Autoworkers Under the Gun

Autoworkers Under the Gun
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Wednesday, February 29, 2012

Labor has a Legitimate Lien on Capital

When Steve Miller, the vulture capitalist who drove Delphi into the ditch of America’s dreams, declared, “Bankruptcy is a growth industry,” he was smiling, but he wasn’t joking. 

Bankruptcy in the US isn’t a sign of economic distress or mismanagement, it’s a business plan: calculated, cunning, and void of redeeming social value. American Airlines is the latest in a long line of financial obscenities that make vulture capitalists salivate. 

If we had a president we could believe in, he would not only call out the National Guard to protect the Constitutional rights of citizens at Occupy protests, he would defend the vested benefits earned by workers with the full moral and institutional authority of his office. It won't happen.

We must cease and desist from unrealistic expectations and mount our own counteroffensive. US courts routinely aid and abet the extortion of workers and the plunder of pension plans. Capitalism isn’t above the law in the United States, it is the law. Peace and solidarity activists are hounded, harassed, and arrested but the forcible transfer of wealth from the working class to the investing class is protected concerted activity. 

American Airlines’ debt doesn’t outweigh it’s cash and assets. In fact, American Airlines is financing its own bankruptcy. That’s not distress, it’s brass knuckle union busting. The business press makes no bones about American Airlines' plan to profit off the broken backs of labor contracts. In fact, they crow about it.  

American Airlines ordered 460 new planes from Boeing and Airbus less than five months ago at a cost of $38 billion. Those contracts will be honored even as American Airlines plans to dump pensions underfunded by about $10 billion for approximately 130,000 workers and retirees. 

American Airlines doesn’t pretend to offer a business plan that promises better management. The only benefits American Airlines purports to extract from bankruptcy are pension evasion, and concessions from unions facing a court ordered firing squad.

The crib notes for this business plan read: bankruptcy = profit. The longhand reveals the moral compunction of a crocodile. 

The Pension Benefit Guaranty Corp [PBGC] estimates that a default at American Airlines could be the largest in US history. The PBGC itself is teetering on the edge of insolvency. In 2004 a report by the Center on Federal Financial Institutions said the PBGC "is insolvent on the basis of Generally Accepted Accounting Principles (GAAP) and would be shut down if it were a private insurer." 

That was before the PBGC absorbed $6.2 billion in pension obligations from Delphi.

US bankruptcy courts protect the assets of US corporations invested outside the United States from creditors. You can bet your mother's paycheck American Airlines' parent company, AMR Corp., has cash and assets stashed in ports all over the world. 

Labor has a legitimate lien on Capital. A pension isn’t an entitlement, an investment, or a gamble, it’s earned with hard steadfast work.  

A company that cancels its pension obligations should not be permitted to profit from the trade off. The trend toward bankruptcy as a growth industry in the United States is a clear indication that we aren’t in a recession. We are experiencing a restructuring at the expense of everyone who works for a living.

We won’t win this struggle in court. The operable word for rank and file workers isn’t competition, concession, or compromise. The operable word is "Occupy."

Bankruptcy at American Airlines shouldn’t be allowed to fly.

sos, Gregg Shotwell

Deconstructing the UAW  (Live Bait & Ammo #167 )

It would take a sleuth with a corkscrew brain to lathe his way through the twisted scheme 
that leads to a broken union, aka, the UAW. There’s fingerprints, traces of blood, a smoking gun, and hundreds of witnesses, but alas, no arrests. 

As usual, the UAW spokesperson takes the Fifth, “No comment,” and the company in charge—peering over the wreckage—just shrugs like Ayn Rand’s Atlas before he makes another killing. 

At UAW headquarters, it’s business as usual: officers dine on pork chops while new members apply for food stamps.
Like Jack Webb always said, “Just the facts, Ma'am.” 

Who, what, when, where, why, and how in the hell did the victim get blamed for his own wound?

Every bloodhound begins where the odor is strongest (Ford) and then follows the trail.

When Ford spun off its parts division, Visteon, in 1999 the company promised workers 
they would be Ford employees for life. Their pension, benefits, wages, and other amenities 
would remain the same as non spun off  workers. New hires? That’s another story. 
New hires would take one blow to the kidney, another below the belt, and work 
right along side the Blue Oval elite like nothing ever happened between bells.
What the hell, the palookas had jobs, didn’t they? 
They should be happy as slaves in a bygone Dixie.

Before long, one union, the UAW, had two separate but unequal contracts 
covering workers who did the same work at the same pace at the same aforementioned place—Visteon—under a new alias: Automotive Components Holdings [ACH]. 

