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"Canadian autoworkers are being raped at a breathtaking pace"
Presentation on Contract Concessions and the Crisis in Auto
by Bruce Allen
FOR YEARS now I have been writing articles and talking at a meetings concerning developments in the auto industry in Canada. I have repeatedly presented a set of arguments built around a longstanding observation that I have made concerning what is happening in the auto industry. Namely I have argued that the multinational auto corporations have been using their control over investment decisions to systematically dismantle and take away all of the gains made by North American autoworkers since the UAW was born in the mid-1930s. In other words these corporations have been witholding their capital in order to advance their agenda in a way not so unlike the way we as workers used to either withold our labour or threaten to withold our labour in order to advance our collective bargaining agenda and make and build upon gains. In effect in recent years the tables have been turned. The collective bargaining process in the North American auto industry has been stood on its head. We as autoworkers no longer go to the bargaining table in order to win our demands. We go to the bargaining table in order to address the corporations' demands in the hope of securing new work and remaining employed. Or at least that is what has been happening.
In 2009 the situation has gone from bad to worse. As retired Canadian Auto Workers (CAW) Research Director Sam Gindin recently observed, “It used to be that corporations promised jobs for concessions; now they aggressively demand more concessions alongside fewer jobs.”
The brutal reality of the situation is that this is where the trajectory of concessions bargaining has taken us since it began to really unfold in the industry in Canada in 1993 and well before that in the United States. In Canada that was immediately following a massive restructuring of General Motors North American operations and at a time when auto corporations in Canada began a concerted drive to extract contract concessions at the local level in order to gut local collective agreements and weaken the power of the union on the shop floor. Significantly these developments also coincided with the North American auto corporations' relentless drive to implement the variants Toyota Production System and other work reorganization strategies in their operations.
One set of concessionary agreements at the local level followed another throughout the 1990s in Canada and this phenomenon has continued into the current decade. This process has not only not let up but has deepened. These concessionary agreements have crippled the power of the union on the shop floor of Canadian auto plants and beat the union into a state of increasing submission not so unlike what has happened in the U.S. This state of submission has been reflected in the wholesale abandonment of an adversarial relationship by local unions toward the employers. Consequently, the union's agenda, especially at the local level, has evolved and became more and more indistinguishable from management's agenda.
Locally managements have responded by consciously taking advantage of this weakening of the union's power on the shop floor due to both the ongoing weakening of our local agreements and to workers' pervasive fear of job losses by shrewdly and meticulously integrating shop floor union leaderships into the process of managing operations without compromising management's agenda. Increasingly rank and file workers have found it harder to tell the difference between the message they hear from in-plant union leaderships and what they hear from the boss. As a result of this the corporations have increasingly prevailed in the battle for the hearts and minds of the automotive workforce. They have increasingly achieved ideological hegemony because the union no longer has an identifiable agenda of its own because securing and retaining work at any price has increasingly become the sole priority of auto union leadership.
This puts in context the efforts of the CAW leadership to constantly promote and encourage handouts of government monies to the auto corporations in order to attract investment in new operations in Canada. This likewise puts in context the conspicuous absence of any open criticism whatosever of these corporations by the CAW simultaneous with and reinforcing this advocacy. Simply stated a fundamental truth has been forgotten along the way. Namely, that when the agenda of the union becomes essentially one and the same as the agenda of the employers the very reason for the union to exist as an independent entity is effectively called into question.
This brings me to the developments of the past 23 months. In addressing them I am compelled to focus on GM in Canada with some reference to developments in my own local union. I do this knowing that they are typical of what is going on generally in the industry.
The brutal truth of the matter is that the CAW has now engaged in four sets of concessionary bargaining with GM in approximately the last two years. In doing so it has born out something former CAW National President Buzz Hargrove said about two years ago when he remarked to the CAW's national council that nowadays in the auto industry we are always negotiating. Furthermore in saying this Hargrove displayed a bit of amnesia by forgetting that such a practice has been in effect for many years in the U.S. where the United Auto Workers has been negotiating what are called Modern Operating Agreements. Modern Operating Agreements involve the continuous negotiation of contract concessions designed to enhance the competitiveness of local operations and ostensibly to improve their chances of those operations' survival.
