USA - Car industry contracts - a company-union partnership against workers

Nov/Dec 2003

$$pThe following article is reprinted from the "Class Struggle" quarterly (issue #41 -October 2003) published in the US by the Spark comrades.

On the very day that United Auto Workers leaders and company officials signed the final auto contracts, having ushered them through ratification votes at Chrysler, Ford & Visteon and GM & Delphi, one of the Detroit newspapers broke a story about significant changes in medical plans included in the contracts. Coverage under the comprehensive Blue Cross plan was eliminated, to be replaced by an as yet unnamed PPO (Preferred Provider Organisation), the plan for which is still to be worked out by the auto companies, Blue Cross and UAW leaders. This drastic change will immediately affect 360,000 people. Under the old contracts, almost three quarters of retirees as well as a proportion of active workers were enrolled in comprehensive Blue Cross, along with their dependents.

Of course, since this plan hasn't been worked out yet, no one can say exactly what it will mean in practice. But at the very least, there will be some restrictions on which doctors can be seen and which facilities can be used. The establishment of "discounted" fees paid to doctors and other medical providers - a feature of PPO plans, just as with Medicare - is certainly only the opening wedge in a campaign by the companies to "contain their costs." There is no reason to believe that this PPO will escape the fate of all the other PPO's and of Medicare in this regard: fee setting used to "contain costs" for the companies sooner or later leads to doctors and other medical providers themselves reducing directly or indirectly the services they provide.

But the issue is not simply or even essentially the details of the change; it is the fact that this sweeping change was voted on by workers who never had the least inkling that it was included in the contract they were voting on. In the contract highlights - the only thing workers see before they vote - nothing said that the comprehensive Blue Cross plan had been dropped, nor did the highlights say that the workers and retirees who currently have comprehensive Blue Cross would be shunted off into a PPO. At GM, the highlights innocently explained that the "Traditional Care Plan will be updated to reflect changes in the health care delivery system," then made a vague reference to "network discounts." The same ingenuous statement was palmed off on Chrysler workers, except that union leaders called it the "Standard Care Plan." In the hair-splitting language of shyster lawyers, those descriptions may not have been false - but they certainly were far from the truth. And at Ford, there simply was no explanation at all.

With shameless cynicism, UAW leaders declared in the highlights: "Our UAW bargaining teams in the auto industry set a clear goal at the very beginning of these negotiations: no cost shifting in health care. Thanks to exceptional solidarity and resolute bargaining, we were able to achieve this goal and more. At a time when millions of workers are facing health care cutbacks, UAW members at Daimler Chrysler [or GM or Ford] will retain full employer-paid health care: no cost shifting, no benefit takeaways."

The total disdain and contempt which union leaders hold for the workers could not have been more clearly expressed than in this carefully crafted deceit.

The "Lowlights"

The dropping of comprehensive Blue Cross was not the only concession in medical coverage built into this 4-year contract. Co-pays on HMO and PPO doctors' visits were introduced and co-pays on prescription drugs increased. In other words, there WAS "cost shifting." Workers who require maintenance drugs for things like diabetes or blood pressure, which altogether account for roughly 50% of all prescriptions today, will be forced to get their prescriptions refilled from a mail-order house. In other words, benefits WERE taken away. It is obvious that the quality of medicines sent through the mail cannot be assured in very hot or very cold weather; that workers will go without their medicine while awaiting mail shipments; that there will be less contact with health professionals, leading to more medical mistakes, etc. All of these changes will hit most heavily the workers who are the most vulnerable - older workers with serious medical conditions or workers with young children.

The dropping of traditional Blue Cross was also not the only item hidden from sight before workers voted. Four hundred Chrysler designers, for example, did not discover - until after they had voted - that the contract included a provision getting rid of every one of their jobs. Not to mention the fact that Delphi and Visteon workers were called on to vote for a pay cut for future workers without knowing how big it would be. And, just in case the workers' usual reaction against two-tier arrangements might translate into a NO vote, Delphi workers' votes were merged into the much larger numbers voting at GM - even though the GM & Delphi contracts were two distinctly different contracts.

