US: Crisis in the auto industry

Nationalize and re-tool to save jobs!

After securing a deal for $17.4 billion in government loans last December, General Motors and Chrysler have been in negotiations with the United Auto Workers (UAW) to restructure the companies to make them “viable.”

The proposed contract changes would be devastating: they would eliminate the cost-of-living-adjustment, limit supplemental unemployment benefits, reduce break times, and destroy other key benefits. There would also be major cuts in company payments into the UAW-run retiree healthcare fund, a key concession from the 2007 contract.

Although Ford has not asked for government loans, they are demanding the same cuts from the UAW. GM and Chrysler have already announced plans to cut tens of thousands more jobs and close more than 15 plants in the next two years.

The past two years have seen the biggest attacks since the foundation of the UAW in 1936. This included cutting wages for new hires in half, eliminating company responsibility for retiree healthcare, the closing of dozens of factories, and the loss of hundreds of thousands of jobs.

With the whole US economy entering the worst recession since the 1930s, the auto companies are now trying to destroy the UAW completely. The demands being put on autoworkers will drive down union wages, benefits, and working conditions to be equal to or worse than those of non-union autoworkers.

“Shared Sacrifice”

The companies, as well as the government, are presenting these attacks on autoworkers using the language of “shared sacrifice,” implying that the pain will be spread equally among everyone.

David Axelrod, a key Obama adviser, says it is, “going to require sacrifice not just from the autoworkers but also from creditors, from shareholders, and the executives who run the company. And everyone’s going to have to get together here to build companies that can compete in the future.” (Associated Press, 2/15/09)

At Ford, the top executives have agreed to a 30% pay cut in exchange for workers making massive concessions. To put this in perspective, Ford CEO Alan Mulally received $21.7 million in 2007.

The overpaid executives and rich investors are fine taking a temporary pay cut; they are already millionaires. Workers with house and car payments, trying to put their kids through college, cannot afford pay cuts. Retired workers cannot afford to have company payments into their already underfunded healthcare fund cut in half.

It is absolutely necessary for autoworkers to fight against these attacks. The Big Three, with the help of Congress, are attempting to make autoworkers pay for a crisis they did not create and have no control over.

The Big Three have been struggling to maintain profitability for several years, during which the auto industry has sold over 17 million vehicles annually in the US. Now, with rising unemployment, stagnant wages, and tighter restrictions on loans, it is unlikely more than 10 million new vehicles will be sold in 2009.

What can save the industry?

This makes it clear there must be a fundamental change. We cannot keep producing the same vehicles using the same number of workers and factories.

But closing factories and cutting jobs will not solve the crisis. Making these concessions will not save the industry. It will only further undermine working people’s ability to buy cars, thereby aggravating the problem of overproduction and guaranteeing more attacks on autoworkers in the future.

The only solution that can save our jobs and living standards is to create a national plan to put the vast infrastructure of the auto industry to alternative uses, retooling them to produce goods that meet vital social needs. This means nationalizing the auto industry and running it in the interests of workers, which means not only saving but also creating jobs.

Plans for plant closures mean entire communities are staring into imminent disaster. Nationalization and workers’ democratic control must now be immediate fighting demands taken up by rank-and-file UAW activists. Unless there is a mass mobilization of autoworkers, from below, around a concrete plan for saving our jobs and retooling the industry, it will mean major attacks without end.

Workers should not have to pay for the bosses’s crisis.

Socialist Alternative Stands For:

  • The UAW and rank-and-file autoworkers to organize a determined struggle against any layoffs, plant closings, and cuts in pay and benefits
  • For an all-out campaign to unionize the non-union “transplants” in the South
  • Nationalize the Big Three, to be run on socialist lines with democratic management by workers’ representatives, including both workers in the industry and the wider working class
  • Re-tool the ‘Big Three’ for a massive development of public transit, electric cars, and wind turbines

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March 2009