GM cuts 25,000: Bad news for whole working class

The action by General Motors in cutting 25,000 jobs — 22 percent of its U.S. workforce — spells big trouble for the U.S. working class.

The loss of jobs at GM comes as no surprise, since there has been a steady loss of GM market share to rivals with lower wages and lower benefit costs and largely nonunion workplaces. General Motors presently employs 140,000 workers in the U.S., a significant decline from the 600,000 U.S. workers employed during its heyday in the 1970s. Its current plan to cut jobs will require obtaining the consent of the United Auto Workers to void the “no layoff” provisions of the existing national agreement.

UAW approval is unlikely. Any job cuts that don’t come about through early or voluntary retirement will face stiff resistance. Richard Shoemaker, a UAW leader, noted that the union is “not convinced that GM can simply shrink its way out of its current problems.”

One of the core issues for General Motors is health and retirement benefits. In his speech at the company’s annual meeting, GM Chairman G. Richard Wagoner Jr. repeated the oft-stated fact that $1,500 of the price of every GM vehicle goes toward providing health benefits for current and retired workers and their families — “a significant disadvantage versus our foreign-based competitors,” who, due to their nation’s socialized medical systems, provide universal coverage at half or one-third the cost in the U.S., and who also do not carry the burden of retiree benefit costs.

Pressure to increase health insurance contributions

No doubt Wagoner’s solution will be to insist that GM blue-collar workers increase their contribution to health insurance costs to 27 percent from the current 7 percent, the concession wrung out of the company’s white-collar staff, a whopping pay cut for GM workers. And what about the 450,000 retired workers and their spouses?

Business pundits are cheering for GM to “break free from the legacy of strong-arm unions, crippling cost structures and onerous commitments to its ex-workers” (The Economist). They are openly advocating a union-crushing strike to ram the health and retirement costs down the workers’ throats, if not wipe them out altogether.

“Perhaps GM should consider confrontation rather than conciliation,” says the June 8 Economist article, continuing, “The benefits of breaking the stranglehold of a union that has turned wages into something approaching a fixed cost are innumerable for a firm that is now fighting the competition with one hand tied behind its back.”

GM and many manufacturers actually need to join with the union to achieve nationalization of the health and retirement coverage problem. That is the path to survival, not going to war with its workers in an effort that may very well destroy the company. There is indeed no escape by simply shrinking. Nor is there escape by impoverishing U.S. workers below their foreign counterparts — who will still have their health and retirement coverage! Investing in, not destroying, this workforce is the way back from the abyss.

Investors seek radical restructuring

The history of corporations joining workers to solve a problem is rare other than in periods of intense worker mobilization. Some might hope that GM will avert a confrontation and sit on its considerable cash reserves. However, outside investors such as Kerkorian are making strong moves to control a larger share of GM stock and compel radical restructuring. Radical restructuring means that the big investors who win the struggle for control, along with top executives, will likely loot GM of its reserves and most other valuable assets, resulting in far greater loss of jobs, wages and benefits and far greater cost to the federal Pension Benefit Guaranty Corporation and “small” investors. Thus the likelihood of a major confrontation is very high. For the UAW this may also be a life-and-death struggle.

This is not just a challenge for GM workers, or just for autoworkers. The birth of modern industrial unionism was integrally linked to the formation of the UAW in the titanic struggles in Flint and elsewhere. Organized labor went from less than 12 percent to 25 percent of the workforce in the wake of that mobilization and strike wave. Today, the continued survival, not to mention recovery, of industrial unionism from decades of decline may well be decided in the fight that is coming. We all have a vital stake in its outcome.