Daily Blog

The Coming Attack Against Auto Workers--And You

    The real story bubbling within the auto industry is not the news that Toyota vaulted over General Motors in worldwide auto sales. Rather, it's the growing ideological--not economic--drumbeat that is gathering targeting the livelihoods of tens of thousands of auto workers. And this is a direct attack against a decent standard of living for every worker. That means you!

  The ideological assault goes something like this: American auto companies are in trouble. The trouble is caused by "generous" benefits paid to auto workers. Solution: cut those benefits to save the auto companies.

  Yesterday's Wall Street Journal typified the rhetoric that I've been seeing for some time now, rhetoric that has picked up in the past few months and is certain to get even louder. In a piece on DaimlerChrysler, columnist Dennis Berman wrote:

     Forget about making better cars. Or even about the rise of private equity. The best way to understand the sale of Chrysler Group is as blood sport between parent DaimlerChrylser and its North American unions.

       Is DaimlerChrysler willing to get fully ruthless with its employees, in spite of its well-hewn image as loveable corporate citizen? The answer will make for some gripping theater in the months ahead. That is because this deal really is about persuading the company's unions to roll back their own health and pension benefits.

   

I want to explain why these attacks, by in large, are ideological, not economic, in nature. If they were economic, then, a whole other set of issues would be on the table beyond cutting rank-and-file workers pay, health care and pensions. Let's see how.

  First, the real burden to auto companies is health care costs. If the auto executives and their counterparts actually dealt with the economics of health care--as opposed to ideology--they would wake up and be avid supporters for a single-payer health care plan. Enacted this year, such a plan would immediately lift off auto companies tens of billions of dollars--that's BILLIONS--in health care costs for current and, most notable, retired workers.

  This is nothing new. Almost two years ago, I cited General Motors as the prime example of a company that should be arguing that single-payer health care is an economic necessity. Many others have made that point before and since. And, yet...these guys are unwilling to break from their ideological framework, even though the economics are unassailable.

  Second, it is not rank-and-file workers pensions that are causing a financial problem for auto companies, or, for that matter, many other big companies. CEO pensions are the problem. I pointed this out last summer by highlighting a terrific article in the Wall Street Journal. Here are two snippets from that article:

    Even as many reduce, freeze or eliminate pensions for workers -- complaining of the costs -- their executives are building up ever-bigger pensions, causing the companies' financial obligations for them to balloon.

    Companies disclose little about any of this. But a Wall Street Journal analysis of corporate filings reveals that executive benefits are playing a large and hidden role in the declining health of America's pensions. Among the findings:

        * Boosted by surging pay and rich formulas, executive pension obligations exceed $1 billion at some companies. Besides GM, they include General Electric Co. (a $3.5 billion liability); AT&T Inc. ($1.8 billion); Exxon Mobil Corp. and International Business Machines Corp. (about $1.3 billion each); and Bank of America Corp. and Pfizer Inc. (about $1.1 billion apiece).
        * Benefits for executives now account for a significant share of pension obligations in the U.S., an average of 8% at the companies above. Sometimes a company's obligation for a single executive's pension approaches $100 million.
        * These liabilities are largely hidden, because corporations don't distinguish them from overall pension obligations in their federal financial filings.
        * As a result, the savings that companies make by curtailing pensions for regular retirees -- which have totaled billions of dollars in recent years -- can mask a rising cost of benefits for executives.
        * Executive pensions, even when they won't be paid till years from now, drag down earnings today. And they do so in a way that's disproportionate to their size, because they aren't funded with dedicated assets.

And...

    When General Motors cites retiree costs, the giant auto maker has a point: It owed nearly 700,000 U.S. workers and retirees pensions that totaled $87.8 billion at the end of last year.

    But $95.3 billion had already been set aside to pay those benefits when due.

    All of these assets are earning investment returns, which offset the pensions' expense. GM lost $10.6 billion in 2005. But deep as its losses have been, they would have been far worse without the more than $10 billion per year in investment income that the GM pension plan for the rank and file generates.

    The pension plan for GM executives is another matter. Unfunded to the tune of $1.4 billion, it detracts from GM's bottom line each year.

   

To underscore: workers pensions are funded, CEO pensions are not.

  More recently, I also pointed out the vast CEO pension riches now coming to light because of new disclosure rules. So, the obvious solution is to first cut CEO pay and pensions deeply. If you want economic solutions, to paraphrase Willie Sutton, go where the money is.