Pensions, which union leaders claimed were "improved", also took a hit. For the first time since the early 1960s, workers already retired will receive no increase in pension rates at all for the next 4 years, only lump sum payments. And these lump sum payments are less than those retirees received in previous contracts, which had also included rate increases. It is a real stab in the back to workers whose labour benefited these companies for decades. As for those workers who will retire during the next 4 years, they won't do so well either.

Wages of active workers are frozen for the first two years of the deal, with only 2% and 3% increases in the last two years. Lump sum bonuses, including $3,000 up front, apparently were supposed to ease the pain (or grease the wheels of ratification). The contract "maintains the improved cost-of-living protection negotiated in 1999". Except that the government's CPI formula was "edited" - downward of course - and some of the new COLA (Cost of Living Adjustment) money is to be "diverted" each quarter, costing workers at least $600 a year, more with overtime. This "diversion" was explained by union leaders as a means to "secure pension improvements." Unfortunately for their little charade, union leaders forgot to clue in the companies, so that when an enterprising reporter called Ford to ask if the COLA money had made its way into the pension funds, a Ford spokesman said simply, "It's diverted to Ford Motor Co. It's not earmarked for any special purpose." Except profits, of course. The other companies gave similar responses.

And there were a multitude of items - for example, more severe attendance controls at Chrysler, easing of restrictions on the companies' ability to shift workers from one plant to others further away, lengthening of time limits in grievances - giving the companies even more time to stall. When added together, the large number of these so-called little items amounted to a very big concession in job conditions. And, as usual, these concessions were often presented as gains.

But, from the point of view of the long-term interests of the workers, the worst concessions of all were the various agreements which can only lead to severe job loss - estimated at 50,000 by the Detroit News - added to the roughly 35,000 jobs lost since the last contract was negotiated four years ago. Once again, as in 1999 and 1996, each company signed a letter promising not to close or sell plants during the course of the contract. These promises ring a bit hollow, since the same contracts included provisions allowing Chrysler to sell, merge or close seven plants; GM & Delphi, three plants; and Ford, five plants. In addition, at least 11 more plants at the various companies were put on notice that they could be sold if they don't "get their act together and get profitable." Explaining away the union's readiness to sign off on all the plant closings, Nate Gooden, UAW vice-president for Chrysler, declared: "We tried like hell to save the plants. When you go to the doctor and he puts you on the operating table and says, 'You will lose an arm or leg or I can't save your life,' you tell him to take the arm or leg." Actually, most people would go and get a second opinion. But for Gooden and other UAW officials, the only opinion that seems to count is the desire of the companies to get rid of plants ... and workers.

Beyond the plant closings are the much bigger job losses that come out of an increased push for productivity - the "lean manufacturing" that the union so approvingly wrote into the Chrysler contract - as it eased restrictions on the number of hours that can be scheduled, on the crossing of job classification lines and outsourcing of jobs, not to mention the ever-greater intensity of work. Concerning the productivity increases that the Big 3 expect to wring out over the next four years, a Detroit News auto analyst reported, "Privately, Ford officials are lauding the more flexible rules as a game-changing coup. Publicly, they have been careful not to trumpet the changes as a victory over the UAW."

These are only the "highlights" - or what a long-time union activist who opposed the contracts called the "lowlights" - of what the UAW gave up in the 2003 auto contracts.

With good reason the New York Times reported that the concessions in this contract "were the most significant since a deep industry recession and a near-bankruptcy at Chrysler prompted the UAW to reopen contracts at GM and Ford in 1982."

The bosses' all-out drive for cuts

Certainly, the concessions written into the new auto contracts are not as large as the ones given up by workers in other industries.

In the airlines, using the spectre of 9/11 and the threat of the bankruptcy courts, the companies got the unions to agree the imposition of actual wage reductions among other things. United workers, covered by the IAM (union), took 13% pay cuts, American mechanics 17.5% and American ramp workers 16%. USAir mechanics gave up 8% in pay. Unions at United and USAir both accepted reductions in health care and pensions. At both United and American, the unions accepted, without protest, to let large amounts of work be transferred to lower-wage regional carriers or to lower-wage sub-contractors. Crew sizes were shrunk and the work load increased. At American, holidays were cut in half, holiday pay cut in half, vacation weeks cut and shift differentials eliminated. With changes in work rules, tens of thousands more jobs are expected to disappear, coming on top of the 80,000 that have already gone down the drain since 9/11.

