Continuing the general trend of the decline in Ontario’s manufacturing sector, General Motors recently announced that nearly 1,000 jobs will be cut in Oshawa in order to relocate Chevrolet Camaro production to Lansing, Michigan. This decision was concluded in 2012, a mere week after the implementation of anti-union “right to work” legislation in that state. Camaro assembly will cease at the Durham Region plant on November 20 this year, decreasing the number of types of vehicles being manufactured in Oshawa from six to five, and the number of shifts at the plant from four to three.
GM Canada president Stephen Carlisle said in a statement that the company will try to “avoid layoffs” by offering “retirement incentives”, which will be provided through buyout proposals for 60 per cent of the 3,600 Oshawa workers who are approaching retirement. Rather than fight against what in reality amounts to job losses, union leaders are encouraging these “incentives” and are even arguing that by hiring lower paid workers under the two-tier wage system Canadian plants can be kept “competitive”.
The president of GM has also maintained that no additional investment decisions will be reached for Oshawa until 2016, when negotiations with Unifor are scheduled to conclude. GM wants the workers to understand that investment in Canadian production will be tied directly to lowering wages and working conditions. Union leaders too have effectively adopted this position and are making the bosses’ arguments for them. With the role the union leadership has been playing, their position during collective bargaining will be bound to the investment decisions of GM, and they will be left to preside over the erosion of working conditions and further job losses. GM management will use the situation to continue driving wages and working conditions down all in the name of keeping Canadian plants “competitive” in relation to plants in the US and Mexico. This will mean a continuation of the downward spiral in Ontario’s auto industry and manufacturing in general, and will only result in further losses for the working class.
In the end, there is still no guarantee for the workers that jobs won’t be lost and production moved south anyway. The automakers have secured huge bailout packages from governments and major concessions from the unions, all in the name of keeping production rolling at Canadian plants. They line their pockets with generous handouts of taxpayer dollars and secure deep concessions from the workers and have still moved plants and assembly lines south as they chase cheaper wages, a softer union presence, and anti-union legislation.
To add insult to injury, along with the recent job losses announced in relation to the Camaro, the production of the Impala Sedan and the Equinox Crossover on the Oshawa plant’s consolidated assembly line is also planned to close next year, which union leaders fear will lead to the loss of more than 2,000 jobs. This is coming in the aftermath of major job losses after the termination of the Windsor plant in 2010 and the 2009 truck plant closure. All this is happening despite the government bailout for GM totaling more than $10 billion in 2009, while the automaker has accumulated massive profits of $2.18 billion in North America in 2014, and GM’s executives have raked in millions.
On top of all of this, the federal government just recently sold its remaining 73.4 million shares in GM to Goldmann Sachs. According to the Globe and Mail’s estimates, the government lost approximately $3.5 billion from the sale, as it made back only $10.2 billion of the $13.7 billion invested by both the Ontario and federal governments through the bailout of GM and Chrysler in 2009. The sale was obviously a cynical political move by the Harper Conservatives, who have used the proceeds to balance the budget, in the run-up to this year’s federal election. The Ontario government is also selling its shares for $1.1 billion. With GM closing down plants and taking thousands of jobs out of the economy, many people are starting to wonder what the point of bailing them out was. What could have been accomplished with the massive amounts of money that were gambled on this corporation?
We’ve been told now for decades that there is no money for public services, schools and hospitals. Now we can all see that when needed there is suddenly plenty of money for corporate welfare. Governments have allowed auto corporations to line their pockets with taxpayer dollars in the form of bailouts, subsidies and tax breaks, in the vain hope that this would spur on investment and job creation. But in the main, the capitalists are not interested in investing to create jobs. They seek profits from squeezing the working class. After cashing in on the deals with governments and securing concessions from the workers, GM has closed plants and shut down operations, and in the end people have still been put out of work, all in the name of “competitiveness” and the pursuit of immediate profits.
