BELVIDERE, Ill. — As the United Auto Workers and the Big Three car companies hammer out a new contract, Tom Daniels is one of many thousands of workers who realize that the drive to cut wages and benefits is not warranted by the facts.
Labor expenses for General Motors, Ford and Chrysler, even by company accounts, do not amount to more than 10 percent of the price of a new car. This includes wages, benefits and costs for retiree pensions and benefits.
Daniels, a 12-year Chrysler worker, says, “It makes no sense when they say they have to close a $30 an hour labor cost gap with the Japanese companies,” Toyota, Honda and Nissan.
“The companies are a lot better off than they let on. Ford is supposed to be in such bad shape, but it just spent over a billion on a new plant in Eastern Europe,” said Daniels in a July 20 interview with the World. He works at a plant in Belvidere that assembles Dodge Calibers, Jeep Compasses and Jeep Patriots.
Six days after Daniels was interviewed, GM, the biggest U.S. auto giant, announced it will pump $6 billion into its South Korean GM Daewoo Auto and Technology Co. as it seeks to increase sales around the globe. In addition, the GM Daewoo part of GM’s global empire has announced it will spend $3.3 billion to develop new models and expand factories.
GM’s overseas sales account for 60 percent of its total sales. U.S. tax laws are skewed in favor of corporations, when GM “opens the books” during contract negotiations it is likely it will hide more than half its profits. Profits made by overseas divisions don’t even have to be reported when a big corporation files for bankruptcy protection.
“I wish I could do that sort of thing,” Daniels said. He explained that when there was no work for him at Warren Trucking in Ohio two years ago, “I picked up and relocated here. I guess I’m a fool — I always believed that you’re supposed to work and you’re supposed to pay your bills.”
Daniel Nagy, another worker who had come to meet Daniels outside the UAW Local 1268 union hall, said, “Yeah. I also relocated from Warren, Ohio. It doesn’t work for us the way it works for the companies. If it did, I could just tear up all the bills me and my wife ran up in Ohio and say they don’t count because I’m in Illinois now. And my kid wouldn’t have to pay off any college loan either.”
Although negotiations are held in secret, the union can be expected to raise both the issue of concealed corporate profits and the issue of nonlabor costs of making vehicles, many of which are controlled by the companies.
“The vast majority of the costs of producing a vehicle and transporting it to a dealership and preparing it for sale, including design, engineering, marketing, raw materials, executive compensation and other costs, are not related to direct or indirect manufacturing labor,” the UAW said in a fact sheet for reporters covering the negotiations.
In addition, observers note, the companies cannot argue that the foreign automakers get away with paying their workers less. Workers at Toyota and Honda plants in the U.S. earn roughly the same as workers at Big Three auto plants.
Nevertheless, the companies are pushing for major concessions in wages and benefits, including dumping responsibility for retiree health benefits into the lap of the union.
Even outfits that specialize in supporting many of the big business wage- and benefit-cutting efforts are finding it hard to justify Big Three efforts to wring more concessions from workers.
Laurie Harbour Felax, managing director at Stout Resius Ross Inc., a financial and strategic advisory company, recently told The New York Times, “When the union says we’re not the problem here, there is a lot of validity to that.”
Daniels said the union, which gave concessions before, shouldn’t give any more. “We have given plenty, they know that. Enough is enough.”
jwojcik @pww.org
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