In steel, the two biggest companies in the industry, US Steel and ISG, dumped the pension plans of other companies they bought out. Ordinarily, when one company buys another, it is legally obligated to maintain all the terms of the existing union contract, including pensions, at least until the expiration of the contract. But when US Steel acquired National this past year, it assumed most of National's debts - except for the obligation to fund and pay for pensions of National Steel workers and retirees. It simply declared it wouldn't take over National Steel if it had to take over responsibility for the pensions too. The bankruptcy court gave its approval. The same thing happened when Bethlehem Steel declared bankruptcy, in anticipation of a buy-out by ISG.

Retirees from both companies saw their pensions thrown into the Pension Benefit Guaranty Corporation. While newspapers may have assured the public that workers did not lose their pensions, since the PBGC took them over, this was far from the truth. Higher paid workers - those whose pensions were more than $44,000 a year at age 65 - had their pensions reduced. Every retiree lost medical care benefits, since the PBGC doesn't cover them. Workers who had not yet retired had their pension benefits frozen at the number of years they had put in when their companies declared bankruptcy. Workers who had gone out early on special early retirement benefits found their pensions severely reduced. Finally, the PBGC doesn't adjust pensions it covers for inflation as the years eat away at pension benefits. And now, the PBGC says it is in danger of bankruptcy itself, threatening even this coverage.

Since 1998, 37 steel companies have gone out of business in similar deals, with parts of their facilities being taken over by bigger companies. As a result, over 240,000 retirees and their families have lost pension coverage, except for the reduced coverage from the PBGC.

"Competition", a cover for stepping up exploitation

While the airline unions dragged in 9/11 every time they needed to justify another cut, and while the steel unions pointed to all those companies that had gone under, auto union leaders were hard pressed to come up with a comparable scarecrow. Auto sales didn't come crashing down with 9/11; in fact, today they are almost at historic highs, and even the most pessimistic commentators, looking at Chrysler, the weakest company, weren't talking about bankruptcy. All three companies had just gone through a string of years when their profits hit record amounts. And GM and Ford are already exceeding their profit targets for 2003. All three had sizeable cash holdings early in 2003, only months before they went into these contract negotiations. GM had 31 billion dollars; Ford 7 billion; and DaimlerChrysler 9 billion. And all three had distributed extra, very large dividend payments - maybe to get rid of some of the embarrassing cash so they could play poor without causing observers to die from a laughing fit.

No auto company declaring bankruptcy, no after-effects of 9/11, and certainly no auto company going belly-up - what could union leaders come up with to justify this level of concessions? Only the same old worn-out war horse, Japanese imports, but this time with a new twist: the auto companies are facing "deadly competition" from the so-called Japanese "transplants" (ie Japanese-owned plants outside Japan).

It is true that Toyota now sells more cars than any single American mark. Of course, the Big 3 have long been opting out of producing cars, especially the smaller (in other words, less profitable) cars that the Japanese produced, choosing instead to push the Sports Utility Vehicles (or SUVs). Not only are SUVs famous for their "roll-over manoeuvres"; they are also cash cows. The Big 3 actually dared to complain that the foreign transplants had a younger work force with practically no retirees - as if the companies are not meant to start paying for pensions long before someone retires. In fact, the Big 3 were supposed to have been putting money aside for today's pensions during all the 30 plus years that today's retirees were working and producing profits for them. So where's all that money?

As for the preposterous claim that the Big 3 are in deadly competition with the "transplants" - this so-called competition reminds one of a famous statement by an old cartoon character, Pogo: "We have met the enemy and he is us." Less than a week after all the contracts were signed, Ford and Mazda announced an agreement to invest over half a billion dollars together in a joint venture they already had ... in Thailand. Toyota has long-standing arrangements with GM, as has Chrysler with both Daimler and Mitsubishi and Ford with Mazda. And this doesn't take into account how many parts they buy from each other and how much contract work they do for each other.

Nonetheless, the leaders of the UAW repeated the nonsense about "competition." In the GM-Delphi highlights, for example, "During the 2003 negotiations, the UAW team faced a wide range of difficult challenges, none more complex - or more urgent - than ensuring the long-term job and economic security of UAW members at Delphi in a time of ever-increasing competition from both foreign and non-unionised domestic suppliers whose significantly lower costs enable them to consistently undercut Delphi and other UAW-represented suppliers. To meet this challenge, the UAW and Delphi agreed to a series of actions aimed at making Delphi a more-quality-minded, competitive and viable company in the long term."

