A Socialist Project e-bulletin .... No. 7 .... November 25, 2005
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The GM Layoffs and the Logic of Neoliberalism

Sam Gindin

Sam Gindin

The perverse logic of neoliberalism took even more twisted turns on 21
November 2005. General Motors, the largest manufacturing company in the
world, had just months ago been promised $450 million in government money
to create jobs in Canada. Leaving aside the questionable merits of that
subsidy - and there are many questions - GM has announced that that it
would in fact cut 3,600 from its Canadian operations - about 20% of its
workforce in Canada. Common-sense might have suggested that the legitimacy
of that deal would now be questioned. But common-sense no longer pertains
in the world of neoliberalism. Challenging the subsidy was a no-no among
politicians, editorial writers, reporters and - so far - even the union.

What is happening at GM is more than a matter of greed. The crisis is real
enough: GM's market share has certainly been plummeting. But it would be
pretty hard to argue that workers caused the problems. Workers did not
choose the models to be made; they are not responsible for the American
health care system which has disadvantaged GM and Ford, with their older
workforces, relative to Toyota and Honda; they work as hard as workers at
other companies (all of whom have been pushed to work ever faster and
harder); and they did not design the irrational capitalist system that is
based on constantly creating excess capacity, a problem capitalism then
fixes through the competitive 'restructuring' of workers lives and
communities. And even when the excess capacity falls, renewed competition
leads to new rounds of excess capacity and the cycle of destruction
repeating itself.

But if workers are not to blame for GM's troubles, they sure are the ones
who will pay for them. That the latest layoffs in the US and Canada -
30,000 overall - were generally expected makes them no less devastating.
The 3,600 Canadian layoffs is a shock since it was only a few weeks ago
that the CAW expressed relief that it had managed to limit GM to 'only'
reducing its Canadian workforce by less than half that number. Moreover,
the actual job losses over the next three years may be even higher since
the new announcements seem to be largely on top of the original 1,700,
which were to come not from closures but from 'efficiencies'. And the
announced layoffs exclude the spin-off effects on parts and suppliers
across the continent (add those in and the total workers directly affected
will be close to 100,000 with about 12,000 of these in Canada).

The new Canadian layoffs will essentially occur in the two Oshawa car
plants. Plant #1 will lose 1,000 jobs as it drops from three shifts to
two, and Plant #2 will lose 2,300 through a projected closing in 2008.
Here's where things get a little strange even in terms of capitalist
logic. GM is preaching the need to improve productivity, satisfy
customers' demands for quality, and cut costs as it especially laments the
absence of a sensible health care system in the US. So what is its
solution? Close or remove shifts from the two plants that are ranked at
the very top of all its plants in terms of productivity and quality and
whose costs are some $20,000 ($US) lower per worker than US plants because
of the advantage of the lower Canadian dollar and socialized health care
costs. In terms of quality, Plant #2 - the plant scheduled for closing -
is ranked first not just within the GM chain but in all of North America,
with Plant #1 being second. As for productivity, Plant #2 is ranked 4th
overall and 2nd within GM while Plant #1 is ranked first amongst all North
American plants.

This obviously makes no economic sense, but it makes sense in terms of the
larger labour relations picture in the US. In the best of times, it would
be 'politically' difficult for GM to announce the closure of five plants
in North America and not include any Canadian plants. But with GM having
won concessions from the UAW, and looking to gain UAW cooperation in
making even deeper cuts in wages and health care, it would be all the
more difficult to imagine GM going to the UAW after exempting Canada from
closures. At one level, this leaves room for some optimism for Canadian
workers: if this is just tactics for the moment, than GM may perhaps find
a way to restore its Oshawa operations once the UAW is 'settled'. (Of
course, by 2008 things may get still worse.)

All of this is not the end of one story, but the beginning of another. The
latest layoffs will not solve GM's overall problems. While excess capacity
will be sharply reduced, uncertainty over GM's future models continues,
and the issue of pension - and especially health care - costs will not go
away (and may even get worse as the number of retirees per active worker
will rise even higher). It will therefore not be surprising to see GM
return to the UAW with a demand for another contract re-opener and
additional concessions even before this contract expires in the fall of
2007. They will be hard pressed to do so in Canada because of both the
existence of socialized health care costs and the recent commitment of the
CAW to fight concessions. Yet Canadian workers can not help but be worried
- the Detroit River is only so wide.

In struggling with what union militants might do in this context, it seems
important to note the following:

1. The problem is not the Canadian industry as a whole or its workforce,
but the 'competitive' position of the unionized Big Three, especially GM
and Ford. The overall industry in Canada has been operating at close to
peak levels over the past few years.

2. The public concessions of $450 million to GM were a sham and any
campaign against the closures cannot possibly begin by assuming that this
can't be challenged.

3. Because the Canadian industry is so integrated into the larger US
industry with its uniquely high health care costs, there is nothing
Canadian workers could do - even if they wanted to - to solve the
'competitive' problem of the companies.

4. Trying to solve this problem through concession-bargaining is just as
self-defeating for American workers. As long as excess auto capacity in
North America and the world is a fact of life, all that is at issue is
which workers will lose their jobs and which will give up the most to save
theirs. And because this weakens all workers, corporations are left in a
better position to demand more from all workers in the future.

