UAW
Sellout At GM And Chrysler
By Stephen Lendman
22 October, 2007
Countercurrents.org
The
September and October United Auto Workers (UAW) GM and Chrysler agreements
are just the latest examples of union leadership surrender and betrayal.
It's an ominous sign of labor's plight and clear indication of what's
ahead - more for business, less for workers, and no relief in sight
with union bosses out for themselves and more allied with business and
imperial interests than their own rank and file.
American civilization and
labor historian Paul Buhle sees organized labor today in a state of
collapse, and labor author Robert Fitch says "American workers
are like owners of a family car whose wheels fell off long ago. Each
family member (must rely) on their own two feet; they scarcely remember
what it was like being able to ride together." Who can dispute
it with union membership down from its post-war 1950s high of 34.7%
to the lowest private sector level in over 100 years at 7.4% today.
In addition, inflation-adjusted wages are stagnant or falling, benefits
are being slashed, and Fitch says conditions in the garment and meatpacking
industries are as bad today as the ones muckrakers like Upton Sinclair
exposed a century ago in his book "The Jungle."
He blames it on union corruption
at the top in different forms - leaders on the take, siding with business,
getting big salaries and fancy perks and more concerned with their own
welfare than the interests of their members. Nothing on the horizon
points to change with corrupted UAW leaders Exhibit A.
Back in June, the UAW reached
an agreement with Delphi Corporation that signaled what would follow
with the auto companies. Following months of negotiating, it allowed
the company to impose pay cuts up to 50%, lay off thousands, and slash
health and retirement benefits. It was a win for company and a crushing
defeat for Delphi workers.
Then in July, UAW and the
United Steelworkers reached an agreement with auto supplier Dana Corporation
that allows the unions to take over managing worker long-term disability
and retiree healthcare coverage. The deal is projected to save Dana
over $100 million a year, eliminate $30 - $40 billion in long-term company
liabilities, and it gives UAW leadership another chance for what it
wanted for years - a VEBA (voluntary employee beneficiary association)
agreement putting the union in the healthcare business for the big profit
potential it represents. More on that below.
In the past, VEBAs proved
costly to UAW workers. The union set one up with Detroit Diesel in 1993
that cost company retirees dearly when funds in it ran out in 2004.
It happened again to Caterpillar retirees in 2005 who'll see their out-of-pocket
costs triple by 2010, and the sky's the limit after that. As for Dana
Corporation, it got more in the deal as well - the right to hire new
workers at half the wages of current ones so older employees can be
phased out and replaced with low-cost new ones.
The same UAW - company pattern
is now in play at GM, Chrysler and Ford. GM workers struck September
24 and returned to work two days later after union negotiators agreed
to huge concessions the company demanded and got without breaking a
sweat. Workers accepted the proposal by a nearly two to one margin,
but in doing it signed away their futures with a deal they'll live to
regret. They traded shaky job security today for big contractual givebacks
later. The pact affects 73,000 hourly workers at GM's 82 US facilities,
and key to it is a VEBA agreement for the UAW henceforth to manage GM's
400,000 retirees' health benefits while letting the company off the
hook for what it's been providing since 1964. The GM VEBA amounts to
a multi-billion dollar trust fund that will transform the union into
a major health care provider, and allow it to reap huge profits by cutting
its own members' benefits.
For its part, GM is only
obligated to contribute $35 billion of the $55 billion it owes retirees.
But the deal is even sweeter than that. Health care costs are soaring,
and the company's have risen by nearly half since 2003. It's clear what's
ahead. The VEBA employee experience at Detroit Diesel and Caterpillar
is coming to GM. When funds in it run out, the UAW will cut benefits
and hike premiums and co-pays so union profits aren't affected. The
agreement also lets GM divert pension fund money to the VEBA trust and
allows for worker cost of living increases to go instead toward retiree
health benefit expenses making the deal even worse.
Other terms agreed to in
the contract include a two-tiered wage and benefit package. Under it,
new skilled assembly-line workers will get $26 to $32 in hourly wages
but less in benefits than current ones for a total compensation package
of around $45 an hour compared to about $73 an hour for existing skilled
workers. In addition, a new non-core worker group, comprising up to
one-third of GM's workforce, will get around $27 an hour in wages and
benefits. Both core and non-core employees will henceforth receive less
in active-worker-health-care benefits with GM saving billions from the
arrangement.
The company told Wall Street
investors October 15 its 2007 labor costs will drop from $12.6 billion
last year to $10.1 billion in 2007 (45% below 2003 wages and benefits
paid) with "significant" further declines from 2008 to 2011.
Further, GM estimates it will reduce its long-term healthcare obligation
to workers by $47 billion and expects over the next four years to retire
up to 75% of its current high-paid work force (earning $78.21 in wages
and benefits) and replace many of them with low-paid non-core, non-assembly
line new hires (costing $25.65 in combined wages and benefits).
