Lundstedt’s assertion of financial strength and Volvo’s continued billion-dollar earnings contradict the dishonest argument implicitly advanced by both the company and the UAW over the course of the past three months, namely, that there was simply not enough corporate money to meet workers’ demands and reverse the long-term decline of wages and benefits, and that workers would, in fact, have to accept even further sacrifices.
Volvo Group announces $1.1 billion second-quarter profits, after telling Virginia workers it could not afford wage and benefit improvements
On Tuesday, Sweden-based Volvo Group announced strong profits of over a billion dollars for the second quarter of the year. The earnings report comes shortly after the conclusion of a five-week-long strike at the conglomerate’s New River Valley heavy trucks plant in southwestern Virginia. Last week, the company, with crucial assistance provided by the United Auto Workers union, imposed a six-year contract that substantially raises workers’ health care costs and keeps wage increases for many below inflation, among other concessions.
While the aim of Volvo and the UAW has been to crush opposition through the shutdown of the strike and enforcement of the contract, workers have returned to the plant in an angry and defiant mood, telling the World Socialist Web Site that production has proceeded only haltingly since Monday.
In its earning statement, Volvo reported roughly $1.12 billion (9.7 billion Swedish kronor) in adjusted operating income, a key measure of corporate profit, for April through June. Combined with its first-quarter earnings, the company took in approximately $2.5 billion in profits for the first six months of the year.
The company also reported a second-quarter operating margin of 10.7 percent, near the upper end for the automotive manufacturing industry, albeit down from the first quarter’s high of 12.6 percent.
Although Volvo’s operating income for the quarter grew sizably compared to the amount for the same period last year, nearly tripling, it narrowly missed financial analysts’ projections of 9.84 billion Swedish kronor, sending Volvo’s share price down 2.9 percent for the day.
The response by analysts at some giant banking firms was nevertheless still favorable, with a research note by JP Morgan stating, “Volvo printed a good set of results, slightly below street estimates.”
Revenue also grew substantially, with net sales for the quarter of approximately $10.4 billion, a rise of 43 percent from the same period last year, when taking into account Volvo’s sale of Japan-based UD Trucks. But despite the growth in sales and profit compared to the second quarter of 2020, which was during the still-early stages of the pandemic and widespread economic disruption, the figures remained down in relation to two years ago, when Volvo reported roughly $13.9 billion in sales and $1.7 billion in adjusted operating income.
CEO Martin Lundstedt, in the company’s earnings statement, said that although Volvo faced “short-term challenges,” it is still “maneuvering from a position of strength.”
Lundstedt’s assertion of financial strength and Volvo’s continued billion-dollar earnings contradict the dishonest argument implicitly advanced by both the company and the UAW over the course of the past three months, namely, that there was simply not enough corporate money to meet workers’ demands and reverse the long-term decline of wages and benefits, and that workers would, in fact, have to accept even further sacrifices.
Commenting on Volvo’s profit report, a veteran Volvo worker said, “Goes to show you they have plenty of money and could have easily paid us what we were asking. They are looking out for the top investors and piss on the employees.”
In its earnings reports, the company largely sought to pretend as though the strike at New River Valley had never happened, referring only to “substantial production stoppages” due to semi-conductor shortages and other “disturbances in the supply chain.” The strike was referred to explicitly only once during a conference call with investors Tuesday, when an analyst for Goldman Sachs asked what profit margins would have been were it not for the walkout, to which Volvo’s chief financial officer, Jan Ytterberg, gave an evasive answer.
However, the ongoing semi-conductor shortage, which has plagued both the auto industry and other global manufacturers, presents a real problem for Volvo, and was the focus of much of the comments by Lundstedt.
“The global supply chain for semiconductors as well as for other components remains unstable and with low visibility,” Lundstedt said in a statement accompanying the earnings report. “There will be further disruptions and stoppages in both truck production and other parts of the group in the second half of the year.”
CFO Ytterberg told investors during the call that the ongoing shortage of semiconductors and other supply chain challenges means the company will “need to have continued focus on cost discipline and cash cautiousness going forward.” The attacks contained in the recently imposed contract are thus viewed by its executives as only the initial offensive in a broader campaign to restructure its operations, imposing the costs of supply chain shortages and the transition to electric vehicle technologies onto workers.
While such “discipline” is relentlessly imposed on workers, it does not extend to Volvo’s treatment of investors, whom it has handed nearly $6 billion in dividends and payouts this year. Nor does “cash cautiousness” preclude multimillion-dollar pay packages for the company’s executives, in their view, with CEO Martin Lundstedt receiving compensation of around $5 million in 2020.
Volvo has repeatedly sought to reassure investors that it will now attempt to dramatically ramp up production to fulfill its backlog of orders. Lundstedt said that “the short-term priorities in all parts of the organization” are to meet demand “as quick and precise as possible as order books are full” for the rest of the year.
As with other employers, Volvo is seeking to insulate its profits from the impact of the chip shortage by driving down labor costs, containing wages, shifting more health care expenses onto workers, and generally increasing the exploitation of its workforce. These were the primary objectives of each of the pro-company contracts pushed by the UAW, and which workers repeatedly rejected, the first two times by 90 percent.