In reality, this is nothing but an argument for workers to help out "their own" companies to increase profits by giving up wages, working conditions, etc. And that's exactly what the UAW did in this contract, promising, among other things, to lower wages for new hires at Delphi and Visteon - to what the UAW called "competitive wage and benefit levels." The GM highlights added that "competitive wage and benefit levels means wages and benefits that meet those of an appropriate, representative group of UAW-represented employers in the US automotive and truck component industry." And just what does the UAW consider a "competitive wage" from a "UAW-represented employer"? A case in point is the Indiana machining and forge plant that Chrysler recently sold to Metaldyne. The UAW agreed to cut wages from $26 to $16 an hour; to halve overtime pay, and to almost completely junk health care and pension plans. And every worker, no matter how much seniority he or she had accumulated at Chrysler, will start out with only a minimum number of vacation days.

Wage cuts like this won't stop at just one plant, nor just in the parts sector of the auto industry. They simply open the door for a much wider attack on everyone's wages, just as will the new wage rates at Delphi and Visteon, the parts plants for GM and Ford. Doron Levin, an openly pro-business writer with the Bloomberg News, complained that "too high" UAW wages and benefits would undercut the big gains in productivity built into this contract, but he found it encouraging that the UAW had agreed to two-tier wage rates at Delphi and Visteon: "Who knows whether four years hence - or even sooner - the union might be willing to discuss a second tier of wages for new hires in Detroit assembly plants? More sacred cows are bound to be slaughtered, as the day of reckoning draws nigh."

"Competition", a pretext to cut jobs

For years, the unions - and not just the UAW - have used imports, NAFTA, WTO, etc., as scarecrows when they argue that the workers need to help out their own companies to lower costs; that if the workers don't, the companies can't compete. The workers' very livelihood depends on it - so says one union after another. This is nothing but an enormous cover-up, hiding the real causes of job losses.

It is true American workers have lost jobs, but overwhelmingly those jobs have been lost to the corporations' unbridled drive for ever greater productivity. When the unions don't contest that drive; when, what's worse, they are ready to let the corporations take the benefits of increasing productivity, they are pushing the workers to dig their own collective grave.

On the scale of industry as a whole, factory output has increased almost two and a half times over the last thirty years, while there are only 80% as many production workers today as there were back then. In the auto industry, the gap is even bigger, since productivity increases have regularly been higher there than in most other industries. When the unions did not fight to have this ever increasing productivity translated into shorter work weeks, more vacations, more holidays, they condemned the working class to steady job losses.

The current push the unions are making for the workers to help "their own" companies become more competitive can only contribute to even more job losses. It does not matter whether the increased productivity comes from an actual increase in intensity of work or from helping the company manage its production so as to make it "more efficient" (which can even help the workers have a more comfortable pace of work for a brief period of time, until the vicious cycle starts up all over again). The end result of productivity improvements is ever increasing job losses, unless the workers fight to reduce their hours of work. And even if most of the workers at a company manage to keep their jobs (and in reality, this hardly ever happens), they do not preserve them for their own children, much less for anyone else. It is the next generation which absorbs the most catastrophic impact of the vicious job losses seen in such industries as auto.

Of course, some union leaders may dress this up, talk about partnership and claim that there are "win-win situations" - the idea that the company and the workers can both win, if only "determined" negotiators find a "creative" way to resolve problems. But the continuing inability of the UAW to maintain what it once had won proves the contrary. The interests of the companies - who are in business to make a profit, the level of which is determined by the degree to which they squeeze the workers - stands in basic opposition to the workers' interests. That drive for profit cannot be stopped, nor alleviated by a "partnership." Just the opposite. Partnership between the union and the company only facilitates a greater exploitation of the workers.

It also brings many union leaders to speak much more openly for the bosses, to the point that it is often difficult to tell them apart. When a UAW vice-president explained the new, very restrictive, Chrysler attendance policy, he issued a warning to workers who are absent: "You will be discharged. You will not return to DaimlerChrysler because we are sick and tired of taking care of you." Which "we" was he talking about - the company, union leaders like him or both together?

