Workers pay the price to save General Motors

General Motors, a company previously thought to epitomise the success of American capitalism, has collapsed, filed for bankruptcy, and been taken-over by the US government. While Obama has committed to the “fight for workers”, being labelled by the American right as a socialist, the facts present a much grimmer reality for General Motors (GM) employees. The takeover has nothing to do with protecting the rights of Auto-workers, many of whom will lose their job, with the remainder forced to accept major concessions in wages, conditions and entitlements.
This attack on workers has been justified by blaming the United Auto Workers (UAW) union and its members for imposing high labour costs on GM. This emphasised the entitlements of the workers, such as “high” wages or retiree health care funds, as creating overheads which the company was unable to maintain. This is despite the fact that labour represents less than 7 per cent of the costs of a new car.
The more significant reason for GM’s collapse is the madness of market capitalism. Worldwide there is massive overcapacity in the car industry—the lack of any rational planning means rival companies are building many more cars than are needed.
The global recession, which means many working class people have lost jobs or taken pay cuts and are therefore less able to afford to buy cars, has seen sales plummet even further. Poor management decisions at GM have also seen the quality of cars it produces fall, with the result that its market share in the US fell from 50 per cent in the 1960s to just 23 per cent by 2007.
Hence the collapse and need for state intervention has less to do with the meagre gains that the UAW has been able to win for its workers than the ruthless competition of the capitalist market which drives “weak” businesses to the wall. Yet the conditions of the state intervention, under first Bush and now Obama have ensured that it’s the workers who will make the concessions in a completely neo-liberal “aggressive restructuring plan” to restore the company’s profitability.
The “controlled bankruptcy proceedings” followed by the nationalisation of the company in a 60 per cent takeover, were focussed around attracting private capital. The deal has forced job losses, worsened conditions for those still in employment, and effectively destroyed any power remaining in the UAW.

Slashing jobs and benefits
Under the deal between GM and the UAW labour costs are expected to be lowered by $1.1 billion. Fourteen plants are to close with 24,000 people to lose their jobs.
Of those still able to remain in employment, GM hopes to eliminate 98 per cent of the benefits it pays to its UAW retirees, such as guaranteed health-care plans after 30 years of service. A two-tier wage system has been introduced whereby new workers earn about half the wage of those they replace.
Not only has the UAW sold out the entitlements of its members. The union itself has been decertified, with workers to effectively forgo union rights. Wage rates will be effectively set by an arbitrator, whose role is to apply non-union standards comparable to other US competitors. Workers will have no right to strike until 2015.
This attack of General Motors’ employees exposes the broader trend in the current recession whereby workers are blamed and expected to pay the price for a crisis created not by them, but by the inherent contradictions within the capitalist system.
The UAW’s sell-out of its members is a far cry from its heyday. It once set the benchmark for wages and benefits in the US. The UAW leadership has gradually abandoned militant strategies and agreed to work intensification, collaborating with the employers to help maintain GM’s competitive success.
Workers’ rights can only be fought for by rebuilding union strength through a militant and class-conscious approach. Rather than setting the benchmark for a punitive takeover whereby workers are expected to pay with positions, wages and benefits, the US government could have converted GM into a manufacturer of products to deal with the climate crisis. A similar process took place in World War II to convert car plants to the war effort.
This would mean fighting for a conversion to produce hybrid buses for public transport or even wind turbines. This, unlike car manufacturing, would be a sustainable company that would increase jobs for future. With a united movement across workplaces and communities, these changes could set a precedent as a company that guarantees jobs and pensions, at the same time as producing sustainable goods.