Manufacturing a crisis

Organized labour and the Canadian auto industry


General Motors’ recent decision to close its Oshawa Truck Plant employing 2,600 workers has highlighted the massive loss of manufacturing jobs in Ontario and much of the rest of Canada in recent months. In the wake of this closure decision, a question has to be asked. Is it accurate to characterize what is taking place a “manufacturing crisis,” in which the auto industry is simply the victim of “market forces”? Or is it actually something more deliberate? The answer to this question has far reaching implications with respect to how organized labour should respond to the exodus of manufacturing jobs from Canada and with respect to the very survival of organized labour as a political force in this country.

Consider, as a cautionary tale, the fate of Michigan’s auto-workers. Downsizing and job losses in Michigan’s massive auto industry beginning in the early 1980s have ravaged the state’s economy, giving Michigan the highest unemployment rate of any state in the U.S. Yet by 2006, Michigan’s “manufacturing capacity utilization rate,” a key measure of productivity, was at a four-year high and was continuing to climb with no corresponding increases in employment. The auto makers used technology, increasingly lean work practices and outsourcing to ramp up production and squeeze more and more work from fewer and fewer workers.

But the situation in Michigan has begun to change again. In the wake of the 2007 United Auto Workers (UAW) contracts signed with the Big Three auto corporations (General Motors, Ford and Chrysler), auto industry analysts have projected that there will be more than 36,000 new job openings at Big Three plants in Michigan over the next three years, though overall employment levels will continue to fall owing to massive buyout offers of the existing workforce. The reason for the new jobs is painfully clear: it is because the UAW capitulated by accepting two-tier contracts and by negotiating retirement and buyout packages to facilitate a mass exodus of the existing workforce in order to replace most of these well-compensated workers with meagrely compensated new hires. These new hires will be paid at half prevailing wages, below the average industrial wage in the U.S. They will receive far fewer benefits. They will get no pensions when they retire, meaning the day is coming when pensions will be non-existent for U.S. autoworkers.

In short, Michigan’s own longstanding “manufacturing crisis” is effectively ending as a direct result of the UAW’s capitulation, thus demonstrating that the exodus of manufacturing jobs from Michigan was not so much the result of a manufacturing crisis as a byproduct of capital’s continuing onslaught against organized labour. Specifically, the exodus of manufacturing jobs stands exposed as an integral part of a corporate strategy to realize a low-wage, economically insecure workforce. The exodus of well-compensated manufacturing jobs had set the stage for the Big Three to extract massive contract concessions from the UAW.

In effect, the Big Three selectively withheld investments of their capital in places like Michigan in order to impose their demands on the UAW, not so unlike the way the UAW membership once withheld their labour through strike action in order to advance their own demands. The Big Three’s plans to hire more than 36,000 workers over the next three years accordingly are clear signs that they succeeded in getting what they wanted. The message is clear: the more concessions unions make and the bigger those concessions are, the fewer net job losses North American auto workers will face.

What is now in crisis in Michigan is not the manufacturing sector but the once-mighty UAW. Indeed, the UAW leadership is actively contributing to this crisis by demonstrating that they have no inclination to fight the rollbacks being imposed on workers. Consequently, the UAW rank and file are being left to suffer the consequences while they watch everything they achieved over the last 70 years be annihilated.

This is a sobering precedent for Canadian auto and other manufacturing workers concerned about the exodus of Canadian manufacturing jobs, accentuated by the historic decline of the U.S. dollar, ongoing job losses inside our workplaces due to relentless corporate restructuring, and union contracts containing more and more concessions. It should lead us to fundamentally question where organized labour is headed.

Such developments point clearly to the need to reign in the mobility of capital. They particularly point to the need to compel the Canadian government to abrogate the North American Free Trade Agreement because it directly facilitates aggressive corporate restructuring. They also point to the clear need to fight for much stronger plant closure legislation and other labour law changes conducive to rebuilding union power and successfully resisting the dismantling of workers’ rights. Without such measures, we can expect to experience the kind of devastation so brutally experienced by workers in Michigan.

Bruce Allen is a dissident CAW activist, local union leader, author and employee of General Motors. He has been active in the labour movement and the left since 1970.


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