Car industry: Magna’s takeover of Opel/Vauxhall

New international jobs massacre in the car industry

Last week, General Motors confirmed the sale of most of the production facilities of its European subsidiary companies, Opel and Vauxhall, to a consortium made up of the Canadian-Austrian car parts supplier, Magna, and Sberbank, Russia’s biggest state-owned bank.

This announcement will see Magna/Sberbank purchasing a 55% stake in Opel, with GM retaining 35%, and the remaining 10% going to ‘the workers’. As was clear from the beginning, whatever the chosen candidate for the takeover, this deal will be accompanied by a social bloodbath: the announcement of more than ten thousand job losses, in several countries in Europe.

Thousands protest against job cuts in Zaragosa, Spain

In total, Magna/Sberbank intends to axe 11,000 jobs, out of the 50,000 that Opel and its British counterpart, Vauxhall, employ in Europe at the present time. About 4,500 jobs are threatened in Germany alone, while in Spain, about 2,000 of the 7,000 workers at the Figueruelas factory (near Zaragosa) will lose their jobs. The latest figures being circulated about the number of job cuts in Britain are about 1,300, and some Eastern European countries like Hungary and Poland, where there are also Opel plants, could be affected as well.

At the very least, the plant in Antwerp (Belgium) will most probably stop assembling Opel cars, if it is not closed down completely. According to the unions and Klaus Franz, IG-Metall’s chair of the Opel German works council, there will be no closure. In 2001, the so-called ‘Olympia deal’ was agreed, which was aimed at countering GM’s policy of trying to play European sites off against one another when deciding where to produce new models. However this agreement represented an ‘orderly’ retreat, as the union leaders were not really seeking to stop the cuts, but simply to ‘spread’ their effect amongst all the different sites. ‘Solidarity in retreat’, you could call it, and, according to the unions, a similar policy will be applied to the latest cuts.

However, it is clear that even if the Antwerp site is not completely closed down, as was announced by GM and by Magna immediately after the sale, at best it will be reduced to the level of parts-supplier or assembly line for extremely limited and flexible production, with a massively reduced workforce on worsened wages and conditions. No matter which scenario is realised, the 2,600 workers at the plant, but also thousands more working for its subcontractors, will be severely hit. This is why it is essential that all job losses and cuts across Europe are resisted.

After the recent bankruptcy of GM and Chrysler in the US, and the resulting cuts of tens of thousands jobs, as well as the 20,000 redundancies announced by the Japanese constructor Nissan, these announcements are not really surprising; they merely represent a new chapter in the long series of massive jobs cuts and plant-closures which have been hitting the car industry for years, but in particular this year, as capitalism faces its worst recession since the 1930s.

“The end of the crisis”?

Recent months have seen widespread propaganda in the capitalist press, to the effect that the crisis is coming to an end. Just a few days before the news about the Magna deal became publicly known, Carlos Ghosn, the boss of Renault-Nissan, proudly announced “the end of the crisis in the car sector” (Le Figaro, 09/09/09). Maybe this is the case for the fat cats and big shareholders controlling the car industry, who are using the crisis to speed-up restructuring plans, but for thousands of families, crisis and anxiety about the future has only begun.

Sergio Marchionne, the boss of the Italian car company Fiat, recently made a more telling observation regarding the future of the car industry on a capitalist basis, predicting that the economic crisis would finally force the world’s car industry to confront profit-destroying overcapacity, by closing more and more factories to reduce overcapacity, and by concentrating the industry into an ever-smaller handful of giant firms. He commented, with great disappointment, that, “In Europe, as a result of the crisis, not a single plant has been shut down.” (Financial Times, 09/19/09)

Overproduction – the sickness of capitalism

Overproduction and overcapacity in the car industry are undeniable facts, and have been since long before the eruption of the current economic crisis. A recent article in ‘The Economist’ pointed out that, “In Europe, factories were capable of churning out 4 million more cars than the market could take, even in a good year like 2007.” (The Economist, 09/17/09). Since then, the worldwide financial and economic crisis has resulted in a sharp rise in unemployment and important restrictions on access to loans.

