Chrysler Worker

The Chrysler Buyout and the UAW's Challenge

The UAW will confront Detroit auto makers at the bargaining table in July for a new national contract. In what will prove to be one of the UAW’s biggest challenges since the union’s birth, this contract will bear the imprint of the wholesale restructuring of the American auto industry. When Cerberus Capital Management paid $7.4 billion to take control of Chrysler on May 13, 2007, the challenge to the Union was official: “Are you ready to negotiate with a private equity firm which specializes in gutting troubled companies?” The UAW’s position on Chrysler will undoubtedly influence negotiations with General Motors and Ford. Cerberus wants to cut costs to make money off its investment. Contract talks open up a golden opportunity for the bosses to cut costs at the expense of the workers on the assembly lines. Cutting benefits which previous generations sacrificed, fought for and in some instances, died for, is what is at risk for auto workers in 2007.

But is our current leadership up to the task? What role have they played in previous negotiations? What role have they played in the face of the all-out assault on our jobs, wages, and conditions over the last few years? Unfortunately, their record is a sorry one. Time and again, they have agreed to cuts in jobs, wages, benefits, and have allowed the introduction of a two-tier wage system – all without even the semblance of mobilizing the membership to put up a fight. This is because the guiding principle of these misleaders is collaboration with the bosses, instead of recognizing that the interests of workers and their employers are irreconcilably opposed to one another. What we need is a class struggle approach, a policy of class independence, and tactics that can mobilize the rank and file in defense of our interests, and the interests of all working people.

When Cerberus purchased Chrysler, it took on the $18 billion obligation to pay for health care costs and pensions. Known as legacy costs, Chrysler contends that these benefits put a cost burden on the corporation of $1500 per vehicle, which severely affects their competitiveness. Newer auto makers such as Toyota or Hyundai have far lower legacy costs because they haven’t been producing in the U.S.A. as long as the “Big Three”. Japan and Korea, where these companies have been producing for decades, have national health care plans, freeing them from the burden of paying for employees’ health benefits. The soaring cost of health care is prompting corporations to cut health care provisions or shift the cost burden to employees. Ford, General Motors and Chrysler all reopened the present contract with the UAW two years ago to negotiate shifting the cost of retiree health benefits onto retirees and active workers. While Ford and General Motors succeeded, the UAW didn’t give Chrysler the green light because the company was much healthier financially, and such a concession was harder to sell to the rank and file . More than two years of consecutive profitable quarters could not convince a workforce that had already suffered three rounds of major economic concessions, along with massive job losses between 1979 and 1981, back when the company was in deep financial trouble.

Employees at the Chrysler Group Belvidere Assembly Plant

Besides, Chrysler wasn’t exactly concession-free when it came to health benefits. The erosion of health care started in the present contract when an experiment was conducted with UAW-represented workers in Missouri, by replacing provider Blue Cross and Blue Shield with UnitedHealthcare. This meant increased deductibles, non-coverage at major hospitals, and specific treatments for cancer and heart patients were no longer covered. Although some of these rough spots have been straightened out somewhat, it is still an erosion of health benefits for auto workers. Combined with the job eliminations (combining 2 jobs into one), speed-ups and unjust discipline; workers were in no mood for further concessions in the final year of the contract. The UAW Chrysler Council (representatives elected by local union members), was open minded enough to reopen talks under one condition: Hands off retiree benefits! Our philosophy is that those on fixed incomes shouldn’t bear the burden of costs. Those who helped generate years of prosperity in America should not be penalized.

Job security, pension and health care costs have been at the center of contract negotiations and strikes for most of this century. Some recent examples include the New York City Transit Workers strike in December 2005; the Detroit Teacher’s strike in Sept. of 2006; and the Goodyear tire workers’ strike in the Fall and Winter of 2006, represented by the United Steelworkers Union. Cerberus will be tough at the bargaining table. They have a track record of taking over distressed, highly unionized industries. In 2002 they bought 5 bankrupt steel firms and sold them to Mittal Steel for a tenfold profit. Cerberus is also part of a group seeking to buy a controlling interest in Delphi, the auto parts maker which asked a bankruptcy judge to cancel its labor contracts. UAW workers at Delphi voted to give Union leaders the green light to call for a strike should that happen. The corporations mentioned above also had substantial pension and health care costs.

The UAW must also be tough at the bargaining table. UAW President Ron Gettlefinger stated that, “Collective bargaining doesn’t mean collective begging.” This is a positive statement, but these words must be backed up with action. What are we going to do when confronted with the inevitable cuts that Cerberus will try and impose on us?  Rank and file auto workers have had enough of cuts, concessions, and forced buyouts.  We need a leadership that will start preparing now for a real fight back.

Faced with job cuts, we should counter that if we all work a shorter workweek with no loss of pay, there would be no need to eliminate any jobs. By reducing or eliminating overtime, increasing the number of sick days and extending paid vacations, we could all keep our jobs. Of course, this all eats into the profits of the corporations, and this is precisely why they want to impose these cuts. By reclassifying jobs and making fewer workers do the same amount of work as before, their profits go up.  But certainly our jobs, families, and communities should come before corporate profits. In short, we need our union to start acting like a union, not as an apologist for the bosses.

