The corporation whose name was once synonymous with U.S. economic prosperity has announced another in a series of layoffs that will leave its workforce a fraction of its former size.
General Motors will cut 25,000 jobs over the next three years, according to Chair and Chief Executive Rick Wagoner–almost one in four of the hourly blue-collar jobs left at the biggest of the U.S. automakers. GM will be left with 86,000 hourly workers in 2008–about the same number of workers the company employed 30 years before in the city of Flint, Mich., alone.
Wagoner’s bombshell at a GM shareholders’ meeting marks the largest single corporate layoff announcement in two-and-a-half years–since Kmart said in January 2003 that it was shedding 37,000 employees. The layoffs will be felt throughout the U.S. economy. According to the Center for Automotive Research (CAR), a nonprofit think tank, every job lost in a carmaking plant has the impact of 9.4 jobs lost elsewhere in the economy.
GM bosses say the cuts will come mostly through attrition–as older GM workers, most of whom were hired in the 1970s, retire–though an unspecified number of plants and other GM facilities are slated to close.
Gregg Shotwell, a veteran activist in the United Auto Workers (UAW) union and member of Local 2151 in Cooperstown, Mich., says the autoworkers left behind will pay a steep price. “Job cuts will save the automakers big bucks, but it’s a bloodletting for the rank and file and euthanasia for the union,” he told Socialist Worker. “Anyone who has worked the line knows job cuts mean speedup, overload, excessive overtime, and health and safety hazards. Production doesn’t slow down when the workforce is reduced. The jobs just get harder, faster, longer and more dangerous.”
GM is suffering through a big financial slump as sales of highly profitable SUVs have declined–in large part, due to rising oil and gas prices. The company has tried and failed to stop the slump by propping up car and truck sales with customer incentives–which now average more than $5,000 per vehicle.
By announcing layoffs and complaining about the cost of wages and benefits for GM workers, Wagoner “is dodging accountability,” says Shotwell. The company’s top executive “neglects to mention the $9 billion GM paid for recall and warranty costs in 2004, or the $1 billion that GM’s Saturn subsidiary has lost every year since its inception,” Shotwell said. “Why should UAW members subsidize Wagoner’s incompetence?”
According to GM management, another part of the company’s crisis is mounting health care costs. GM is now the largest provider of health care in the U.S.–covering 1.1 million active autoworkers, retirees and their families at a cost of nearly $6 billion. At the shareholders’ meeting, Wagoner vowed to get tough with the UAW and force new concessions in the form of higher co-pays and cuts in health coverage.
Shotwell responds that the union has already made concessions. “In 2003,” he says, “the UAW agreed to remove the health care factor from the cost-of-living calculation, purportedly because UAW members had full medical benefits and weren’t affected by inflation in medical care. If we agree to increase premiums and co-pays, will the COLA be fully restored and reimbursed?
“On top of that concession, 2 cents is diverted from COLA every quarter to ‘secure pension improvements for current retirees and surviving spouses.’ It doesn’t sound like much until you multiply it times sixteen quarters times 135,000 UAW members times the number of hours worked. We also accepted higher co-pays for prescriptions and doctor visits…Where is the tradeoff? What does the UAW rank and file receive in return for concessions on jobs and health care?”
As Shotwell concludes, “Concessions don’t save jobs, improve products or sell vehicles. If UAW members agreed to pay for their own medical insurance, GM would not reduce the price of its cars. The board of directors would simply reward themselves. The only legitimate solution is universal health care. The UAW should take the lead and refuse all concessions until all Americans have full and equal access to health care.”
Industry analysts say that GM managers were under pressure to make a dramatic layoff announcement because they face a takeover threat from Las Vegas casino mogul Kirk Kerkorian, who has been amassing shares of GM stock. His aim is straightforward–break up GM. The calculation is that while GM stock is worth less than $20 billion in total, the various elements of the corporation could be sold off in pieces and bring in three or four times that amount.
GM bosses are using the Kerkorian threat for leverage against the UAW. As David Cole of the CAR think tank told one newspaper, “What GM in effect is telling the union is, with Kerkorian in the picture, who would you rather deal with, Kerkorian or us?”
Autoworkers will be the losers either way, as one writer on Left Coaster Web site explained: “There is nothing worse than being a pawn in a dominance game between two corporate bastards. You watch all of your plans evaporate and your dreams crumble into dust with every move they make. Your future is nothing to men who can reduce vast sums of cash into a single item on a balance sheet.”
Another target that GM bosses have in their sights is the workforce at the parts maker Delphi–once a GM subsidiary, and now an independent company that is GM’s largest supplier. UAW leaders showed that they are willing to sacrifice members at parts plants when they accepted Ford Motor Co.’s restructuring with its chief supplier Visteon.
“In recent years,” says Shotwell, “many plants formerly owned by the Big Three were forced into ‘separation agreements.’ The restructuring has instigated massive concessions, intolerable working conditions and a gross neglect of ergonomic standards. The corporations are breaking the union into smaller, more isolated, and thus more manageable pieces. Without a world view independent of the capitalists, the union has no strategy other than the Three Cs–Cooperation, Collusion and Capitulation.”
UAW President Ron Gettelfinger and Vice President in charge of GM Richard Shoemaker talked tough earlier this year when they said they would refuse to reopen the union’s contract with GM to consider further concessions. But Shotwell says their bluster hides a threat–that they will “work within the confines of the contract to reduce health care costs for the company.”
“If the contract isn’t reopened, the UAW leadership will claim victory–and the rank and file won’t be required to ratify the concessions, though they would in effect be subsidizing management’s incompetence,” Shotwell said. “GM will reduce health care costs through workforce reduction and the cooperation of union officials. The rank and file won’t have any say.”
Shotwell says that the hope for a UAW resurgence lies among parts workers–where there are now more UAW members than are employed at the Big Three automakers. He also says that there has been renewed interest in the UAW New Directions Movement (NDM), a union reform group. Shotwell says the group’s Web site will soon “introduce a plan calling for a national pattern contract [at parts companies], portability of pensions, a national benefits pool and preferential hiring and transfer rights for UAW members. NDM is promoting a ‘No Concessions’ campaign and advocating that the UAW put the horse in front of the cart by organizing transplants, instead of lobbying for Democrats.”
As he concludes, “It remains to be seen if the sleeping giant can be roused to action. In the meantime, I intend to stick verbal firecrackers in her ears.”