Skyline of Richmond, Virginia

UAW busting, Southern style

12.19.08

UAW busting, Southern style

Foreign carmakers are enlisting the help of GOP senators from states in the South to break the union.
By Bruce Raynor

http://www.latimes.com/news/opinion/commentary/la-oe-raynor18-2008dec18,0,4066838.story

The foreign nonunion auto companies located in the South have a plan to reduce wages and benefits at their factories in the United States. And to do it, they need to destroy the United Auto Workers.

Last week, Senate Republicans from some Southern states went to work trying to do just that, on the foreign car companies’ behalf. Senate Minority Leader Mitch McConnell (R-Ky.), Sen. Bob Corker ( R-Tenn.) and Sen. Richard C. Shelby (R-Ala.) ## representatives from states that subsidize companies such as Honda, Volkswagen, Toyota and Nissan ## first tried to force the UAW to take reductions in wages and benefits as a condition for supporting the auto industry bailout bill. When the UAW refused, those senators torpedoed the bill.

They claimed that they couldn’t support the bill without specifics about how wages would be “restructured.” They didn’t, however, require such specificity when it came to bailing out the financial sector. Their grandstanding, and the government’s generally lackluster response to the auto crisis, highlight many of the problems that have caused our current economic mess: the lack of concern about manufacturing, the privileged way our government treats the financial sector, and political support given to companies that attempt to slash worker’s wages.

When one compares how the auto industry and the financial sector are being treated by Congress, the double standard is staggering. In the financial sector, employee compensation makes up a huge percentage of costs. According to the New York state comptroller, it accounted for more than 60% of 2007 revenues for the seven largest financial firms in New York.

At Goldman Sachs, for example, employee compensation made up 71% of total operating expenses in 2007. In the auto industry, by contrast, autoworker compensation makes up less than 10% of the cost of manufacturing a car. Hundreds of billions were given to the financial-services industry with barely a question about compensation; the auto bailout, however, was sunk on this issue alone.

UAW President Ron Gettelfinger realized that the existence of the union was under attack, which is why he refused to give in to the Senate Republicans’ demands that the UAW make further concessions. I say “further” because the union has already conceded a lot. Its 2007 contract introduced a two-tier contract to pay new hires $15 an hour (instead of $28) with no defined pension plan and dramatic cuts to their health insurance. In addition, the UAW agreed that healthcare benefits for existing retirees would be transferred from the auto companies to an independent trust. With the transferring of the healthcare costs, the labor cost gap between the Big Three and the foreign transplants will be almost eliminated by the end of the current contracts.

These concessions go some distance toward leveling the playing field (retiree costs are still a factor for the Big Three). But what the foreign car companies want is to level ## which is to say, wipe out ## the union. They currently discourage their workforce from organizing by paying wages comparable to the Big Three’s UAW contracts. In fact, Toyota’s per-hour wages are actually above UAW wages.

However, an internal Toyota report, leaked to the Detroit Free Press last year, reveals that the company wants to slash $300 million out of its rising labor costs by 2011. The report indicated that Toyota no longer wants to “tie [itself] so closely to the U.S. auto industry.” Instead, the company intends to benchmark the prevailing manufacturing wage in the state in which a plant is located. The Free Press reported that in Kentucky, where the company is headquartered, this wage is $12.64 an hour, according to federal labor statistics, less than half Toyota’s $30-an-hour wage.

If the companies, with the support of their senators, can wipe out or greatly weaken the UAW, they will be free to implement their plan.

But their plan will not work. The Bush administration is likely to keep the Big Three alive long enough for President-elect Barack Obama to construct a real solution. Democrats and even most Republicans understand that a nation that has already lost 2 million jobs this year cannot afford to put at risk 3 million more.

What the economy needs now is rising wages so the country can get on the path of wage-driven consumption growth. That means stronger unions. Indeed, I believe eventually it will mean the unionization of the entire U.S. auto industry.