Employee buyouts, early retirement
offers and other downsizing efforts are coming that will let the company
eliminate expensive workers and replace them with cheaper new ones.
The contract runs four years and includes three lump-sum bonuses but
no wage increases so annual cost of living adjustments won in 1948 are
ended that over time will cost workers much more.
It's a dark new age for GM
workers as well as for those at Chrysler and Ford. The days of Walter
Reuther-type leadership are long gone. He led the UAW from 1946 until
his death in 1970, grew the union to more than 1.5 million members,
and over that time delivered for the rank and file like few other labor
leaders ever did. He was a union reformer, shrewd bargainer, master
strategist, champion of industrial democracy and worker rights and once
said "If fighting for a more equal and equitable distribution of
the wealth of this country is socialistic, I stand guilty of being a
socialist." In fact, he was pro-capitalist, opposed forming a labor
party and allied the UAW to the Democrat party and its imperialist agenda.
Nonetheless, he won sizable
wage increases and a historic tying of them to living costs and productivity
gains. He also got his membership paid vacations, employer-funded pensions,
medical insurance with defined benefits, improved safety and health
measures, and supplemental unemployment benefits that guaranteed members
up to 95% of their pay if they were laid off. That's now lost today
with UAW and other union bosses conspiring with business for their own
self-interest at the expense of their members.
The UAW Chrysler betrayal
was as cynical and self-serving as the GM deal. It was packaged around
a staged six hour partial walkout of 37,000 of the company's 49,000
work force that was more theater than strike action and another defeat
for UAW members unless they reject the agreement as some locals are
doing in voting so far. Some local union leaders oppose it as well as
the terms agreed to are even more draconian than at GM:
-- a new VEBA trust (only
for current employees) with Chrysler contributing only $8.8 billion
of its $18 billion long-term health care obligation to its 78,000 retirees;
new hires will get no retirement health care benefits and will have
to enroll in a new health care program that will increase deductibles,
co-pays and other out-of-pocket expenses; current retirees for the first
time will have to pay out-of-pocket expenses; savings to the company
will exceed $300 million a year;
-- a two-tiered wage and
benefit arrangement with new skilled hires getting as little as $14
an hour or half or less the current pay rate and well below the $19.62
average non-union wage in the manufacturing sector; the agreement lets
the company expand the number of low-paid non-core workers as well as
be able to designate "Non-Core Facilities" in which the entire
workforce will get lower pay and benefits once current employees are
phased out;
-- new health care concessions
similar to what GM and Ford got in 2005 that require retirees to pay
part of their rising health care premiums; current worker pension funds
will be shifted to the VEBA;
-- the elimination of employer-paid
pensions for new workers, replacing them with 401(k) plans in which
the company will contribute one dollar to be invested in the stock market
for every hour worked;
-- freedom for Chrysler's
private equity firm owner, Cerberus Capital, to downsize and close as
many of its plants as it wishes with early retirement offers and employee
buyouts ahead so expensive current workers can be eliminated;
-- workers' wages will be
frozen, and the Cost of Living Adjustment (COLA) benefit won in the
two month 1970 GM strike is now lost;
-- more flexibility for the
company to outsource jobs to non-UAW workers at lower pay and benefits;
these will include so-called "housekeeping functions" like
janitorial and trash handling, grounds keeping, machine and booth cleaning
and others;
-- freedom for the company
to expand the number of low-paid, low-benefit part-time workers as well
as long-term temporary ones who can't gain seniority;
-- the company freed of any
commitment to build vehicles at US assembly plants or guarantee the
number of jobs at them plus other thus far unreported worker concessions.
The GM, Chrysler and upcoming
Ford negotiations herald a new day for UAW workers in the wake of another
crushing defeat affecting all working Americans. Gone are one million
UAW jobs since 1978 (from 1.5 million to 520,000) along with hard-won
gains that took decades to achieve. No longer do men like Walter Reuther
represent workers. Today's UAW leadership betrayed its members trust
for its own self-interest, and there's no relief in sight for change.
Overall, organized labor is on its knees and Wall Street loves it. GM
stock alone rose over 5% the day its deal was announced.
Looking ahead, there are
no easy answers, just tough choices, and job one for working people
is to join in solidarity for their own self-interest and survival. Past
successes can be regained, but wishing won't make it so. A new political
movement is needed based on social equity and justice with a new breed
of leaders to head it. The odds for success are long, but the alternative
is intolerable. That should be incentive enough to go for it.
Stephen Lendman
lives in Chicago and can be reached at [email protected].
Also visit his blog site
at sjlendman.blogspot.com and listen to The Steve Lendman News and Information
Hour on TheMicroEffect.com Mondays at noon US central time.
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