Ownership but no control

Get your head round this one. Members of the United Auto Workers of America (UAW) are voting today on a deal which would give them majority ownership of Chrysler, one of the big three US-based global car makers. But don’t get the wrong idea – the corporation is not throwing in the towel and handing control to its workforce.

Far from it. In fact, the employers, with the insistence of the Obama administration and the connivance of a compliant, supine union UAW leadership, have devised a new way of getting workers to cut their own throats on the grounds that bankruptcy would be worse.

Some 55% of shares in Chrysler, the world’s fourth largest seller of cars, are to be handed over to the UAW. Another 35% are to be given to the Italian car maker Fiat.

The union leadership has agreed to reduce health and pension benefits and abandon agreed pay deals. In exchange for what, exactly? A single representative on the board alongside directors appointed by the US government and Fiat.

Since the company is on the brink of bankruptcy, haemorrhaging sales and profits, along with most of the other car makers in the world, the workers can expect to be left prisoners of a pretty sick loss-making baby. Fiat isn’t handing over any cash for its minority holding, but is offering access to its new productivity-enhancing small car technology as a way of breaking into the US market.

So the workers will be majority owners of company that’s taking on investment that will be used to intensify the rate of their own exploitation. Nice. No wonder Chrysler said that it "commends the UAW's leadership for their endless determination and perseverance in reaching this tentative agreement, especially during these unprecedented economic circumstances that plague the automotive industry".

Chrysler has a debt of $6.9 billion but Obama has cooked up a deal. He’s swapping the otherwise worthless debt for $2 billion of taxpayers’ money in cash, which he’s giving to JPMorgan Chase, Goldman Sachs, Morgan Stanley and Citigroup who between them hold 70% of the total.

In Canada, the auto workers union has already agreed a similar deal, with leaders telling members that there was no alternative. Hourly wages of Chrysler's 8,000 unionised Canadian workers will be cut by about C$19 an hour. The agreement includes the elimination of the C$1,700 Christmas bonus, a reduction in health care benefits and flexible working.

The North American car workers’ unions were forged in militant, pitched battles with employers like Fords. Today’s leaders betray not only those traditions but the interests of their members. Their surrender to the employers sounds the death knell for the UAW in its present form. According to Gary Chaison, a professor of labour relations at Clark University in Worcester, Massachusetts, said: "This is the eclipse of the UAW. It's going to be a shadow of what it once was, I'm afraid.”

A similar process is under way in Britain, where union leaders have negotiated wage cuts, unemployment and short-time working. None of these measures will, of course, prevent the global capitalist downturn from turning into a full-blown economic slump that, if left to run its course, will destroy hundreds of millions of jobs and futures worldwide.

Ultimately, corporations like Chrysler and Fiat need the workforce if they are to make and sell cars for profit. But in handing over most of the shares to employees, the company is in practice saying that the workforce doesn’t need shareholders. This is the best case yet for a complete takeover of car production by workers worldwide and a new system of democratic ownership and control – and it’s been made by the employers! Creating a movement with leaders who can inspire such a leap in theory and practice is the key to a future beyond capitalism.

Gerry Gold
Economics editor