GM bankruptcy restructuring puts risk on to workers; no vision for a green transportation system
JESSE FREESTON, TRNN: General Motors, for years the world’s largest corporation, is set to file for bankruptcy protection on Monday morning. The Obama administration will finance the restructuring at an approximate cost of $50 billion.
BARACK OBAMA, US PRESIDENT: Our auto industry is the foundation for economies all across the Midwest, and ultimately for the country as a whole. And had we allowed GM or Chrysler simply to liquidate, that would have been a huge anti-stimulus on the economy as a whole.
FREESTON: In recent days, the White House has intervened in the pre-bankruptcy arrangements between GM and its two largest creditors—it’s bondholders and the United Auto Workers union. Seventy-four percent of the UAW membership voted to accept a new contract offer loaded with concessions. For retirees the news was grim. Instead of the $20 billion owed them by General Motors in order to fund their health care trust, they will receive a 17.5 percent share in the new, post-bankruptcy version of GM and one seat at the 13-member executive board. The cash owed to the union was the result of a 2007 concession by the union to take responsibility for retiree health benefits off the shoulders of the company under an agreement known as the VEBA [voluntary employees’ beneficiary association]. We asked Frank Hammer, retired GM employee and co-organizer of the Auto Workers Caravan, if he was optimistic about having his health care depend on the new company’s stock.
FRANK HAMMER, AUTO WORKERS CARAVAN: The American market, first of all, is going to take years to recover, if ever, to the levels where we were, which was 16 or 17 million cars sales per year. I believe that’s gone. And certainly with the take-backs from workers, as is going on right now, there are certainly going to be fewer and fewer workers in the United States who will in the future be able to purchase brand-new, spanking new, you know, cars. And the competition will be for a declining share of that market. I don’t think there’s any particular reason to feel hugely optimistic about it – perhaps with the introduction of the electric car and some government subsidy that this may turn around, but I think that there’s going to be other competitors that are going to be producing electric cars. There’s no reason to believe that General Motors is going to be the standout. So I don’t see a great reason to be optimistic. I’m skeptical, to say the least.
FREESTON: While retirees are left to gamble on Wall Street for their health care, one-third of active workers will lose their job by year’s end. Forty-one thousand workers will be all that remain at the company, a 91 percent reduction in the workforce when compared to the late 1970s, when GM employed 450,000 UAW members. With the US government set to take on majority ownership of the company, they will be appointing five members of the new board of directors. Six will roll over from the existing board, one from the union, and one from the Canadian government in return for its approximately $10 billion contribution. Hammer’s optimism lies in the potential for a much more drastic restructuring being implemented by the new board of the company.
HAMMER: The elephant in the room that’s not being talked about is the imminent crisis of climate change. And if you take this crisis into account and realize that that’s not a crisis that can be solved some other day, but if you really understand that that’s a crisis that has to be addressed immediately, then we would be talking about refashioning a transportation industry rather than saving a car company. I likened it to the conversion that happened at the beginning of World War II here in the United States. And the voice of the union, who at that time was Walter Reuther, advocated the rapid conversion of the automobile factories into sources of material for the war effort, whether it be tanks, bombers, whatever. And at first the privately owned auto companies were very reluctant to make this shift, and it took a lot of pushing, especially by the UAW, to make this conversion happen. And the conversion was done rapidly in a period of about eight months. We need the same urgency today in converting, especially, these factories that are subject to being closed to produce transportation systems that are more environmentally friendly and reduce our carbon footprint. So by converting into a green industry, a holistic transportation system, etcetera, we could be doing two things at once: we could be resuscitating the communities that are facing devastation now; we could be re-employing the autoworkers who have incredible skills, both in the skilled trades and in production; and we could at the same moment be addressing global warming. And it’s going to take the political will to make that happen, and that political will in part is going to come from workers who are going to have to demand this. And by the way, this car company, General Motors, is still talking about coming out with wonderfully styled cars and trucks. It’s not understanding that it has to be part of a solution of climate change. It’s not there yet, and I don’t see it forthcoming, and certainly the Obama administration hasn’t pushed hard enough to make it realize that we have to go into a different mode.
April 5, 2009
FRITZ HENDERSON, CEO, GENERAL MOTORS: In terms of what we have to do to be successful, David, we need to take the tough actions to restructure our business. But it’s all about capturing the imagination of consumers with great cars and trucks, fantastic styling, winning the consumer back.
FREESTON: So far the government has shown no sign of any intention to implement the vision that Frank and other workers have put forward.
OBAMA: Ultimately, I think that GM is going to be a strong company. And we’re going to be pulling out as soon as the economy recovers and they’ve completed their restructuring.
HAMMER: It’s all been about saving GM the corporation and has been very little about saving GM the workers and the communities. And even if it is successful coming out of this bankruptcy, the workers, the working class as a whole, and the communities are going to experience devastation for a number of years to come. We haven’t even seen what the effects will be of the liquidation of 1,000 dealers or more. We don’t even have an idea of what that’s going to mean, never mind all the workers who have lost their jobs.
FREESTON: The bankruptcy didn’t come as a shock to GM’s top brass, who were preparing themselves weeks in advance.
May 12, 2009
NEWS PRESENTER, BLOOMBERG: Regulatory filings show that six GM executives have sold all of their shares in the company since last Thursday’s earnings report, and that includes vice chairman, Bob Lutz, who sold 81,360 shares at $1.61 each on Friday. North America president Troy Clarke sold 21,380 shares yesterday at $1.45. According to a GM spokesman, the sales came during the window when insider sales are allowed after quarterly earnings reports.
FREESTON: Retiring vice chairman Bob Lutz, seen here promoting a prototype of the Chevy volt on the Dave Letterman show, was publicly praising the GM of the future while privately cashing out of his personal stocks in the company. For GM workers, watching the company fail has shed some light on some glaring inconsistencies.
HAMMER: There’s been less attention paid to the financial arm of GM or the financial company General Motors, which is GMAC. The government has made sure that GMAC wouldn’t fail. And all they had to do there was give GMAC billions of dollars, much like it has these other financial institutions, no questions asked, no problem. And it’s sort of like, okay, we’ve talked about financial institutions being too big to fail, but when it comes to the largest auto company in the world, that doesn’t go into the equation. It’s not a question of whether it’s too big to fail or not. In fact, there’s been some effort for some time to make it fail so that it can be reinvented into a different kind of company. That has not been done with the banking institutions, the financial institutions. They have been left intact. And it really shows the supremacy of finance capital in the United States, that is to say, the supremacy of people that produce nothing over the companies and the manufacturers who produce something.
Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.