GM has been technically recovering from the 2008 financial meltdown. The company has been accumulating billions in profits while executives richly reward themselves. But it is the workers who are responsible for creating these profits. And it is the workers who are receiving the short end of the proverbial stick when their jobs are relocated in order to save on labour costs. This is a graphic reflection of the decay of capitalism, in which the capitalists are no longer capable of, nor concerned with, developing and accelerating the productive forces of society, but instead are seeking to amass profits at any and all costs—despite the economic and social toll of removing or outsourcing jobs, which devastates families, communities and economies. Over 300,000 manufacturing jobs have been lost since 2002 and real manufacturing output has fallen by 20 per cent over that period. Investment in manufacturing out of total business investment has fallen from 14% to 8% over that same period with next to no growth in productivity.
A study which Unifor produced on the Oshawa plant concluded that the economic ramifications of shutting down the plant would be disastrous, diminishing the province’s GDP by upwards of $5.7 billion for one to two years afterwards, with approximately $3.9 billion lost annually over three years. The study also noted that anticipated job cuts would impact the economy not only with the 4,100 positions at GM, but also with up to 24,000 jobs lost in businesses and at feeder plants throughout Ontario once the assembly line shut down, while between 30,000 and 33,000 jobs could be lost in the next two years. This would severely impact both the local Oshawa and Canadian economy, with services cut and taxes raised while wages would drop. Meanwhile, provincial tax revenue would decline by approximately $1.6 billion and federal tax revenue by nearly $2 billion over three years. As a direct result of the plant closure, the amalgamated provincial and federal deficit would rise annually by $1 billion.
It was these types of numbers that led the Tories to declare that GM was “too big to fail” in the first place. Flying blind and faced with a massive bailout package in the United States, the federal and Ontario governments rushed to save GM and Chrysler during the 2008-2009 financial crisis in order to prevent their complete collapse. If the closure of just one plant would be as devastating to the community and the province as the above figures show, the closure of all the automakers’ plants in Canada would have a massive knock-on effect and would be catastrophic.
The bailout, however, has not removed the threat of catastrophe for Ontario’s auto manufacturing sector. It was but a stop-gap measure to prevent the immediate implosion of the automakers. While the immediate collapse of the automakers was averted, the threat still remains as the Canadian economy, along with the world economy as a whole, steers headlong into recession and crisis. Moreover, the GM layoffs demonstrate that Ontario manufacturing, once the powerhouse of the Canadian economy, continues its steady march on a downward spiral.
The catastrophe looming on the horizon now arrives piecemeal, with each plant closure and each job lost. In the end, the bailout could only mean increased austerity. The bailouts for the auto manufacturers and banks increased public indebtedness, and this in turn meant further austerity and cuts in living standards as the ruling class makes working people pay for the crisis. The working class now continues to pay for the bailout in the form of job losses and plant closures, exasperating the economic crisis and driving austerity further.
Union leaders mistakenly saw the bailout as long-term fix, and saw the government as an ally. They believed that government involvement would bring stability and solve the problems of the industry. But the government bailout could not reverse the long-term trends in the industry, and could never lead to a return of stable and unionized manufacturing jobs. Unifor president Jerry Dias recently lamented that, “the selling of shares, both by the province and the feds, certainly took away bargaining power,” adding that, “shareholders have rights, shareholders have power, and they just gave it away, which to me was completely foolish. Before they sold any of their shares, they should have solidified General Motors’ footprint in Canada. But they were all about balancing the budget.” Pinning the interests of the workers on the bargaining power of government shareholders has left the union leaders caught with their pants down, and left the workers on the defensive and open to attacks on jobs, wages, and working conditions.
Despite the illusions of the union leadership, the bailout could never turn the Ontario auto manufacturing sector around for the long term, and indeed was never intended too. From the point of view of the ruling class, there is no long-term perspective or plan. They lurch from one crisis to the next. The idea all along was that the working class would have to pay for the bailout and the crisis. The bosses got everything out of those deals and the workers got nothing. Bailout or not, the end result has been the same - continued job losses and attacks on wages and conditions.
