What To Do With the Big Three

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[by Bill Onasch]

In the November issue of Socialist Action newspaper we wrote about a potential deal for General Motors to acquire Chrysler. That fell through because GM couldn’t put its hands on enough cash..

It turned out their troubles were actually much deeper than previously acknowledged. Plunging sales, downgraded credit ratings, and tanking stock value, was burning through cash reserves at the speed of a California wildfire. The bean counters projected GM would likely be dead broke–with little in the way of credit life lines–by the end of the year. Chrysler was in about the same predicament. Only Ford, while not in great shape, was not in imminent danger.

Still, the Titans of Detroit were not unduly alarmed. If mere lenders and insurance companies could be considered “too big to fail,” getting emergency government rescue programs now funded with over a trillion dollars, surely the iconic Big Three automakers should have no trouble getting another measly 25 billion. Undoubtedly, that’s what their CEOs, decked out in their thousand dollar suits, must have thought as they each swooped in to Washington in their private jets.

They insisted the more modestly attired UAW “partner,” Ron Gettelfinger, accompany them on their visit to Capitol Hill. Their mission had already been vaguely blessed by president-designate Obama a few days earlier on Sixty Minutes. Several governors of both parties had endorsed their appeal and the House Democrats had all their ducks lined up–or so they thought.

But other factors led to an unaccustomed welcome for this party of four from Detroit. Polls show deepening public suspicion and opposition to the whole bailout approach. The CEO of Bank of America, fresh from picking up Merrill Lynch for a song, declared that no more than one of the Big Three deserved to survive. Former Massachusetts governor and failed presidential contender Mitt Romney–the son of an automaker CEO– extolled the virtues of corporate bankruptcy. He urged the Big Three to exploit this tool–as his own private equity strip and flip ventures have profitably done.

So, just as some had initially rebelled against Pelosi on the scam that ultimately became the 700 billion TARP, Democrat as well as GOP representatives cynically grandstanded with some rude shots at the men from Motor City–instead of their usual fawning.

“There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand…It’s almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious,.” quipped Long Island Dem Gary Ackerman, best known as a super-hawk supporter of Bush’s war drive in the Middle East.

Perhaps the dazed looking brother Gettelfinger would have got more attention and respect if he, instead of sitting shoulder to shoulder with these down at heel plutocrats, had invited his members to knock off work for a few days to join him in meeting with Ackerman & friends.

The two Democrat Senators from Michigan teamed up with a Republican from Missouri to craft a hasty compromise that appeared to have a chance of passing. It would have allowed the companies to tap the 25 billion previously earmarked to retool for more fuel efficient cars for day-to-day expenses now. They would defer the question of further assistance to the new congress and White House taking office in January. But it was never to get to a vote.

Whether pre-planned or improvised, Speaker Pelosi stepped in to make clear the rules of the game had now changed. She summoned the visitors from Michigan for a private meeting where she told them the lame duck session was being immediately adjourned with no action taken. She gave them an ultimatum–come back with a recovery plan that includes “shared sacrifices” by December 2 or forget about any aid until some time next year. She then went to the press saying “they’ve got to show us their plan before we show them any money.”

It might be mildly amusing to watch the haughty bosses get their comeuppance, even at the hands of unsavory politicians, if this was just a performance for reality TV. Go ahead, kick ‘em off the island.

But this was neither entertainment nor mere gratuitous insults. While clearly bristling, the Titans took a hit for their class to help set the stage for a new assault on our class. Out of sight of the cameras was the real target of Pelosi’s masters–millions of blue and white collar workers and retirees, most with families, whose lives are now threatened with disaster. They live in dozens of cities, especially in the Midwest, that are fretting about becoming ghost towns. And, with the globalization of the auto industry, this hardship will be strongly felt in Canada, Mexico, and other countries as well.

The smart aleck Democrats are dead serious about wanting a Big Three loan plan that includes more “tough love” major concessions from the UAW. They’re talking a minimum of eliminating the Job Bank, Supplemental Unemployment Benefits, and restrictions on plant closings that are still retained in the union contract. Some want much more: reducing the company payments due to the VEBA established for retiree healthcare (some payments have already been deferred with the union’s agreement), making current workers pay more of healthcare costs, and even outright wage cuts.

