The following article appears in Proletarian Revolution No. 82 (Winter 2010).

The Auto Crisis

The crisis in the American auto industry is the key example of the economic turmoil facing the working class. It also reveals how Obama (or any competent capitalist leader in his place) must make an attack on workers central to any “solution” they concoct to address the economic crisis.

A crisis of overproduction plagues the auto industry worldwide, but the problems of the American companies have been compounded by their bosses’ strategy of relying on sales of gas-guzzling SUVs for their profits, even as oil prices went sky-high. U.S. auto companies have also suffered from a serious, competitive disadvantage in overall costs. Like the financial collapse, the auto crisis was inherited from the Bush years yet was given its own stamp by the Obama administration.

In 2008, when the Bush administration stipulated that a bailout of General Motors and Chrysler would require massive cuts against UAW workers and a no-strike pledge, the Democrats could have voiced the standard liberal arguments: 1) universal health insurance is needed to replace the health care costs that burden the “Big Three” car companies: 2) the allegedly “gold-plated” wages and ­benefits of active workers constitute a relatively small proportion of the American companies’ overhead. But pro-union liberals are a minority among Democratic politicians, and the liberals themselves change their tune when faced with practical and political realities. Thus the Democrats pressed for their own souped-up version of a bailout and government intervention – including more severe attacks on auto workers.

In March, Obama’s Auto Task Force rolled out its plan for the industry. A big show was made of forcing the retirement of GM chairman Rick Wagoner. Wagoner was treated more harshly than Wall Street executives whose firms have failed more spectacularly (even though he walked away with a $23 million settlement) for two reasons: financial stability is crucial for reviving the troubled capitalist system, and the auto crisis was an opportunity for the ruling class to put the working class in its place. Tens of thousands of unionized industrial workers were being set up for savaging, and Wagoner was sent packing to give the impression that management was also getting hit.

The UAW Folds

When the government’s plans for GM and Chrysler more fully emerged in late April, the UAW was given a stake in ownership – in the case of Chrysler, a majority. That is, the UAW was handed responsibility for the loss of jobs, wages, pensions and other benefits for its members. Obama’s plan is to “rapidly achieve full competitiveness with foreign transplants” – meaning that Big Three workers will have to accept the lower benefits of these non-union firms.

The Chrysler deal means that the union-run Voluntary Employee Beneficiary Association (VEBA), created in 2007 to take over management of the workers’ health care fund (with company funding greatly reduced), will now be paid for not by cash but by largely worthless company stock. As we wrote in opposing the VEBA deal, “the fund will be subject to the mercies of a stock market that is grossly over-valued and primed for a meltdown.” (PR 81.)

Further, health benefits for retirees will be slashed, vacation and overtime pay reduced – and many more jobs placed in the second-tier category averaging $14 an hour rather than the previous average of $28. Despite some protest, the UAW, once the trend-setter in wages and benefits for U.S. industrial workers, is now collaborating in getting rid of sixty years of hard-fought gains. New York Times business columnist Floyd Norris effectively dispelled arguments that the auto workers were getting off easy:

It is said that the United Automobile Workers, which supported Mr. Obama in the election last year, is effectively being paid off by treating the bondholders worse than the retirees. I disagree. The retirees may have a little better chance of getting benefits they were promised [than they would under outright bankruptcy], but the current workers are getting little more than being allowed to keep some of their jobs. Walter Reuther, the man who built the U.A.W., must be spinning in his grave at the concessions his successors are making. (May 2, 2009.)

The White House press office observed in its June 1 Fact Sheet on the administration’s Auto Restructuring Initiative: “In virtually every respect, the concessions that the UAW agreed to are more aggressive than what Bush originally demanded.” As so often happens, the Democrats face less opposition to their attacks than do the Republicans, because of the workers’ official leaders’ ties to their party. Indeed, Norris added in his Times column:

This may come to be seen as Mr. Obama’s “Nixon in China” moment. Just as it took a conservative Republican to open relations with the largest Communist country in the world, it took a liberal Democrat to break the U.A.W.

We assume that Obama & Co., unlike leading Republicans, were not simply making use of the economic crisis to destroy the auto workers’ union. The administration was also motivated by a desire to salvage as much of the domestic auto industry as possible, with fewer workers and greater profits. Nevertheless, it is still a matter of raising the rate of exploitation, which is a central component of regaining competitive advantage, particularly at a time of acute crisis. So it is the workers who bear the brunt in any case. And the UAW rolled over obediently.

About the only thing that some union leaders have gotten worked up about is GM and Chrysler’s plans to import more vehicles from its foreign plants, even though factories are being closed in the U.S. UAW leaders joined other union tops in an unholy bloc with the Alliance for American Manufacturing to protest the offshoring of production previously based in this country. (The Alliance includes US Steel, which has laid off thousands of workers in the U.S. and Canada in the past year but which prefers to see auto production done at home so that its steel has a better chance of being used.)

In May this bloc held a series of rallies at plants scheduled for shuttering under the slogan “Keep it Made in America.” Such protectionist campaigns are reactionary alternatives to what the union should be doing, namely fighting for the government to take over factories to convert them to useful production and to ensure the jobs of the workers who make them run.

One way to fight back would have been to follow the example of the militant factory occupations that helped build the UAW in the 1930’s – or the dramatic sit-in at the Republic Windows and Doors factory in Chicago last December. (See our statement on page 16.) But even though there are quite a few nominal socialists in the local and lower-level leadership of the UAW, no proposal to occupy the plants was pushed. Factory seizures in auto could have gone further than the Republic takeover and demanded that the plants stay open. Such an initiative in this central industry could have tapped into widespread feelings of discontent within the working class and focused significant opposition to the climate of attacking workers.

That discontent was demonstrated by Ford workers in the fall, when they resoundingly voted down a new package of concessions proposed by the Ford bosses and the UAW leadership. The ranks at Ford were keenly aware of recent improvements in the company’s profit picture and were determined not to surrender even more while the bosses fattened their wallets. This is a striking indication that auto workers at the Big Three have not been broken, despite the seemingly endless series of attacks and union betrayals.

Additional reading:

Barack Obama: Wall Street’s Warrior accompanies this article in PR 82.

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