Bruce Raynor is the general president of Unite Here, a union of 465,000 workers in the apparel, textile, laundry, food service, distribution, hotel and gaming industries.

Democratic Talk Radio 2008 Villain & Hero Awards

12.19.08

Democratic Talk Radio 2008 Villain & Hero Awards

Political villains were rampant in 2008. It was impossible to give a single award for the injustices committed for solely political reasons this past year. For the first time ever, Democratic Talk Radio was unable to even narrow the infamous winners to just two. We have selected three “Villains of 2008” to share the award.

Our first choice is obvious. Fox News wins the first 2008 villain slot for their disinformation campaign against ACORN. The efforts of Fox News to provide political cover for Republican efforts at voter suppression during the 2008 elections were, in the opinion of Democratic Talk Radio, the lowest thing ever done by Fox News.

The second winner for 2008 political villain is George McGovern. Fans of Democratic Talk Radio may be surprised by this choice. Frankly, we never expected to be giving a former Democratic Presidential candidate a villain of the year award. However, McGovern has lent his name to the Right-Wing, corporate effort to undermine workers’ right to unionize. George McGovern has allied himself with the anti-worker efforts to defeat the Employee Free Choice Act. His TV commercials are frankly an open act on working Americans. McGovern has disgraced himself by joining with the most anti-working class political forces in America and misleading the American public on the nature of the Employee Free Choice Act.

The Senate Republicans out to destroy the American auto industry and the United Auto Workers union are our third villainous winners. Senator Corker of Tennessee, Senator Shelby of Alabama, Senator McConnell of Kentucky, Senator Vitter of Louisiana and their fellow Senate Republicans put the interests of foreign corporations over the interests of the American economy. Since all were opposed by the United Auto Workers in previous elections because of their militantly anti-worker voting records, their efforts are obviously motivated by personal political considerations that directly undermine the national interest. These Senate Republicans have sided with foreign companies to drive down the wages and healthcare benefits of American workers.

The hero of the year selected by Democratic Talk Radio is Al Franken. The American nation should be delighted at his political courage and determination. By insisting that all the votes be counted in the 2008 Minnesota Senate race, Franken has set a good example for all candidates running for office and for American voters. American Democracy has been strengthened by his resolve.

Al Franken will be a great asset should he eventually prevail when all the votes are finally counted. Norm Coleman has been very aggressive in his attempts to undermine a free and fair counting of the ballots.

For more information, contact Stephen Crockett at 443-907-2367.

AFGE “INSIDE GOVERNMENT WITH WARD MORROW ” radio show expands to new stations

12.19.08

FOR IMMEDIATE RELEASE:
Dec. 19, 2008

AFGE LOCAL 1592 TO SPONSOR “INSIDE GOVERNMENT WITH WARD MORROW ” IN SALT LAKE CITY, UTAH

Program to Air Sundays on KSL Newsradio 102.7 FM and 1160 AM

WASHINGTON—“Inside Government with Ward Morrow ,” the radio show produced by the American Federation of Government Employees (AFGE), the nation’s largest federal employee union, will begin airing on Sunday, Dec. 21 in Salt Lake City, Utah on KSL Newsradio 102.7 FM and 1160 AM. The program, which will air Sundays at 9:00 p.m. Mountain Time, is sponsored by AFGE Local 1592. Local 1592 represents workers at Hill Air Force Base.

“’Inside Government with Ward Morrow” is a great way for Local 1592 to have its issues, such as the fight against the National Security Personnel System, heard in Salt Lake City. The hard-working men and women at Hill Air Force Base are proud to serve their country, and Local 1592 will continue to fight just as hard to protect worker rights as workers do to protect our country. We are thrilled to have an opportunity to sponsor “Inside Government” in Salt Lake City, and look forward to the launch of the program on KSL Newsradio,” said AFGE Local 1592 President Troy Tingey.