The ACHtung regime came with new imperatives and new labels. 
Blue Coats were traditional Ford employees. Orange Coats were new hires. 
The difference wasn’t merely color and wages, it was treatment. 
Blue Coats have a national contract. 
Orange Coats have never seen the contract that governs every working day of their lives.
Blue Coats have rights and privileges. 
Orange Coats are subject to the whim and whip of the boss. 

The bosses were having a heyday but the thrashing had just begun. 
ACH was formed in 2005 when the bankruptcy of Visteon threatened the supply of 
critical parts to Ford. ACH is owned and managed by Ford and represented by the UAW. 
The mission of the holding company is to prepare the plants for sale or closure 
while ensuring that Ford gets all the parts it needs at discount prices. 

One may wonder, did this strategy really have the union’s support?

“Yes. The UAW's support helped Ford reach an agreement with Visteon that paved 
the way for ACH's formation, and that support has continued. 
The new owners will work directly with the UAW on local agreements and pay structures for new hires.”

As the auto market nose dived from 2005 to 2010 staff thrashing intensified. 
Some Blue Coats were given the option to transfer to ACH plants “temporarily.” 
Trouble is, when the hostile environment of a two tier plant became too hot, 
these “light” Blue Coats found they couldn’t transfer back to their home plant 
until there were openings. Of course, openings at their home plant were filled by new hires 
at second tier wages with the support of the UAW. 

When these same Blue Coats dug in for the long haul at ACH and 
decided to run for elective office, they were told they couldn’t because they were temps. 
Hence the Light Blue Coat label which shaded their rights and privileges with a miscreant tint.

As the thrashing machination cycled through the parts plants Ford announced 
the closure of the Twin Cities Assembly plant which built the popular Ranger pickup. 
Consequently, Ford, with the support of the UAW, pressured Blue Coats to transfer or retire, 
then staffed the plant with temporary workers at discount wages and bennies. 
Then Ford decided to keep the plant open a little longer and hired newbies at wages below the temp standard. On top of that, Ford, with the blessing of the UAW, rehired retired skilled trades workers through a separate contractor and thereby retained experienced trades at discount prices. 

Four years later the plant is still humming. Ford continues to announce the closing at regular intervals but at these rates temps, second tier new hires, and de-unionized trades are padding 
Mulally’s parachute with gold leaf and silver linings. Who knows? The Twin Cities plant 
may get another reprieve, a new transient product for the time being and some day, baby, who knows, maybe, we’ll all be permanently temporary.

Meanwhile, back in Flat Rock, Michigan the Mazda-Ford dalliance, Auto Alliance International [AAI], with the support of the UAW had already achieved most of the outsourcing of non core jobs. Nevertheless, in June 2011 Mazda announced that they were going to end production at AAI where Ford also builds the Mustang. Thus, Ford would be forced to reconsider 
whether they would keep the plant open without their foreign paramour. 
Then Mazda informed employees that they were committed to providing a new product for AAI 
but—surprise, surprise—accomodations would be necessary. Of course, 
this latest round of concession thrashing on behalf of Ford-Mazda comes 
with the support of the UAW and the crack of a whipsaw.

Any Columbo wannabe worth his per diem would have to inquire which UAW leader 
aided and abetted Ford’s dismemberment of the union at these sundry 
yet eerily similar scenes of iniquity and debasement. Just the facts.

The one and only Bob King was head of the UAW-Ford Department and Independent Parts Suppliers [IPS] during the most degenerate union negotiations since . . . 
Hell, I can’t think of a traitor who doesn’t pale in comparison. But now King is president of the UAW and he is eager to demonstrate that the UAW has been a vital partner in the de-structuring of the auto union for the benefit of US corporations. 

If King can wind up current negotiations with the Detroit Three with a third tier wage, defanged trades, and a cash balance pension plan which will set the standard below the transplant competition, he may get a seat on the Board of Directors and a good shot at some insider trading. 

King contends he can organize employers easier than workers because he and his corporate comrades are of the same mind set. Namely, profit is the fundamental value and workers should pay for it by sacrificing annual raises and cost of living adjustments for profit sharing schemes. 

I’m betting King won’t make another appearance at his home local in Dearborn where he was booed out the door. His working class hero cape won’t fly on the shop floor.  And he knows it.
sos, Gregg Shotwell

An Inside Job: The Stealth Transfer of Labor’s Accumulated Wealth (Live Bait & Ammo #168)

I get tired of kicking that dead horse we old soldiers of solidarity call the UAW but as soon as I turn my back the carcass puts the hooves to me with a vengeance reserved for divorcees. What did I do? I’m retired. I can’t even vote, let alone, sue for breach of contract.

