Tuesday, November 22, 2005

What's good for GM is bad for Workers

The saying used to be 'What's good for GM is good for America', well this morning what's good for GM is bad for workers across North America. GM announced it is cutting its nose to spite its face, laying off 36,000 workers and closing plants across North America, including one of its most productive.

GM to shut star Oshawa plant

Auto maker to slash 3,900 jobs in Canada

General Motors Corp. admitted yesterday that it has too many underproductive factories, so it will shut 12 of them, including one of its crown jewels in Oshawa, Ont. -- a plant that leads auto-industry quality rankings and is one of the most productive in North America.

The world's largest auto maker will wipe out about 3,900 jobs in Canada and 30,000 overall. But the decision to close the Oshawa No. 2 car plant in the city that Canadian automotive pioneer Sam McLaughlin made famous is the one that stunned industry players yesterday.

Among them was Canadian Auto Workers union president Buzz Hargrove, who received the news in a private meeting with Michael Grimaldi, the president of General Motors of Canada Ltd.

"These are tough times for General Motors, but we've got to fight like hell to save them from themselves," Mr. Hargrove said. "Not putting in a new product in your best plant is not the greatest strategy to revive North America."

The moves will reduce GM's employment here to a little more than 16,000.

That number is just above the threshold at which the federal and Ontario governments would require the auto maker to give back some of the $435-million in financial assistance they doled out this year.

The government money underpins $2.5-billion in investments at the Canadian operations, including the Oshawa plant.

Some industry sources and observers said GM had to make some moves in Canada to assure the United Auto Workers union that U.S. plants were not the only ones affected.

The crisis facing GM and the Big Three Automakers in the U.S. is the crisis of outsourcing and globalization. Ford and Chrysler are less vulnerable due to their takeover by European carmakers, Volvo in Fords case and Dahlmer Benz in Chrsylers. Only GM remains untainted by globalization. It remains the sole American car maker, though its recent problems have been a direct result of outsourcing its Delphi operations which have now come back to bite it.

Delphi was GM parts, and was sold off in order to save GM money last time it faced an economic crisis of its own making. Now Delphi is facing bankruptcy, and is threatening its workers with ending their pension and medical benefits. Once it declares bankruptcy all that money will be available for Delphi, and GM to revinvest in the new imporved Delphi. In the US this means that taxpayers will then have to pay for the pension and medical benefits that Delphi workers should have received from Delphi.

This is the old switcheroo, the new three card monty, that corporations are playing in North America. Declare bankruptcy, grab the pension and benefit funds and use the capital to intice investors to refloat the company. Its worked for the airlines, both Northwestern and Air Canada, so why not for the auto industry.

In Canada GM and the other two North American auto makers don't face a Delphi problem, as secondary outsourcing has been well developed here as the non Union Mana Corporation has proven. Magna was the model for Delphi, but Magna was also the competitor to Delphi. And lets not forget in Canada the auto industry is subsidized by the State, more so than in the U.S. Those subsidies include health care costs, which are lower in Canada than the U.S.

$435M auto investment still on track

The GM job cuts will not affect the Ontario government's plan to invest $435-million in the company as part of a project to upgrade the infrastructure and research capacities of the automaker's plants in the province.

The federal government is contributing $200-million to the $2.5-billion project, with the remainder coming from GM.

"The 2.5-billion investment, I've been assured by GM, is moving forward," said Joseph Cordiano, Minister of Economic Development and Trade.

Dalton McGuinty, the Premier, defended his government's management of the auto sector in the face of growing attacks from the Tory opposition.

He said that while the Ontario plants produce 25% of North American output for GM, they will only be subject to 10% of the job reductions.

GM for the past decade has relied less upon its automotive operations to make a profit than it has GMAC, its credit business. It is GM's credit business that has made the company profits, just as GE has made profits from its credit business, enough so that it can own and operate its manufacturing business as well as media giant NBC.

This then is the nature of the new capitalism of the past two decades, the move away from production to investment. It is the wild and wooly world of casino capitalism where the stock market, finance capital, dominates over productive captial. Globalization is not about corporations moving production around the globe as much as it is about capital moving to where it can make record profits.

Mike Swanson: Wall Street Window

There was a time when General Motors represented the might of America. In the 1940's and 1950's it was one of the most innovative companies in the world and was considered a lynchpin of our economy.

An old mantra of the stock market was "where GM goes so goes the country." Stock traders used GM stock as a leading indicator for the economy and the rest of the market. My favorite stock market book, Stan Wanstein's Secrets to Profiting in Bull and Bear Markets, which was written in the 1980's, has a whole section on tracking GM.

People don't think of GM like that anymore. The United States is no longer a leading industrial power. We import most of our goods and are now the world's largest debtor nation. Since George Bush has been President our country has borrowed more money from foreign nations than was borrowed during all of the administrations that came before him combined! Bush didn't create this trend, but he has certainly helped accelerate it.

It's an incredible statistic, but it's true. The old notion of going to work in an industrial plant and earning a middle class standard of living is gone. Where I live, textile plants are shutting down all around me. Those that worked in them are getting jobs in retail for half the pay they had before. The service industry is now what offers jobs.

