https://www.wsws.org/en/articles/201.../wall-s21.html

Wall Street to General Motors: End strike and ram through cuts

By Tom Hall
21 September 2019

Shut down the strike by GM workers quickly and force through massive concessions. This was the meaning of a statement this week by credit rating agency Moody’s, which called the strike a “credit-negative” for the company, increasing the likelihood that Moody’s might downgrade GM’s credit.

If the strike is not wrapped up within one to two weeks, Moody’s warned, “the financial burden of a strike will become more material and the prospects of a contract that avoids erosion of the company’s current competitive position is less likely.”

In plain language, it means that if GM and the United Auto Workers cannot shut down the strike quickly and force through major concessions, Wall Street will punish the auto giant by making it more expensive for the company to borrow money and by tanking its stock value.

This demonstrates that striking GM workers are not simply confronting GM CEO Mary Barra and other executives, but the entire capitalist class. Behind GM stands its Wall Street investors, who are demanding that the company do everything to ensure a high rate of profit in the face of what is expected to be a protracted downturn in the auto industry.

This is despite 10 years of near-record profits in the auto industry, which produced a bonanza for GM’s wealthy investors. For the most part, these profits have not been used to invest in new production or emerging technologies. Instead, they have been wasted on stock buybacks, including $10 billion since 2015 alone, and billions more in dividend payments.

One of the beneficiaries of the stock market runup is the UAW, which owns more than $3.7 billion in GM stock through its retiree healthcare fund.

Joe Ashton, former UAW vice president for GM, joined the company’s board of directors in 2014. He resigned in 2017, after the Detroit News first reported his ties to the expanding federal corruption investigation into the UAW. His former top assistant Mike Grimes has since pleaded guilty to extorting hundreds of thousands of dollars in exchange for contracts from the UAW-GM training center.

Wall Street has already turned the screws on GM’s rivals. On September 9, Moody’s downgraded Ford’s credit rating to junk status in retaliation for the perceived slowness of its “fitness” program—in reality, a jobs massacre.

In May, Ford announced that it would lay off 7,000 salaried workers, or 10 percent of its global white-collar workforce. Investors greeted this with a collective yawn, with some analysts demanding at least 23,000 layoffs, or one-third of the company’s salaried workforce.

In June, Ford announced that it would close five plants throughout Europe and eliminate 12,000 hourly jobs, a 20 percent reduction of its European workforce. But this was too little, too late as far as Moody’s was concerned.

In a Wednesday opinion piece reflecting the mood of investors, the Wall Street Journal wrote that General Motors “is under intense pressure to show it can cruise through the next downturn without too much damage. Only then can the largest U.S. auto maker expect a better stock-market valuation.”

The article states: “Many of the UAW demands seem reasonable, particularly for temporary and other workers who don’t enjoy the same perks as Old Timers. But that is no basis for an agreement.” The Journal continues, “GM’s credibility with investors depends on it maintaining as flexible a cost base as possible.”

In reality, while these are the issues animating rank-and-file autoworkers, the UAW has made no such demands. In fact, it has not made any demands whatsoever, and it continues to keep workers in the dark about the content of its discussions with GM.

This is because the UAW is conspiring with GM to shut down the strike as quickly as possible and force through a concessions-laden contract. The UAW has its own financial incentives to do so. In addition to its ownership of stock in GM, it also wants to avoid draining the $760 million strike fund, which UAW officials use to pay out their bloated six-figure salaries.

“GM may have played hardball in November to leave itself room to compromise now,” the Journal writes. “ Its offer to the union involves giving new projects—its electric pickup truck and, intriguingly, battery cell production—to two of the affected plants. This may hint at a path to a deal.”

This refers to the terms of the proposal by GM, published by the company after the beginning of the strike, which combined promises to eventually reopen Detroit-Hamtramck Assembly, which is slated to close in January, as an electric truck plant and build a battery factory near the shuttered Lordstown plant in northeastern Ohio. This would be a fig leaf that would cover up massive concessions, including major out-of-pocket healthcare cost increases and raises below the rate of inflation.

