeks later ... in a racing car, sitting next to Chrysler Group executive Gary Henson at the start of the "UAW-DaimlerChrysler 400," the jointly sponsored company-union NASCAR Winston Cup race. Touting the Chrysler-UAW partnership and rubbing shoulders with the Chrysler brass, Yokich still had no time to say anything about Chrysler's impending job cuts.

It was not until April 5 that UAW officials got around to holding a press conference on the matter. Neither Yokich nor Nate Gooden, the top UAW official for Chrysler, hinted at the slightest criticism of management. On the contrary, they both insisted that company-union relations remained excellent. Gooden explained that the company had kept union officials fully informed of its restructuring plans. Yokich stressed that he intended to continue sitting on the company's supervisory board.

Did they question what Chrysler claimed that it lost? Did they raise the issue of the enormous profits that Chrysler had rolled up in the 1990s? Did they bring up the billions of dollars that Chrysler spent buying back its own stock during all these years? No, of course not. "There would be no Chrysler right now without Daimler's deep pockets," lectured Yokich. The furthest that either Yokich or Gooden would go in questioning the job cuts was to say that they thought that Chrysler's estimates of the job cuts "needed" were perhaps a little too high - but they offered no challenge to the idea that Chrysler "must" cut jobs, nor to the idea that the workers would have to buckle down to help Chrysler out.

Co-operation: a recipe for disaster

The readiness of the union leaderships to co-operate is nothing new, of course.

The UAW has long held up its friendly relationship with Ford as a model of what it wants with all of the companies. According to UAW leaders, Ford has always been the readiest to co-operate with the union - a co-operation the union says leads to greater profits for the company AND more job security for the workers. It's just a "win-win situation" - to use the phrase which has been so much in vogue in labour-management negotiations.

In fact, the 1999 UAW auto contract, as well as employment figures, give lie to the claim of job security. Like several contracts before it, the last contract was presented to the workers as "guaranteeing jobs." What it actually did was authorise each of the "Big Three" auto companies to cut the number of jobs - and to cut them drastically. For each two workers who leave, the company is required to replace only one. (Of course, if production is reduced, the company can cut even more.) This contract was little more than a formula for reducing the size of the workforce.

Obviously, for the workers who remain, this kind of job cutting means that the intensity of work is greater. And it means greater fatigue, more danger, longer hours. It means the auto companies cut corners on anything which does not add to productivity - like cleanliness in the plant, or maintenance and safety procedures. The cost of this was demonstrated clearly in the February 1999 explosion in the Ford River Rouge Complex power plant that killed six workers and seriously injured 12. For years, workers in the Power House had complained about it being unsafe and had filed numerous grievances pointing to precise parts requiring maintenance - including the very ones which led to the explosion. The union did not pursue the grievances. Why not? Maybe we cannot know what was discussed behind closed doors, but we certainly do know that the UAW proved its complete subservience to its "partner" Ford when, on the day of the explosion and in the days following, UAW officials actually defended Ford's safety record.

Example after example can be found to show the deadly results of union officials blatantly ignoring problems in working conditions while trying to help a company improve its profits. The OSHA (Occupational Safety and Health Administration) had cited Chrysler's old Toledo Jeep Assembly Plant 165 times since 1980 for violation of its workplace safety code and included Jeep on a watch list of the factories with the worst safety records in the country. In 1997, after workers, frustrated with no response to safety grievances, filed complaints directly with the OSHA, a surprise inspection resulted in a large number of further serious citations. According to OSHA inspectors, the citations were then dropped because UAW officials agreed with factory management that the responsibility for the safety violations lay with "employee wrongdoing," and not with the company. (Of course, the OSHA itself is not blameless in this matter. It did not need the UAW's approval to cite and penalise Jeep; it had dozens of statements from the workers who made the complaints.) Some of the 1997 citations which OSHA dropped led to the death of a Jeep worker last year. Even with all that, when the situation in this plant was made public earlier this year, UAW officials defended the company, saying that they believed that top managers were genuinely interested in improving safety. The full-time UAW safety representative in the plant shamelessly put the blame on the workers for the unsafe conditions, saying, "A lot of times the person is the problem. To blame it on the company or union is far from the truth."

These are just a few examples and from just one union. But they could be multiplied many thousands of times, from one company to the next, one union to the next. Pushing these partnerships, the union leaderships have nothing to propose when their "partners" turn around and attack the workforce, as they are once again preparing to do, and in a very big way, judging by the continuing flood of job cut announcements.

The class perspective, which recognises the reality that the corporations' interests are in the most basic way opposed to those of the workers is of course as far from the union leaders' perspective as ever.

Why should the corporations get away with imposing more job cuts, forcing the workers who are left to work still harder and faster, under even more dangerous and unhealthy working conditions? Why should workers have to live in fear that at any moment they and their families can be plunged into unemployment and destitution, just because some corporate honcho decides to squeeze the workforce for a few more dollars of profit?

Workers do have the strength to respond to these attacks. What is lacking are not the forces to make the fight, but the collective confidence to do it. And the union leaderships, who tell workers that they should "co-operate" with the bosses in order to save their jobs are helping to undermine this confidence.

21 July 2001