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The Steve Miller band
Sunday, January 29, 2006
Bankruptcy means: richer bosses, poorer workers
By Martha Grevatt
Published Jan 28, 2006 8:47 AM
Bankruptcy is good business. No, that's not some Orwellian doublespeak along the lines of "War is Peace."
It's the conclusion being drawn by more and more top executives. This corporate consensus is the topic of a recent New York Times article entitled, "Gee, Bankruptcy Never Looked So Good." (Jan. 15)
United Air Lines (UAL) has just emerged from bankruptcy, proclaimed solvent after looting workers' pensions and extracting huge concessions from airline workers' unions. For so skillfully pulling off this embezzlement through the grand theft of workerslabor, the corporate thieves are being handsomely rewarded.
As the Times article points out, on Jan. 12 "unsecured creditors and executives at the UAL Corporation...agreed to a deal in which 400 executives stand to share an astonishing 10 million shares...worth an estimated $115 million."
How are the workers being rewarded for their sacrifices? They aren't. But the bosses, who gave up nothing, justify their priorities. In the words of UAL spokeswoman Jean Medina, "It's in everyone's interests for management to have this component of management compensation tied to the future performance of United's stock price."
UAL is not the exception but the rule. Bankruptcy courts approved hefty bonuses for US Airways executives after pensions were dumped and workers took three successive pay cuts. These concessions are locked in until 2009.
On Jan. 16 Northwest Airlines asked a bankruptcy court to void its contracts with flight attendants, pilots, customer service agents, and ramp workers, even after those workers had agreed to concessions. The pattern was repeated throughout the steel industry and has hit the auto and auto parts industry with Delphi's filing for bankruptcy last Oct.
Sometimes bankrupt companies are then bought out by people like Wilbur Ross, CEO of International Coal Group, blamed for the tragic deaths of the miners in Sago, West Virginia.
According to the ICG web site, "Inter national Coal Group was organized by WL Ross & Co. LLC to acquire the principal operations of then-bankrupt Horizon Natural Resources on October 1, 2004." Ross also has strong connections with Steve Miller, hired to put Delphi into bankruptcy and destroy the workers' livelihood.
When Miller put Bethlehem Steel into bankruptcy, Ross purchased the company cheap and then sold it out fairly quickly for a profit of $500 million. On Jan. 11 it was reported that Ross was reviewing assets of distressed auto suppliers for possible takeover and stated that consolidation was "even more imperative" in 2006.
In nearly every case, a company leaves bankruptcy "leaner and meaner." After slashing wages and cannibalizing pensions, it is better poised than before to exploit a smaller, lower-paid workforce. It's all a big scam perpetrated by corporate con artists.
Pensions, jobs under attack
Bankrupt or not, major firms are going after pensions and retiree health benefits. Earlier this month IBM suspended its pension program. Alcoa, the world's largest aluminum company, announced that new salaried employees would not receive traditional pensions. Are union pensions next on the chopping block?
GM and Ford asked for and received from the United Auto Workers an increase in retiree health care costs.
Equality of sacrifice? Forget it. GM's CEO Rich Wagoner states, "Here's where people get this wrong: They say, 'Why are executives paid so much? You have to ask: Why are professional athletes paid so much?' The capability of successfully trying to turn around an unsuccessful automobile company is a very rare and highly sought after skill set."
In 2004 Wagoner's "skill set" got him a $2.2 million salary, a $2.5 million bonus, and 400,000 stock options worth $5.1 million.
Meanwhile, workers at GM, Ford and DaimlerChrysler are left wondering if they will have a job long enough to even have a pension. Last month GM announced plans to cut 30,000 jobs. GM recently revealed plans to go after the "jobs bank," a program that allows laid-off workers to receive 40 hours' pay. Ford has just announced massive layoffs. The Jan. 22 Detroit News describes how Daimler Chrysler is scheming to eliminate skilled trades jobs by combining classifications.
The auto bosses cite loss of market share to foreign competitors to justify these drastic cuts. This is a bogus argument because they are selling as many cars as ever. In 2005 GM sold nine million vehicles worldwide, the most it has sold since 1978. DaimlerChrysler sold a record four million vehicles, led by its Chrysler Group.
Delphi workers point the way forward
These attacks are widespread, and the situation could seem depressing and hopeless, but the inevitable resistance to capitalist restructuring is emerging.
A tremendous fightback is spreading throughout the Delphi corporation, started by rank-and-file UAW members who call themselves "Soldiers Of Solidarity." As reported in an earlier WW article, SOS has been able to slow production by way of "work to rule."
SOS has supplemented its in-plant strategy with public demonstrations, including a Jan. 8 picket of the North American International Auto Show and a Jan. 23 picket of Delphi world headquarters. After the auto show picket, the Detroit capitalist media could not hide its nervousness about SOS.
The Flint [Michigan] Journal bemoaned that SOS was creating a militant climate and that Toyota might decide not to build a plant there after all. "You can bet Toyota officials read the local newspapers carefully and are aware of the SOS activities," wrote Tom Walsh in the Detroit Free Press. The whole situation is making the ruling class jumpy, further evidenced by the FBI visiting two progressive Michigan lawyers involved with SOS.
Delphi is showing signs of conciliation. CEO Miller on Jan. 16 told the World Automo tive Congress that his "committed objective is to arrive at a consensual resolution." UAW President Gettelfinger said that was "certainly a step in the right direction."
Stronger language came from SOS spear header Gregg Shotwell, who hails from Flint, Mich., the site of the original 1937 sit-down strike. "A reporter asked me, 'If you strike and shut down GM, won't you be biting the hand that feeds you?' We aren't biting the hand that feeds us. We are biting the hand that slapped us, cheated us, and robbed us. First, we'll bite the hand. Then, we'll go for the throat. What have we got to lose?"
The bankruptcy courts conspire with corporate America and Wall Street financial and banking institutions to profit at the expense of the unions and its members. Also sitting on the UAL board that approved the benefits for the UAL executives is Miller, who was the architect of the Bethlehem bankruptcy, and is now doing the same thing to the UAW and it's members at Delphi.
If the workers are able to stay Miller's hand and save their contract, it will lift the hopes of the whole working class and inspire a broader fightback.
The writer is on the executive board of UAW Local 122 at DaimlerChrysler's Ohio Stamping Plant.
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