Despite COVID and chip shortages, US auto companies enjoyed a profit surge. Ford recorded $17.9 billion in after-tax profits, following a loss in 2020. GM reported $14.3 billion in 2021 earnings.
Stellantis announces hundreds more job cuts at Belvidere, Illinois plant, as layoffs continue to roil global auto industry
Are you an autoworker? Contact us and tell us how the latest round of layoffs are impacting you. Comments will be published anonymously.
Stellantis NV, the world’s fourth-largest automaker, is planning to cut hundreds more jobs at its Belvidere assembly plant in northern Illinois, according to a letter sent to workers by United Auto Workers Local 1268 on March 25.
A Stellantis spokesman told local news station WREX that the company was “making additional staffing reductions to operate the plant in a more sustainable manner.” The cuts will be achieved through a combination of early retirement packages and involuntary layoffs, the company said.
The Belvidere factory, which produces the Jeep Cherokee SUV, has already suffered thousands of layoffs over the past three years, with five rounds of job cuts in the last 13 months alone. The plant is currently operating with 1,812 hourly workers on just one shift. As recently as 2019, the plant, then operated by Stellantis’ predecessor Fiat Chrysler, had more than 5,000 workers across three shifts.
Stellantis is seeking to reduce employment at Belvidere to “603 non-skilled and 199 skilled trades employees,” the UAW local wrote in its March 25 letter to workers. The company was planning to issue WARN layoff notices to 579 employees beginning March 28, the letter stated, raising the question of whether more cuts are planned later this year to reach the company’s targeted headcount. The layoffs will impact those even with decades of seniority at the plant, as far back as 1994.
Beyond Stellantis, the layoffs will almost certainly cascade throughout the local supply chain, threatening jobs at plants operated by parts producers such as Magna, Syncreon, and Android Industries, as well as others.
Seeking to chloroform workers and block a struggle in defense of jobs, UAW Local 1268 wrote, “We don’t believe they will be able to make all these cuts, don’t make any irrational decisions at this point. We believe this is completely unobtainable and we will know more in the near future.”
Local 1268 officials said they were scheduled to meet in Detroit last week with the UAW vice president for Stellantis, Cindy Estrada, to discuss the layoffs. Such talks, however, have the character of a conspiracy against workers aimed at ensuring an “orderly” draw-down of jobs at the plant and preventing a serious struggle by workers. Estrada—who recently announced she would retire at the end of her term, and had previously been named as a target in the federal corruption investigation into the UAW—is notorious for having repeatedly negotiated painful concessions behind autoworkers’ backs, including outsourcing jobs at GM’s Lake Orion and Lordstown assembly plants.
The savage attack on jobs at Belvidere by Fiat Chrysler and then Stellantis have already had a devastating impact, confronting workers and their families with impossible decisions to either uproot and transfer hundreds of miles away, live apart indefinitely or take lower-paying jobs in the area.
Until recent years, the Belvidere plant had been the largest private employer in the region and one of the few remaining sources of relatively better-paying manufacturing jobs. The unemployment rate in the economically hard-hit Rockford metro area, which is roughly 90 miles northwest of Chicago, stood at 7.9 percent as of February 2022, the highest among major urban areas in Illinois and more than 50 percent higher than the state average.
Pointing to the widespread social, economic, and political crisis in which the layoffs are taking place, a veteran worker at Stellantis Belvidere told the WSWS Autoworker Newsletter, “All of this, including the pandemic and war in Ukraine, is looking more like an economic collapse that’s going to make the recession look like a walk in the park.
“Homelessness is at an all-time high already and it’s only growing,” he continued. “Even when Wall Street takes a nose dive the billionaires, hedge fund managers and too-big-to-fail financial institutions will be insulated from the fallout that is to follow.”
Consumer prices are surging, and the Federal Reserve is moving to raise interest rates to counteract rising wages. Under these conditions, the ruling elite is seeking to distract attention from an increasingly disastrous domestic situation via the rapid escalation of a war drive, he said. “What better way to distract people than to antagonize WWIII.”
Chip shortage, supply chain disruptions continue to idle plants
Intermittent layoffs have continued to grip the global auto industry more broadly, causing considerable uncertainty and financial strain for workers.
In addition to Belvidere, Stellantis announced recently that it would be indefinitely laying off 98 workers at its Sterling Stamping plant in suburban Detroit, where five workers died of COVID-19 in 2021. The company’s Jefferson North Assembly Plant in Detroit is also temporarily shut down until May for scheduled retooling. In Canada, the company is planning to cut the second shift at the Windsor, Ontario van plant later this year.