“Inside Government” is hosted by AFGE Assistant General Counsel J. Ward Morrow. Programs are archived on the Federal News Radio Web site and can be heard on demand (available anytime) at http://www.federalnewsradio.com/?nid=300 or http://www.afge.org/insidegovernment or on Saturdays from 6AM to 7AM on WMAC News Talk 940 in Macon, Georgia . Please note there will be a short advertisement prior to the start of the program. The program is also available via iTunes podcast by clicking here. Users must install iTunes on their computers before accessing “Inside Government” via podcast.

For more information, please e-mail InsideGovernment@afge.org or go to http://www.federalnewsradio.com.

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“Inside Government with Ward Morrow ” is a one-hour weekly nationwide radio/Internet program dedicated to issues that impact federal and D.C. government employees. The show airs each Friday at 10:00 a.m. on Federal News Radio 1500 AM in Washington, D.C. or on Saturdays at 6AM on WMAC News Talk 940 in Macon, Georgia and online at http://www.federalnewsradio.com. It is also available to 70 million iPod users through Apple’s iTunes podcast. “Inside Government” is produced by The American Federation of Government Employees (AFGE), the nation’s largest federal employee union, representing 600,000 workers in the federal government and the government of the District of Columbia.

Bailout approved: Automakers to get $17.4B

12.19.08

Bailout approved: Automakers to get $17.4B

article link

By DEB RIECHMANN and TOM KRISHER, Associated Press Writers

WASHINGTON – Citing imminent danger to the national economy, President Bush ordered an emergency bailout of the U.S. auto industry Friday, offering $17.4 billion in rescue loans and demanding tough concessions from the deeply troubled carmakers and their workers.

Detroit’s Big Three cheered the action and vowed to rebuild their once-mighty industry, though they acknowledged the road would be anything but smooth as they fight their way back from the brink of bankruptcy.

The autoworkers union complained the deal was too harsh on its members, while Bush’s fellow Republicans in Congress said it was simply bad business to bail out yet another big industry.

Bush, who signed the massive $700 billion rescue for financial institutions only this fall, said he was reluctant to approve yet another government bailout of private business. But he said that allowing the massive auto industry to collapse in the middle of what is already a severe downturn “could send our suffering economy into a deeper and longer recession.”

Speaking at the White House, he also said he didn’t want to “leave the next president to confront the demise of a major American industry in his first days of office.”

President-elect Barack Obama, who takes office a month from Saturday, praised the administration action but warned, “The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely necessary to save this critical industry and the millions of American jobs that depend on it.”

Obama will be free to reopen the arrangement from the government’s side if he chooses, and the head of the United Auto Workers said the union would be appealing to the new president and the strongly Democratic new Congress on that subject.

Obama, commenting in Chicago as he named more economic Cabinet members, was noncommittal on possible changes. But he said he would “make sure that when we see a final restructuring package that it’s not just workers who are bearing the brunt.”

Stock prices rallied on Wall Street after Bush’s announcement but faded late in the day, and the Dow Jones industrials declined 25.88 points. GM shares, however, jumped 22.7 percent and Ford shares 3.9 percent. Chrysler is not publicly traded.

Some $13.4 billion of the rescue money will be available this month and next — $9.4 billion of it for General Motors Corp. and $4 billion for Chrysler LLC, the two auto giants that have said they could be facing bankruptcy soon without government help. GM is slated to receive the remaining $4 billion in loans after more money is released from the financial rescue account. Ford Motor Co. says it doesn’t need federal cash now but would be badly damaged if one or both of the other two went under.

Under terms of the loans, the government will have the option of becoming a stockholder in the companies, much as it has with major banks, in effect partially nationalizing the industry. Bush said the companies’ workers should agree to wage and work rules that are competitive with foreign automakers by the end of next year.

And he called for elimination of a “jobs bank” program — negotiated by the United Auto Workers and the companies — under which laid-off workers can receive about 95 percent of their pay and benefits for years. Early this month, the UAW agreed to suspend the program.