  Third, as a matter of economics--and, to be fair, a tad of ideology--it's worth noting what auto workers "generous" pensions amount to: an average of $32,000 if you worked 30 years and retired. And that monthly payment by the company GOES DOWN once a worker begins to collect Social Security.

  It's ironic that the ideologues are calling for cuts in auto worker pensions, of all places. After all, it was Henry Ford himself who used to say that he wanted to pay his workers enough money so they could buy Ford cars. Exactly how do the ideologues think retired auto workers, not to mention other workers, will be able to participate as consumers in the fall and winter of their lives if they are asked to live on less even as expenses like health care, rent and gas go up?

  And that's where this all comes back to you. We all need to see the coming attack against auto workers as a direct attack on the ability of average people to make a fair wage and retire with dignity and respect. The attack against auto workers will be lead by the same voices who have fashioned a global economy with rules that enrich a few and impoverish the many; the same people who have created, in our country, the chasm between rich and poor and the obscene spectacle of CEO legalized robbery with very little resistance from our elected leaders.

  Our response has to be very clear: The auto worker pension is not the "gold" standard. It is the decent and fair standard.

Ideology v. Reality

    The inevitable ideological attacks against the UAW has begun. Just in time for the news that Toyota overtook General Motors in worldwide sales for the first time in history, the drumbeat has picked up in the pages of the business press: auto workers have to just buck it up and take the hit to save Chryslyer. Or so says Dennis Berman in The Wall Street Journal (subscribers only):

Forget about making better cars. Or even about the rise of private equity. The best way to understand the sale of Chrysler Group is as blood sport between parent DaimlerChrylser and its North American unions.

Is DaimlerChrysler willing to get fully ruthless with its employees, in spite of its well-hewn image as loveable corporate citizen? The answer will make for some gripping theater in the months ahead. That is because this deal really is about persuading the company's unions to roll back their own health and pension benefits.

    Really, is that the deal? The truth is that that is not an economic statement but an ideological statement. And there is a difference. Ideology urges Berman to see the challenge through a particular prism where workers are the problem or, at least, their benefits are the problem dragging down the fortunes of Chrysler.

    But, economics might actually lead one to a different conclusion. On health care, the economics would be solved overnight if Chrysler and the rest of the business community would park their moronic, blind ideology and support single-payer health care--which would, almost overnight, remove billions of dollars of costs from their bottom lines.

    And as for pensions--many companies, like General Motors actually have large pension liabilities because of THEIR CEO PENSIONS, not rank-and-file workers' pensions, which are funded. One solution, then, is to first slash CEO pay and pensions first. That's economics...okay, with a bit of ideology mixed in.

UAW Owning Chrysler?

    I don't really find this story to be too credible.

UAW Group, Tracinda
Discuss Bids for Chrysler

By GINA CHON and JOHN D. STOLL
April 23, 2007

Representatives of billionaire investor Kirk Kerkorian's Tracinda Corp., which has proposed a $4.5 billion acquisition of DaimlerChrysler AG's Chrysler Group, met yesterday with United Auto Workers members who have separately proposed an employee-stock-ownership plan for Chrysler, according to people at the meeting.

The meeting, in Toledo, Ohio, produced no firm conclusions, but it represented a fresh twist in the intensifying contest for America's fourth-largest auto maker, a unit of the German industrial giant since 1999. It also underscored the influential position the UAW holds with potential bidders.

    You can read the rest of the story at the subscription-only site of the Journal. Further in the story the reporters write that the UAW members are folks from Local 12. But, be real: this doesn't seem logical that a Local is going to make a bid for the company. As I mentioned some time ago, it's one thing to have a big piece of the company, which UAW workers already have because of the huge pension funds, but it's another thing all together to actually manage and run a company. It does show, however, how much the future management and health of this company is very much up in the air.

Taking on Smithfield

    Smithfield Foods is a very ugly company. As the UFCW explains, "Smithfield Foods is the largest pork producer and processor in the world, the fourth largest turkey processor and fifth largest beef processor in the U.S." It has its own police force and jail cell in its Tar Heel, North Carolina processing plant. It has repeatedly violated labor laws to prevent its workers from organizing.

    Which is one reason, in case you are pretty good in the kitchen (I mean you can cook), you should not be buying “It Ain’t All About the Cooking". The author, celebrity chef Paula Deen, is a shill for Smithfield. Yesterday, there was a demonstration outside her book signing in Washington, D.C.:

Paula Deen, the Food Network’s ebullient queen of butter-drenched Southern cooking, has found herself in the middle of a dispute between Smithfield Foods Inc. and a union that has long tried to organize one of the company’s pork processing plants.