While the organized labor movement in the U.S. may not be as strong as it once was, the working class is still what keeps this country moving. The fact is, there are no profits, returns on investments, jobs, markets, executive salaries and bonuses, stock options, growth or prosperity without labor. The working class includes both union and non-union labor. Labor unions are just the results of militant, organized fight backs of various groups of workers. From the factories, truck docks, mines, mills, farms, restaurants, hotels and offices, workers have organized sit-down strikes, walk-outs, slow downs and “sick-outs” to pressure employers to provide decent wages, hours, and working conditions. Workers who organized unions led the way for all workers in America by setting standards for safety and health, cost-of-living raises to keep up with inflation, and the seniority system to eradicate favoritism and the persecution of union activists. The ripple effect of these gains on behalf of union workers encouraged employers who have remained non-union to offer similar benefits to their employees. In one way or another, all workers have benefited from the struggles of organized labor.

Before labor was organized into what became our present-day unions, workers from the grass roots took action. In 1877, a strike by railroad workers in Martinsburg, West Virginia, extended across the country, sparking rebellions nation-wide. Within a few days, 100,000 workers were on strike in the U.S.’ first nationwide labor upheaval. In St. Louis, MO., the strike developed into a complete organized shutdown of all industry, becoming what noted labor historian Phillip S. Foner described as the first general strike in U.S. history. In 1937, auto corporations were forced to recognize the UAW as the bargaining agent for auto workers when workers evicted management from the plants and took them over. These plant occupations, which became known as “sit-down strikes”, spread throughout the auto, steel, tire, and other industries. It exposed the inhumane working conditions of the time and had broad support from the public. This was all the result of having workers’ leaders who had a class struggle approach to the bosses – and this is precisely what is needed now.

But these fight backs are not just “ancient history”. Collins & Aikman (C&A), a bankrupt auto parts manufacturer announced that they would be closing their plant in Scarborough, Ontario. The Canadian Auto Workers union (CAW), quickly negotiated a moderate severance package for $6 million. On March 30, 2007, when C&A announced that they wouldn’t be honoring the severance agreement, workers learned of their plans to remove machinery and molds out of the plant to transfer operations. Workers immediately planned the take over of the plant. They ordered management to leave, set up security and completed the occupation. When company trucks arrived to remove the machinery the next morning, they were met by a blockade of forklifts, trucks and a militant picket line. Within hours of the occupation, solidarity strikes took place at other parts plants in Ontario. Postal workers and steelworkers also took solidarity action. All this took place through the spontaneous actions of rank-and-file workers – completely independent of the CAW leadership.

The CAW leadership quickly worked out a severance package. When C&A went bankrupt, Ford, G.M., and Chrysler took de-facto ownership of the company. So the CAW accepted a proposal from Chrysler and Ford to pay $1.8 million and $1.45 million each toward severance packages in exchange for an end to the occupation and blockade of the Scarborough plant. Although this was more than $2 million short of what the original severance package guaranteed, it proves that nothing is won without struggle – not even the crumbs of a severance package.

That same month, Delphi announced the closing of an auto parts manufacturing plant in Cadiz, Spain which employs over 4,000 workers. Workers responded by removing all management personnel from the plant, blockading all the gates and entrances with trucks and forklifts so that Delphi cannot transfer any equipment. Workers from the region responded with acts of strike solidarity and material aid for the Delphi workers. Students formed solidarity brigades to aid the workers by bringing food and other supplies. Public meetings were organized, calling on the company to pay back the millions in tax credits and subsidies it had received from the government, and for the nationalization of the factory under workers’ control. These are living examples of class struggle trade unionism in action.

This year’s auto negotiations will certainly be extraordinary. At stake will be the jobs of tens of thousands of auto workers, and possibly the future of the U.S. auto industry itself. Health care is also sure to be a major sticking point. There is a danger that Cerberus will try to shift the burden for health care costs onto the UAW, through a union-administered health plan, as was done to Goodyear workers last year. This would put the union in a position where it could be forced to cut its own members’ health benefits. But the determining factor of the outcome will ultimately be decided by the workers themselves. Working class leaders emerge from the rank and file – not from the offices of Solidarity House or other labor union headquarters.

What happens inside the plants will influence the results at the bargaining table. Although there is no predicting the outcome of the ‘07 contract talks, one thing is certain: without an approach that starts from the perspective that the interests of the workers and the bosses are completely opposed to one another; without mobilizing the rank and file to fight for our interests based on this perspective, we will suffer yet another humiliating defeat.

At root, the crisis of the auto industry can be traced to the crisis of the capitalist system itself. In the relentless pursuit of profit, workers and their families are mere “factors of production”, dollars and cents in the company books. Therefore, the idea that we can form a “partnership with the bosses” has no basis in reality.  It has led to one disaster after another – it’s time we learned from this bitter experience and changed our approach.  Some people define insanity as “doing the same thing over and over again and expecting a different result.” The current approach of class collaboration will inevitably lead to the same results.

We must understand that conflict with the bosses is unavoidable, and we must ensure that our leadership does not shirk from its duty, which is to defend the membership. Just as the Chrysler contract will define the entire auto industry for years to come, a successful struggle against cuts in jobs, wages, benefits, and conditions would serve as a shining example of class struggle trade unionism for millions of workers across the country. All workers deserve quality health care, pensions, and jobs. After all, we produce the wealth of this nation and of the world.


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