Upon his election as president of Unifor, Jerry Dias claimed that the new union would “stop playing defence” and begin “setting the agenda” through “challenging the status quo,” thereby “changing the discussion about workers and how they have to somehow accept less.” Nonetheless, Unifor’s response to these closures and lost jobs has been tepid and meek and the union leadership has actually accepted the auto-manufacturer's dialogue of making workers accept less.
The union leadership, with no perspective beyond a declining capitalism, has joined in with GM management in this race to the bottom. Dias has now adopted the same language as the bosses, the language of keeping plants “competitive”. We now even witness union tops making these arguments about being “competitive” for the bosses, pleading with the bourgeois to save money and remain competitive by taking full advantage of the two-tier wage system - a system the union leaders should be leading the fight against, not encouraging. But rather than fight against the two-tier wage system, union leaders are now arguing for a lowering of wages.
A good example of this is the fact that, in response to the threat of shutting down the factory, the union leadership in agreement with GM merely offered a voluntary premature retirement package to the workers. This move to push out the older workers is the natural result of the two-tiered wage system conceded by the Canadian Autoworker's Union leadership in contract negotiations years ago. This system has meant that newer workers are hired at significantly lower wages. In the spirit of making the Canadian labour market more “competitive,” union leaders have been bargaining away workers’ wages and benefits for years. Most recently, the president of Unifor local 222, Ron Svajlenko, argued that GM should invest in Ontario because they could save $300 million over six years by hiring entry level workers, who are to be paid at only 60% of the regular hourly rate. Far from “setting the agenda”, Dias and other union leaders have accepted the constraints of the capitalist system and are therefore forced to accept continual retreats on all fronts, to the detriment of union members and the working class as a whole.
The relocation and outsourcing of auto manufacturing jobs to American jurisdictions or states with right-to-work laws – legislation which makes union membership and the payment of union fees as an employment requirement completely voluntary – is becoming a growing trend. For instance, Hyundai, Kia, Toyota and BMW all opened auto manufacturing plants in states hostile to unions. Automobile corporations who relocate in right-to-work jurisdictions can pay workers less, use temporary employees, and avoid giving workers any considerable benefits. The U.S. based advocacy group National Employment Law Project (NELP) published a report on the correlation between the growth of jobs and declining wages in the manufacturing sector, stating that “By the 1990s, foreign automakers were expanding their operations in the United States, especially in southern “right to work” states, to take advantage of what had now become relatively cheap U.S. labor and to avoid rising shipping costs.” The NELP study also noted that with capital investment of up to $38 billion since 2009, 350,000 jobs have been generated at automobile assembly and parts plants, while “In auto assembly, real wages fell by 21 percent,” between 2003 and 2013. In 2003, a motor vehicle manufacturing job paid $31.45 an hour, but by 2013 that wage had fallen to $24.83. The NELP report also highlighted that autoworkers’ median wages are declining much quicker than manufacturing workers overall, and, “Real monthly earnings are declining for all autoworkers, not just new hires.” Furthermore, the study observed how automobile corporations are relying more on staffing agencies to fill positions which feature lower wages and fewer benefits, with scarce prospects to obtain permanent employment. Additionally, union membership dropped significantly in Michigan in 2014 to 14.5% from 16.3%, a drop of 48,000 workers who are no longer unionized.
What these numbers show is that investment goes to the market where the capitalists will have to pay the least for wages and benefits. If union leaders accept capitalism, they are forced to accept lower wages and benefits to compete with right-to-work states. This is why the union movement in the industrial sector has been in such stark decline in the past period. It is a race to the bottom. If union leaders are genuine about protecting good jobs, they need to reject capitalism and all of the ills that come with it.
