Obama team pushes huge GM down-sizing

Waggoner walks plank, but is Obama team’s plan even worse for GM workers?


By Roger Bybee


Few tears were shed among working people as GM CEO Rick Waggoner got pushed out recently as the result of pressure from the Obama Administration, especially as he stands to collect at least $20 million in pension benefits.


Michael Moore, the documentary filmmaker and gutsy social critic, was understandably gleeful about the firing of "the King of the World," thinking of the devastation that GM CEOs have caused in Moore‘s hometown of Flint, Michigan.


But given the Obama team’s rejection March 30 of GM’s Feb. 17 plan, it is clear that the Automotive Task Force, headed up by corporate raider Steven Rattner, whose recent questionable conduct and short-sighted economic philosophy (check out here and here and here) deserve further examination from progressives in Congress, wants far more drastic cuts than even Waggoner had in mind. (And Waggoner was certainly no working class hero– check out in Dissent Waggoner’s stated willingness to "destroy the middle class" in order to save GM).


In the spring 2009 issue of Dissent, long-time progressive auto industry expert Harley Shaiken of UC-Berkeley notes how drastic the rejected GM plan was:


  • 14 of 59 existing plants in the US would be shut down.


  • Almost one out of four remaining production jobs would be eliminated, dropping GM from its president level of 62,000 to 46,000. That would place GM at just one-tenth the level of its peak employment of about 470,000 in 1978. (GM has already whacked about 855 of the production workers it had in 1990, around the time Michael Moore’s "Roger & Me" documentary revealed the human destruction caused by GM’s strategy of abandoning US communities like Flint, Michigan while General Motors became Mexico’s "numero uno" private employer.)


GM’s capacity would be reduced to producing 2 million vehicles in the US, down from the current level of 2.8 million.


  • With GM projecting sales of 3.2 million by 2013, it would have to rely more heavily than it does now on off-shore plants for the remaining 1.2 million vehicles.


"The plant closings and sharp drop in employment reflect [GM’s} plans to rely more heavily on imports to supply the US Market," writes Shaiken. "….It is likely that Mexico Korea and China will play and expanded role."


But GM’s plans were not draconian enough to suit the Rattner team, as announced in a March 30 memo. The implications of further GM’s radical down-sizing–as a condition for continued US loans– at the hands of Rattner are simply staggering:


  • JOB OUTSOURCING DURING  DEPRESSION In the midst of the worst domestic economic crisis, with unemployment in former auto towns like Detroit and others across the Midwest approaching Great Depression levels, the federal government is not only pushing for vast cuts in family-supporting jobs, but also out-sourcing more jobs to repressive low-wage producers like Mexico and China.


  • MORE STRIPPING OF US PRODUCTIVE BASE: The direction of both GM and the Obama administration represent how far we have moved as an economy based on production to one based on paper profits produced through financialization of the economy. "The Heartbeat of America" will become a mere token presence in an auto industry dominated by anti-union racist foreign producers, with Honda in Indiana blatantly seeking to avoid black workers because they are much more pro-union than white rural workers, as I covered here and here.


  • DE-FANGING THE UAW The UAW will have lost its power as the most vigorous and central force in labor to uplift the living standards of Americans both inside and outside the labor movement, a crucial role it has played since its founding in 1935. New UAW members in the auto industry starting at a miserable (considering the pace, physical demands, and skill required on an auto assembly line) $14.50 an hour, plus vastly reduced health and retirement benefits.


  • PAUPERIZING PENSIONERS LIKELY Worse, in order to save any GM jobs, the UAW may come under tremendous pressure to accept concessions in retiree pensions and health benefits, which represent gains achieved in exchanged for sacrificing wage increases over the years.  (I discuss some of this in a forthcoming article in The Progressive.)


  • BIG BLOW TO BLACK WORKERS African-American workers, who found a route to the middle class and a base for political power through working in auto and membership in the UAW, will be among the primary victims of cutbacks at General Motors. As a number of studies have shown, African-Americans, Latinos, and women all face tougher sledding when it comes to finding decent-paying jobs after a mass layoff. They are less likely than white males to locate good job opportunities, and their quest to get re-employed typically takes considerably longer. 

In sum, it is hard for me to imagine–based upon the information I have collected thus far–how the Obama Administration could have pursued the GM re-structuring  with more perverse results in a moment of extreme economic crisis.. In my mind–and I hope I am wrong–the Rattner direction for GM seems destined to drain purchasing power instead of stimulating it, relocate good US jobs, not increasing them, weaken unions rather than strengthening them, and to inflict the most painful concessions from UAW retirees. 

As I add this up, this represents the "neutron bomb" style of industrial policy: the corporate headquarters remains intact, while most of the production workers and retirees are incinerated.  


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