Spokespersons for both the CAW and the Big Three auto makers have heaped praise on the new three year collective agreements reached without a strike. CAW Secretary Treasurer Jim O’Neil went as far as to claim the pattern agreement signed between the CAW and Daimler Chrysler, Ford and GM is “perhaps the best agreement to be signed in Canada in a generation.” GM CEO Jack Smith’s response was no less enthusiastic. He proclaimed that he was “pleased as punch” with the agreement.
The most signifcant and revealing expression of the exuberance greeting the new agreements was manifest in Toronto’s Royal York Hotel just hours after a tentative agreement was reached between the CAW and GM of Canada. The Toronto Globe & Mail and other newspapers described the unprecedented scene. “When the General Motors of Canada Ltd. negotiating team strode into the Royal York Hotel’s Tudor Room members of the CAW rose and gave them a standing ovation. The GM managers returned the favour. ‘It went on for about eight minutes,’ says GM’s Chief Negotiator Al Green.”
Such a display begs a question. Why would negotiators for a corporation like GM be so enthusiastic about having just signed new collective agreements containing the following? 3% annual wage increases plus COLA, 25% in pension increases over a six year pension agreement, retroactive pension increases for GM workers who retired prior to 1993 and a number of significant benefit improvements.
Principally there are two reasons for this. One is that GM, like Ford and Daimler Chrysler is having record sales. U.S. auto sales are projected to exceed 17 million units this year. Furthemore, these record sales are accompanied by both ongoing and significant productivity increases and record profits.
But that is not all. GM was especially happy because it was desperate to avoid a strike after the billions it lost last year during the UAW strikes in Flint, Michigan and a strike-induced and even more costly loss in market share. The situation at Daimler Chrysler was not essentially different. A strike would have affected its U.S. operations where 60% of its worldwide profits are being made and could have had unpredictable consequences with respect to the continuing merger between Daimler Benz and Chrysler.
The other principal reason for the euphoric response is that their new collective agreements will in no siginficant way block efforts by the auto makers to restructure and downsize both their operations and their workforces. Indeed, the CAW’s collective agreements do not even contain the nominal and often ineffective limitations on workforce reductions negotiated into the UAW’s collective agreements with the Big Three. By one estimate those will allow workforces to be shrunk by as much as 24% over the life of the new four year agreements before the corporations are compelled to hire a new worker for every worker whose job is eliminated.
This is particularly significant with respect to GM of Canada. Consider the following statistics. In the early 1980s GM of Canada employed a workforce of about 40,000. By 1996, when the CAW negotiated its famous “work ownership” language, in response to corporate restructuring and especially outsourcing, the workforce had been shrunk to about 26,000. By the time this year’s contract talks were in full swing the GM of Canada workforce stood at about 22,500, including some 1,300 on layoff. Immediately after the tentative agreements were signed GM’s Chief Negotiator Al Green proclaimed that by the time they expire in the autmn of 2002 about another 3,000 jobs will be eliminated. 3,000 jobs represents about 15% of the current workforce. Furthermore, it should be noted that in 1996 a non-arbitrable document was negotiated with GM stating that “the Company commits there will be no reduction in community levels of employment as a result of outsourcing during the term of this agreement.”
Both the reasons why the corporations were eager to avoid a strike and the fact that the new agreements will not seriously impair their ability to restructure and downsize their operations and workforces put the widely publicized economic gains achieved in their proper perspective. Suddenly these gains don’t look so impressive and it becomes clear that they will not consitute a major, new burden on GM, Daimler Chrysler and Ford. Indeed, spokespersons for all three of these corporations have been unanimous in expressing their confidence in their ability to continue to prosper in Canada. It is also worth noting that the main features of the economic package closely resemble the main features of the economic package the UAW negotiated with the Big Three in the U.S., with essentially the same implications.
Much has been made of the 3% annual wage increases plus COLA. In light of the profits and productivity gains (more work from fewer workers) being made these are rather meagre. Much more significantly, the fact that 3% wage increases are widely considered large speaks far more to the abysmal track record of unions in North America in terms of failing to negotiate substantial wage increases for workers. This shows just how weak and ineffective North American unions have become in the face of the generalized implementation of lean manufacturing and capitalist globalization. It also show how hapless the labour leadership is.
There is a particular need to emphasize the relationship between these relatively meagre wage increases and the lean manufacturing strategy of cost down restructuring or restructuring to drive down costs in an effort to increase market share. The application of this strategy is a central fact of life in auto and other workplaces today. Yet it is noteworthy that the Left, with a few notable exceptions, does not even begin to adequately appreciate its significance.
Relating these wage increases to cost down restructuring makes it brutally apparent that they will not increase labour costs nearly as much as corporate restrusturing decreases labour costs by reducing workforce headcounts and increases the amount of production squeezed out of the remaining workforce.
