Grassroots push helps save U.S. auto jobs
Along with millions of people across America who are part of the U.S. auto industry, Lorenzo Poole was glued to the news on Dec. 19 – and he breathed a deep sigh of relief when a $17.4 billion emergency loan package was announced to help U.S. auto companies survive the current economic crisis.
“I was excited,” recalled Poole, president of UAW Local 51, representing workers at Chrysler’s Mack Avenue Engine Plant in Detroit. “This gives us the opportunity to at least make it for another few months, until the companies can make a viable plan for the future. Now we’ve got the ability to fight another day.”
The emergency loans, approved by George W. Bush in the final weeks of his presidency, will keep GM and Chrysler operating until March, leaving crucial, long-term decisions about auto industry restructuring to be determined by President Barack Obama.
While welcoming the emergency aid to keep America’s factories running, the UAW took exception to strings Bush attached to the loan package which treat workers differently than other industry participants.
“All stakeholders have to participate in shared sacrifice to help the industry move forward,” said UAW President Ron Gettelfinger, pledging to work with the Obama administration and the new Congress to remove any conditions which unfairly target workers.
After the loans were announced, Brian Fredline, president of UAW Local 602 at GM’s assembly plant in Delta Township, Mich., said, "We were relieved – for about 10 seconds."
“Now we understand it’s time to roll up our sleeves and go on the next phase. We need to promote our products, because in the end, we need to sell products,” he said.
Real solutions for the auto industry, Fredline added, can’t be found by narrowly focusing on UAW labor costs. “Labor is only 10 percent of the cost of a vehicle. If you get stuck on 10 percent, you miss 90 percent of the structural costs, and the chance to make real changes,” he said.
Companies hammered by recession, credit crunch
All three U.S. auto companies have seen their cost structures hammered by the severe U.S. recession and a global credit crunch.
U.S. auto sales have plummeted by double digits, with catastrophic sales declines of 30 to 50 percent
for all major automakers in December 2008, when compared to December 2007. GM sold fewer vehicles in 2008 than in any year since 1959; Ford sales were its lowest since 1961.
With a sudden decline in sales and revenue, the operations of domestic automakers quickly became unsustainable. Even industry leader Toyota is projecting more than $1.7 billion in losses in 2008 – its worst financial results since 1938.
GM and Chrysler were hardest hit, with both companies in immediate danger of running out of funds by January. Such a failure would have dragged down auto industry suppliers, with a devastating effect on Ford and on foreign automakers operating in the United States.
Bankruptcy was not an option, since consumers will not buy vehicles from a bankrupt auto company. Without an immediate cash infusion, one or more of America’s major auto companies would be forced to liquidate, shattering lives and communities.
The crisis in the American auto industry, Gettelfinger told a national audience on CNN’s “Larry King Live” on Dec. 9, reaches far beyond autoworkers.
“It’s the suppliers, the dealer network and everybody else that’s impacted by these auto companies,” he said. “Estimates run anywhere from 3 million to 4 million people in the event that these companies go out of business.”
From bleak to breakthrough
Just a few weeks earlier, prospects for winning emergency aid looked bleak. Unlike the banking and insurance industries, which received hundreds of billions in federal aid with little scrutiny, auto company CEOs were subjected to withering scorn when they first testified before House and Senate committees on Nov. 18-19.
Much of the questioning focused on fuel efficiency, product quality and labor costs. Apparently, many members of Congress were not familiar with the current achievements of the domestic auto industry, which is meeting – or exceeding – industry benchmarks in all these areas. (See story on page 13.)
For several heart-stopping weeks, the fate of millions of workers and thousands of businesses appeared to be caught in a political crossfire. Bush was adamantly opposed to using any of the $700 billion in Troubled Assets Relief Program (TARP) funding to help automakers. He insisted any money for the auto industry come from a $25 billion fund – originally proposed by the UAW – set aside by Congress to help automakers and parts manufacturers build advanced, fuel-efficient vehicles and their key components here in the United States.
But House Speaker Nancy Pelosi was opposed to using green technology funds for emergency bridge loans. Meanwhile, a core group of Senate Republicans were digging in against any assistance to any unionized auto company.
Union members crank up the heat
As the maneuvering continued in Washington, UAW members – along with allies from industry, political and community groups – rolled out a grassroots campaign to win support from the public and policy makers.