For the automobile sector, this has concretely meant a sharp decline in demand for new cars, which has considerably sharpened the problem, with several countries seeing dramatic drops in car sales, the scale of which, in some cases, has not been seen for half a century. According to some experts, overcapacity next year will be at around 7 million units for passenger cars (30%) in Europe, and at over 4 million units in the United States, even taking into account the 2009 wave of savage cuts and plant closures implemented by the ‘Big Three’ (GM, Chrysler and Ford).

This shines light one of the main contradictions embedded in the anarchic, profit-driven, capitalist economy. Harsh competition between different companies forces them to expand production to try to overtake their competitors, and to invest in the latest technology and material in order to produce more and more with a smaller workforce. The bosses consistently try to reduce labour costs in a way or another, in order to keep their profit margins up.

The result is that consumers (mainly workers) are not able to absorb all the products flooding the market. The crisis of overproduction results from this contradiction between the tendency towards unlimited expansion of production on the one hand, and limited consumer capacity on the other. This is what is happening in the car sector today. New redundancies and attacks wages will only serve to increase the gap and feed the endless downward spiral, of which the worker is always the victim and the capitalist, always the winner.

German workers’ placards at Antwerp protest 23 September – "all for one and one for all"

‘Cash-for-clunkers’ programmes – giving with one hand to take back with the other

This year has seen huge state intervention into the car industry. To save jobs? Definitely not. In fact, the number of job losses in the car sector has been historically high this year. Public aid was mainly concentrated into the famous “cash-for-clunkers” programmes, destined to keep the market afloat artificially, using taxpayers’ money to stimulate the sale of new cars by giving customers a subsidy for trading in their old vehicles for new models.

The ‘environmental impact’ of these measures is very limited. These government-sponsored scrappage schemes were mainly aimed at bringing buyers back into the market, in order to allow the big capitalists controlling the car industry to continue to make profits.

But car industry bosses themselves fear that once the effects of these incentives come to an end, the volume of sales will slide once again, with all the effects we can expect from this. “The year after France discontinued a similar programme back in the 1990s, car sales plummeted 20%” (The Economist, 08/15/09). In the US, despite the $3 billion invested in these programmes, some predictions are that sales could already return to ‘pre-cash-for-clunkers’ levels by the end of September, as the pool of qualifying car buyers becomes exhausted.

Sales have been kept temporarily at a certain level, thanks to these government subsidies, but these are only short-lived stimuli and will certainly not lead to a structural solution to the present crisis.

Political calculations behind the backs of the workers

Before the Magna deal was concluded, the Canadian firm had already announced its intention to axe about 10,000 jobs in Europe. As half of the Opel workforce is located in Germany (25,000 workers out of 50,000), the Merkel government was concerned that this issue would interfere in their electoral campaign (for the national legislative elections, which take place next weekend). Merkel had promised €4.5 billion in state guarantees to Magna, on the condition that no plants would be closed in Germany.

She was proud to declare in a very optimistic way, that “The patience, the determination and the clarity of the government and of me personally, have contributed to this decision.” (Le Soir, 09/11/09). However, the motives behind Merkel using large sums of public money to buy an agreement with Magna, have nothing to do with car workers’ futures or saving jobs, and everything to do with electoral gain.

Last weekend, newspapers reported that Magna would be cutting more jobs from Germany’s Opel plants than had previously been expected (around 4,000, rather than between 2,500 and 3,000). It is not certain that after the elections, the issue of a plant closure will not come back onto the agenda. The boss of PSA-Peugeot Citroen once explained, after the Sarkozy government had given €6.5 billion to the French car firms in February 2009 – on the condition that these firms not close any plants in France – “we can never exclude the closure of a plant if the conditions force us to do so.” (Le Monde, 02/10/09)

Hypocrisy and nationalism

In the last days, following the intervention of the German government, other EU states with Opel or Vauxhall factories on their soil have made declarations accusing Germany of ‘protectionism’ and ‘nationalism’. At the same time, they have themselves consistently played the nationalist card, praising the competitiveness of ‘their’ car factories as opposed to the foreign ones.