Now we do have one big import, but unfortunately that import is the US dollar and debt. Even though interest rates have been rising over the past year, the Fed has actually been flooding the economy with so much money that it has more than offset its interest rate increases.

On Faux News this morning the unadulterated glee of its business commentators was palpable as they mourned the passing of GM, looking forward to what they can pick off its bones with their vulture hedge funds.

Cradle to Grave benefits are over, they declared, American workers had it good for too long, now they have to face reality, they chortled with glee. The new global economy has no place for pensions, medicare benefits, entitlements or the expectation of life long work with one company.

This was the paternalistic capitalism of the past, the glory years of the post war economic boom of the sixties and seventies is past. Well tell us something we don't know. Well actually most workers don't, and their unions fail to understand this is what class war looks like.

So wrapped up in their tripartite bargaining, the big business unions continue to deny that capitalism has changed, that the social agenda has changed. There is no social contract with capitalism, that social contract ensured workers of steady employment and beneftis, including pensions. Capitalism declared war on that social agenda in the past two decades, as it moved towards global trading agreements, outsourcing, privatization, and the dominance of shareholder interests over corporate paternatalism.

Union leader says Canada PM to help save GM jobs

Canadian Auto Workers President Buzz Hargrove said on Tuesday he would team up with the Canadian prime minister to keep General Motors (GM.N: Quote, Profile, Research) from closing a key plant and slashing thousands of jobs. Hargrove said Prime Minister Paul Martin had called him on Monday after the world's largest automaker said it would cut about 3,900 jobs in Canada and shut its plant in Oshawa, Ontario.

The reality is that Canada has bailed out the Big Three before, and is currently bailing them out before these cuts. DaimlerChrysler confirms $768M investment in Canadian operations

While Hargrove does his pass the cap for GM dance, perhaps we should ask him why his union has organized more southern Ontario casino workers than it has workers at Magna or Toyota and Honda plants.

When push comes to shove Hargrove is quick to grab his Canadian Auto Pact bullhorn and denounce 'foreign' car manufacturers in Canada, that is Toyota and Honda. They currently are the largest sales leaders in North America and Canada, yet they remain out of his reach. And they too get generous state subsidies.

Oshawa's Seen It Before

But the question I wonder about is was there really a need to make these giant cuts at all? There were lots of GM cars sold in 2005. Many dealerships sold out their stock, for heaven's sake! Whatever the reason, everybody seems to be buying the storyline out of Detroit.

But when the dust settles on this, and the fine print is studied, you'd think Hargrove and others would want some answers. Are these jobs actually being eliminated or are they being outsourced?

Meanwhile, the federal government's trade experts must investigate this -- much like they do with the softwood lumber issue.

The Canadian trade people need to look because the men and women of Oshawa and St. Catharines deserve to know. "This plant makes all the money and they are shutting us down," yelled one autoworker angrily on the way into work.

He wants to know why? Does Mexico, or other places where you can get around union rates, benefit?

This is not about car manufacturing, NAFTA or even outsourcing of jobs. Or else GM would not have planned to close its most efficient North American plant in Oshawa. Nor would it close any Canadian plants if it was simply about car production, as Canadian GM sales were the sole source of profit for GM for the last year. Record sales of GM happened in Canada. Hey we build em we buy em.

This is about the new capitalist economy, the shareholder/investor economy of Fianance capitalism. Capitalism in this decadent period cannot survive merely on the production of goods for profit. In order to maintain record profits it must move more money into capital to produce more money (m-c-m) to produce more and higher profits. Mothball production in the G8 countries and invest in production abroad in the newly industrializing economies,like China.

In the old G8 economies banking and credit, finance captial is the source of capitalisms strength. What is good for GMAC is Good for American Shareholders is the new axiom. The workers in the G8 countries are just replacable cogs in the machine, as anyone at Rover will tell you.

Hargrove's handwringing and soliciting State subsidies are a temporary fix to the long term slow death of production in North America. He would be better off to challenge the State and the Corporations with the threat that CAW will take over the plants themselves and run them under workers control. But even Buzz ain't that radical.

And of course Buzz, Georgetti, and the rest of the house of Labour continue to battle the day to day shibolleths of capitalism without learning the historical lessons of the class war. They have ignored those lessons so aptly outlined by Dr.Karl Marx.

The Interests of Capital and Wage-Labour are diametrically opposed
Effect of growth of productive Capital on Wages

We thus see that, even if we keep ourselves within the relation of capital and wage-labor, the interests of capitals and the interests of wage-labor are diameterically opposed to each other.

A rapid growth of capital is synonymous with a rapid growth of profits. Profits can grow rapidly only when the price of labor — the relative wages — decrease just as rapidly. Relative wages may fall, although real wages rise simultaneously with nominal wages, with the money value of labor, provided only that the real wage does not rise in the same proportion as the profit. If, for instance, in good business years wages rise 5 per cent, while profits rise 30 per cent, the proportional, the relative wage has not increased, but decreased.