Given the level of surrender agreed to just last year in the name of job security and retiree healthcare, this may be more than the UAW “partner” can reliably deliver. But it’s expected Gettelfinger will do his best to make it work. In an interview with Bloomberg,

“United Auto Workers President Ron Gettelfinger said he’s ‘at the bargaining table’ to help find ways to cut costs at U.S. carmakers, signaling the union may be flexible in making concessions to push through an aid package.”

Both the bosses and union bureaucrats will focus on the palpable option to a bailout–bankruptcy. Experiences in the steel, airline, and auto parts industries clearly demonstrate that whether a chapter eleven reorganization, or terminal chapter seven liquidation, bankruptcy would transform crisis in to disaster for the workers. Bankruptcy judges have almost unlimited authority to abrogate union contracts and impose draconian conditions. Without a bailout GM and Chrysler would almost certainly take the bankruptcy route.

The only two broad alternatives currently offered by the bosses and politicians- -bailout with conditions or bankruptcy– are like the option of a migraine or impacted tooth. Maybe it’s time we changed the rules with a new third alternative–national ization.

Nationalization can mean different things in different circumstances. We have seen so-called “partial nationalizations” over the past three months of Freddie, Fannie, and AIG. Such nationalizations are a sham, a way of, as Paul Krugman put it, socializing loss while privatizing profit. Amtrak is another phony nationalization that accompanied the abandonment of most passenger rail service in the USA.

Perhaps an even more relevant example of nationalization to avoid is what happened in the British auto industry. Like Obama’s declarations about the Big Three, Harold Wilson, a Labor prime minister during the Sixties and Seventies, thought the collapse of the British-owned auto industry would be a disaster. Through a series of bailouts and nationalizations 14 car, truck, bus and construction equipment companies were ultimately brought together in to British Leyland.

The last time I visited Britain I had a chance to chat some with Alan Thornett, a leader of the British section of the Fourth International. He worked at Cowley, the historic center of British auto production, for 24 years, 20 of them as a well known leader of the Shop Stewards Movement. He related in our discussions, and in two books about the experience, how conditions under nationalization became steadily worse until the Thatcher regime pulled the plug.

But despite speed up and other attacks on the workers BL still couldn’t successfully compete in the market. Much of British Leyland simply closed down while profitable sectors were sold off to “foreign” buyers. Today there is no British-owned car industry.

Like Britain already faced thirty some years ago, the underlying crisis in American auto today is of overproduction, over capacity. Nationalizing the Big Three to keep them in competition with the “foreign” owned transplants would almost certainly lead to no better results than British Leyland.

And would we want to subsidize a public policy of promoting car growth in the midst of the global warming crisis? Do we really want more cars in a country where registered vehicles already outnumber licensed drivers?

It’s in the interest of the working class as a whole to fight to save the jobs and industrial capacity of the Big Three. But they don’t have to be utilized making cars and SUVs. Instead, we should propose they become the pioneer component of a new public sector dedicated to converting our economy from environmental destruction to ecological sustainability.

Instead of the law of the capitalist “market,” which has led us in to both the present economic and global warming crises, our kind of nationalization would utilize scientists, environmentalists, and elected worker representatives, to participate in both the planning and day-to-day management.

Far from demanding give-backs we should keep UAW contracts intact, and guarantee continuing wages and benefits during conversion and necessary retraining.

And why stop with the Big Three? The transplants should be included too–and extend the union contract to their workers as well.

Converting the auto industry to other use is, of course, not unprecedented. In 1942, car production came to an abrupt halt, not to be resumed for four years. Instead the industry built planes, tanks, and jeeps. No auto worker was outcast and starving as a result. The union contracts were kept in place and the workforce grew. It’s what finally pulled America out of the decade-long Great Depression.

The twin crises the working class faces today requires similar bold, urgent action though with a different objective–to save the planet, not destroy it.

To achieve such a goal will demand determined struggle on multiple fronts–in the workplace, street heat, and building a party of our own. In future issues we’ll have more to say about how workers can start forging a new class struggle left wing that can advance this perspective- -and we’d like to hear your ideas as well.

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