In 2005 the UAW trotted out a couple of stalking horses—retirees chosen for their blinders—in order to engage GM in a phony lawsuit. I say phony because there was no conflict. The two parties, GM and the UAW, had already agreed that UAW-GM retirees would pay through the nose. 

The purpose of the stalking horses was to gain recognition for the UAW as the legal representative of retirees. Up until then, the union did not have any legal right to negotiate takeaways from retirees, since retirees don’t pay dues, can’t vote on contracts, and aren’t employees.

Ever since that landmark case, the UAW has had the legal right to negotiate reductions in the accrued vested benefits of retirees. 

Federal courts have repeatedly protected the accrued vested benefits of retirees under a union contract. In layman’s terms, the contract you retired under is good for life. Unless your union reps have been recognized in court as your legal representatives, in which case, as Lenny Bruce once said, “Everybody’s ass is up for grabs.” [see endnote]

False representation is the first leg of my dead horse metaphor. The second leg is VEBA. 

In 2005 the UAW negotiated a “partial” VEBA (Voluntary Employee Benefits Association) which is essentially a health care trust for retirees. In 2007 the UAW made the VEBAs permanent, and thereby institutionalized the transformation of an earned vested benefit into a depreciating return on a risky investment with a dishonest broker.

Why do I claim the broker is dishonest? 

The companies charged customers for the increased cost of health care for future retirees as those benefits were negotiated. They blamed increased costs on greedy unions. Rather than set aside the cash gained from price increases in a trust for benefits promised to retirees, they used the cash for dividends, bonuses, and investments overseas. When it came time to pay the promise, they claimed the deferred compensation was an unjust entitlement, and besides, they were broke.

Broke in one pocket and flush in the other—foreign investments. 

The UAW Concession Caucus went along with this scam and blamed “foreign competition,” an allegation that ignored the fact the American auto companies were multinational corporations, aka, “foreign competition.” 

The UAW VEBAs with the Detroit Three automakers were worth about 50 percent of the projected liability. Post bankruptcy the situation is dicier in terms of both financing and conflict of interest since the VEBAs are funded with company stock.

To further augment the companies’ competitiveness the UAW negotiated buyouts to entice workers into early retirement. This didn’t puzzle the business press but I couldn’t help but wonder how the purported problem—legacy costs—could also be the solution. I’m not a math wizard, but I couldn’t comprehend how adding to the legacy cost would subtract from the problem of too much legacy cost. 

In order to further fuzz the math the UAW allowed the companies to use the pension funds for cash incentive buyouts to reduce the active workforce. The companies complained that there weren’t enough active workers to support the retirees, just like the Social Security canard, so they bought them out, thereby, further teetering the totter. 

The UAW also allowed the companies to use the pension fund to pay for retirement benefits that were not a part of the pension plan per se, but add on benefits negotiated from contract to contract. For example, cost of living bonuses, legal services, and the Social Security Age Creep Patch which is compensation for the early retirement penalty imposed on social security benefits.

Let’s see, the first leg was false representation; the second leg was the health care trust; the third leg is draining the pension fund.

In 2011 the UAW agreed to eliminate the cost of living adjustment bonus which over the years had come to be called the “Christmas Bonus,” legal services, and the Social Security Age Creep Patch because the pension was underfunded and hence was “at risk.” 

The fourth and final leg of the dead horse metaphor is a letter in the 2011 UAW-GM National Contract which states in part: “. . . the parties agreed that the national parties may mutually agree during the term of this agreement to amend the plan to add retirement options for some or all existing retirees to help GM reduce the volatility and risk related to the plan and benefit existing retirees by providing an additional voluntary option.” [emphasis added, see endnote]

Will all volunteers, please, line up against the wall?

Who knows what the motion to amend may foreshadow for the parties who don’t get to vote let alone mutually agree to party on somebody else’s dime? But it appears the old metaphor isn’t dead despite its blank stare and wooden headed unresponsiveness. 

There’s something moving around inside.

[see Conclusion: “To avoid the quicksand of extrinsic evidence, employers must be vigilant about how and where they make retiree medical benefit promises. All statements made about these benefits should be reviewed for clarity and consistency. Populating enrollment forms, summary plan descriptions, plan documents, and collective bargaining agreements with a reservation of the right to amend, modify, or terminate the plan is clearly the best medicine.” [emphasis added] Retiree Medical Litigation's Dirty Little Secret: "Location, Location, Location!"  ]

sos, Gregg Shotwell

A Union at the Crossroads (Live Bait & Ammo #169)
I remember my first job in a UAW shop. It was 1972. I worked at Kelvinator assembling refrigerators. After ninety days I was up to full pay and benefits. As soon as I got health insurance, I took a day off to take care of a medical problem that required a doctor visit. When I returned to work the next day, the foreman —a gargantuan bully with a flat top haircut, teeth like the grill on a ’56 Pontiac, and a nose like a tomahawk— verbally abused me for calling in sick.
I asked to see my union steward. The foreman shut up fast and walked away. A few minutes later the union steward was in the foreman’s face. I’d never seen anything like it. The bully was cowed. After that the foreman always treated me with respect, grudgingly, but respectfully nonetheless.  