The reality is that none of the measures adopted by the government, the capitalists, or the union leadership can overcome the central contradiction that is the fundamental cause of the crisis in Ontario manufacturing. The crisis of capitalism is at root a crisis of overproduction. Under the anarchy of the capitalism, too many goods being produced and markets are saturated. Given this saturation and seeing no prospects for short-term profit in investment and the expansion of production, the capitalists seek their profits in other places, such as privatization and attacks on wages and working conditions. But each measure designed to increase profitability and “competitiveness” only shrinks the market further, exacerbating the crisis of overproduction. Each plant closure, each job loss and every attack on wages and conditions only serves to shrink the market further. This was summed up by The Huffington Post in relation to the crisis in Canadian manufacturing, “Other knee-jerk reactions [to the crisis of manufacturing and job losses], such as mass reductions in wages, ought to be avoided too. After all, good paying jobs are what allow people to pay the rent, buy a home and put food on the table. Once those jobs fade, people suffer and economies shrink.”
Under the logic of capitalism and competition, particularly under the pressure of the crisis, auto manufacturing finds itself on a downward spiral - a race to the bottom. Overproduction forces the capitalist to pursue immediate profits in plant closures, job losses and attacks on wages and conditions, which in turn only shrink the market and increase the general crisis of overproduction, leading to further plant closure and attacks on workers. The logical end result of “keeping Canadian plants competitive” is the total disappearance of unionized manufacturing jobs and the development of a low-wage economy. This will cause government revenue to decline as well, which can only result in a further deterioration of infrastructure, social services, education, health and housing, and will mean further economic decline and social disintegration. Capitalism cannot take society forward but can only lead us down a road of steep decline.
The bottom line is that we simply cannot trust the capitalists to restart production and protect jobs. In this regard, we can only trust ourselves – the working class. As workers, we have a direct material interest in ensuring our own livelihoods and well-being, and maintaining vibrant communities to inhabit. The private investors, stakeholders and owners of private property, have simply no interest in the general welfare of the working class, and instead are preoccupied with their top priority: the accumulation of profits.
Dias and Unifor need to set a strong example by fighting back against job losses and deteriorating conditions for workers. But this can't be done if the leaders accept the dictates of the capitalist market. Canada’s largest private sector union needs to start fighting for those it claims to represent – the working class – instead of collaborating with the bosses and their political representatives. Unifor, together with the provincial and federal NDP, should facilitate a mass campaign to save not only these jobs, but manufacturing in Ontario as a whole, by demanding the nationalization of GM under democratic workers' control and management. Only a democratically controlled and efficient plan of production can guarantee well-paying and permanent jobs, not only for those already in the manufacturing sector, but as well for those who are faced with the reality of precarious employment.
The capitalists are viewing the situation from an international perspective. The current leaders of the labour movement appear to view the problem from a profoundly narrow outlook. The logic of keeping wages and working conditions “competitive” in Canada means equalizing wages and working conditions in the north and south. From this point of view, this means the transformation of the United States and Canada into low wage economies as wages and working conditions are equalized downwards. The unions and labour leaders should be fighting to defend jobs and working conditions, and leading the fight to improve them. But this fight cannot be maintained within national borders. It cannot be a fight for the status quo, because the status quo is unstable. The status quo is in fact the downward spiral to a low-wage economy. This is the eventual outcome if the union leadership continues to accept the limitations of capitalism. There is no solution to this problem under capitalism. The only way forward, the only way to protect jobs and defend wages and conditions is the struggle for socialism. The logic of being “competitive” pits workers in one country against workers in other countries. By accepting the logic of capitalism, the union leaders are leading a race to the bottom in order to compete with their neighbours. Rather than argue, in the name of being “competitive” for a lowering of wages and erosion of working conditions in Canada in order to compete with workers to the south, the union leaders should be arguing for a common struggle of all workers; for an increase in wages and improvements in conditions for workers in Canada, the United States and Mexico. This cannot and will not be achieved under capitalism. Reversing the downward spiral in manufacturing and fighting to protect jobs and wages means the fight for socialism.