The following article was originally published in Proletarian Revolution No. 81 (Spring 2008).

Auto Workers Betrayed – Again

Auto workers took a beating in the contract rounds between the “Big Three” American auto companies and the United Auto Workers (UAW). The UAW leadership rammed disastrous contracts down the throats of General Motors, Chrysler and Ford workers. President Ron Gettelfinger and other union officials, after the thinnest facade of leading a fight, settled on terms that mean massive givebacks in wages, job conditions, health care and – despite assurances to the contrary – the loss of jobs themselves.

The betrayal by the UAW bureaucrats is a big setback for all workers. If organized union workers in the auto industry can be forced to swallow such concessions, all of us have to be worried about what will happen to workers with less immediate power to fight back, particularly unorganized workers and young workers just getting a start. That is why it is especially important that revolutionary-minded workers analyze what has happened in auto and reach conclusions about what is necessary to prevent further disasters.

The UAW has a special history and role in the U.S. working class. The automobile industry remains the greatest concentration of production workers in the country. Auto workers were at the center of the great industrial battles of the 1930’s and 1940’s, fights in which socialists were prominent. The union that emerged from those struggles became a trendsetter for wage and benefit gains in the post-World War II era. And as a result of the ghetto rebellions of the 1960’s, auto became a key source of decent-paying stable jobs for Black people in cities like Detroit. The UAW in turn became a focus of Black workers’ struggles, both against the racist anti-worker bosses and against the treacherous UAW bureaucracy.

While pro-capitalist leaderships over the past 30 years have surrendered the leading role it once played, the UAW is still central to the labor movement. This latest major defeat of a core industrial union will be a green light for other capitalist bosses to further press their long-term offensive against the working class.

The contracts were not passed without opposition, particularly at Chrysler. They were certainly not approved with any satisfaction by the rank and file, either for their terms or for the conduct of the union leadership. And while such a defeat inevitably creates a measure of demoralization in the working class at large, class-conscious workers should see it as a lesson in the class struggle: it is an indication of capitalism’s plans for a ramped-up assault on the working class, of the treacherous role of the union bureaucracy in collaborating with the bosses’ attacks, and of the utter inability of the reformist union oppositions to offer a serious defense of workers.

A massive, militant fight back against the bosses’ attacks is needed. But workers can afford to have no illusions – under conditions of increasing economic crisis, the attacks will just keep coming. In the course of their struggles to defend their jobs and standard of living, workers will have to see that the only solution is the revolutionary overthrow of capitalist profit system.

Outline of a Sellout

The UAW leadership selected GM as the first company to attempt to settle with, in large part because it figured the chances for rank and file approval were highest there. The terms of the GM contract add up to a wholesale slashing of hard-won rights and working and living standards of GM workers and their families. They include:

In fact, the VEBA trust is expected to be the largest stockholder in GM. So the UAW leadership will feel even more pressure to help company profits at workers’ expense in order to prop up the fund. The UAW leadership well knows of the collapse of such a plan at Caterpillar after just a few years, but nevertheless proposed this for its flagship industry.

Reversing the traditional aim of UAW “pattern bargaining,” the GM sellout became the template for the settlements at Chrysler and Ford. With some variation in terms to further please the bosses at the other companies or attempt to fool the workers, the disaster was repeated: frozen wages, diverted COLAs, two-tier wage systems, the replacement of retiree health care by VEBAs. The supposed sweetener at all three companies was the union getting “solid pledges” about new investments in domestic production to maintain current job levels.

These job security pledges are worthless scraps of paper. Similar promises in past contracts did nothing to stop GM from destroying over 600,000 jobs since 1978, and the latest promises are already being shredded before the ink is dry. GM is closing three plants and planning to base the fate of others on agreements over unspecified cost-cutting measures, while Chrysler announced the layoffs of 10,000 workers within a week of its agreement.

The reaction of the vampires on Wall Street was by itself an indication of just how bad the deals were. The news of the initial contract at GM produced a sharp increase in the price of GM shares, along with those of Ford and Chrysler in anticipation of similar sellouts. Finance capital loves attacks on workers as a solution to ailing companies, and these days only true bloodlettings qualify as the right medicine. That’s what the auto Big Three got. GM’s post-contract buyout offers, which would gain them nearly $50 per hour for each worker replaced, means that the bottom tier the union signed on to could become the industry standard wage.