That said the first of these four sets of concessionary negotiations with GM were conducted at the local level in Oshawa, Ontario via what was termed a “shelf agreement” and then in St. Catharines, Ontario via what was called a “Competitive Operating Agreement”. Both of these local agreements gutted and rewrote existing local collective agreements from start to finish giving the corporation almost everything it wanted locally in exchange for the promise of new work. In St. Catharines this meant new transmission work that has yet to arrive and which has been put off until 2012 and may never arrive give the state of the industry. In Oshawa this yielded work on a new Camaro.
Next in March 2008 then CAW National President Buzz Hargrove opened the 2008 contract negotiations half a year early. He did so based upon a belief that collective bargaining would be tougher when the existing contracts with the Detroit 3 would to expire in the autumn of 2008.
This was a pivotal turning point. We went from negotiating one set of concessionary local agreements to negotiating major contract concessions at the corporation wide or master level. Wages and pensions were frozen. Cost of Living Allowances (COLA) increases were “temporarily” suspended. A week's vacation per year was given up. Starting wage rates were lowered from 85% of the established rate for each job classification to 70% of the established rate with the full rate to be paid only after three years of service. All the while the union leadership proclaimed that it had successfully resisted a UAW style two tier wage and benefit structure. Most importantly, co-pays for benefits were substantially increased with the amounts of money to be paid by workers increasing in each successive year of the collective agreements thereby setting the stage for continuous increases in these co-pays.
Then came last year's global economic meltdown. Following it and the ensuing global capitalist crisis the CAW was back at it again in March 2009 giving even more contract concessions. At GM the union conceded $7.00 per hour in wage and benefit concessions. The contract was extended for another year with no wage or pension increases meaning we effectively had a 4 year contract. This effectively marked the end of the CAW's long standing opposition to long term collective agreements. Our Xmas bonus was negotiated away. Additional co-pays on benefits were introduced. The door was open to a Canadian version of the UAW's Voluntary Employeee Benefit Association (VEBA) which relieves corporations of full, direct responsibility for employee benefits and effectively guarantees ongoing erosion of benefits via underfunding of this separate benefit fund. Coverage for long term care was reduced. Dental benefits were frozen at 2008 levels through to 2012.
Despite all of these giveaways they were still not enough in the view of Chrysler and the U.S. and Canadian governments. Chrysler wanted $19.00 per hour worth of wage and benefit contract concessions. The Canadian and Ontario provincial governments supported Chrysler's position and put a gun to the union's head saying there would be no money for the corporations otherwise. The CAW quickly gave in to them.
With the resulting concessionary agreement at Chrysler in April newly hired employees will have to work 6 years before getting the established full rate of pay. New hires will now also have $1.00 per hour deducted from their wages to go to pay for their pensions when and if they retire. Their pensions will be capped at the amounts paid out for 30 years of credited service meaning you can work 40 years and will get the pension of someone who worked 30 years. The waiting period for Sickness & Accident benefits was increased. Semi-private hospital care was eliminated. Refunds on education tuition for family members were reduced. A rebate paid to employees for new car purchases will end. The establishment of a VEBA went from being an item for discussion to a certainty.
Worst of all contractual language was negotiated at the corporate wide or Master Level to allow for local arrangements where outside suppliers will be able to locate on site at and even inside Chrysler plants just like the experimental plants in Brazil developed by Ignacio Lopez formerly of Volkswagen. This will produce outsourcing of our work on a huge scale. Then in a matter of weeks these concessions were suddenly deemed to be not enough for General Motors of Canada (GM's CEO had previously said that the contract concessions negotiated with the CAW in March were good enough) and the Canadian and Ontario provincial governments.
This brings us to where we are today faced with further concessions particularly affecting pensions at GM which match and even exceed those contract concessions negotiated at Chrysler. If the additional concessions are not subsequently matched at Chrysler then there will no longer be a pattern agreement in the auto indsutry in Canada ending a practice of negotiating industry wide collective agreements that has absolutely critical to all of the gains North American have made in the past. If they are to be matched then it will mean that the CAW will have to go back to the negotiating table at Chrysler. Ford of Canada meanwhile is sitting back waiting for the cascade of contract concessions to end at their competitors. Ford fully expects to get just as much and the CAW leadership at Ford is preparing to deliver similar concessions and will try to scare its membership into accepting them.
