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Ford and GM Devastate Workers by Slashing Jobs and Closing Plants

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Earlier this week, Ford Motor Company, the nation’s second-largest automaker, announced plans to slash up to 30,000 jobs and close fourteen plants in North America over the next six years. This comes on the heels of similar GM cuts, causing massive job losses in the auto industry nationwide. We speak with UC Berkeley professor Harley Shaiken, who has done research and policy work examining issues of technology, labor, and globalization. [includes rush transcript]

Over the past five years, the Big Three American automakers, Chrysler, GM and Ford, have cut 140,000 jobs. Just last November, GM said it would slash 30,000 jobs and close up to 12 factories. And more cuts at GM might be coming. General Motors reported a loss of $8.6 billion in 2005, its largest since 1992.

Ford’s jobs cuts are part of what it calls a “restructuring” plan to reverse a $1.6 billion loss in its home market last year. But Ford actually announced an overall profit of $2 billion for 2005. The cuts make up 20 percent of Ford’s North American work force.

Thousands of workers who have spent their entire adult lives at Ford now face unemployment with bleak job prospects. One worker interviewed for the Detroit News said he had no idea what he will do next with “everybody leaving and all the contract people out of work”. At the end of last year, the Bureau of Labor Statistics reported that Detroit had the highest unemployment rate of any urban area in the nation except New Orleans.

The United Auto Workers described the cuts as “extremely disappointing and devastating news for the many thousands of hard-working men and women who have devoted their lives to Ford.”

  • Harley Shaiken, a Professor of Education and Geography and Chair of the Center for Latin American Studies at U.C. Berkeley. His research and policy work examines issues of technology, labor, and globalization.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: To talk about these massive job losses, we’re joined by Harley Shaiken. He’s Professor of Education and Geography and Chair of the Center for Latin American Studies at U.C. Berkeley. His research and policy work examines issues of economic integration, technology, labor and globalization. Welcome to Democracy Now!


AMY GOODMAN: It’s good to have you with us. Can you talk about what’s happened, first at Ford?

HARLEY SHAIKEN: It is devastating. We’re looking at major layoffs that really probably amount to more than one out of every three hourly workers at Ford. It’s across the board. 14 plants are going to be closed. So the impact on the workers is obviously traumatic, but it has an equally devastating impact on the communities. The St. Louis plant, for example, is a major employer; Wixom, Michigan; or Atlanta. It’s a very, very serious path of social devastation that’s coming out of this economic decision.

AMY GOODMAN: Was it avoidable?

HARLEY SHAIKEN: Well, they didn’t have a quick beginning. Ford has lost market share for each of the last ten years. A decade ago, it had about 25% of the market. Today, it has about 17%. But that’s not the same as saying that it wasn’t avoidable. Ford management pursued very narrowly designed strategies. They kept reinventing the imaginal line. Whatever had worked in the past, they seized on for the future. The net result is: they were making a product that people didn’t want to buy, and a product they couldn’t sell at a profitable price.

AMY GOODMAN: SUVs, for example.

HARLEY SHAIKEN: For example, yes. SUVs was a decision where Ford made a lot of money for a while, but really neglected the broad geopolitical undercurrents of gas prices, fuel prices going way up, which all Americans feel the moment they go to fill up a car. So the net result is: Ford has redesigned SUVs; Toyota has the Prius. So that has created part of the problem.

But it isn’t just poor managerial decision-making over a protracted period. It’s also the structure of government policies in the U.S. that penalize companies like Ford that have an older workforce and provide health and retirement benefits. That’s also an important part of the picture here.

AMY GOODMAN: Would you say, Professor Shaiken, that the war was bad for Ford — is bad for Ford?

HARLEY SHAIKEN: Well, the war was devastating in that it jacked fuel prices up, and that hit at the core of the kinds of vehicles that Ford was producing and selling.

AMY GOODMAN: So is corporate America against the occupation of the war against Iraq?

HARLEY SHAIKEN: Well, corporate America hasn’t taken a position on that one way or another. But I suspect there are Ford executives that are really feeling the pinch and are looking at this with a more critical eye. That’s hardly been the position of the Ford Motor Company. It hasn’t really had a position one way or another. But there’s little question the fuel prices have been a factor in the current crisis.

AMY GOODMAN: And what about General Motors? The former G.M. lobbyist, Andrew Card, is actually the chief of staff for President Bush.

HARLEY SHAIKEN: G.M. has very similar problems. In some ways, it’s better off than Ford. But in other ways, it’s even worse off than Ford. In both cases, the real potential victims are men and women who have spent a lifetime building these companies. Two of the key issues here are health care costs and pension costs. They’re both vital to creating a middle class, to creating some sense of security. So in my view, the issue isn’t getting rid of health care insurance and pensions, but rather, insuring that they are paid for the way every other industrial country in the world pays for them; that is, through federal policies, through national health insurance, for example.

