Auto union mobilizes to save the industry, but with tight strings attached

DETROIT — The prospect of 3 million jobs lost; pension and health care benefits cut for 1 million retirees, spouses and dependents; thousands of other businesses – dealers, suppliers and others – threatened; huge pension and health care costs tossed onto the federal government and taxpayers; a drop in revenues to federal, state and local governments forcing cuts in vital social services; a devastating blow to the entire economy, already in crisis — it’s a scenario that gets people’s attention.

The United Auto Workers union says these would be the terrible consequences of the collapse of the domestic auto industry. In advance of the Dec. 2 deadline that Congress gave auto executives to spell out in detail how a government loan would be used, the union is mobilizing its membership to lobby Congress to support the loan request — but with meaningful strings attached.

In “talking points” posted on the UAW web site and circulated by e-mail, the union says the loan should include requirements that place tough limits on executive compensation, prohibit the auto companies from paying dividends, and give the government an ‘equity stake’ in the companies to protect the interests of taxpayers.

Interestingly, the union also says the loan should be accompanied by establishment of a ‘government advisory board’ to oversee the operations of the companies, to ensure that taxpayer funds are spent in the United States. The Detroit News reported last week that General Motors intended to use $1 billion of aid to retool a plant – in Brazil. News like that suggests the union and Congress are well advised to place such conditions on the loan.

The UAW says the loan approval should require the Obama administration to submit to Congress “a plan for the long-term revitalization of the domestic auto industry. This plan should involve all stakeholders, and should include commitments by the automakers to retool facilities in the United States to produce more fuel-efficient vehicles” — a call that mirrors Obama’s own thinking.

Republicans have argued against a loan package and many of them support pushing GM to declare bankruptcy instead, because it would destroy labor contracts and almost certainly cripple the UAW, a union that played a big role in mobilizing votes for the Democrats in key Midwestern states.

‘A managed bankruptcy may be the only path to the fundamental restructuring the industry needs,’ proclaimed Republican Mitt Romney. He thinks autoworkers are paid too much but this multi-millionaire — or is it billionaire? — opposes “redistributive” restrictions on his own fortune.

Autoworkers here are disgusted with this trickle-down philosophy, which helped to create this mess in the first place. To end the economic crisis that is already ravaging Michigan, they are saying, we need to put more money in workers’ hands, not less. The union argues that calls for sacrifice by their members have already been met and they have the contracts to prove it. Last year’s national GM contract lowered wages by 50 percent for many new hires.

Of course, in addition to stipulations on loans to the auto companies, many are also wondering why the “sailing” is so easy for Citigroup and other financial giants? It’s hard to imagine that the CEOs of Ford, GM and Chrysler are that much more inept than those of the floundering banks and Wall Street firms.

Former Labor Secretary Robert Reich wrote in his blog last week that ‘there may be more reason to do the reverse’ — bail out GM rather than Citigroup — as GM has a far greater impact on jobs and communities, and the number of jobs dependent on GM is “many multiples that of Citi.’

“Even if Citigroup were to go belly up, the real economy would not be seriously harmed,” Reich noted. “The mutual funds, pension funds, and deposits overseen by Citi would be safe; fund managers would find their way to other banks.” Citibank can easily get $300 billion because the Treasury and the Federal Reserve Bank see their role as keeping the financial economy ‘sound,’ by keeping Wall Street’s investors and creditors happy, Reich wrote.

The UAW is asking: isn’t the fate of autoworkers and their families a lot more important than making Citigroup investors happy?

jrummel@pww.org