The Deal That Saved Detroit (and Banned Strikes) 

Laura Flanders

The Nation
February 2, 2012 

http://www.thenation.com/blog/166031/deal-saved-detroit-and-banned-strikes

President Obama is, as AP puts it, "wearing his
decision to rescue General Motors and Chrysler three
years ago as a badge of honor" on his re-election
campaign. It saved jobs and working communities,
brought the US auto industry back from the brink. In
January, US auto sales were up 11 percent over a year
ago, and a proud president was cooing to the college
students of Ann Arbor, Michigan:

"The American auto industry was on the verge of
collapse and some politicians were willing to let it
just die. We said no.... We believe in the workers of
this state."

You're going to be hearing a lot about the deal that
saved Detroit in the next few months, not least because
likely opponent Mitt Romney was against it. Then
Governor Romney wrote in the fall of 2008 that if the
big three auto companies received a bailout, "we can
kiss the American auto industry goodbye." Romney bad;
Obama good; Big Three back. The Deal with Detroit is
gold dust for Democrats. Reality is a bit more
complicated.

For one thing, it was Republican President Bush, not
the Democrats' Barack Obama, who originally decided not
to stand by as the auto makers died. The deal saved an
industry--US cars are still being made in the US--but it
came at such a high price that in many ways it's a
whole new industry. The American auto industry that
built middle-class lives as well as cars--that one we
kissed good-bye, and it may be a while before we see it
back again.

To review: in the fall of 2008, President George W.
Bush announced a $17 billion loan, split into $13.4
billion at once and another $4 billion in February. The
billions for Detroit were tied tight with all the
string that had not been attached to the trillions
simply given away to Wall Street. The Treasury never
forced the financial industry to hand over majority
shareholder control in exchange for access to the
Troubled Asset Relief Program. No CEO of AIG or Bank of
America or Well Fargo had to shrink a wage or skimp on
a pension. (Far from it, the Government Accountability
Office found that the "standard agreement between
Treasury and the participating institutions does not
require that these institutions track or report how
they plan to use, or do use, their capital
investments.")

Big bucks for the Big Three, by contrast, came with all
sorts of ties--mostly around the neck of the United Auto
Workers and their members. When the deal was finally
worked out, under Obama's "Car Tsar" (a man with zero
manufacturing experience but oodles of admiration from
NY developer Steve Rattner and Lawrence Summers), the
worker's concessions amounted to a slash in all-in
labor costs from around $76 per worker-hour in 2006 to
just over $50. Abandoning decades of principle, the UAW
approved a two-tier wage structure in which new hires
start at $14 per hour--roughly half the pay and benefits
of more senior line workers. To top things off,
Treasury demanded--just one more teeny thing--a strike
ban. The piece de no resistance! Under the government's
agreement with the companies, any strike by workers is
grounds for forfeiting the loan.

The timing couldn't be more poignant. Seventy-five
years ago, in the winter of 1936-37, it was a strike at
General Motors that won the first victory for the
1-year-old UAW, and won for organized labor the respect
that made it possible to negotiate for those
middle-class automakers' lives. Late on December 30,
1936, autoworkers in Flint occupied a General Motors
plant, launching a strike that, within less than a
month, involved 135,000 workers in thirty-five cities
across the country. When the union called for support
in early January, 150,000 people showed up at Detroit's
Cadillac Square in a show of solidarity.

The Sit-Down Strike, as it came to be known, ended on
February 11, 1937, with a defeat for GM, but for
forty-four days the company used every tactic to end
the occupation. (Take courage, Occupy Wall Street!) In
the dead of winter, owners turned off the heat to the
occupied plants. Knowing the strikers depended on
"solidarity kitchens," they cut off food delivery. When
police moved in on one of the plants in Flint in
January, workers pelted officers with engine parts and
police fired back tear gas and bullets, sending
twenty-eight injured workers to the hospital. Women
formed an Emergency Women's Brigade. The next time
police threatened to storm the plant gates, they found
their way blocked by women locking arms--the
indominatble "Rolling Pin Army."

The battles of seventy-five years ago forced GM
negotiators to recognize the union as the bargaining
agent for the workers, and for a while at least,
factory owners across the country negotiated in fear of
a sit-down. Seventy-five years later Obama and the
Democrats are cheerleading the deal that saved
Detroit--and did away with the right to strike, at least
temporarily. Now US auto sales are on the rise and with
unemployment what it is, the companies say there's a
line around the block for those $14-per-hour
entry-level jobs.

"On the plus side we still have US-based auto
production," says Ed Ott, former chair of the New York
Central Labor Council. What are union rights going to
be like going forward? "The unions say we'll build back
up. Let's hope they're right."

A more likely scenario is $14-per-hour auto jobs are
here to stay. If wages in the United States get low
enough, they may even draw jobs back from where they've
gone. As long as no one is looking to raise their taxes
employers will see that offshore wages right here save
them the trouble and cost of offshoring. What's it mean
for those workers' families? Unless their low-wage
lives are subsidized by more taxpayer dollars in the
form of free or low-cost public services, they're in
for pretty lean years. UAW President Bob King (praised
for his "flexibility") is hopeful union strength will
return. Heaven knows how.

Lucky us. We missed it the first time. Now, it looks as
if we get to experience the Gilded Age all over
again--and in another half century or so, some fed up
autoworker may decide to sit down and occupy a factory.

___________________________________________

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