5. Resisting concessions is the only way American have of forcing the
issue of socialized health care on the national agenda. And if such a
confrontation and campaign materialized, it might even contribute to the
revival of American labour as a leading social force.

6. While overseas imports and 'globalization' more generally are part of
the problem, the main issues are within North America. For example,
two-thirds of Toyota's sales in North America, come from plants in North
America and this overall trend among the Japan-based producers will, if
anything, increase.

7. Global pressures do of course remain a factor, but the answer here is
not to open up th Japanese market - this only legitimates free trade and
we could not in any case compete in that market against Asian wages (nor
would it help us if GM responded to such an opening by investing directly
in Japan. Rather the issue is to return to an auto pact kind of agreement,
tightened and expanded on a North American basis.

8. Since foreign-based plants are here, they must be unionized or the
industrial labour movement, both in the US and
here, will die a slow death. While this is fundamental to unions remaining
relevant, a sober perspective would also have to admit that even if the
Japanese companies were now organized, this would not likely reverse
market shares to where they were; but it might only at least limit the
erosion of jobs in the Big Three, and contribute to defending Big Three
standards.

9. Lurking in the background is the imminent disaster at Delphi and its
implications through the automotive parts sector (and across borders and
other sectors). Again, the issue is not just Delphi's greed (though that
is in stunning abundance). But that workers' standards cannot be
maintained when only 20% (US) or 40% (Canada) of a sector is unionized.
And if parts workers are crushed, assembly workers will not escape the
temptation to outsource even more and to follow the example of
concessions.

We need to be honest about how difficult the above challenges really are.
There will be an understandable attempt on the part of unions and workers
to survive as best they can and hope something will change down the road.
Part of this may be to lower expectations in light of the fact that 'we
are living in new times'. But that is precisely the point - the times are
new and after the experiences of the past quarter century, the lesson that
screams out at us is that we need is to raise and broaden our expectations
and above all start thinking about how we develop our collective capacity
to fight back. Organizing cannot be an 'objective': it has to be a cause
and part of rebuilding the working class as a relevant social force.
Opposing free trade can't be a politically correct policy; defeating it is
part of challenging the legitimacy of property rights over democratic
rights and a precondition for winning a measure of security, equality, and
community. Demands for decent work can't be left to markets or made
dependent on 'competitiveness' and bribing corporations with concessions
or incentives; participating and sharing in collective labour is a matter
of individual dignity and of developing and using all the potentials of
society.

Workers in earlier times rose to the occasion when past answers didn't
work and surprised not just others but themselves with their
organizational capacities and creativity. This same challenge now applies
to the present generation. Surely the failed promises of neoliberalism
leave more than enough openings on which to build? The choices today do
seem limited. But if working people and trade union leaders are incapable
of transforming their unions to inject a heightened mobilization and
radical creativity, the available options will only shrink further
tomorrow.

Sam Gindin is retired from the CAW and now teaches political economy at
York University, Toronto.

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Letters to the Editor: Public ownership way to protect jobs
Toronto Star, Nov. 24, 2005.

For years now, workers have been told that efficiency and productivity
gains are the only way for them to keep their jobs. International markets,
we are told, are extremely competitive for business, so workers must also
be more competitive. Across North America this has meant contracting out
jobs and, of course, reduced wages for the same work, and concessions
bargaining for unions.

Moreover, unions have been pressured to enter into partnerships with
employers to help manage workplace restructuring. To a large degree the
unions have been "tamed". This year's round of negotiations between the
Canadian Auto Workers Union and the big three auto manufacturers is a
testament to this.

Yet, the argument that concessions and competitiveness will save jobs was
shown to be a farce this week when General Motors announced it would
eliminate, directly, 3,660 jobs. What makes the lie of competitiveness
more apparent is that "one of the top-ranked auto plants in the western
hemisphere - Oshawa's Number 2 assembly plant" is on the chopping block.
When the job losses at GM are compounded by 15,000 job losses in assembly
plants we can see that the "new economy" simply does not work for workers.

And still, Canadian governments plan on negotiating $435 million in public
aid to a corporation that has shown no commitment to Canadians. We give
constantly and what do we get in return: reduced wages, longer workdays,
pink slips and the chance to work at Wal-Mart. There has got to be another
way.

First, we need to stop subsidizing business. If there is going to be
public investment, there should be a public ownership stake in the
corporation. There is no other way to make sure jobs are protected and
communities sustained.

Second, unions (and workers in general) should abandon concession
bargaining. It hurts in the short term, and does little if anything to
save jobs in the long term. This, of course, is not an easy strategy for
unions. But unless unions organize a fight-back (which would also
necessitate a major campaign to organize new workers into unions) and a
political strategy to reduce the competitive pressures on workers, there
is no way to prevent GM-style job losses.

Dan Crow, Toronto, Ontario

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Sources:

For a discussion of an alternate North American auto industry, addressed
to American, Canadian, and Mexican auto workers, see the Socialist Project
pamphlet on the auto industry: 'Concretizing Working Class Solidarity:
International Solidarity beyond Slogans' at http://www.socialistproject.ca.

GM's statement on health care can be found in their 2004 Annual Report,
p.8. It can be downloaded at:
http://www.gm.com/company/investor_information/docs/fin_data/gm04ar/download/gm04ar.pdf.

Reference to the above rankings of Oshawa plants can be found at:
http://www.gm.com/company/gmability/workplace/100_news/120_news/oshawa_051905.html.

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