When UAW (and other union leaders) first began to push openly for accepting concessions in the early 1980s, they argued that if the workers were to defend their jobs, they would have to make temporary concessions in wages and benefits. The workers did make wage and benefit concessions - many of which turned out to be permanent, not temporary. But they did NOT protect their jobs. In fact, by openly agreeing to give back concessions to the companies, the workers were only inviting the companies to come back and attack them again and again - which the companies did. And the biggest attack of all during that period was not the wage and benefit concessions - although those were sizeable. It was the enormous and permanent job losses.

We've now come to the point where the 2003 UAW contract doesn't even try to hide this anymore. Not only does the UAW say to the workers that they have to give up some of their wages and benefits; it also says they have to give up jobs - in the interests of making "their companies" competitive. According to the UAW in its Chrysler contract highlights, the companies have to get rid of "non-competitive" plants.

Looking to the bosses to help the union

In 1980, the membership of the UAW hit its high point, registering over 1,528,000. Today, membership stands at less than 640,000. The drop in the auto industry - which was once the heart of the UAW - is even more significant. Not only has the union not been able to protect the gains that earlier generations of auto workers had won. It has also not been able to protect its own ranks.

But, claim UAW leaders, this contract now gives them a hope to rectify part of this membership loss. Nate Gooden, UAW vice-president for Chrysler, went so far as to assert, "Under my watch, the Mercedes-Benz plant will have a UAW flag on it." His optimism was based on a deal that the UAW was reported to have made earlier in talks in Germany, the sense of which is incorporated in the new contract. In exchange for accepting plant closings and the other concessions written into this contract, the UAW was supposed to have gained the assurance that DaimlerChrysler would do nothing to stand in the way of the UAW signing up members in any of its non-union plants - apparently including the Alabama Mercedes plant. The UAW is to be recognised in any plant where the UAW can get the majority of the workers to sign up. And the company "reaffirmed its commitment to using suppliers that are good corporate citizens... urging its suppliers to treat their employees fairly, to provide them with good wages and benefits and to provide a safe workplace. The company will also inform its suppliers of the company's 'positive and constructive relationship' with the UAW and affirm DaimlerChrysler's recognition that all employers should 'fully respect the right of employees to seek representation by a union.'"

Of course, this same letter has been in the previous two contracts, not just at Chrysler, but at GM and Ford. This friendly advice by the Big 3 to their suppliers did not prevent the UAW's membership from continuing to decrease over the years of those two contracts - including in the parts industry, toward which these letters are directed.

The UAW is not the only union to attempt to trade off disciplining its own members in exchange for gaining new members. In Las Vegas - the city the unions have pointed to as a model of organising - the leaders of HERE (Hotel Employees & Restaurant Employees) negotiated concessions on work rules at hotels which the union had organised, in exchange for being allowed to freely sign up workers in other hotels owned by the same companies. It has become a hallmark of many unions' policy to try to demonstrate to the bosses how "responsible" they are - explaining that if the union is allowed to organise new members, the company has much to gain, and little or nothing to lose.

"Partnerships" disarms the working class

UAW leaders also made every effort to demonstrate their "responsibility" in maintaining industrial peace. At the end of July, top UAW officials from the five companies met to discuss the technicalities in the event of a strike - a meeting which leaders went out of their way to stress was only a formality. At the conclusion of the meeting, local officials spoke to the media, repeating the same refrain, almost in the same words, as if scripted. In the words of a GM local financial secretary: "I don't think there will be a strike. I don't think any of us think there will be. A strike would be devastating to us and the company. We come here to get prepared, but in the back of our minds we don't think there will be one. None of us want one." A GM local president put it even more bluntly: "Our people at the plant, most of the people here, know we have to get along with the companies. These aren't the days where you tell the company to kiss your ass."

"Getting along with the companies" - UAW leaders may say it openly these days, but this has been the policy of top UAW leaders for a very long time. The UAW has not called a national strike at one of the Big 3 auto companies since a brief token strike at Chrysler 18 years ago. Since then, the only UAW strikes have been local strikes, aimed sometimes at supposed "strategic plants." But even these strikes have been few and far between. The last important local auto strike took place in 1998.

