On June 26, General Motors, one of the richest corporations in the world, announced that it will cut its union workforce by 35,000. On the same day, Delphi, an auto parts manufacturer that was part of the GM empire until 1999, announced that it will cut union jobs by 12,500.
In one of the largest buyouts in history, GM and Delphi workers will get either a small cash settlement and benefits with early retirement or a lump sum payment and the forfeiting of all retirement benefits except vested pensions.
GM will hire temporary workers in place of union workers. These workers will be paid much lower wages and will receive no medical or retirement benefits. Delphi plans on paying new workers $10 per hour whereas union workers in the same job made $27 per hour.
Workers at GM, Ford and Delphi have always been under attack by the auto bosses. But those attacks have become more severe over the last 20 years and especially in the past year.
Using their declining market position and profitability in the domestic automobile market as an excuse, the three companies have won mid-contract concessions from the United Auto Workers union. Delphi filed for bankruptcy in October 2005. Delphi is threatening to use the filing to void all union contracts.
Massive layoffs, plant closings, and buyouts are greatly eroding living conditions for all auto workers.
Workers face crisis while GM swims in wealth
But why does GM, a company that controls over $450 billion in assets, insist that it needs to reduce its workforce and slash pay and benefits for workers?
GM is one of the largest owners of wealth in history. Its 2004 sales of $193 billion were larger than the entire economic output of Finland. Venezuela s Gross Domestic Product in 2004 was $109 billion.
GM is the biggest auto manufacturer in the world. It is the third wealthiest corporation in the United States. It owns or partially owns car companies in Japan, Korea, China, Russia, and all over Europe.
GM has $40 billion in available cash and sells $200 billion a year in cars. In the first three months of 2006, GM sold over $52 billion worth of cars worldwide—the highest figure ever for the company. It’s planning to invest $8 billion in 2006 to improve and upgrade its production process. Over $20 billion a year is spent on advertising-related expenses by this giant company.
General Motors is not hurting for money. Its current corporate crisis is based on the fear that after one year of financial losses it will not be able to continue to make enormous profits in competition with other auto monopolies. In a time of crisis for corporations, workers are always the first to suffer with losses in jobs, wages and benefits.
Globalization and capitalist restructuring
The current crisis for auto workers is directly related to the nature of capitalism’s intrinsic need to expand or die. It’s a product of globalization and capitalist restructuring.
Beginning in the late 1970s, the vast expansion of computer technology into all sectors of the economy signaled a structural change in the U.S. economy, with more jobs in the service sector and fewer in the manufacturing sector.
Productivity increased, but wages dropped as the skills necessary to perform jobs declined. The introduction of the new technology was accompanied by plant closings and massive layoffs.
This trend was further compounded by capitalist globalization, an economic trend enshrined in various free trade treaties like the North American Free Trade Agreement, and the Free Trade Area of the Americas. Under these agreements pushed by U.S. imperialism, weaker capitalist countries are forced to open up their economies to U.S. corporate investments and agribusiness exports.
For workers in the oppressed countries, this has meant the destruction of local agriculture and increased exploitation. All the wealth generated by workers in Latin America and Asia is extracted and centralized in the hands of the imperialist banks.
In the United States, this has meant dangling the threat of moving plants overseas or across the border every time unions ask for better wages or working conditions. Globalization has led to an aggressive assault on union and workers wages and rights.
Struggle can turn around setbacks
In spite of the difficulties facing the U.S. labor movement, the working class is still the producer of all wealth. Without our labor, the capitalist class is unable to make profits. The potential power of the united working class is immense. In 1998, a Delphi autoworkers strike brought production at GM factories around the country to a halt in a matter of days.
Union activist Greg Shotwell addressed the June 12 UAW convention on the need for militant action. “We need to hear boots on the pavement,” he said. “We need a one-day general strike for Delphi workers just like the immigrant workers. If immigrants could organize a national day of solidarity, why can’t the UAW?”
An appeal rooted in the union’s strength and militancy, directed toward the whole working class, steeped in international solidarity with auto workers in plants in Mexico and around the world, would be an effective first step in turning back the anti-worker offensive of the capitalist class.