The contract debacle was no surprise to anyone familiar with the Gettelfinger leadership. In the lead-up to the current contract round, the union tops already accepted huge cuts in the health care programs at Ford and GM, and had helped bosses carry out a bloodletting attack on jobs, wages and benefits at Delphi, GM’s parts-supplier spin-off. They signaled that they would be more than receptive to GM’s demands for this contract. The bureaucrats had been meeting with the company for months before the bargaining formally began. Gettelfinger even let fly the fact that the union had proposed a VEBA set-up to management two years ago! All this just emboldened the bosses: in the bargaining itself, GM and then Chrysler appeared unwilling, at least publicly, to throw Gettelfinger any job security sops he could possibly use to sell the deals to the membership and soften the anger over the massive cuts.

So at GM and Chrysler, the briefest of strikes – two days at GM and not even the length of a shift at Chrysler – were called by the union leadership before agreements were announced. Dubbed “Hollywood strikes” in the capitalist press, they were in large measure maneuvers to make the union leadership appear willing to fight back and hold the line – if they weren’t fully stage-managed affairs by management and union tops. Gettelfinger made clear that any strike would be half-hearted and short and would accomplish as little as possible. (According to a Washington Post account, a UAW official revealed that Gettelfinger had actually suggested over the summer that GM build up its inventory as strike preparation!) At Ford, the union tops managed to avoid a strike altogether in fashioning their betrayal.

Anger and Resistance in the Union Ranks

Nonetheless, the strikes themselves showed the the potential for workers to unite in action against the bosses. Tens of thousands of GM and Chrysler workers had no problem walking out. Teamster drivers honored picket lines by refusing to deliver completed cars while threatening the same for parts and supplies. It was possible to cripple the car companies, particularly GM with its more limited inventory of cars and trucks. Most important, serious strike action by auto workers had the potential to be a rallying point for the entire working class.

Opposition to the sellouts was widespread and almost decisive. At GM, the one-third rejection rate by both production and skilled workers was higher than typical contract votes in the union. At Chrysler, the opposition was more intense, as were the efforts of the Gettelfinger leadership to win approval. Unlike at GM, some of the Chrysler local leadership – most importantly the head of the bargaining committee, Bill Parker – expressed opposition to the contract.

Parker, a long-time supporter of the reformist socialist Solidarity organization, was reluctant in his opposition and respectful of bureaucratic superiors who truly deserved contempt. His “Minority Report of the Bargaining Committee” said:

In taking this position, I want to make it very clear that this is, in no way, a reflection on the leadership of Vice President General Holifield. I am very appreciative of the changes and integrity he has brought to the Chrysler Department since his election.

For his part, Holifield supported the contract, exulting that the agreement will “allow opportunities for the company to grow.” Parker’s report did write pointedly on the evils of the multi-tiered wage scales: “Two tiers of workers create divisions within the union, pressure to reduce the top tier in the direction of the second tier, and efforts to drive the second tier even lower.” Which made it all the worse when he ended up voting for a modified version of the two-tier settlement!

Parker may well be the sincere, hard-working type he is portrayed as by other oppositionists in the union. But it is a sincerity that has been hardened over a long time in the direction of seeing collective bargaining, and a bureaucracy-management relationship that oversees it, as the solution for workers’ struggles. He stressed in his minority report that the proposed contract was “a devastating break from the pattern,” as if that “pattern” was a golden path that had not led to the dire results of the contracts.

Parker’s instant status as a high-profile labor maverick should not fool militant workers that he represents a real alternative to the pro-company Gettelfingers. But the opposition that he and other local leaders put up, in particular to Chrysler’s failure to commit to future products, expressed widespread anger among the ranks and briefly provided a focus in building momentum against the deal. Key locals voted down the contract by significant margins, and only a frantic campaign of intimidation by the leadership at late-voting locals salvaged the agreement, with only 55 percent of production workers and 51 percent of skilled trades voting for the contract. Deeply concerned with this opposition, and fearing it could be worse at Ford where workers had only narrowly approved (perhaps by a rigged vote) previous cuts in health care, Gettelfinger & Co. crafted a contract with Ford management that played up the promises of production and jobs.