General Motors announced Thursday that it would be idling its Lansing Grand River assembly plant in Michigan next week, with a spokesman ascribing the downtime to parts shortages unrelated to semiconductors. GM had previously announced that it would be temporarily shutting down its Fort Wayne, Indiana, assembly plant for two weeks beginning April 4 due to a lack of microchips. The Fort Wayne plant produces the lucrative Chevrolet Silverado 1500 and GMC Sierra 1500 pickup trucks.
Ford also announced in recent days that it would idle its Flat Rock assembly plant in suburban Detroit for one week beginning Monday, also due to a chip shortage.
Even as workers at plants such as Belvidere assembly and GM’s Fairfax assembly have faced near-continual layoffs, workers at plants that produce the auto giants’ top-selling, highest-margin pickups and SUVs, such as Stellantis Sterling Heights assembly, have faced relentless demands for overtime, with their plants driven to run almost non-stop.
The impact on autoworkers’ jobs extends internationally, with supply chain disruptions exacerbated by the US-NATO conflict with Russia in Ukraine. Ukraine is a major exporter of neon gas, which is critical for microchip production, and international transportation routes and trade have been snarled by the conflict and US-led sanctions against Russia.
Stellantis CEO Carlos Tavares said this week that the company’s van plant in Kaluga, Russia, operated as joint venture with Mitsubishi, will soon run out of parts and be unable to operate. The company’s Jeep plant in Melfi, in southern Italy, will also a face a slowdown beginning next week due to a worsening chip shortage, with roughly 1,500 workers furloughed a day.
Despite the automakers benefiting from rising prices and reaping bumper profits—with Stellantis seeing its earnings nearly triple from 2020 to 2021—a brutal new wave of restructuring is being prepared, as the corporations engage in a furious struggle to dominate electric vehicle technologies and markets.
The Detroit Three, GM, Ford and Stellantis, have all announced massive investments in EVs over the coming decade, which they expect to offset by dramatically intensifying the exploitation of workers. Stellantis has stated that it will invest $35 billion in EVs by 2025, while at the same time targeting double-digit profit margins.
Stellantis CEO Tavares and his counterparts are all attempting to extort massive tax breaks from local, state, and national governments, in return for promises—easily broken—for new investments in EV manufacturing facilities. Auto industry analysts have for years put a question mark over the future the Belvidere plant, which is situated far from the core of Stellantis’ operations in the Detroit area. To attract renewed investment to the plant as well as other EV makers, Illinois’ billionaire Democratic governor, J.B. Pritzker, signed a package of major corporate tax credits last year. Press reports in recent months have indicated that Stellantis is considering assigning production of new Dodge Charger and Challenger EVs to Belvidere.
The company recently announced that it would be investing $4 billion to construct a battery facility in Windsor, just across the border from Detroit, as part of a joint venture with LG Energy Solution. Ontario Premier Doug Ford boasted that the province put up “hundreds of millions” of dollars in incentives to lure the company. Stellantis is also reportedly searching for a US location for a second North American battery plant.
The UAW, with the support of the White House, is seeking to expand its reach into the new battery plants and other EV facilities, offering its services as a “reliable partner” to the automakers and hoping to secure new dues streams. In remarks at a press event this week, UAW President Ray Curry noted that the battery plants “are joint ventures, and they are apart from the national agreements,” meaning that workers at these facilities will face even more brutal conditions and ultra-low wages.
Heading into the Detroit Three contract negotiations next year, the automakers and the UAW are preparing a similar strategy to the one they carried out in 2019 and in previous years. Massive concessions will be demanded to “save jobs,” with the future of Belvidere or other plants held as ransom. In fact, this is already being carried out in Europe, where Ford is working with the Spanish and German trade unions to pit plants against each other in a fratricidal concessions bidding war, with the losing plant slated to be shuttered. But as previous experience shows, no amount of concessions will provide a guarantee against plant closures and layoffs.
However, the assault being planned against autoworkers threatens to eclipse even the attacks of preceding decades, as brutal as they were. With the enormous capital investments required by the transition to EVs, the auto companies must extract even greater profits. Further, the enormous amounts of resources being channeled by capitalist governments towards war must be paid for by workers, who face an historic battle.
The struggle to defend jobs and secure a massive improvement in workers’ pay and working conditions requires new organizations, rank-and-file factory committees independent of the pro-corporate UAW. With workers confronting powerful transnational corporations, a key task of these committees is to link up and coordinate workers’ struggles across national borders, and combine the fight for higher wages and better working conditions with the fight against war.