After workers defeated a third, essentially identical, tentative agreement by nearly two thirds on July 9, the UAW announced that Volvo would move to impose its “last, best and final” proposal the following week. The union proceeded to facilitate this blatant corporate strikebreaking, forcing a revote on the deal one week ago, which the UAW dubiously claimed resulted in ratification by just 17 votes.
Summing up the experience of the struggle, the Volvo Workers Rank-and-File Committee, which led the struggle against Volvo and the UAW’s concessionary demands, wrote in a statement Sunday, “The fight continues. Opposition and anger are inevitably going to reignite as the full reality of this new contract comes to light, and as the company tries to enforce speedup to make up for lost production.”
Workers at Ford’s Rouge complex in Dearborn, Michigan denounce “horrible” conditions in the aftermath of the death of co-worker Khaled Nasser
Khaled Nasser, an electrician at a steel mill at Cleveland Cliff’s Dearborn Works near Detroit, was pronounced dead at the scene Friday morning when he slipped over the guardrail of a catwalk during regular maintenance on a Basic Oxygen Furnace and fell 50 feet to the concrete. He was pronounced dead at the scene. Nasser was 50 years old.
The Dearborn Works, part of Ford’s massive Rouge manufacturing complex, was spun off by the automaker in 1989. Cleveland Cliffs took over the facility after acquiring the previous operator, AK Steel, last year.
Nasser’s identity was initially withheld by the United Auto Workers union and the company, but later released over the weekend in response to the massive outpouring on Facebook of solidarity, sorrow and condolences that followed the announcement of his death. Both he and his family are well known and loved among co-workers and friends in the area. Of Yemeni background, Mr. Nasser’s death is being widely mourned in the large and tightly-knit Arab-American community in Dearborn.
A co-worker’s wife wrote, “This is so sad, my husband said he was a nice guy. He was an electrician at the BOF. Our condolences go out to his family, they are in our thoughts and prayers.”
“Condolences to all the family in Memory of our Brother Steelworker,” added another worker. A friend added, “He was such a good man who loved life, always smiling and always talked about his family. He will be missed.” Hundreds of people added to the stream of deeply felt condolences.
The World Socialist Web Site spoke with electricians who work in the complex about the conditions that led to Mr. Nasser’s death. One had worked in that area before Ford sold it to Severstall and then Cleveland Cliffs/AK Steel. “It’s just horrible,” he said. “Your sight distance is limited.”
A by-product of the BOF process, in which oxygen is forced into hot molten iron converting it into steel, is a dense and blinding smog, he said. “You can’t see the ground below the catwalks, and the railings are not high enough to prevent a fall.” There are no safety cables to tie off to. This is a standard requirement for high hazard areas, but has been ignored by the companies who operate the furnaces, the union and the Occupational Safety and Health Administration inspectors who inevitably visit the facility in the aftermath of a fatality.
Mr. Nasser was a member of UAW Local 600, which issued a perfunctory statement of condolences. But Rouge workers who spoke to the WSWS did not even know if the workers in the steel plant still had a union, because “they are never around and they don’t do anything.”
“Anytime someone dies on the job it’s sad,” added a colleague. “We are upset even if we don’t know the man personally. It was absolutely unnecessary.”
The Rouge blast furnaces began production in May 1920. Hot metal was used to cast engine blocks, cylinder heads, intake and exhaust manifolds for the Model T’s that were assembled at the company’s historic Highland Park plant.
By 1927 the Rouge complex had grown into the largest factory in the world at the time. It included 93 structures, 90 miles of railroad tracks, 27 miles of conveyors, 53,000 machine tools and 75,000 employees. The feverish industrial expansion which had begun at the outset of World War I would continue until the end of World War II, when the complex employed more than 100,000 workers.
Today, after decades of layoffs, Rouge is a shadow of the massive industrial complex it once was. The workforce now consists of only 6,000 workers.
The pro-corporate website www.fundinguniverse.com describes the process by which the company introduced pay cuts, fob cuts and the erosion of safety and other concessions at the steel plant:
“In the summer of 1982, a consortium of Japanese companies under the leadership of Nippon Kokan (NKK) began negotiations with Ford for the purchase of Rouge Steel ... Talks between Ford and NKK collapsed in 1983, however, because the Japanese wanted to reduce Rouge’s labor costs. Workers at Rouge Steel—organized under the UAW rather than the U.S. Steelworkers because of Rouge Steel’s origin within Ford Motor—maintained an hourly rate of pay almost $5 higher than the U.S. industry standard.
“Following the failed talks with NKK, officials at UAW Local 600 began to negotiate with Ford over proposed wage reductions at Rouge Steel,” the pro-company analysts continue. “Philip Caldwell [then-president of Ford] had announced that Ford Motor was suffering its worst economic downturn since the Great Depression: in the four years preceding 1983, Ford had lost $2.1 billion and had eliminated 67,000 workers from a workforce of 158,000. Clearly, operations at the Rouge had to change, and meetings between Caldwell and UAW Local 600 president Michael Rinaldi in the summer of 1983 resulted in wage and benefit reductions for Rouge Steel workers.”
The UAW has long since given up defending safe working conditions. On the contrary, the joint corporate/union safety committees which were initiated during the Chrysler bailout in the late 1970’s and subsequently spread throughout the industry became a model across all industries for transforming the union into a corporatist police force for company management on the shop floor.
No comments:
Post a Comment