The success of that tactic underscored that, in the end, concerns with keeping their jobs was the most prominent consideration for the ranks. A well-founded fear of losing jobs when few other options are available framed the defensiveness of the workers and their grudging acceptance of concessions, while the dubious promises of job security proved to be effective sweeteners. But the ratifications will not obscure the deep dissatisfaction in the ranks at the contracts and towards the union leadership. Indeed, the acceptance of the contract can be largely attributed to the lack of confidence in Gettelfinger & Co.’s unwillingness and inability to lead any sort of real struggle.

Capitalist Crisis, Reformist Betrayal

The conduct of the union tops, treacherous as it was, was to be expected of a leadership that is tied to the preservation not only of the capitalist system but also of the individual companies it does business with. And a business it is. The labor bureaucrats derive their privileges and prestige from performing as bargaining agents between workers and bosses. To do this, they must protect company profits while trying to throw the ranks enough sops for them to stay in power and maintain their bargaining position, collect dues and conduct financial operations. With the sustained and growing decay in the American economy and in industry in particular, this has meant agreeing and helping to carry out the bosses’ demand that the workers pay for the crisis of the system. The leadership’s betrayals in auto are but the latest demonstration that the trade union bureaucracy must be replaced by a revolutionary leadership, committed to the interests of the working class and therefore to the necessity of socialist revolution.

Auto workers are already seething over the previous health cuts and the deterioration of their communities, as plant after plant shuts down. They are tired of management and the capitalist media rattling on about how the companies are doing so badly because the workers supposedly have it so good. There are strong currents of feelings, nurtured by some out-bureaucrats, militant reformists and leftists, that the plight of the domestic auto producers is a hoax; that the companies are really rolling in profits. It is understandable and even healthy that many of the more militant workers so mistrust capitalist propaganda. And to some extent their feeling is accurate. The auto companies have undoubtedly exaggerated their woes while conveniently neglecting the high living of management and big shareholders, and have blamed workers for their own stupendous levels of incompetence in design, production and marketing.

But let’s be clear: Big Three automakers do have a real crisis. Mountains of money have been lost in recent years – Ford lost $12.6 billion last year, while GM lost $39 billion in the past quarter. The Big Three lose money on their domestic operations, and they are losing market share (now around only 50 percent in the U.S. itself). But beyond the immediate bottom line is the competitive disadvantage with foreign-owned companies in this country who have avoided unionization and therefore pay far less in benefits to a far smaller number of retirees. It’s the way the system works: capitalism rewards those companies who cut their labor costs, however ruthlessly, and punishes those who don’t. This has never been more true than in recent years, when a decaying capitalism demands a dramatic intensification of exploitation.

The Big Three have staved off a reckoning for years by relying on sales of over-priced gas-guzzling SUVs, speed-up on the factory floor, and cutting the workforce to the bone. (GM has reduced its workforce from a quarter of a million to just 73,000 since 1994.) But their SUVs are facing stiffer competition; and the sales of the larger models, the biggest cash cows, are declining in a world of high gas prices. Now the companies not only must further cut the workforce but must go harder on the employees who survive.

While the automobile industry has its own unique conditions, in basic ways it is representative of the fundamental problems confronting the capitalist system as a whole. The boom of the post-World War II years has long since been replaced by capitalist stagnation. Only a greatly intensified exploitation of the working class in the U.S. and internationally, from the vast outsourcing of industry to oppressed third-world countries, to the shredding of wages and benefits and job rights in the richer imperialist countries, has prevented the system from suffering a full-scale depression. But that – and a massive deepening of the capitalist assaults – is in the cards. The domestic auto industry has in a sense been a more fortunate sector of manufacturing. But no longer.