US corporate profits, CEO pay surged in 2021 while inflation slashed real wages
The corporate assault on US workers’ living standards during the pandemic intensified in 2021. While inflation slashed living standards for most of the population, corporate profits surged to their highest levels in decades, rising 25 percent year over year to $2.81 trillion. The rise is even greater—37 percent—when taxes are factored in. This is the highest figure since records began in 1948.
At the same time, according to a report by Compensation Advisory Partners, US CEO pay increased in 2021 by an average of 19 percent at the 50 companies surveyed, a record amount. Leading the field was Discovery CEO David Zaslav, who took in a staggering $246.6 million. Amazon CEO Andy Jassy received a pay package valued at $212.7 million, mostly from stock options.
Others cashing in included:
- Apple CEO Tim Cook, who took in $99 million last year
- Intel CEO Pat Gelsinger, who received $178.6 million
- Chad Richison, CEO of Paycom Software, who was paid $211,131,206
- Lawrence Culp Jr., CEO of General Electric, who pocketed $73,192,032
- Mike Sievert, T-Mobile CEO, who received $54,914,015
- Leonard Schleifer, CEO of Regeneron Pharmaceuticals, who took in $135,350,121.Surging profits on Wall Street boosted the average employee bonus in the New York securities industry to a record $257,500 last year, according to state officials.
The statistics on corporate profits and executive pay expose the blatant profiteering by large corporations during the pandemic. Companies have been able to raise prices far beyond increases in production costs, vastly inflating profit margins.
According to a report by a watchdog group, the top 25 global oil companies reaped $237 billion in profits in 2021. Last year, oil giant ExxonMobil posted its largest profit in seven years, $23 billion, as increased oil prices added $100 billion to its sales revenues. Saudi Aramco, a major oil and gas company owned and managed by the Saudi royal family, reported $110 billion in profits last year, a 124 percent increase from 2020.
Logistics giant Amazon reported $33.4 billion in after-tax profits in 2021, up from $21.3 in 2020.
Despite COVID and chip shortages, US auto companies enjoyed a profit surge. Ford recorded $17.9 billion in after-tax profits, following a loss in 2020. GM reported $14.3 billion in 2021 earnings.
The official inflation rate was 6.7 percent last year. Inflation has accelerated in 2022, with prices rising 7.9 percent year over year in February 2022, eclipsing year-over-year wage gains of 5.1 in February and 5.6 percent percent in March.
According to Bloomberg Economics, the average American household will spend $5,200 more this year to buy the same goods and services it purchased last year. With prices on basic commodities set to rise even higher due to the war in Ukraine and US and NATO sanctions on Russia, a further assault on living standards is being prepared.
Even though real wages are declining in many sectors, Wall Street is expressing concern over the tight labor market, which has allowed workers to press for higher wages. The US jobs report for March, released Friday by the Labor Department, reported the addition of 431,000 jobs, the 11th straight month of job gains surpassing 400,000. The official unemployment rate fell to 3.6 percent in March, close to the 3.5 percent pre-pandemic rate, which was a 50-year record low.
In fact, the figure for new jobs was lower than predicted by economists, and far below the average of 600,000 over the past six months. More threatening to the ruling class are near-record highs of unfilled jobs and voluntary quits.
In remarks Friday morning after the release of the jobs report, President Biden hailed the increase in hiring, citing “Record job creation. Record unemployment declines. Record wage gains.” However, the reality is quite different for workers, whose paltry wage gains are being eaten up by rising prices for gasoline, electricity, food and other necessities.
The most significant job gains have been for workers in the retail sector and leisure and hospitality, such as hotels and restaurants. These sectors have historically paid poverty-level wages.
The resistance of workers to laboring for near-starvation wages in the midst of a deadly pandemic, and ongoing supply chain bottlenecks due to shortages of workers in key sectors such as trucking, potentially put workers in a strong position to fight for significant improvements in living standards.
In 2021, strikes took place in a number of key industries as workers sought to fight back against rising prices and the impact of decades of wage stagnation. These struggles for the most part took the form of rebellions against the trade union bureaucracies, which for decades have worked to impose brutal cuts in wages and the destruction of working conditions, in line with their transformation into corporatist appendages of the corporations and the capitalist state.
In a number of contract struggles last year, unions settled for pay raises well below the rate of inflation, including Volvo (average 2 percent annually over 6 years), Nabisco (2-2.5 percent annual raises), Kellogg’s (one-time 3 percent for “legacy” workers), and Dana Corporation (as low as 1 percent annually for top pay scales).
