Saving Corporations, Sacrificing Workers

Against the Current, No. 140, May/June 2009

Dianne Feeley

PRESIDENT OBAMA’S MARCH 30th report on what General Motors and Chrysler must do to obtain further government loans demands that all “stakeholders” make additional sacrifices.

The assumption is that everyone must pull together to keep the U.S. auto industry afloat. But in actuality the industry has been structuring and restructuring itself over the last 30 years, and it’s the autoworkers who are continually expected to take the concessions — resulting in cuts in pay, benefits and working conditions.

Obama’s March 30th statement started off on the wrong foot. Restoring the industry’s profitability in car/truck production, even with substituting the electric car for the combustion engine, isn’t a comprehensive solution.

Let’s examine the industry. Internationally companies can produce 73 million vehicles, employing eight million people. U.S. and European production constitute approximately half of the total, but in 2008 manufacturers in China produced more vehicles than the Big Three did in the United States.

Commonly referred to as “Detroit,” the Big Three produce about half their cars and trucks in the country. Ford built plants in South Africa, Canada and Mexico well before World War II, while today General Motors seems the most committed to a strategy of global implantation. Initially companies set up production in other countries in order to access the local market, but given growing competition and a flattening internal market, trade agreements and a “logistics revolution” that allows supply chains to stretch across countries and regions, all car companies are international.

What is an “American” vehicle anyway: one made in the United States, or made by a company headquartered here, or one that contains more domestic content?

I worked in a Ford assembly plant that produced the Escort, which was marketed as the first “world” car. I remember the engine came from Brazil. Back then U.S. car companies were selling almost 11 million vehicles. In 2007 total U.S. sales were 16.1 million, but dropped to 13.2 million in 2008.

Today transplants (“foreign-owned” companies with U.S. plants) build 3.5 million vehicles for an expanding share of the U.S. market. Today, too, transplants use more U.S.-made parts than “American” cars.

With the first oil crisis in 1974-75 the Big Three were faced with a threat to their profit per vehicle at a time that they were subject to greater competition. They solved this conundrum by introducing SUVs and trucks, essentially abandoning production of smaller cars to the competition.

This restored their profitability ($10,000 profit per light truck and SUV) until Toyota and Kia began to successfully compete in that market too. As an autoworker I was painfully aware, as I parked my car in the company lot, of how many workers bought these oversized and expensive vehicles.

Given the pressure on profitability, companies introduced new technology and lean production. They also employed “whipsawing,” pitting one plant against another to find a workforce desperate enough take concessions in order to get a new product. Outsourcing, that is taking work out of a plant and giving it to a lower-waged company, was another company favorite.

In the 1990s the Big Three sold off most of their parts plants (Visteon, Delphi, American Axle, etc.). This allowed for new arrangements between parts suppliers and the UAW. Later these were introduced at the Big Three. Most important was the introduction of two-tiered wages, with new hires permanently doomed to make half the wage and never the equivalent benefits of those previously hired.

Two-tier breaks the solidarity between generations of workers. Why should the new hire defend the worker with the higher wage and benefits, let alone protect the benefits of the retirees that she’ll never get? Frankly one of GM’s biggest headaches is that its 391,000 UAW retirees and their surviving spouses aren’t dying fast enough!

In 1979, at the time of the Chrysler bailout, the UAW represented 1,500,000 autoworkers; by 2008 total UAW membership (including state workers, health care workers and graduate student unions) stood at 431,000 — less than the number working at GM in the ’70s. Currently GM has 61,000 U.S. production and skilled trades workers in 47 plants; by 2014 it anticipates a workforce of 46,400 with 15 plant closings. Interestingly, the salaried workforce will drop by a mere 3,000 over the same time period.

Interlocking Crises

Today the auto industry faces interrelated crises: the industry’s failure to maintain its profitability, the current economic crisis, and environmental issues. Vehicle sales have fallen by 20-40% while auto production contributes 20% of all annual U.S. greenhouse gas emissions (more than four tons per person) and 40% of U.S. oil consumption.

With its network of suburbs and highways, the country is designed for auto travel. In fact 90% of Americans drove to work in 2007, 76% of them alone. Fewer than 5% used public transportation, and those who did lived in New York, Washington, DC and Chicago. When I ride the bus in Detroit, I am usually the only white person on the bus — riders are more likely to be poor and Black, and female.

Yet 80% of the U.S. population lives in metropolitan areas, 30% in populated city centers. As some studies of Los Angeles and Detroit reveal, better public transportation existed 100 years ago. Why did the rails get covered over? GM lobbied the government for freeways, not mass transit, and demanded that buses replace the efficient trolley systems. (GM stopped making buses in the 1980s.)

The auto industry failed to invest the money it made hand over fist to mass-produce a relatively inexpensive, energy-efficient vehicle. Of course we need electric or battery-operated vehicles, but that should be only one portion — and a secondary one — of a new transportation and energy-efficient industry. Such an industry would manufacture a wide range of products, from fuel-efficient buses and light rail to wind and water turbines and solar panels.

But here’s the problem: management at the Big Three is incapable of re-imagining such an industry. Their yardstick is not public need but their companies’ profit. That’s the lesson of the entire past 30 years of gas-guzzling and unsafe vehicles while workers perform under high levels of stress for lower wages and benefits — and are now being told to work even harder for less.

I agree with Michael Moore — let the government buy up General Motors and Chrysler and convert them into a public trust. As in most work sites, production, skilled trades, engineers and support staff have more innovative ideas about what can be done than supervisors and managers.

Why not have the trust managed by those who work there, aided by environmental experts and members of the community? That’s the only way we can place auto production into the integrated transportation and energy industry we deserve.

For further reading:

Obama Administration New Path to Viability for GM & Chrysler, March 30, 2009.

Emma Rothschild, “Can We Transform the Auto-Industrial Society?” New York Review of Books, 2/26/09.

Jean-Claude Vessillier, “Cars, the end of a cycle,”

“2009-2014 Restructuring Plan: Progress Report,” submitted by General Motors,

ATC 140, May-June 2009