“On the basis of economic criteria, I’m convinced that Antwerp is better than a lot of other sites in Germany”, the Flemish President Kris Peeters declared, during a press conference on Monday 14 September, stressing the productivity of the Antwerp workers. “Our Vauxhall plants at Ellesmere Port and Luton are highly efficient and lucrative, and I am sure, and we insist, that this be recognised”, British Business Secretary Peter Mandelson sais in a interview on BBC radio the same day. “Any decision on plants and jobs should be taken according to criteria of productivity”, pointed out a spokesman of the Spanish ministry of Industry, adding that “we would be much quieter if this postulate was adopted, because the Spanish plant of Figueruelas, with 7,000 jobs, is considered one of the most productive in Europe”.

Race to the bottom for workers, more profits for shareholders

Workers have nothing to gain from this nationalist propaganda which attempts to play different sections of workers against their foreign counterparts. This classic divide-and-rule tactic has always been used as a way of weakening workers’ resistance and making attacks on their living standards and working conditions with greater ease.

The above public statement by Kris Peeters echoes the past declarations of former Belgian Prime Minister, Guy Verhofstadt, three years ago at a time when massive lay-offs were announced at the Volkswagen factory in Brussels, criticising the ‘nationalism’ of the German unions, and citing the indisputable productivity and flexibility of the Belgian workers. However, all the sacrifices made previously by the VW workers (cuts in break times, increased workload, etc.) and all the money given to VW by Brussels’ government didn’t stop the firm finally sacking 3,000 workers at the factory and imposing new ‘flexibility’ arrangements and an increase in the working week for those workers remaining at the plant.

The only winners in this kind of game are the capitalists themselves, who use systematically this ‘race to the bottom’ to maximise their profits at the expense of workers’ interests. The way to save the jobs is not to preserve ‘a few more jobs here to cut more there’, but to build a united struggle of the working class across national boundaries. Against attempts at division by the ruling class, it is vital to put forward demands which can build workers’ unity. The only way to do this is to lead a struggle in defence of all jobs. Unfortunately, this does not seem to be the aim of the union leaders, who don’t put forward any demands of this kind.

Weakness leads to aggression

The reaction of the different union leaders has been extremely weak until now. Some seem more interested in preventing workers from fighting back than preventing the bosses from closing factories and destroying jobs, while others simply echo the nationalist propaganda of capitalist politicians, accepting the logic of competition between the workers from the different countries and plants affected by the redundancies.

Most of today’s union leaders, instead of refusing the job cuts, only put into question the so-called ‘inequitable’ way they are shared between the different countries. Outside Germany, some of them are explicitly complaining about the fact that “As a percentage, we’re losing significantly more than Germany is, and significantly more than any other country. Therefore the plan as it stands is not acceptable” (Dave Osborne, national secretary for the automotive industry with Unite, a British trade union, in the Financial Times, 09/22/09).

In the same nationalist tone, Rainer Einenkel, the union leader at the Bochum plant in Germany, argued that “Bochum’s production is €200 cheaper per car than in Antwerp” (Deutsche Welle, 09/21/09). An internationalist and fighting alternative to the present strategy of the union leadership is definitely needed. Not only solidarity with workers in other countries seems to be a closed book for the present leaders, but in the end, it will not even help the workers in "their own country" either.