This phenomenon is no less apparent with respect to the pension increases the CAW has just negotiated with the Big Three. The cost of these pension increases will likewise be far more than made up for by the reductions in workforce going forward. Pension improvements in fact expedite cost down restructuring and workforce downsizing because the jobs performed by those who take pensions are often not filled but eliminated and the work is redistributed among other workers. Pension improvements also give corporations younger, generally more educated workforces that are much more adaptable to flexible working arrangements and capable of working considerably harder.
This in turn tends to highlight the matter of local collective agreements. These are the agreements that get no public attention and about which the rank and file is often told little or nothing at contract ratification meetings. Yet these are agreements where the auto corporations are really winning the battle. And these are the agreements which make union claims of victory and historic achievements look rather hollow.
Neither time nor the availability of adequate information will allow this subject to be dealt with in considerable detail except with respect to my own location. Nonetheless, it should be emphasized and understood at the outset that what has been happening in St. Catharines is not exceptional. The near wholesale implementation of lean manufacturing throughout the auto industry in this country effectively precludes such a possibility.
At the outset it is also essential to note that the corporations’ control over investment decisions has been a decisive factor in determining what has been happening at the local level. The introduction of new work has essentially made it possible for the auto corporations to realize the new, ever more flexible workplace they desire. Furthermore, their ability to do this is exacerbated by the fact that auto is an industry with considerable production overcapacity.
More to the point, the lure of new work tends to set the stage for the kind of situation seen at the local level in this year’s contract negotiations in St. Catharines where the union had one overriding demands; new jobs. It also points to larger problems.
A focus on new work essentially turned the collective bargaining process in St. Catharines on its head. The union negotiating team did not do what union negotiating teams have done in the past. It did not go to the table with a long list of demands that the bosses would either fully or partially meet under the threat of a strike. This time the bosses came to the negotiating table with a long list of demands for contract concessions to be negotiated in exchange for new work. In effect, the union’s negotiations for new terms of employment with the General Motors Corporation looked more like the corporation’s negotiations for obtaining new work. The question to be answered was no longer how much would the corporation concede to avoid a strike. It was how much would the union concede to get new work.
As it turned out some contract concessions were made affecting production workers. However they were much less than what the corporation sought. These concessions essentially accelerated the process, already underway, which will result in almost all production workers being brought under one job classification. The significance of this cannot be understated and it is directly related to the implementation of the lean manufacturing system. Such elimination of job classifications gives the bosses far more flexibility in running their operations and this directly facilitates efforts to restructure and downsize a workforce. It makes for a lean workplace.
The Skilled Trades made more concessions. Notably, there was a union defeat on the issue of outside contractors working in the plants. A document was “negotiated” interpreting the CAW’s work ownership language, as applied to the Skilled Trades, basically in line with the corporation’s position on the matter. In addition, some 2,000 grievances on the issues were resolved with a lump sum payment that will mean taking token settlements for those grievances.
The Skilled Trades definition of a permanent layoff was also weakened. There were other concessions as well. But it must be emphasized that the effect of these concessions will be to make it easier and less painful for GM to both permanently and temporarily downsize its Skilled Trades workforce.
Elsewhere, the local situation in Oshawa was especially significant. This is because some 30% of the membership voted against the agreement and the leadership got a rough ride at the ratification meeting. The reason why this happened is clear.
By all accounts the GM plants in Oshawa have become increasingly intolerable to work in. Hargrove repeatedly acknowledged this by saying GM was running them like a boot camp. And the implementation of the lean manufacturing system created this situation and the absence of a CAW strategy for fighting the lean manufacturing system guarantees that it will stay this way if not get worse.
Just consider what a Skilled Trades worker from CAW Local 222 said in response to an inquiry about why there were so many No votes cast in Oshawa. He wrote, “As I have discussed with you previously, the National doesn’t give a shit about local issues, as long as they get increased wages, pensions, and benefits. Everything else falls by the wayside. The trades have amalgamated the Machine Repair and Millwrights in order to get a no layoff (6 year) policy. This as well as other giveaways. Workers in Oshawa are fed up with the way they are mistreated by Management, more work added to their jobs, constant line speed increases and RSIs on the increase. It seems the reps must be out of tune with reality on the shop floor in order to have endorsed this agreement. Go figure.”
One has to get past the misleading impressions created by the size of the Yes votes at ratification meetings to get to the reality of the situation. It then becomes clear that many voted Yes only because they did not want to or felt they could not afford to go on strike.
The reality on the ground and removed from the glass bubble existence of our leadership is ugly. The rank and file is increasingly distrustful of and cynical about the leadership and it is finding it harder to distinguish the agenda of their union leadership from that of the corporations they work for.
Given that the CAW leadership has effectively abondoned the fight against the lean manufacturing system, which has been implemented to varying degrees by all of the auto corporations, this is hardly surprising. It shows the real orientation of the CAW leadership.
At its worst this creates situations like one which just took place in St. Catharines. There members of the Shop Committee recently worked hand in hand with Management to help it build 7,000 units of GM’s newest VIII engine in a week. They did this in order to impress GM’s upper echelon and convince them to make further investments in the St. Catharines plants.