As part of a national campaign to win support for its effort, the union, the United Food and Commercial Workers, is trying to get Ms. Deen to sever her ties to Smithfield, for which she has been a paid spokeswoman since last fall.

Within the growing world of food-celebrity endorsements, Ms. Deen is the first personality to have become entangled in such a fight.

The latest round of it took place on Wednesday night at the National Museum of Natural History here, where Ms. Deen, on a national book tour, made an appearance before a sold-out crowd.

    The full story about the campaign is at the UFCW's website. So, when Deen comes to your town, get out there with your pots and pans and make some noise.

      

A Very Interesting Merger

    Good for Steelworkers president Leo Gerard--from today's Wall Street Journal--

Unions in the U.S. and abroad have been slow to follow companies as they extend their overseas reach. The United Steelworkers and two of Britain's largest unions are considering a daring move to catch up.

The Steelworkers union is expected to sign an agreement tomorrow with Amicus and the Transport and General Workers' Union to explore a merger, the biggest step to date by a U.S. union toward creating a significant global union. Amicus and the United Kingdom transport-workers union, known as T&G, are finalizing a separate merger and will soon represent a total of 2.1 million members in a range of industrial and service sectors in the U.K. The Steelworkers union represents 850,000 workers in the U.S., Canada and the Caribbean, in steel, aluminum, paper, tire and rubber and health care, among others industries.

The clout of a new global union is far from certain, given the waning power of organized labor in the U.S. and abroad. A merged union's effectiveness will depend largely on how it is structured, who leads it and how well it can marshal resources against common employers. Structuring the combined organization will be complicated, which is why the unions plan to give themselves 12 months to work out legal, constitutional and structural differences between the unions.

Such a merger comes at a time when unions around the world struggle to respond to globalization, which is pushing down wages and benefits for workers in many Western countries, labor experts say. They note union density has declined throughout much of the industrialized world and unions have been largely ineffective in maintaining wages and benefits when employers open new operations in different parts of the world. Talks between the unions were reported by the Times of London earlier this month.

    The rest of the story for subscribers only is here. How you deal with marauding transnational corporations is a tough question, and the answers are no less easy. But, at least, this acknowledges the challenge and may even provide some new leverage. At least Leo is trying.

Exploited Delivery People

    Today, Steve Greenhouse has a good story in The New York Times about the struggle of many food delivery workers to get a decent wage.

They can usually be seen pedaling madly on Manhattan streets, often against traffic, rushing to satisfy New Yorkers’ capacious appetites for cold sesame noodles and General Tso’s chicken.

Yu Guan Ke, who started working for Saigon Grill a decade ago, says he was paid $120 in wages for 75-hour weeks as a deliveryman.

But nowadays these restaurant deliverymen can increasingly be seen standing defiantly on the city’s sidewalks, hoisting protest signs and shouting that they should be paid the minimum wage.

Call it the deliverymen’s rebellion. These workers, almost all of them immigrants from China, have picketed several Saigon Grill, Ollie’s and Our Place outlets, accusing these well-known Asian restaurants of paying them as little as $1.40 an hour, far less than the federal and state minimum wage. The workers have filed federal wage lawsuits in Manhattan against those restaurant companies, and their advocates say they will soon sue a dozen other restaurants in the city.

“The conditions are pretty bad in all the restaurants, so there’s no real advantage to switch to another restaurant,” said Yu Guan Ke, a deliveryman who said Saigon Grill usually paid him just $120 in wages for his 75-hour weeks. “Before we would accept whatever wages they would give us, but now we see we should stand up for what we’re entitled to under the law.”

    The rest is here.

The UAW Gears Up

    This is going to be a tough fight for our sisters and brothers in the UAW (of which I am a member). The Wall Street Journal has a story previewing the bargaining convention taking place in Detroit next week:

United Auto Workers union leaders will convene in Detroit next week for a critical collective bargaining convention against the backdrop of hard times for the U.S. auto makers and suppliers that anchor the 72-year-old union's membership.

The convention, scheduled for Tuesday and Wednesday, is a longstanding ritual for the UAW in the runup to national contract talks with Detroit's Big Three, which begin this summer. In the past, UAW leaders used the convention to rally their troops to seek improvements in job security, pay and health-care benefits.