Indeed, the current union leadership, instead of drawing the lessons from past defeats, is seemingly just going to repeat them. In the last few years, the metal union leaders in Germany accepted a whole series of worsening wages and conditions at Opel, always in the guise of keeping jobs. But these concessions actually helped the management to keep cutting jobs. Now, with the prospect of a "New Opel", they have already said they are prepared to accept that workers will have to make a ‘contribution’, by giving up part of their wages in return for getting shares!

German unions had previously threatened ‘spectacular action’ – but only if the Magna deal didn’t go through. With the idea that a takeover by Magna would be the best solution, Rudy Kennis, the main shop steward at the Antwerp plant, was unable, once the Magna deal was announced, to hide his “satisfaction” and his “trust in the Magna concept”, “a unique occasion to get a negotiated solution in order to keep the plant open”! (Le Soir, 09/11/09).

These union leaders don’t even seem concerned about the fact that Magna is notorious for its harsh anti-union policies. Indeed, since its founding 50 years ago, Magna has always been viewed as one of the worst enemies of organised labour. Until 2007, only 3 of its 43 Canadian plants were unionised, but two years ago, a formal agreement was concluded between the Magna’s bosses and the leadership of the CWA, Canada’s most prominent union, to allow increased unionisation – on the condition that strikes was banned in all the firm’s factories.

For months, the Belgian union leaders have systematically belittled the threat towards the Antwerp factory, even attacking the media for their “negative views”. When the GM-management announced the sale to Magna and added the Antwerp plant would be closed down, Rudy Kennis declared that the union would not take action. “Our members are too intelligent to respond to the provocations of the ex-GM leadership”, he said. We do not think that the workers can just wait and suffer cuts and redundancies, as if they were fate, without doing anything. Fighting back and struggling have never been signs of stupidity.

Does workers’ action threaten more jobs, as some in the unions seem to have accepted? In fact, the opposite is true. A docile reaction from the working class is exactly what the bosses want. With a timid reaction from the workers, the bosses know that they can attack them more easily, and go through with plant closures without much resistance. As the saying goes, “weakness leads to aggression”.

Protests have begun

Anger against these massive job cuts exists everywhere. Thousands of Opel workers demonstrated today, Wednesday 23 September, at the Antwerp factory, and were joined by their colleagues from the German factory in Bochum. Despite the lack of a will to fight on the part of the union leaderships, workers and people in the different areas have already demonstrated that they are not ready to take these attacks lying down. Protests against possible plant closures and job cuts have been staged not only in Belgium, but also in Britain and notably in Spain, where demonstrations of discontent have spread very fast, in a country where the unemployment rate could soon exceed 20% – more than twice the European average.

Last Sunday, on 20 September, more than 15,000 people demonstrated in Zaragoza to defend the 7,000 jobs at the Opel factory in nearby Figueruelas. The workers there have threatened massive strikes if large-scale job cuts are made at the plant. The protesters included not only workers from the plant, but also people from other workplaces and regions, carrying placards of support and solidarity with the Figueruelas workers.

These protests show the way forward and the instinctive solidarity which has developed from below. This could be the starting point for organising larger scale international protest actions; not the kind of protests intended only to “let off steam” and to show that the union leaders are doing something, while at the same time they refuse to lead a real fight. On the contrary, these must be real fighting protests, used as a step towards developing concrete solidarity between the workers of the different Opel and Vauxhall plants, with the aim of defeating the bosses’ plans through struggle, including the best reliable weapons in the hands of the workers – strike action and plant occupations.

Immediately, an all-European conference of genuine Opel, Vauxhall and GM workplace representatives should be called to discuss and agree upon a programme of action, starting with a one-day European strike, to save jobs and protect living standards.

Democratic socialist plan needed to retool the car industry for social and environmental needs

All this points to the urgent need for combative and democratic trade unions on an international plain, organising general assemblies in every workplaces to allow the workers to discuss democratically their strategy to fight back against the bosses’ plans. This must include making solidarity appeals to all the subcontractors and supplying companies’ workers hit by ongoing restructuring to join the struggle too.