In short Canadian autoworkers are being raped at a breathtaking pace. What is more the cascade of contract concessions will certainly continue because, as I indicated, the establishment of a VEBA for healthcare benefits means there will be an erosion of our benefits on an ongoing basis. This is due to the certainty of inadequate funding of the VEBA because when health care costs rise due to inflation additional monies to cover the additional costs will not be put into the fund making reductions in benefits unavoidable. The downward spiral consequently has no end in sight unless and until the union's rank and file finally says no to these corporations; corporations who will emerge from bankruptcy protection and then become very profitable again.
In short autoworkers never created this crisis. We are in no way responsible for it. But we are paying the price for the crisis in auto with a cascade of contract concessions on a monumental scale.
What is taking place is a quintessential example of Capital taking advantage of a crisis for which it bears sole responsibility in order to deal a historic and crushing blow to workers who have led the way for the entire working class. Accordingly the emerging result is a historic setback for the entire working class in Canada comparable in its potential consequences to the defeat of the air traffic controllers in the United States in 1981 at the hands of Reagan and the defeat of the British coal miners in 1985 by Thatcher. It logically follows that we should be seeing all of organized labour in Canada and beyond mobilizing to support Canadian autoworkers in the face of the enormous onslaught we are being subjected to.
What is more, in view of these things the relative silence of the leadership of almost all of the rest of the labour movement in Canada in response is worse than reprehensible. It is treachorous. Likewise the response from the leadership of the social democratic New Democratic Party (NDP) in Canada has been grotesquely inadequate with the leader of provincial Ontario NDP being virtually alone in coming to the defense of autoworkers and then doing so only to a very limited extent with regard to the issue of protecting autoworker pensions.
Simply stated we are isolated while being under this intense attack. The situation could hardly be worse. Disaster is staring us immediately in the face and essentially all we are getting from our leadership are excercises in damage control and empty rhetoric about fighting again another day and possibly regaining some of the things we have just lost. Indeed it is impossible to take such claims seriously given the duration, extent and acceleration of the retreat which has been taking place and the auto and labour leadership's general unwillingness to mobilize the memberhip and confront Capital in response.
To the contrary, in the auto industry we in fact have a union leadership very much in the habit of helping to scare the membership into accepting one set of concessionary collective agreements after another all the while stating that there is no alternative. They are even doing this while knowing full well and sometimes even acknowledging that making government economic aid to the auto industry contingent upon workers taking contract concessions is a phenomenon unique to Canada and the United States. They know that even right-wing governments in countries like Germany and France would not dare to attach such conditions to aid for the industry. Workers and their unions in those countries would absolutely not stand for it and would wage fightbacks that would terrify any government.
What is more the option of public ownership of the industry is not even being openly considered let alone being seriously advocated as an alternative worth fighting for. This is even the case while tens of billions of dollars of government monies are being poured into GM and Chrysler.
In conclusion we are currently witness to three crises. One is the global economic crisis of capitalism. A second is the crisis specific to the auto industry. This second crisis simply would not exist in North America were it not for last year's economic meltdown, the very costly privatized American health care system and the disproportionate number of retired workers relative to active workers in the plants; a phenomenon entirely due to corporate decisions designed to lower the age of the workforce and avoid the training costs that would be generated by the layoff of low seniority workers and retraining of those who replaced them on their jobs.
The third crisis is a crisis of leadership in the labour movement. This is clearly demonstrated by these events unfolding before our eyes, particularly in the auto industry, and by the wholly ineffectual response of the current labour leadership to it. In other words to paraphrase a quote from a small bearded man who died here in Mexico seven decades ago the crisis of the labour movement is a crisis of labour leadership.
Bruce Allen
Vice-President of Canadian Auto Workers Local 199
President of the St. Catharines & District Labour Council
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