To give you an idea of the scale of this, we look at just at health insurance costs. In its U.S. operations last year, Ford lost over $2 billion. For every car it produced, it had an average cost of $1,200 for health insurance. That’s more than it pays for steel in a car. Honda pays $450 per vehicle for health insurance. The difference is a much younger workforce. The average age of Ford workers is pushing or a little above 50. So if Ford had Honda’s health care costs, then it would have made money in North America last year. That’s the scale of the difference. So unless and until we have national policies that address health care, we’re going to have very uncompetitive manufacturing firms.

AMY GOODMAN: Do you see corporate America pushing for this?

HARLEY SHAIKEN: Well, there’s pushing and there’s pushing. Corporate America has been so hard-hit, particularly in the auto industry, that Ford executives, G.M. executives, have essentially said, “Well, you know what? We need better health insurance. Federal government ought to do something.” But it doesn’t yet have the urgency, and I suspect that many of these executives are prisoners of their own ideology. They don’t want to advocate a greater federal role on health insurance, where they clearly know it’s necessary, because they’re worried about a greater federal role on fuel standards; that is, you know, mileage, higher mileage for their vehicles. But that contradiction — they are pushing for this now. They are working with the UAW for some reform of health insurance, but they’re not doing it with the enthusiasm and the energy that say they would battle California fuel standards or California emissions standards.

AMY GOODMAN: What about, Professor Shaiken, the role of the union, the role of the United Auto Workers?

HARLEY SHAIKEN: Well, it’s been a very important role. Now, a lot of blame has been heaped on the union and bloated contracts. But I think that’s very misplaced. What’s missing in the analysis is the relatively good contracts, among the best industrial contracts, that the UAW has negotiated over recent years really have reflected very high productivity in the industry. Honda or Toyota makes a large profit paying comparable wages and benefits, although with a younger workforce, as the UAW plants. So it isn’t the union’s contracts that have been the problem — not that the union hasn’t made some mistakes — but rather, the kind of overall decisions that the companies have made and the federal policies that have been so inadequate in the area of pensions and health care.

AMY GOODMAN: Can you fit this into a larger picture around globalization? The World Social Forum just wrapped up in Mali in Africa and is going on right now in Venezuela. Next, it will be in Pakistan, the World Economic Forum in Davos, in Switzerland. How does this fit into the globalization picture?

HARLEY SHAIKEN: Very directly and very poorly. What we’re looking at today is a focus on health care costs and pensions, because that’s the most immediate cost. Longer term, the issue of globalization could prove even more devastating to employment in this industry.

There’s a new reality to the global economy. In emerging economies, you can have comparable productivity and quality to the most advanced industrial countries at a fraction of the wages. In my view, the issue isn’t jobs or development for emerging economies. That’s absolutely vital, clearly, to the people of these countries, and it benefits workers in the U.S. But when you have a situation where wages are held down, because of a lack of labor rights, in an emerging economy, then what you have is not high productivity prosperity, which the UAW and other unions have been able to forge over time in the U.S., but what you have is high productivity poverty. And those wages they set in China or elsewhere become the global standard.

Today, China exports about $4 billion or $5 billion worth of auto parts. Within five years, that could be over $20 billion. So the impact of globalization, already large in this industry, one of the pioneers, is likely to get a lot worse, and until this issue of labor standards is addressed, one way or another, we’re going to have, I think, even greater problems in terms of employment within the industry.

AMY GOODMAN: And what about what’s happening in Latin America today? One government after another, the latest inauguration of the President of Chile, Michelle Bachelet; of course, you have Hugo Chavez in Venezuela; Lula in Brazil; how does this play into, and is there a change in the approach to globalization?

HARLEY SHAIKEN: There is not yet a major change in the approach to globalization in Latin America, but there is something that I think is coming out of this generation of new governments. There’s two dimensions that are really important: number one, the democratic governments; number two, they have a broader social vision. That said, they are very much constrained by the rules of the game that have been defined by the more powerful economies.

Latin America today, the biggest challenge to that right now is probably coming out of Brazil. The Lula government wants to establish a more independent trade policy, a more independent approach to economic integration, and wants to lead the Latin American countries, in terms of dealing with the U.S. U.S. policy has been focused on dealing with each of the Latin American countries one at a time, for obvious reasons. There’s a vast asymmetry of power. So, there isn’t an immediate change on globalization, but there is clearly different — a different approach that many Latin American countries are beginning to examine quite seriously.

AMY GOODMAN: Well, Harley Shaiken, I want to thank you very much for being with us. Harley Shaiken is a professor at the University of California, Berkeley. Thank you.


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