If, therefore, the income of the worker increased with the rapid growth of capital, there is at the same time a widening of the social chasm that divides the worker from the capitalist, and increase in the power of capital over labor, a greater dependence of labor upon capital.

To say that "the worker has an interest in the rapid growth of capital", means only this: that the more speedily the worker augments the wealth of the capitalist, the larger will be the crumbs which fall to him, the greater will be the number of workers than can be called into existence, the more can the mass of slaves dependent upon capital be increased.

We have thus seen that even the most favorable situation for the working class, namely, the most rapid growth of capital, however much it may improve the material life of the worker, does not abolish the antagonism between his interests and the interests of the capitalist. Profit and wages remain as before, in inverse proportion.

If capital grows rapidly, wages may rise, but the profit of capital rises disproportionately faster. The material position of the worker has improved, but at the cost of his social position. The social chasm that separates him from the capitalist has widened.

Finally, to say that "the most favorable condition for wage-labor is the fastest possible growth of productive capital", is the same as to say: the quicker the working class multiplies and augments the power inimical to it — the wealth of another which lords over that class — the more favorable will be the conditions under which it will be permitted to toil anew at the multiplication of bourgeois wealth, at the enlargement of the power of capital, content thus to forge for itself the golden chains by which the bourgeoisie drags it in its train.

Growth of productive capital and rise of wages, are they really so indissolubly united as the bourgeois economists maintain? We must not believe their mere words. We dare not believe them even when they claim that the fatter capital is the more will its slave be pampered. The bourgeoisie is too much enlightened, it keeps its accounts much too carefully, to share the prejudices of the feudal lord, who makes an ostentatious display of the magnificence of his retinue. The conditions of existence of the bourgeoisie compel it to attend carefully to its bookkeeping. We must therefore examine more closely into the following question:

In what manner does the growth of productive capital affect wages?

If as a whole, the productive capital of bourgeois society grows, there takes place a more many-sided accumulation of labor. The individual capitals increase in number and in magnitude. The multiplications of individual capitals increases the competition among capitalists. The increasing magnitude of increasing capitals provides the means of leading more powerful armies of workers with more gigantic instruments of war upon the industrial battlefield.

The one capitalist can drive the other from the field and carry off his capital only by selling more cheaply. In order to sell more cheaply without ruining himself, he must produce more cheaply — i.e., increase the productive forces of labor as much as possible.

But the productive forces of labor is increased above all by a greater division of labor and by a more general introduction and constant improvement of machinery. The larger the army of workers among whom the labor is subdivided, the more gigantic the scale upon which machinery is introduced, the more in proportion does the cost of production decrease, the more fruitful is the labor. And so there arises among the capitalists a universal rivalry for the increase of the division of labor and of machinery and for their exploitation upon the greatest possible scale.

If, now, by a greater division of labor, by the application and improvement of new machines, by a more advantageous exploitation of the forces of nature on a larger scale, a capitalist has found the means of producing with the same amount of labor (whether it be direct or accumulated labor) a larger amount of products of commodities than his competitors — if, for instance, he can produce a whole yard of linen in the same labor-time in which his competitors weave half-a-yard — how will this capitalist act?

He could keep on selling half-a-yard of linen at old market price; but this would not have the effect of driving his opponents from the field and enlarging his own market. But his need of a market has increased in the same measure in which his productive power has extended. The more powerful and costly means of production that he has called into existence enable him, it is true, to sell his wares more cheaply, but they compel him at the same time to sell more wares, to get control of a very much greater market for his commodities; consequently, this capitalist will sell his half-yard of linen more cheaply than his competitors.

But the capitalist will not sell the whole yard so cheaply as his competitors sell the half-yard, although the production of the whole yard costs him no more than does that of the half-yard to the others. Otherwise, he would make no extra profit, and would get back in exchange only the cost of production. He might obtain a greater income from having set in motion a larger capital, but not from having made a greater profit on his capital than the others. Moreover, he attains the object he is aiming at if he prices his goods only a small percentage lower than his competitors. He drives them off the field, he wrests from them at least part of their market, by underselling them.

And finally, let us remember that the current price always stands either above or below the cost of production, according as the sale of a commodity takes place in the favorable or unfavorable period of the industry. According as the market price of the yard of linen stands above or below its former cost of production, will the percentage vary at which the capitalist who has made use of the new and more faithful means of production sell above his real cost of production.

But the privilege of our capitalist is not of long duration. Other competing capitalists introduce the same machines, the same division of labor, and introduce them upon the same or even upon a greater scale. And finally this introduction becomes so universal that the price of the linen is lowered not only below its old, but even below its new cost of production.

The capitalists therefore find themselves, in their mutual relations, in the same situation in which they were before the introduction of the new means of production; and if they are by these means enabled to offer double the product at the old price, they are now forced to furnish double the product for less than the old price. Having arrived at the new point, the new cost of production, the battle for supremacy in the market has to be fought out anew. Given more division of labor and more machinery, and there results a greater scale upon which division of labor and machinery are exploited. And competition again brings the same reaction against this result.

Karl Marx
Wage Labour and Capital


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