The heartland of America skipped a beat June 6 when Rick Wagoner, chairman and CEO of General Motors, announced plans to eliminate 25,000 jobs. A few days later the corporation gave the United Auto Workers until the end of the month to accept savage cutbacks in health benefits for 1.1 million active and retired workers and their families.
Eldon J. Renaud, president of UAW Local 2164 in Bowling Green, Ky., accused GM of “forcing something down our throats.” He told The New York Times, “I don’t think it leaves us any other option” than to strike.
Wagoner announced the job cutbacks during the GM annual shareholders meeting in Wilmington, Del. The announcement came on top of two plant closings earlier this year: the Linden, N.J., facility, in April, resulting in the termination of its 1,000 remaining jobs, and the Baltimore van assembly plant in May, cutting its 1,100 remaining jobs.
Almost half of the cars and trucks on the road were GM products 15 years ago. That number has dwindled to 25 percent today. Recently, GM and Ford, both of which own large financial institutions, had their money-lending arms reduced to the status of junk bonds. GM’s decisions, led by Wagoner, who is paid a lofty $4.8 million per year plus $2.7 million in stock options, have cost it U.S. market share.
General Motors claims it lost $1.1 billion in the first quarter of 2005. Workers are skeptical. Although workers do not decide what gets produced or how investments are made, they will get all the pain if GM has its way.
GM’s plan to increase its profits hinges on eliminating 22 percent of its U.S. workforce, saving $2.5 billion — jobs that will be gone forever. “No wonder everyone in this country is uneasy — very, very uneasy,” said United Auto Workers Ohio Director Lloyd Mahaffey.
With 77,000 GM workers in Michigan, that state would be hardest hit. Ohio, though, has 11 GM plants with 15,000 workers, including the facility in Parma, near Cleveland, the country’s poorest city.
“There’s a rippling effect,” said Mahaffey. “Cutbacks at GM hit steel — and steel is struggling — rubber, glass, scrap, and services to workers, from the coffee shop to the mall. It is Friday night football and braces for the kids’ teeth. We’ll talk with GM. But just imagine if workers’ wages had escalated at the same rate as the CEOs’, or if we got a raise when we screwed up — we would all be sitting pretty.”
In a statement, UAW national vice president Richard Shoemaker said, “The UAW is not convinced that GM can shrink its way out of its current problems. What’s needed is an intense focus on rebuilding GM’s market share and the way to get there is by offering the right product mix of vehicles with world-class design and quality.”
There are 20,000 GM autoworkers in Canada, mostly in Ontario. “They said it’s isolated to the U.S.,” said Canadian Auto Workers (CAW) union representative Doug Orr. “I think we’ll find that far from the truth.” Buzz Hargrove, CAW president, said he was “shocked” at the corporation’s announcement.
Canadian autoworkers have national health care. Health care for active and retired U.S. workers, according to GM, costs $5.6 billion per year. In the 2003 contract, GM workers agreed to a transfer of a 2-cent-per-hour cost-of-living increase to pay for health care and pension improvements. They agreed to plant closings. Workers and their families now pay health care co-pays for doctor visits and prescription medications. Many U.S. autoworkers are working 10-plus hours per day, logging substantial overtime.
For more on GM job cuts, see People before Profits column.
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