“However,” the Journal warns, “the company can’t afford to stray far down this path. GM has more spare manufacturing capacity than either Ford or Fiat Chrysler, with four plants in addition to the ‘unallocated’ ones that are poorly used, according to LMC Automotive data. ‘GM really didn’t need the factories,’ says LMC analyst Jeff Schuster.”

The article concludes: “Mary Barra is popular on Wall Street, in particular for well-timed decisions to quit Europe and raise $7.25 billion of frothy tech capital for GM’s driverless project. Even so, GM stock fetches just under six times earnings. To cement her reputation, Ms. Barra needs to drive the company successfully through tougher times. Investors can expect her to fight hard for GM’s flexibility.”

The stock market’s response to the strike thus far has been muted, with GM’s stock price dropping less than 3 percent from the end of trading Friday, reflecting hopes that GM and the UAW will be able to shut down the strike soon. However, uncertainty over the outcome of the strike has produced a spike in options trading, a sign that investors are expecting volatility in GM stock prices, according to the Wall Street Journal.

“The company has enough cash on hand and its dealers have enough vehicles in stock to weather the storm without significant problems for at least a week, according to financial analysts. After that, investors may become more concerned, potentially having a greater impact on shares of the company,” CNBC reported.

 

article from the world socialist web site?

from their about page:

 

Actual article title on that site

The only solution to climate change is world socialism

 

The UE (United Electrical Workers) have come out in support of the strike.

https://www.ueunion.org/ue-news/2019...rt-gm-strikers

STATEMENT OF UE OFFICERS
UE stands in full solidarity with the rank-and-file UAW members on strike against General Motors’ corporate greed.

With billions of dollars in profit, GM can easily afford to continue to provide decent healthcare for its workers, bring all workers up to one “tier,” and commit to keeping its factories open in the communities that have made it such a profitable company.

We particularly denounce GM’s heartless and cruel decision to cut off healthcare for its workers. Healthcare is a fundamental human right, and access to healthcare should not be dependent on employers who are clearly willing to use it as a weapon against us.

As many UE locals have demonstrated in recent years, ending two tiers is not an unrealistic goal. Neither is maintaining decent healthcare. When rank-and-file workers are united, and supported by their community, victory over the forces of corporate greed is always possible.

Peter Knowlton
General President

Andrew Dinkelaker
Secretary-Treasurer

Gene Elk
Director of Organization

 

So has NCL...National Consumers' League.

https://www.nclnet.org/uaw_strike_2019

NCL statement in support of UAW Strike

Posted by NCL Communications - September, 2019

Tagged: press releases,


Media contact: National Consumers League – Carol McKay, carolm@nclnet.org, (412) 945-3242 or Taun Sterling, tauns@nclnet.org, (202) 207-2832

Washington, DC—The National Consumers League (NCL) has announced its support for the 48,000 United Auto Workers who have gone on strike this week to demand their share of the $12 billion profits GM earned last year. The strike also comes in protest of GM’s announcement that it–the largest of American automakers–would shutter four different U.S. plants.

“We stand with UAW members who are asking for what is only fair–a reasonable share of the enormous profits GM has enjoyed in the past year alone. The UAW loyally took a hit a decade ago to keep GM profitable and viable. Without the workers, there would be no cars and no profits. Ten years later, with GM back earning billions in profits, auto workers are entitled to enjoy this success and the fruits of their labor: better pay, profit sharing, and an end to GM’s bringing in temporary workers that reduce pay and benefits. Workers also deserve improved health care benefits,” said Sally Greenberg, the League’s executive director.

More than a decade ago when GM was facing bankruptcy, UAW members bore a significant portion of the sacrifices to bring the automaker back to financial health. At the time, the union agreed to a plan whereby General Motors hired many new workers at roughly half the pay of unionized members and greatly reduced their retirement benefits. Then GM brought in temporary workers with even fewer wage-and-benefit packages and little job security.