In each of these cases, the unions sabotaged the struggles of workers, keeping the strikes isolated and shutting them down at the point where they threatened to seriously impact corporate profits and inspire solidarity action by other workers both in the US and internationally. Workers were forced to vote without having time to adequately review the terms of the contract and were often denied the right to see the full contract language.
At Volvo and other workplaces, unions called strikes only after workers had voted multiple times by massive margins against sellout agreements brought back by union officials.
In one of the latest acts of treachery, the Steelworkers union blocked strike action by 30,000 US oil workers and rammed through a sellout deal with wage increases far below the rate of inflation, even as the oil giants continued to gouge the public with spiraling gas prices.
In recognition of the vital services of the unions in suppressing workers’ wage demands and squashing strikes, the Biden administration has made a central focus of its anti-working class policy the promotion of the trade unions, appointing a “Task Force on Worker Organizing and Empowerment,” including national security cabinet officials. In a report issued in February, the task force made a series of recommendations to encourage unionization by government contractors, with the aim of “promoting stability” and “minimizing disruption”—that is, preventing strikes.
Fearing that low levels of unemployment will encourage workers to battle back against raging inflation by demanding significant wage increases, US financial authorities are taking measures to slow down the economy by increasing interest rates. Remarking on the fact that there are 1.8 job openings for every unemployed worker, US Federal Reserve Chairman Jerome Powell said, “By many measures, the labor market is extremely tight, significantly tighter than the very strong job market just before the pandemic,” adding that it was tight to “an unhealthy level.”
After raising rates by 0.25 percent in March, the Federal Reserve is indicating support for a more substantial 0.5 percent rise in May. The central bank has already said it plans at least six more rate increases in 2022, the first increases in three years.
The last round of rate increases set off a precipitous fall in the stock market, inducing the Federal Reserve to rescind its rate hikes. Since then, the markets have become even more inflated as the US Treasury pumped trillions of dollars into Wall Street. The turn toward deflationary policies threatens to upset this financial house of cards in dramatic fashion.
Growing sections of workers are defying the pro-corporate unions, including oil refinery workers in Richmond, California, who have voted down two sellout contracts pushed by the United Steelworkers’ union and gone on strike to secure a substantial wage increase and an end to brutal overtime and unsafe working conditions. They are joined by 5,000 teachers on strike in Sacramento, California and tens of thousands of other workers with looming contract expirations. This is part of a growing movement of workers internationally fueled by inflation, inequality and the growing threat of world war.
Reports of the unrestrained profiteering by the financial elite will only further fuel workers’ anger over declining living standards and the criminal mismanagement by all sections of the political establishment of the pandemic. The impending war danger and the demands that workers finance another huge military buildup at the expense of wages and social services will heighten class tensions.
This social anger must be consciously directed against the capitalist system, its political parties, the Democrats and Republicans, as well as the pro-capitalist trade unions. The way forward requires the building of new, genuinely democratic organizations of struggle—rank-and-file committees in every factory, school and workplace—and a political movement of the working class, international in scope, to end the subordination of the productive forces to the profit drive of big business. The working class must assume direction of economic and social life based on a new, higher principle—production for human need, not profit—that is, socialism.
Inflation slashes living standards and pushes millions of workers in the US to the brink
The rising cost of living will force the average American household to spend $5,200 more a year just to buy the same goods and services as last year, according to a report released Thursday by Bloomberg Economics. This comes to an average of $433 a month robbed from the pockets of workers and their families, under conditions where 60 percent of the US population cannot afford an unexpected expense of $500.
This staggering fact demonstrates the human cost of the rise in the rate of inflation, which hit a 40-year record of 7.9 percent in December. The rate of increase in the Consumer Price Index slipped slightly to 7.5 percent in January and 6.4 percent in February, but it is still well above the forecast of both the Federal Reserve and the Biden administration.
The core inflation rate, not counting food and energy prices, which fluctuate more from month to month, stood at 6 percent in January and 5.4 percent in February, according to figures released by the federal Department of Commerce Thursday. This means that regardless of efforts by the Biden administration to manipulate temporarily the price of gasoline at the pump, the reduction in the living standards of the working class will continue.
Bloomberg Economics—part of the publishing empire of billionaire Michael Bloomberg—pointed out the benefits for capitalist employers of the inflation “tax” on workers. “Accelerated depletion of savings will increase the urgency for those staying on the sidelines to join the labor force, and the resulting increase in labor supply will likely dampen wage growth,” the authors of the report said.
The American capitalist class as a whole is preoccupied with the problem of a “labor shortage,” which means the refusal of workers to take jobs at the starvation-level wages being offered, particularly to entry-level workers. Retail, restaurant, nursing home and other low-wage employers continually report being unable to hire enough workers.