“We’ve been busy,” said UAW Local 863 President Phyllis Blust. She represents 1,500 workers at Ford’s Sharonville, Ohio, transmission plant, as well as the remaining workforce from a recently shuttered plant in Batavia, Ohio.
“We’ve worked hard to contact our elected officials, thanking the ones that are helping us, and asking the ones that aren’t helping us to get on board,” she said.
“The choices they make,” Blust said, “are going to affect so many people and their lives. It’s families, it’s communities and our tax base – and also the benefits for our members who have retired. The impact is phenomenal when you look at the big picture.”
Historic council meeting
On Dec. 3, a day before a new round of congressional hearings was to start, the UAW convened the first-ever joint meeting of the UAW Chrysler, Ford and GM councils.
UAW members had already made substantial sacrifices; including deferred wages and cost-of-living increases for current workers in 2005, a wage freeze in 2007, a lower wage scale for new workers, and the establishment of an independent trust to take on obligations for retiree health care.
But with an entire industry in crisis, delegates overwhelmingly approved a recommendation from the UAW International Executive Board (IEB) to offer new modifications to the agreement. These included: immediate suspension of jobs bank programs; deferral of company payments into the Voluntary Employee Beneficiary Association (VEBA) trust for retiree health care, and an agreement to convene UAW bargaining committees to consider additional contract changes.
At a news conference following the council meeting, Gettelfinger explained the union’s willingness to “go the extra step” to ensure auto companies would be competitive. All stakeholders, he said, would have to join together to share sacrifices. America’s auto industry, he said, must not be allowed to fail.
“The real issue is the backbone of America,” Gettelfinger said, drawing cheers from union members, “an industry that does more for the economy than any other industry and, quite frankly, made the middle class what it is today."
New tone and a turnaround
After bold action by UAW leaders on Dec. 3, and a new round of hearings on Dec. 4-5, a consensus emerged that it would be irresponsible to allow the collapse of America’s industrial base.
Democratic congressional leaders and the White House agreed on a bipartisan $14 billion loan package. Funds would be drawn from the green technology program, to be immediately replaced in the next Congress. Tough conditions were attached, including: limits on executive pay, suspension of dividends and a mandate for all stakeholders to create a plan for long-term viability by March 31.
As the loan package moved to a Dec. 10 vote in the House, however, a small group of Republican senators – Shelby of Alabama, Coburn of Oklahoma, DeMint of South Carolina, Vitter of Louisiana and Ensign of Nevada – held a noon news conference to announce they would filibuster the legislation.
Their stated reason was that the bill wasn’t “tough” enough on automakers. But a 10:29 a.m. “action alert” to the Republican caucus announcing the news conference revealed their true intentions. Here’s an excerpt:
“This is the democrats (sic) first opportunity to pay off organized labor after the election ... Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it … The hardest thing for the democrats to do is get 60 votes. If we can hold the Republicans, we can beat this.”
Later that night, the emergency loan legislation passed the House with a strong bipartisan majority, 237-170. The next day, the promised GOP filibuster arrived. With the bill blocked by a minority of senators, Tennessee Republican Bob Corker called Gettelfinger and suggested talks to find an alternative that might be acceptable to the GOP.
All-day discussions with Corker produced a tentative agreement, but Republican senators revealed again their goal was to kill the bill, not find a compromise.
Corker was unable to persuade his colleagues to accept the agreement with the UAW that he had negotiated.
On Thursday night supporters of the bipartisan bill – including 43 Democrats and 10 Republicans – were unable to get the 60 votes needed to shut off debate. Critical aid for America’s automakers was stalled, despite support from a majority of senators, a majority in the House and the Bush administration.
Facing the collapse of a major U.S. industry in the middle of a severe recession, Bush reversed course the next morning. Shortly before the financial markets opened on Dec. 12, White House spokeswoman Dana Perino announced that “given the current weakened state of the US economy, we will consider other options if necessary, including use of the TARP program, to prevent a collapse of troubled automakers.”
A week later, Bush announced the $17.4 billion emergency aid program.
Millions of autoworkers, dealers, suppliers and other stakeholders breathed a sigh of relief, while realizing that even tougher challenges lie ahead.
“We overcame incredible obstacles to win this victory,” said Gettelfinger. “But this is only a short-term fix. We’ve still got an enormous amount of work to do to rebuild this industry.”
“We’ll get there the same way we beat the odds this time. We’re going to bring everyone together, and because we all understand that we’re talking about people’s lives here, we’re going to do what it takes to find common ground.”