Spark Sputters

There may be comfort for some in the thought that enough anger and militancy will call the auto companies’ bluff and tap into their supposed vast troves of buried treasure. Such an outlook characterizes the approach of a number of union oppositionists and even some socialists. The group around the Spark paper carries this notion to an absurd level, suggesting that the crisis in the Big Three is a mere charade. “Ford has been pretending financial trouble,” they wrote on October 8. More elaborately, at a public meeting on September 23, a Spark presentation made the claim that labor costs are only $8.40 out of each $100 of an average vehicle’s price:

Thus they have $91.60 for everything else – not only materials but CEO bonuses, payoffs, corruption, mismanagement, profits, country clubs, you name it.

Spark is pulling a fast one here. Even assuming their numbers are right, they are overlooking the cost of plant and machinery, which is substantial in the auto industry. They also slip in “materials” among all the bosses’ perks, which is another big chunk of an automobile’s cost. As self-styled Marxists, Spark ought to know better since Marx showed that the cost of any commodity includes not only wages and profits but also “constant capital,” the used up portion of plant and equipment.

This accounting fraud allows Spark to imply that the overwhelming proportion of sales is realized as profits, broken up in a variety of ways to benefit management and stockholders – as if there is all kinds of room for massive improvements in wages, benefits, “you name it.” If only life was this simple. Why bother with the trouble of making a revolution and building a society on a fundamentally new basis if the wealth is already here and only needs to be redistributed?

Revolutionary Marxists, in contrast, explain that as overall profits fall and competition intensifies, there is no solution to the needs of the working class under capitalism. Mass struggles can at best defend and win limited and temporary improvements in the working class’s unsatisfactory-at-best living standards. Such struggles certainly cannot hold the line for long in the face of mounting capitalist attacks. The great importance of union and other struggles is that they can teach increasing numbers of workers that the only real solution is the overthrow of the system by workers’ revolution. Spark’s stress on corruption and greed is not Marxism but populism, the notion that capitalism in clean hands can be run in favor of the people.

The October 8 Spark also tried to use the foreign transplants’ success as part of its argument:

The fact is that the biggest, most profitable market for vehicle sales is in the United States. Why have the Japanese companies come here? Why are German companies building plants here? Because here is where the money is.

These companies did see money in the American market, but as only one part of an international strategy. And they actually began building plants in the U.S. as a way of getting around import quotas. Once here, they discovered they could make handsome profits – in large part because they have not had to pay the kind of health and retirement benefits that the Big Three have been desperately trying to shed. Spark’s argument only draws attention to their own failure to understand the very real problems of the capitalist system.

UAW Reformists Offer No Alternative

While Spark wishes away the capitalists’ profit crunch in order to encourage illusions that old-style union militancy can still offer a way forward, others inside and around the UAW proposed another approach. Former mid-level UAW bureaucrats Jerry Tucker, Paul Schrade and Warren Davis were once leading figures in the now defunct “New Directions” caucus that posed as a militant alternative to the UAW tops. In response to Gettelfinger’s proposed VEBA they had a letter published in the New York Times which expressed their “grave concerns” about the idea and in diplomatic tones suggested an alternative: a different kind of alliance between the union and the bosses! They wrote:

We do respectfully submit that the appropriate counter-proposal to the corporate bailout by way of a VEBA is a UAW demand that ... the corporations become a moving force on the public policy front for the enactment of the current universal, comprehensive, single-payer healthcare legislation. ...

Such a national healthcare system would serve the auto companies self-interest and level the competitive playing field ... . (Sept. 16, 2007.)

This appeal to collaboration with the bosses was quoted without criticism by the Solidarity-associated Labor Notes magazine and was even echoed by Greg Shotwell, leader of the militant Soldiers of Solidarity movement within the UAW. Shotwell is hardly one for “respectful” debates with the UAW leadership – his Live Bait & Ammo newsletter is know for its caustic attacks on the union bureaucracy. But in an issue otherwise hammering the bosses and bureaucrats, he quoted GM rhetoric advocating national health care and added his own take:

If taxpayers are going to get stuck with the bill, the investment should have a commensurate return, i.e. health care for everyone not just the privileged few. Furthermore, the return should ensure a level playing field for all employers. National health care is the only viable social-economic solution to the crisis in American industry and our communities. (Live Bait & Ammo, No. 73, July 8, 2007.)

