Wednesday, October 12, 2005

A Bad Omen

A Bad Omen

“If Delphi, which filed for Chapter 11 protection on Saturday, gets what it seeks in wage and benefit reductions from union members, the pay for members of the United Auto Workers could shrink to as little as $10 an hour from the current $27. Their benefits almost certainly would drop as well. Those drastic cuts would come not only as a blow to thousands of Delphi workers, but they also could set the pattern for negotiations between the union and the Big Three domestic automakers, which for years have struggled to find ways to lower their costs on the assembly line. ‘In one fell swoop, U.S. auto workers are going from being solidly in the middle class to being part of the working poor by earning $10 an hour,’ said Harley Shaiken, a University of California-Berkeley labor expert.” RICK POPELY, JIM MATEJA and STEVE FRANKLIN Chicago Tribune 10-10-05

The Delphi Corp’s filing of bankruptcy last Saturday sent shock waves through the AmeriKKKan economy. It is a harbinger of ill, a bad sign and a harmful omen for the unionized working class. By going into bankruptcy Delphi is looking to restructure its debt, and get out from under its wage, benefit and pension obligations which will not bode well for factory workers who earn as much as $27 an hour now. This is a form of class warfare. While Delphi seeks wage reductions from its factory workers, it is putting together generous packages for its upper management. As grossly unfair as this is, Delphi’s strategy may set the tone for negotiations with the rest of the auto workers who will be involved in negotiation with Ford, GM and Chrysler in the very near future. Delphi’s situation may very well impact its parent company General Motors which had the misfortune of losing $1.64 billion in the first half of 2005 and saw its bond ratings reduced to junk status by two major rating companies’ Moody’s and Stand and Poor. Many are looking at the Delphi situation as a precursor. Delphi’s bankruptcy they say, will send a ripple effect throughout the auto industry hitting its’ parent company GM first but also impacting Ford whose bond rating was also reduced to junk this Summer by Moody’s and S&P. An article in the Chicago Tribune dated 10-10-05 offered a bleak picture for the auto workers, “Delphi, which lost $741 million in the first half, says it will close or sell several of its 45 North American plants and cut thousands of jobs. By not helping Delphi, GM is warning the union to brace for tough talks two years from now, when the four-year contract ends, Burnham Securities analyst David Healy said. ‘The Delphi action means negotiations on the 2007 contract with the UAW are under way,’ Healy said. ‘The union has to make concessions because GM can't keep losing money at the rate they are. The small print in the GM financial statements says that in 2004 its labor cost was $78 an hour with benefits.’ GM lost $1.64 billion in the first half, with losses at its North American auto unit wiping out profit at GMAC. Even if GM doesn't seek bankruptcy, the UAW faces growing pressure to give back big chunks of the wages and benefits it has won in the last 70 years to save U.S. jobs.”
We are watching the vaunted US industrial economy come unglued and collapse under the weight of globalization and fascism. What this means for the average unionized auto worker, is a drastic change in lifestyle due to a drop in hourly wages, job losses and benefit cuts. Trade unions which have been under assault since the Reagan era are taking a pounding from a myriad of forces: globalization, the outsourcing of factories to places like Mexico and China, the corporatist agenda of the fascist Republican Party and it’s Democratic Party clones who have abandoned their traditional organized labor constituency. Hank Hardhat won’t be making the big bucks working the assembly line any more, his benefits package will be pared down and his pension may be either defaulted or passed off to the Pension Benefit Guarantee Corporation which is itself facing a $30 billion deficits thanks to the steel, airline and auto industries who have dumped their pension obligations on the PBGC Auto workers may soon find themselves in a similar situation to the Enron employees several years ago, left out in the cold with severely reduced pensions or none at all to fall back on. The union leadership is in a bind. They can’t play hardball because there isn’t any wiggle room to negotiate, they are going to have to give back and give back a lot The Tribune article also said, “‘The power of the union has been altered, and their negotiating power is gone,’ said David Cole, chairman of the Center for Automotive Research. ‘Their wages and benefits are now going to be defined by the bankruptcy judge, which basically means wages and benefits will be defined by the global market where if you aren't competitive, you have a problem.’ UAW President Ron Gettelfinger, who Saturday described Delphi's filing as ‘an extremely bitter pill,’ had no additional comment Monday... Labor expert Shaiken said high productivity and low wages in countries such as Mexico and China are shaping wages in the United States, where auto workers in the future may not be able to afford the cars they build.” With the judges Bu$h and his Democratic Party sycophants are appointing to the federal bench who sympathize with the capitalist class (owners and stockholders), look for more bankruptcy rulings where the benefits and pension obligations of the corporations are allowed to be restructured, terminated or defaulted. The sad part about all of this is it will create a ripple effect throughout the industry and will be the death rattle for unionized labor as we know it.

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