The New York Times cited this issue in a worried article on its business pages Thursday, headlined, “Rising Wages Could Complicate America’s Inflation Cool-Down.” It cited the hopes of economists that the ending of pandemic-related restrictions—itself entirely unjustified from a public health standpoint—would help shift consumer spending from goods to services, “betting the transition would take pressure off supply chains and help inflation to moderate.”
The article continues: “Rapid wage growth could make that story more complicated. Demand for services is rising just as many employers are struggling to find workers, which could force them to continue raising wages. While positive for workers, that could keep overall inflation brisk as companies try to cover their labor costs, speeding up price increases for services even as they begin to moderate for goods.”
The language here is remarkable. The Times admits that wage growth is “positive for workers”—who happen to comprise the vast majority of the American population. But it is more worried about the downside, i.e., the interests of the employers, especially big corporations and their wealthy shareholders.
The article continues in this vein, citing the concerns of economists that wages might be permanently reset at a higher level, although this is only the abysmal pay offered by Amazon and other giant exploiters of labor. It reports the observation of one employer of low-wage labor, noting that “executives had expected the labor crunch to ease when enhanced unemployment benefits from the federal government ended in September. But while there was some increase in willing workers, there was no sudden flood.”
In other words, despite the best efforts of the Biden administration to force millions of workers back to jobs despite low wages and the dangers of the COVID-19 pandemic, including through the slashing of federal support for the unemployed, workers are still resisting.
That resistance is expressed most powerfully in the mounting wave of strike action that developed in 2021 and continues in the first months of this year. A major feature of this class movement has been a series of rebellions by workers against the pro-corporate trade unions, which have been relied upon by the Biden administration to suppress the class struggle and help the corporations impose brutal conditions of low-wage exploitation on workers.
This is the context in which President Biden announced an executive order Thursday to release a substantial amount of oil from the US Strategic Petroleum Reserve. About 1 million barrels a day will be put on the market for the next six months, for a total of 180 million barrels, nearly one-third of the total reserve. The announcement led to a drop in oil prices, but the effect will only be temporary, since 1 million barrels is less than 5 percent of US daily consumption.
The president claimed that the purpose of his action was to cut the price of gas at the pump for American consumers, and media coverage generally focused on the transparent political motivation of the timing and duration of the move. It is seven months until the US midterm congressional elections, where Biden’s Democratic Party is trailing in the polls, with inflation and the runaway cost of living cited by those polled as the top issue.
Within the constraints of the American two-party system, which offers voters only the choice between two right-wing capitalist parties, the Republican Party is expected to make gains. It is a measure of the bankruptcy of the Democratic Party that it could well lose control of Congress to the Republicans, despite the popular hostility to the previous administration of Donald Trump and the revulsion against his attempted coup of January 6, 2021.
Biden used the announcement of the oil release to beat the drums for his war policy directed against Russia, calling the rise in the cost of gasoline “Putin’s price hike.” He claimed that inflation had two causes, the pandemic and the Russian president. He said nothing about the main driving force of rising prices, the trillions of dollars pumped into the financial system by the Federal Reserve and the US Treasury to bail out Wall Street and corporate America, beginning in March 2020 and continuing to this day.
Instead, he engaged in a bit of anti-corporate demagogy, criticizing oil companies which “sit on record profits” but refuse to increase production “for the good of your country.” This was combined with the reiteration of his loyalty to the profit system: “I’m a capitalist. I have no problem with corporations turning a good profit.”
In a briefing to the media, a “senior administration official” said that US oil companies had pledged to bring a million more barrels a day on line by the fall. He described the release of oil from the government reserve as “a wartime bridge to additional US production.”
The effort to link the crisis at the pump with the war in Ukraine has an unmistakable and ominous meaning. Biden is seeking to use Russia as a scapegoat for the attack on working class living standards being waged by the capitalist class in the United States. This has already led to suggestions that American workers should be willing to make sacrifices for the war in Ukraine, sacrifices that will be imposed by the Democratic Party and the trade union apparatus in the name of “national unity.”
The truth is that American workers have no interest in the war in Ukraine, launched by Putin as a reactionary response to the encirclement of Russia by a longstanding US-NATO campaign aimed at the break-up of that country and its transformation into a semi-colonial appendage of the imperialist powers. Workers must wage the class struggle against the ruling class with redoubled intensity, and reject all demands for sacrifice in the interests of the war machine of American imperialism.
No comments:
Post a Comment