I was sold. Hell yes, I’ll pay union dues. 

When I met with volunteer organizers at Toyota in Georgetown, KY in 2004 they told me the main reasons that they wanted the UAW were: pension and health care in retirement, cost of living raises as opposed to profit sharing, elimination of temp worker status which they felt was abusive, and to protect workers from injuries on the job. All in all, what they wanted was power: power to demand just compensation, power to confront the boss, and power to control the pace of the work and the assignment of jobs. Like workers everywhere they were tired of getting bossed around and belittled. They wanted dignity.

The UAW struck out on all counts except safety. Union shops do have better over all safety records, but speedups and overloaded jobs have led to increased work related injuries in UAW shops which can disable a person for life. In the chase to catch up with Toyota’s relentless pace, the UAW sacrificed what is most important: the power to demand not only a fair day's pay, but a fair day's work load. Life in a UAW shop is getting tougher on workers and easier on bosses.

Despite rhetoric to the contrary, the UAW has permitted the companies to expand utilization of temporary and flex workers. The definition of flex work is a union without a backbone. Flex workers are not only “at will,” they are at the end of a whip. Temp workers defy the meaning of unionism. Temps pay full union dues but are denied the rights and privileges of first class UAW members because they don’t acquire seniority, and thereby, equality.

In 2007 the UAW negotiated contracts with the Detroit Three which denied pensions and health care in retirement for new hires and instituted a malignant second tier wage. As Detroit native Paul Clemens noted in his book Punching Out, new hires can make more money gutting an auto plant than they can working for GM.    

In 2011 the UAW swapped the certitude of cost of living raises for the hoax of profit sharing. Capitalists don't share profit with workers. Capitalism is based on the swindle of paying less than the cost of living for labor and awarding all excess value to the leisure class. The day workers share profits is the day traders on Wall Street are given brooms and told to sweep up on their way out the door.

What does the UAW have to offer a nonunion worker? The ten hour day? 

Since the inception of company and union partnership, UAW members have lost not only job security and compensation, they have lost power. When a UAW member goes to work on the assembly line, they don’t know what time they will arrive home. The company can lengthen the work day in the eighth hour or send them home early with impunity. The company union partnership has two faces and one forked tongue.

The baseline driving need of workers —North and South— is power not kowtow. If a union wants to organize, leaders must demonstrate that workers can stand up to the boss and win. Under the direction of UAW President Bob King, the UAW slavers and slobbers to convince employers the union can help keep costs down and workers compliant. Rather than offer workers a practical solution (solidarity) to an urgent need (powerlessness), King appeals to management’s conscience, which is like asking the executioner for a smoke.   

Neutrality agreements between the union and the target company are King’s preferred method of organizing. Neutrality agreements exchange power for pity. Not a very desirable transaction for workers under the gun of a multinational corporation armed with the power to hire, fire, and injure a worker for life. 

The first thing the union gives up in a neutrality agreement is the right to strike. After that the boss writes the terms of indentured servitude and the UAW musters the consolation votes. King may believe his curtsy approach to corporate power will gain traction with workers in the South, but there's few things more demoralizing than watching rebels play golf with the boss, and nothing more insulting to southerners than suggesting that they are patsies. 

After years of “jointness” —that peculiar alias of nefarious union-management partnership— the UAW has stripped autoworkers of every benefit that makes union membership worth fighting for. 

King admits that if the UAW fails to organize southern transplants, the union's slide into obsolescence will avalanche. King has pledged international solidarity and made some flowery gestures of support to Korean temp workers. But there’s a scrap in his neighbor's yard which gives him an opportunity to prove his mettle and win the hearts and minds of the unorganized here at home.

Electro-Motive, a Canadian company controlled by Caterpillar, has locked out Canadian autoworkers and demanded 50 percent wage cuts, elimination of pensions, and reduction of other benefits. 

Where did they get the idea that shit would fly in North America? 

The pressure on unions is mounting. Can the UAW organize militant support for brothers and sisters in struggle across the border, or will King partner with the economic terrorists at Caterpillar by organizing workers in Muncie, Indiana to work for less?

The UAW is at the crossroads of Fight or Flight. One choice makes all the difference.
 sos, Gregg Shotwell