In fact the last significant company-wide strike called by the UAW was the hundred-day GM strike way back in 1970, which established the principle that workers could retire after 30 years of work - provided it was 30 years for the same company. This is not to say that even that strike brought forth a real mobilisation of the workers, since, as had already been the case for years, picketing was minimal, meetings to discuss what was happening as the strike continued were non-existent. There certainly was no organisation of the workers to plan, run or control their strike. Nonetheless, it conveyed a certain combativeness, because the companies did not willingly concede to the demand for "30 and out." And it also conveyed some sense of "solidarity," since the union collected double dues from Ford and Chrysler workers to reinforce the strike fund depleted by supporting nearly half a million GM workers. That strike was watched closely at the time by other workers, and not just in auto.

The fact that the union has been so obviously unready to call even company-wide strikes has been parallelled by the elimination of other traditions of militancy and solidarity that existed among older generations of workers. Unfortunately, it didn't come as a big surprise to see the Michigan AFL-CIO, at the behest of the UAW, cancel the annual Labour Day March this year in Detroit, replacing it instead with a "Labour Fest" scheduled two weeks later, in which one of the main activities was the signing of great big anti-NAFTA postcards to Congress.

What is true of the UAW is true of other unions as well - all we need to do is look at the appalling drop in strike statistics going as far back as the 1970s. In 1974, there were 424 major strikes (those involving at least 1,000 workers), with 1.8 million workers on strike. In 2002, there were only 20, involving 47,000 workers - less than 3% of the workers involved in 1974!

Even the so-called "progressive" unions go out of their way to use means other than strikes - ranging from "corporate campaigns" to boycotts and lobbying. The current "Immigrant Workers Freedom Ride" is a particularly good case in point. It completely ignores the fighting capacity that some immigrant workers demonstrated in a few local situations where they took the initiative themselves to mobilise in recent years. Instead, this AFL-CIO sponsored bus ride was aimed at "lobbying" friendly politicians. Union leaders may have adopted the name used by activists in the Freedom Rides of 1961, which were part of a movement that involved the black population in actions in the streets against the defenders of Jim Crow. But the name was all they adopted.

A strike is not the only weapon in the workers' arsenal, but it is still the one which is best adapted to allow workers to bring their forces together to bear on the companies in ordinary times. Every strike is a fight - which expresses the real situation in the workplace, exposing the hypocrisy behind the idea that the company and the workers have interests in common. And, to the extent that a strike is decided on, carried out and controlled by the workers and led by people the workers themselves choose, it also becomes a school in which workers can gain consciousness of their own capacities and of the workers' power, and through which they learn to distinguish their real friends from those who only pretend to be their friends.

Not all the drop in militancy can be attributed to the policies of the leadership of the unions. Obviously, the consciousness of the working class plays a significant role in this field. No one would claim that the readiness to struggle that pervaded the working class and other layers of the population in the 1960s and 1970s still exists today. Not nearly. But what the union leaderships - with very few exceptions - have done now for years to divert the workers from any kind of a struggle can only have contributed to undermining the consciousness of the working class.

One of the characteristics of the union bureaucracies is that they have come to represent the general historic interests of the capitalist class, even though in their daily activity they may defend some of the specific and immediate interests of workers. But in the ever more decaying economy of imperialism, they are even less and less able to make any fight for immediate reforms. In his unfinished 1940 text on the trade unions, Trotsky insisted that the unions "can no longer be reformist, because the objective conditions leave no room for reforms. The trade unions of our time can either serve as secondary instruments of imperialist capitalism for the subordination and disciplining of workers and for obstructing the revolution, or, on the contrary, the trade unions can become instruments of the revolutionary movement of the proletariat."

That was written more than 60 years ago, but it is even more relevant today, as the absolute collapse of the unions in front of American capitalism shows. In this country, which decade after decade has accumulated an ever larger share of the world's wealth, the working class finds itself falling further and further behind.

To resist this offensive, workers need unions that act on the basis of a policy whose ONLY aim is to defend the interests of the working class - what the IWW stood for almost a century ago, when it inscribed these words in its constitution: "The working class and the employing class have nothing in common." Revolutionaries, even if their numbers are very small today, have a necessary role to play in helping workers fight to take back control over their own unions, to transform them into instruments that will fight to defend the interests of the working class against the capitalists.