It appears likely that the Bush administration will soon do what Congress failed to do because of Republican obstructionists in the Senate: Provide a bridge loan to the auto companies to prevent an immediate collapse of that industry.
On December 11, the Senate failed to muster the 60 votes needed to overcome a Republican filibuster and approve a $14 billion bridge loan, with strict conditions on the auto companies. The failure of this measure – which represents just 2 percent of the $700 billion bailout Congress gave the financial industry – means there is a real possibility that GM and Chrysler could collapse by the end of December, potentially throwing millions out of work and driving the country into a far worse recession or even a depression.
At the center of the Senate wrecking crew was a handful of Southern Republicans. The main focus of their attack was not mismanagement by the auto executives or their bloated salaries and perks. Their immediate target was the wages and benefits of UAW auto workers and retirees. Beyond that, they saw this as the opening round in their effort to defeat the Employee Free Choice Act (EFCA), and thereby prevent union organizing.
Senator Bob Corker of Tennessee, little-known before this, emerged as the GOP’s point man on the auto industry crisis. Corker demanded, as a condition for voting to keep the industry alive, that the UAW agree up front to cut its members wages and benefits to the level of the non-union Southern auto plants owned by Japanese, Korean and German automakers. When the UAW refused this demand to unilaterally surrender years of bargaining achievements, Corker and his colleagues killed the bridge loan bill – and blamed its defeat on the union.
Corker and other outspoken GOP opponents of the U.S. auto industry appear to be representing foreign corporations. Corker’s state, Tennessee, has two Nissan plants and Nissan’s North American headquarters. Volkswagen is planning to open a plant near Chattanooga in 2011. Another leader in the effort to kill the auto bailout was Sen. Richard Shelby of Alabama. His state has a Hyundai plant, a Honda plant, and a Mercedes plant, all non-union. Shelby has strongly criticized the mismanagement of the Big Three. But he doesn’t mention that until recently Chrysler was owned by Daimler, the German company that’s building Mercedes SUVs in Alabama, and which drove Chrysler to the brink of collapse and then unloaded it.
Other Southern Republicans in the anti-Detroit camp have foreign-owned non-union auto plants in their states. These states gave huge tax breaks to these companies and built roads and other infrastructure for them; the states are essentially paying the foreign companies to manufacture cars in their states. The other thing they offer is a virulently anti-union climate; in exchange, the local politicians, including these senators, get corporate campaign contributions.
Something else you should know about Bob Corker is how he got into the Senate. He ran for an open seat in 2006, and the polls showed him trailing behind the Democrat, Rep. Harold Ford. Then the Republicans began running the sleaziest ad of the 2006 election – featuring a blonde actress winking and seductively saying, “Call me, Harold.” Rep. Ford is African American, and the ad’s sexual innuendo was such a blatant appeal to bigotry that even some Republicans called it racist. But it worked in Tennessee, and Corker pulled ahead and won the election. Bob Corker thus represents the continuation of two ugly traditions of the Southern upper class that have long gone hand-in-hand: race-baiting and union-busting.
Several analyses in the news media, including the Los Angeles Times and BBC, have observed that there’s a broader motive behind Senate Republicans’ decision to play chicken with the future of the auto industry and the economy. In “action alerts” and memos obtained by reporters, conservatives called the auto fight the first skirmish in a war against unions, with the vote on EFCA to be the decisive battle in the new Congress. One memo circulated among top Washington Republicans in early December made their motives clear: “This is the Democrats’ first opportunity to pay off organized labor after the election. This is a precursor to card-check and other items. Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it.”
THE MYTH OF $73 WAGES
Aiding the conservative attack on the UAW has been widespread circulation by the news media of the lie that auto workers are paid $73 an hour. This falsehood has been regurgitated by media ranging from Fox News to National Public Radio, and has fueled the attacks on “greedy” autoworkers and their “irresponsible” union as the cause of the auto industry’s troubles.
The number was actually cooked up by the auto companies themselves as a tactic in contract negotiations. Many of us have heard our own bosses at the bargaining table tell us that they are “paying us” a lot more per hour than anything we’ve ever seen in our paychecks. They come up with these figures by adding in the costs of insurance, retirement, and sometimes even government-mandated expenses like unemployment and workers’ compensation insurance. In the case of the auto workers, on top of their wages – which fact average between $25 and $30 – their opponents are adding not only the costs of workers’ vacation, healthcare, pension, etc. They are also tacking on the “legacy costs” – the costs of pensions and healthcare for all the UAW retirees from the Big Three. Those costs are divided by the number of hours worked by the workers in the plants today, and the result adds another $15 or so to the fictitious “auto worker hourly compensation.”
A few other points to keep in mind:
- While the three Detroit automakers have 800,000 retirees, the foreign transplants, which have been in the U.S. a short time, have only about 1,000 retirees altogether. So they have almost zero “legacy costs.”
- Labor costs represent only about 10 percent of the costs of building a car.
- Auto workers and their union are not responsible for the bad management decisions that got the industry in trouble. And not even the auto executives are really to blame for the current economic crisis that has killed demand. That was primarily the doing of the banks and other financial corporations.
- While UAW members in GM, Ford and Chrysler earn about $3 an hour more than workers in the foreign-owned plants, their bosses are paid many times more than Japanese auto executives. The U.S. auto companies, compared to their foreign competitors, are also overloaded with bosses. In the price tag of a $20,000 car, $4,000 goes to pay all the supervisors, managers and executives who didn’t get their hands dirty building that car.
- If any U.S. industry knows the economic benefits of the Canadian single-payer healthcare system, it’s the auto companies, which save billions every year on health costs in their Canadian plants. They could cut their U.S. operating costs dramatically if they would help to enact single payer here. But apparently out of some sort of capitalist solidarity with the insurance executives, they have failed to do so.
- No union should apologize for negotiating decent wages, healthcare and pensions for its members. Of all the politicians and media pundits who are attacking the auto workers – how many of them would last even one week doing the hard physical labor, at a grueling pace, of an auto assembly line? How many could even make it through one eight-hour shift?