But this year, the UAW will confront intense pressure from the auto makers to give up hard-won gains, amid the most difficult environment for the unionized U.S. auto industry since the dark years of the recession and energy shocks of the early 1980s.

    Shake your head time for this little nugget:

At the same time, GM and Ford have announced plans to give bonuses or stock awards to top management -- reflecting the diverging markets for skilled, managerial talent and UAW hourly workers who increasingly are measured against lower wage, nonunion workers in the U.S. and elsewhere in the world.

    Well, sure, it may be true that UAW members are competing against lower wage workers. But, the "diverging markets" relative to pay have more to do with the unbelievable corporate greed, not some competitive issue. Executive pay abroad is not close to the outsized packages that the pigs in our corporate suites seem to believe they are entitled to.

    Yesterday, I pointed out that GM executives have no shame in their excessive greed. In today's piece, a UAW leader asks the same question:

"Why do they deem it necessary to reward these executives with exorbitant bonuses?" asked Rick Vargesko, president of UAW local 544, whose members work at a GM metal-fabrication plant in West Mifflin, Pa. Recalling the union's acceptance of buyouts in the past two years to help GM rein in costs, he added, "I thought we were in this together. Are we saving this company or not?"

    The answer is that auto executives don't really care about saving the industry if they end up with huge pay and pensions--they figure that they can land somewhere else if the company goes under (failure in the corporate suite has never been a barrier to future employment) or retire somewhere and live off the pile of money they've socked away--money that the rank-and-file workers they are about to screw made for the company. Is this a great system, or what?

Union Busting in NYC

    I'm shocked, shocked, that the Republican mayor of New York would stoop to union-busting--particularly after so many of the city's unions supported him for re-election (there is a healthy dose of sarcasm there):

Day-Care Group: City Union-Busting

By MEREDITH KOLODNER
THE CHIEF
March 16, 2007

The city's day-care union and several elected officials charged last week that Mayor Bloomberg's re-organization of child-care services has resulted in illegal union-busting.

District Council 1707 officials filed a civil suit in an effort to force the city to comply with a 13-month-old arbitration ruling that ordered it to abide by the union's contract for all employees working inside day-care centers funded by the Administration for Children's Services.

There are currently about 600 workers in 25 of the city's 44 unionized ACS day care centers who are without a union contract because their work was switched from ACS's jurisdiction to the Department of Youth and Community Development.

The union and some City Council members also say that many of the 13 unionized day-care centers are under-enrolled and risk being shut down because DYCD's new program, called Out of School Time, is pulling school-age children out of the centers. ACS officials say there are no plans to close the 13 centers.

Out of School Time (OST) consists of 550 programs citywide, most of which are non-union, that provide child care and after-school care for more than 63,000 children. Mayor Bloomberg is proposing $32 million in additional funds next year to expand the initiative, which is the largest of its kind in the country.

About 205 of the OST programs, which are run by non-profits, serve elementary school-age children, the population that DC 1707 members generally care for. The union estimates that there are thousands of non-union OST workers taking care of young children.

"I don't subscribe to conspiracy theories," said Brooklyn Councilwoman Letitia James at a March 8 Youth Services hearing, "but when I see this mass transfer of programs to DYCD and all this infusion of money into not-for-profits, and I see that ACS is getting out of the business of child-care centers, I have to ask whether or not this is nothing more than an attempt to engage in union-busting."

    The rest of the story is here (but you need a subscription)

Nurses Join AFL-CIO

    Here's an interesting development. The California Nurses Association, and its national arm, the National Nurses Organizing Committee, joined the AFL-CIO on Thursday. CNA represents 75,000 nurses throughout the country. It isn't so much the affiliation that I find interesting--it's one of the reasons given: the Federation's endorsement of single-payer health care as the solution to the nation's failed profit-based, insurance-and-drug-industry controlled system. CNA has supported single-payer for sometime now.

Manufacturing Decline Hits Blacks

    From my friends at the Center for Economic and Policy Research comes this troubling study:

African-American workers have been particularly hard hit by the decline in U.S. manufacturing, according to a study by the Center for Economic and Policy Research. Chrysler's recent buyouts signal the continuing decline of the U.S. auto industry, which has had a disproportionate effect on the African-American workforce. Manufacturing jobs, particularly unionized jobs in the auto industry, have been an important source of well-paid employment for African-Americans since World War II.

    You can read the rest here.