Saving the Detroit Three, Finishing Off the UAW: Learning From the Auto Crisis

http://www.socialistproject.ca/bullet/bullet172.html

Sam Gindin

At the end of 1979, President Carter offered loan guarantees to Chrysler to prevent the company's imminent bankruptcy. The loans were conditional on wage concessions of some 10% and the outsourcing of half of Chrysler's work. In August 1981 a newly elected President, Ronald Reagan, ended a strike of 13,000 air traffic controllers by firing the strikers en masse (the controllers' union had ironically been a supporter of Reagan in his 1980 presidential campaign). In these cases, the American state was not just following the private sector's bidding, though corporations of course cheered it on; rather, the state was leading the assault on workers' conditions and rights. The result was a redefinition of American labour relations for a generation to come, with implications for workers everywhere. The American labour movement proved incapable of mounting any resistance through that period and assumed it couldn't get much worse.

It just did. It was expected that the economic crisis, like past crises, would intensify pressures for concessions from auto workers. And it was understood that in responding to the loan requests from General Motors (GM) and Chrysler, the American state would likely reinforce that pressure. But the U.S. Treasury and the Bush Administration went stunningly further. By formally linking UAW conditions to those in the Japanese transplants, the union – whose independence had already been compromised through years of concessions – was pushed to effectively act as an agency of the state.

The loan conditions asserted that “By no later than February 17, 2009, the Company shall submit to the President's Designee ... term sheet signed on behalf of the Company and the leadership of each major U.S. labor organization that represents the employees.” Over and above the elimination of any layoff benefits above customary severance pay – something the union had already conceded – the terms called for a reduction in workers' wages, benefits and working conditions to match “no later than December 31, 2009” levels that are “competitive with the average as certified by the Secretary of Labor” at the U.S. operations of Nissan, Toyota, and Honda. As well, the union had to accept that at least half of each company's obligations to the union administered health care plan would now include company stock (the full terms are available at www.ustreas.gov/press/releases/hp1333.htm).

While American unions were waiting for the inauguration of a new president to bring them legislation that would make it easier to establish unions, the current administration (with no dissent to date from President-elect Obama) essentially declared, in a standard-setting industry, that: “You can have unions but you can only have non-union outcomes.”

There are a number of lessons to learn from this unfolding event and we raise a few of them here.
1. Finance and Auto

The auto sector begged for $34-billion in loans and loan guarantees and was conditionally given half that amount. Finance, on the other hand, didn't have to ask or commit and got $700-billion – more than 20 times what auto asked for. Moreover, the total amount that the U.S. government, and therefore American citizens, are now liable for as a result of the attempt to bailout Wall Street is now estimated to have reached a mind-boggling $8.4-trillion – almost 250 times the monies requested by the Detroit Three.

The difference in the treatment of the auto executives relative to finance was not simply a matter of inconsistency. The first and perhaps most obvious lesson of the auto crisis was to confirm that the iconic status of the American auto companies is over. Finance received the treatment it did because it was understood to have become a vital “public utility” (though hardly a democratic one). Since the entire U.S. economy now depended on the health of finance, and since Wall Street was also so central to the functioning of the American empire, finance had to be saved at any cost.

In contrast, while the Detroit Three were acknowledged as still being important to the economy, they were no longer perceived as indispensable. The U.S.-based industry's notorious lag in responding to the environment – resisting stronger legislated standards on fuel efficiency and pollution control, and focusing on larger, more profitable vehicles – ultimately cost the Detroit Three not only market share, but credibility as a creative, dynamic sector. Moreover, with Japanese transplants having spread outside the U.S. Mid-west, auto production could no longer be identified solely with the U.S.-based auto companies.

That the auto sector did get an instalment on the loans it asked for reflected its lingering importance, but had as much or more to do with the particular moment. The collapse of GM and Chrysler was deemed unacceptable not just or primarily because of the impact on working class communities, but because it would further aggravate “business confidence” and the deepening crisis confronting finance and the economy as a whole.

FULL story at link.

I've forwarded it to a couple of email lists.