Underscoring the automakers’ peril — and how close the bailout is cutting to the edge — GM Chief Financial Officer Ray Young said the company expects to have the first money from the government by Dec. 29, just in time to pay suppliers.

CEO Rick Wagoner said, “The timing was specifically aligned with the timing we said we needed in order to make our payments on a timely basis, so we’re right on schedule there.”

The deal also calls for two-thirds of the automakers’ debts to be converted to stock in the companies.

Also, Chrysler, GM and Ford were to pay billions into UAW-administered trust funds that will take over paying health care bills for hundreds of thousands of retirees on Jan. 1, 2010. The trusts, called Voluntary Employees Beneficiary Associations, were to last at least 80 years.

But if half the cash is swapped for stock, the trusts might not last that long if the value of the shares declines. Swapping stock for cash payments helps the cash-starved companies, though, because they have more money to spend on operations.

Bondholders may be left with a take-it-or-leave it proposition with the government requiring them to exchange two-thirds of their holdings for stock. But they, too, could try to negotiate with the Obama administration, said Pete Hastings, an auto industry corporate bonds analyst with Morgan Keegan & Co. in Memphis, Tenn.

If they don’t take the deal, GM could wind up in bankruptcy and the bondholders would get little or nothing, Hastings said.

Though auto stocks rose on Friday, the companies’ stockholders aren’t out of the woods.

Provisions in the bailout agreement will force GM to produce more shares, diluting the value of its stock several times over, said Efraim Levy, a senior auto industry analyst with Standard & Poor’s.

There’s no way the automakers will be profitable next year, said Levy. Things could be different in 2010 if the market rebounds and cost cuts kick in, he said.

Meanwhile, Treasury Secretary Henry Paulson said Friday that Congress should release the second $350 billion from the financial rescue fund that it approved in October to bail out huge financial institutions. Tapping the fund for the auto industry basically exhausts the first half of the $700 billion total.

If the carmakers fail to prove viability by March 31, they will be required to repay the loans, which they would find all but impossible. A firm will be deemed viable only if it can show positive cash flow and can fully repay the government loans.

Friday’s rescue plan retains the idea of a “car czar” to make sure the companies are keeping their promises and moving toward long-term viability.

The short-term overseer will be Paulson. But the White House deputy chief of staff, Joel Kaplan, said that if the Obama team wants someone else installed to bridge the administrations, Bush is open to that.

The White House package is the lifeline desperately sought by U.S. automakers, who warned they were running out of money as the economy fell deeper into recession, car loans became scarce and consumers stopped shopping for their vehicles.

The carmakers have announced extended holiday shutdowns. Chrysler is closing all 30 of its North American manufacturing plants for four weeks because of slumping sales; Ford will shut 10 North American assembly plants for an extra week in January, and General Motors will temporarily close 20 factories — many for the entire month of January — to cut vehicle production.

Chrysler CEO Bob Nardelli said the initial injection of capital would help the company get through its cash crisis and give it a push toward eventually returning to profitability. He said Chrysler was committed to meeting the conditions set by Bush in exchange for the money.

Though Ford didn’t seek short-term aid, company President and CEO Alan Mulally said, “The U.S. auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened U.S. economy.”

House Republican leader John Boehner called the plan “regrettable.” He said that granting loans for automakers was never the intention when Congress passed the $700 billion plan to rescue financial institutions and that the new plan “has failed both autoworkers and taxpayers.”

Rep. Jeb Hensarling, R-Texas, chairman of the congressional oversight panel for the Wall Street rescue program, said a Chapter 11 bankruptcy reorganization, not loans rewarding decades of mismanagement, would have been a better decision.

Grover Norquist, president of the Americans for Tax Reform, sent a one-word letter to Bush that said in huge letters: “No.”

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AP Auto Writer Tom Krisher reported from Detroit. AP Writer Kimberly S. Johnson contributed from Detroit.