But first of all, we have to reject accepting the divide and rule logic of the bosses. Our starting point cannot be “How many jobs will we have to give up to ensure the survival of our plant?” but on the contrary, “How do we draw up a plan of action to push back the profiteers, to keep our plants open and to save all our jobs?”

An offensive struggle organised from below is necessary to stop these job cuts. This must include demands such as the shortening of the working week without loss of pay and the opening up of the books of the management. But how can we counteract the arguments of some capitalist economists, journalists and politicians, who argue that closing car factories and cutting jobs is a necessary step to ‘clean up’ the saturated car market?

Today, the car industry faces overproduction whilst, at the same time, many social needs are not satisfied. Sufficient free public transport is lacking, while our planet faces catastrophe. As long as the car industry is dominated by private interests only interested in short term profit, this will always be the case. Making the workers and their families pay for the crisis is the only way forward, from the point of view of the capitalists.

A programme which bases itself on the views, needs and interests of working people is needed. We think the debate about saving jobs must be linked to the discussion about using the vast technology, knowledge and wealth of the car industry to develop green technology and public transport on a massive scale.

That’s why socialists argue for the need to nationalise the whole car industry, with compensation to be paid only on the basis of proven need. This doesn’t mean nationalisation of the losses and privatisation afterwards, when profits for the bosses can be generated again. The production of goods that meet social needs and the development of alternative forms of transport can only be realised if the whole auto industry is put under the democratic control and management of elected workers’ representatives, subject to recall. The crisis is international which is why such planning cannot work only on a national level but also needs to be international. The auto industry is a prime example of the chaos caused by the market system. A successful struggle by auto workers could be an example to others and help build support for the only alternative to the capitalist system of booms and slumps, a democratically planned socialist economy, in which the commanding heights of the economy are brought into public ownership. Workers create the wealth. They must have the final say in how this wealth is used.

Statement from Socialist Party (CWI in Ireland) MEP Joe Higgins supporting Opel and Vauxhall workers

  • Reject job losses across Europe
  • Nationalise Opel/Vauxhall to save jobs

The prospect of over 10,000 redundancies across Europe at Opel represents a grave threat to the livelihoods of those workers and their families. It would also devastate cities like Antwerp, Bochum and others, while also being a blow to the traditionally strong trade union movement in the car industry.

This vicious plan, which aims at offloading the cost of the crisis onto the shoulders of ordinary workers, so that Magna can make a profit, must be rejected. There is no guarantee at all that this plan will succeed. The crisis of overproduction in the car industry is not the fault of the workers – and they should not pay the price for it. The plan should be fought by the Opel workers, backed up by the wider trade union movement.

The various national governments as well as sections of the trade union leaderships have tried to push Opel workers from different countries into competition with each other – into a productivity race. This offers no way forward for Opel workers, it just offers a "race to the bottom" in conditions for workers and leaves the path clear for Magna to divide and rule.

Instead, I would argue for a united struggle against all job cuts at Opel, calling for nationalisation of the factories, with compensation only to be paid on the basis of need. This could have a massive impact across Europe. It would be an inspirational example to hundreds of thousands facing the threat of unemployment.

A militant united campaign across Europe to defend jobs and wages would win massive public support. Very serious pressure could be put on the governments of Belgium, Germany, Britain, Spain and Poland to nationalise the factories to defend the jobs. If there are attempts to close down plants or sack workers then other measures, including plant occupations and solidarity strikes, will have to be considered.

In answer to those who say that overproduction in cars means that jobs must be lost, I would argue that through nationalising these companies and bringing the workers to the heart of the industry through democratic workers’ control, an alternative plan could be developed. Production could be shifted to producing public transport solutions and other socially necessary production.

You have my full support in your campaign to defend jobs. Don’t hesitate to contact me for assistance at info@joehiggins.eu.

Joe Higgins MEP (www.joehiggins.eu)

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