End of the Road: Is the Auto Industry Dead?

By Mark Brenner and Jane Slaughter, Labor Notes. Posted November 19, 2008.

This mindset misses most of what's important about the crisis in auto. Downsizing isn't accountants shuffling numbers around on a spreadsheet; the lost jobs are concentrated in specific communities, such as the already devastated Flint, Michigan made famous by Michael Moore in his first film, Roger and Me.

Cuts of this magnitude will reverberate throughout the Midwest, leaving a lasting economic and social hangover. And they will not be confined to auto, as other companies follow the Big Three's lead.

High tech companies can't fill the void. Google, for example, has just announced plans to open up shop in Michigan. But Google employs less than 6,000 people worldwide, a drop in the bucket compared to the 70,000 jobs this round of auto restructuring will destroy.

How could the auto industry right itself without devastating workers and communities? Execs have shown themselves curiously unwilling to campaign for one measure that would save them billions of dollars per year: single-payer health insurance.

GM is the largest private purchaser of healthcare in the country, providing coverage to 1.1 million people. Last year the price tag was $5.3 billion, which, as CEO Rick Wagoner is fond of pointing out, is more than GM pays for steel. Half of those covered are retirees, and the company claims to provide healthcare to 1 percent of America's seniors.

Legacy Myths

The Big Three say that such "legacy costs," which also include pension benefits, are choking their business, obscuring the fact that all three auto makers have pension and retiree health funds flush with cash--healthy for the foreseeable future. If health care is such a heavy burden, why not join the movement for a far cheaper national health care plan? Canada's single-payer system makes it much less expensive to do business there and has spared most Ford and GM plants north of the border from the ax.

But despite promises to the UAW to pursue "universal coverage" in exchange for the union's $1 billion in concessions on retiree health care last fall, GM's CEO didn't even mention national health care in testimony before a June Congressional special hearing on the nation's healthcare crisis. Either free-market ideology is trumping good business sense, or paying for benefits is not such a burden after all -- or the employers don't mind having a propaganda hammer to use against the union.

When Henry Ford introduced the five-dollar day in 1914 he famously quipped that he wanted to pay his workers enough so that they could afford to buy his cars. Today, a new-hire at Delphi or Visteon now makes $14.50 an hour, a bit more than half his or her counterparts at the Big Three. In 2007, when new agreements are negotiated, the Big Three's new-hires are sure to take a hit.

What will America look like if most workers earn Wal-Mart, instead of General Motors, wages? For those without a four year college degree - i.e., about 70 percent of the labor force - average wages (adjusted for inflation) have stagnated or fallen for the last 30 years, hovering under $15 today. Manufacturing jobs paid wages no better than the economy-wide average when Henry Ford was perfecting the assembly line, but by the end of the 20th century they were about 25 percent above average, in no small part due to unions like the UAW.

A New Playbook

To solve the industry's problems, many analysts have urged Detroit executives to go back to the drawing board and start fresh. This advice applies with even more force to the UAW.

Forged in the 1930s' social upheaval, the UAW's pioneers originally saw the union as just one piece of a large-scale social movement to solve the problems of the Great Depression.

Today the stakes are higher than they have been in 60 years, but the UAW is still fumbling through its golden-age playbook. The rank-and-file revolt after the Delphi bankruptcy demonstrates that members are willing to fight, but they can't do it alone.

Now, more than ever, the UAW needs the audacity and the guts of its founders, who set their sights on more than the survival of their union headquarters. Their fight to build a better world inspired millions.

With health care becoming less and less attainable for more and more working people, the fight for national single-payer health care has the potential to galvanize a new workers' movement. Rekindling such a movement may be the only way to ensure that the UAW founders' legacy doesn't evaporate before our eyes.

See more stories tagged with: economy, uaw, auto industry

Mark Brenner is the Director of Labor Notes.

Jane Slaughter is a founder of Labor Notes.

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