Another very revealing development arising out of negotiations in St. Catharines is also worth noting. Ostensibly new axle work was secured. In fact this work had been slated for plants in the U.S. and was taken from them, coincidentally, right after local negotiators in St. Catharines made concessions. Whipsawing? Probably. But this did not stop CAW leadership from telling St. Catharines GM workers that securing this work was another union victory.
In short, the evidence is there to show that beyond the hype surrounding the outcome of this year’s negotiations is a union increasingly accommodating the agenda of the corporations. This is happening, in large measure, due to its weakness vis a vis corporate investment decisions linked to corporate work reorganization strategies and, beyond that, its unwillingness to even contemplate a meaningful challenge of Capital’s control of the means of production.
This is neither inevitable nor unavoidable. To see this it is only necessary to note recent developments in the auto industry in Brazil. These developments clearly indicate that things can develop in a very different direction. Brazil has become a laboratory for cutting edge innovations in auto manufacturing and, consequently, is a magnet for new auto investment that rivals what we have seen in Mexico since the mid-1980s.
Construction of nine new assembly plants has begun in Brazil in the past three years. These are owned by nine different auto makers and they cost as much as $5 billion each. In addition, one estimate has it that $25 billion in new investment has recently poured into Brazil and Brazil’s principal free – trade partner within the framework of the Mercosur free trade bloc; Argentina.
According to a recent article in Fortune Magazine this massive flow of investment is part of a “global shift to more and bigger modules along with a related move to force suppliers to put up plants largely dedicated to one customer and as close as possible to an assembly line.” This said it must be noted that wages are a fraction of what they are in Western Europe and the U.S. (about one eighth). But they aren’t what attracts to Capital to the Brazilian auto industry. The attraction is the increasing prevalence of these modular build operations and the fact that management in these operations often starts with a clean slate. This means it is often possible for auto corporations to start them up from outset with the employment of fully cross-trained workers who perform a variety of tasks and to employ flattened, team-based organizational structures. In short, the main attraction is the ability ramp up with operations that are both totally lean and increasingly modular in character. Another attraction for the auto corporations is the fact that Brazil is expected to become the fifth largest vehicle market in the world within the next ten years.
Nonetheless, there is one complicating factor that sets what is happening in Brazil’s auto industry very much apart from what is happening here and in the U.S. To begin to appreciate this it must be noted that the bulk of this new investment and the construction of these cutting edge facilities are located outside of Brazil’s Michigan. Namely, the Sao Paulo region. That is where the strength of the metalworkers section of Brazil’s largest labour confederation (CUT) is concentrated and it is the bastion of the left in the Brazilian labour movement.
That is why lean manufacturing and the types of work practices I have just described encounter stiff resistance in the auto plants in the Sao Paulo region. And it is why worker militancy and strike activity are most commonplace.
Notably, the auto work force in the highly industrialized and densely populated Sao Paulo region was in large measure responsible for the fact that at one point earlier this year there were some 70,000 Brazilian autoworkers on strike. And the metalworkers employed in the auto plants in the Sao Paulo region are in very large measure responsible for a movement being underway in Brazil to go beyond the prevalence of enterprise by enterprise and company by company contract negotiations towards the establishment of national auto agreements.
The importance of this in relation to what is happening here cannot be overstated. This is because this movement in Brazil represents a frontal assault against the logic and the continued development of lean manufacturing in Brazil’s auto industry. Why? Precisely because the lean system is predicated upon encouraging workers to identify their interests with those of their employers and to compete for work with other workers; exactly what is becoming more prevalent here in North America’s auto industry. In other words, the lean manufacturing system is being fought in Brazil in a serious way and that fight is being led, as we speak, by the most advanced section of the Brazilian working class. Furthermore, even the right-wing and corrupt auto unions outside of Brazil’s main labour confederation are backing the call for establishing national auto agreements which, by their very nature, seriously limit management flexibility in running their plants as they see fit.
This is a real class fight and because it is it stands in stark contrast to what is taking place here where a meaningful class perspective is non-existent among top union leadership. And that I believe explains why their struggle is moving forward while auto unions on this continent are caught up in a retreat that leads towards the end of meaningful national auto agreements bolstered by strong local agreements and to the eventual re-emergence of enterprise level bargaining.
Finally, should this seem alarmist it is only necessary to consider one pivotal development in the U.S. in this year’s auto contract negotiations. It shows where whipsawing and the signing of local agreements with numerous contract concessions can lead. That being the agreements the UAW negotiated with Delphi Automotive Systems. Delphi had just been spun off by GM. The UAW – Delphi agreement contains contract language explicitly allowing local unions to negotiate local agreements directly departing from the UAW National Agreements even with respect to the most basic contract issue of all. Namely, rates of compensation. Such language makes National Agreements almost hollow and lean compatible enterprise level bargaining becomes a full fledged fact of life. Indeed, due to this pivotal retreat the UAW-Saturn agreement is really no longer a real exception to the main U.S. auto agreements.