“GM has reduced its U.S. payrolls, announced it is closing four plants in the United States, and moved a number of others to Mexico–all of which has helped to restore GM to its current health and ability to earn billions in profits, at the sacrifice of its workers,” said Greenberg.

“NCL supports the 48,000 workers who are demanding what is theirs: a fair share in more than 50 GM plants and other locations across the Midwest and South,” said Greenberg. “We support these hardworking women and men and call on GM to sit down with the union and arrive at a contract that shares the benefits of GM’s current profits with its dedicated, hardworking employees.”

###

About the National Consumers League

The National Consumers League, founded in 1899, is America's pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.

 

MM, let's not bump the thread for all the supportive union / random group statements please or we'll have 100 of them.... provides very little value to this thread or conversation

 

Other unions ‘supporting’ uaw, what does it cost them? Nothing.

 

Not necessarily. Depends the circumstances. If one union is honoring another union's picket line, for example, their own members could suffer from the lack of business, supples, profits, etc.....getting through to the company if, for example, both unions have workers in the same company or business. One must remember that the world of economics, today, is extremely complex, and if you cut one part of tail off, even for short periods of time, all sorts of both known and unknown repercussions can, and sometimes do, happen throughout the body.

 

Jalopnik of all things weighing in on GM and the UAW. The byline is from Detroit Hamtramk plant on the picket line with retirees and current workers. The article was written by a former UAW employee who has connections to the issue so that does bias it to a certain extent, but there is some insightful stuff in there. Oh... and cue the usual corportist/Wall Street sniping by...<fill in the blank>.

Source

 

I myself brought up those truths before, and was accused of having "outdated" thinking.

 

Pretty simple, if they don’t like the job, leave, like the rest of the nation’s workforce does. If it’s really as bad as they claim, gm won’t be able to find people to do the work.

But all the fluff about retired or near retired uaw workers wanting a deal for recently joined union members, similar to what they’ve had - they’re delusional. Times change, industries change, and the ‘good jobs’ are in tech and services, not getting carpal tunnel on an excruciatingly boring production line. That may have been a good job in the past, but now it pretty much sucks and should pay accordingly.

 

True, but sometimes they don't change for the better. It was GM's "changes" that got them into this mess in the first place. And you are (conveniently) ignoring the fact that, among other factors, it was big sacrifices by the UAW that allowed GM and Chrysler to survive this long, get out of bankruptcy, and make good profits. You don't bite the hands that fed you.....especially when those hands are your own employees and customers.

 

Wow. I never would have expected a union to support union action....


Cry me a friggin' river. My current job has what I consider to be the best overall health insurance I've ever had (and one of the best I've ever seen or heard about), and I pay 24%, before copays and OOP stuff. For 3% they should be dancing in the streets.

 

Unions don't always necessarily support each other....it's not an automatic knee-jerk reaction. But, at Dave's request, we aren't going to post long lists of those who do.

 

Many years ago I dropped out of college after my third year (EE major, lousy grades). I was able to get a job driving a concrete truck, thanks to my uncle who was a mid-level manager in the company. It was an interesting education for a pasty-faced nerdy kid and by the time I left five years later I was tanned, muscular, and extremely fit. But it had become obvious to me that I would be a fool to not finish my engineering degree, so I did.

The point of my little story is this: Back in those days, the Teamsters union controlled the drivers. By the time I left to go back to school I was making about $80,000 (inflation adjusted to the present day). For driving a truck! Yes, there was quite a bit of skill involved, and it could have dangerous moments, but was I "worth" $80K for driving that truck? Nope. I had not sought out that job, but was of course happy to receive the money. My understanding is that these days the Teamsters are much less in evidence and the money is not as generous.

To the extent that an auto worker makes more than the prevailing wage, I'd suggest he or she thank their lucky stars and not bite the hand that feeds them. They are in a market distortion and those things can dissipate in time.