A taxpayer funded national healthcare system would indeed take the burden of paying for workers’ healthcare costs off the auto bosses and help them to compete with companies that don’t have to pay for such benefits. But the auto bosses know this and still don’t support the move because they are part of a capitalist class whose fundamental interests are served by cutting the benefits workers receive everywhere. The idea that there can be a “level playing field” for companies to compete is ridiculous. In market competition, somebody has to lose – and it’s always the workers, one way or another.

This kind of militancy is in fact counterposed to a more fundamental class opposition to the attacks: it leads to a serious mis-estimation of the auto bosses’ resolve and what it will take to beat them; it doesn’t take into account that any gains are apt to be very temporary; and it points away from the necessity of linking the auto fight to other workers’ struggles and taking on the system as a whole.

Even after these contracts, the sad fact is that most workers in this country and certainly the world have it far worse than those at the Big Three. For decades the militancy of the union and the profits amassed by the American car companies allowed U.S. auto contracts to be trend-setters for other union and even non-union workers. But the auto plants never ceased to be miserable places to work. And with the end of the post-war boom, the union leadership’s counterposing of bargaining to mass struggle could only roughly maintain wages and benefits at the price of deteriorating work rules and the mass depletion of the workforce, hitting Black workers disproportionately as the last hired and first fired. Now even those basic standards are being shredded, with the reformist-led UAW in panicky retreat. Trade-union reformism, even militant versions of it, has no answer to the capitalist attacks – except in one way or another to accept and enforce them.

Revolutionary Solution

The auto sellouts underscore the absolute impossibility of securing the needs of workers through the collective bargaining process. Consider health care. The increasing inability of the working class to afford health care costs – or, for many, even an insurance plan – is a scandalous indictment of the capitalist system. Like other reformists, the UAW leaders have clamored for national health insurance. (And the union tops are playing up the GM contract’s creation of a labor-management study of the matter.) But the VEBA plan is a monstrous step in the opposite direction – its coverage will be inadequate and its private funding based on stock market investments is doomed to collapse. And it is being touted in the capitalist press as the alternative to other union health plans that appear too generous toward retiree health needs.

Likewise job security. The massive loss of jobs, which will only continue under the new contracts, in what has been a premier industry of modern society, demonstrates the inability and unwillingness of private enterprise to provide sufficient good-paying jobs, or any jobs, for the available workforce.

The demands of capitalist economics for ever-increasing mass misery, the increased association of anti-worker attacks with privatization schemes, and the great limitations of collective bargaining all point to the need for solutions for the entire working class like socialized health care and nationalization of industries. There will likely be a mass upsurge of workers and oppressed people in response to the continuing attacks, and its hopes and demands in the initial stages will be largely focused on measures demanded of the capitalist state. Revolutionists will be active participants in mass militant struggles for health care and jobs, just as we will fight for all the gains the working class has won and can win under this system.

But we argue in these struggles that serious, lasting protection of those and other rights cannot be won under the crisis-ridden capitalist system and the state which defends it. What is needed is a working-class socialist revolution and the creation of the workers’ own state to secure those rights. Only under a workers’ state will nationalized industry and services be under the control and serve the interests of the working class and the oppressed. A revolutionary leadership, committed to the overthrow of the system itself, must be forged among the most politically advanced, revolutionary-minded workers, to start assuming leadership of the vast struggles that the criminal capitalist system is pointing towards.

Auto workers have a proud history as a militant, organized and often-victorious section of the American working class. And despite these harsh setbacks, the UAW is still a powerfully situated union which is capable of inspiring other workers, union and non-union alike, who can more closely identify with their conditions, and muster the beginnings of a real defense. Their struggles must become one with those of the increasingly restive and powerful immigrant workers and the struggles of Blacks against racism. The most politically conscious workers must see the destruction of their class’s dreams under the bosses’ system as a wake-up call for the creation of their own revolutionary party that can fight for a revolutionary state and society dedicated to human welfare, not profit.

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