As a result of decades of betrayals by the trade union bureaucracy, the ratio of CEO pay to worker pay is at its second highest level in history, 272-1, according to the Economic Policy Institute. Meanwhile, productivity gains have outpaced wage rises by a ratio of 3.7-1 over the past 40 years, a period that has seen a vast enrichment of the super wealthy and a massive growth in social inequality.
Wall Street moves to profit from mass layoffs as Yellow prepares to file for bankruptcy
After laying off 30,000 employees, national less-than-truckload company Yellow is set to be looted by Wall Street. Since its shutdown, Yellow has seen large investments from Boston-based hedge fund MFN, and a group of investors led by Apollo Global Management is reportedly preparing an investment to restructure Yellow’s debt under a bankruptcy filing.
The immediate cause of Yellow’s collapse was its inability to pay off its debt, totaling $1.6 billion with $1.2 billion due next year. Of this, $700 million is due to the United States government and over $500 million is due to Apollo, a major private equity firm with close to $600 billion in managed assets.
Apollo played a leading role in Yellow’s management over the last few years. It had kept Yellow afloat in 2019 by loaning it $500 million, and Apollo co-founder Marc Rowan used his connections with the Trump administration to secure a bailout from the CARES Act.
Despite the influx of new cash, Yellow was still unable to manage its debt, and its only way out of potential bankruptcy was to cut costs. This took the form of Yellow’s One Yellow plan, a massive consolidation program designed to sell off facilities, slash jobs and cut wages and benefits.
Phase two of One Yellow was delayed by contract negotiations with the Teamsters. With One Yellow stalled, Yellow was unable to convince Wall Street it could extract value from workers effectively. Investors made it clear that no new money would be made available until Yellow could prove that it could force workers to pay for its debts and Wall Street’s profits.
Struggling to post a profit, Yellow quickly ran out of money and shuttered its operations last Sunday.
Yellow could easily enter into bankruptcy, which it apparently has not done yet and sell off its assets to pay back its investors. But Wall Street appears to have other plans for Yellow.The hedge fund MFN has rapidly bought up shares of Yellow, now owning more than 40 percent of the company’s shares (22 million). This seemingly peculiar move from MFN is a maneuver by the hedge fund to manage its investments in Yellow’s rival XPO. Should Yellow declare bankruptcy and go under, MFN will see profits from XPO absorbing some of Yellow’s volume. If Yellow survives bankruptcy and returns as a competitor, MFN will profit from its stake in the company. This investment sent the price of Yellow shares up by 78 percent to $3.14.
MFN’s gamble that Yellow might survive bankruptcy was accompanied by reports that Apollo and a group of other lenders are preparing to loan Yellow money as part of a debtor-in-possession (DIP) bankruptcy plan.
DIP is a form of Chapter 11 bankruptcy filing that allows for the debtor, Yellow, to continue with its operations on behalf of its creditors, such as Apollo. If Yellow does file for a DIP program, its creditors would be able to form a committee to oversee the company and manage its operations. If the committee believes that the company is not operating in its best interests, it can ask a court to appoint a trustee.
Essentially, Apollo and its associate lenders would take control over the company and its operations.
However, this does not necessarily mean that Apollo plans on resuscitating Yellow as it was operating previously. Under DIP, and even currently, Apollo has the first lien on Yellow’s debt obligations. This means that it must be paid back first before anyone else, including the US government.
By loaning Yellow more money to restructure its debt under DIP, Apollo is able to guide how Yellow liquidates and take the prime pieces of Yellow’s assets for itself.
Tom Goldsby, a professor of Logistics at the University of Tennessee’s Global Supply Chain Institute, said of the potential loan that “There appear to be all kinds of financial shenanigans going on around Yellow—none of which have anything to do with bolstering its potential as a viable trucking company into the future.”
Apollo has used bankruptcy to attack workers and restructure companies before. In the case of Warrior Met Coal, Apollo and other private equity firms used the company’s bankruptcy to erase pensions for workers and enforce massive pay cuts. And Apollo has reportedly been in talks to carry out a similar DIP program with Scandinavian airline SAS, which is also considering bankruptcy as it fails to force through concessions from airline workers. Apollo could be planning something similar at Yellow.
Regardless of Apollo’s plans, it is clear that the working class has been made to pay for Wall Street’s profits.
Effectively managed by Apollo, Yellow has carried out a major offensive against the working class on the behalf of finance capital and the US government. Worker resistance to exploitation was met with the annihilation of 30,000 jobs by Wall Street, which intends to use the collapse of Yellow to extract as much wealth from the working class as possible.
With the US government owning 27 percent of Yellow through its CARES Act bailout, the Biden administration has also played a critical role in the fall of Yellow. The US is fighting a two front war against Russia abroad and the working class at home. In order to pay for the war—which is costing as much as Yellow’s debt every week—and to enforce labor peace at home the Biden administration has relied on the trade union bureaucracy to enforce sell out contracts and has intervened against workers directly where necessary.
The Teamsters are willing participants in this effort. Teamsters President Sean O’Brien met with Biden several times ahead of the Congressional intervention against railroad workers last winter and was holding meetings with the Biden administration in the days before the announcement of a sellout contract at UPS this summer.
In response to the collapse of Yellow the Teamsters have hardly lifted a finger. It had canceled a strike at the last minute over the company’s non-payment of its pension obligations, and announced a deal which supposedly gave the company an extra 30 days to pay. Instead, the company predictably ceased operations and moved towards bankruptcy within only a few days..
In announcing that the company had ceased operations O’Brien simply stated that “Today’s news is unfortunate but not surprising.” In other words, nothing will be done to protect the livelihoods of 22,000 union members at Yellow. Instead of mobilizing the hundreds of thousands of Teamsters across the country to defend jobs, O’Brien and the union bureaucracy have allowed Yellow to lay off thousands of its members at one of the few remaining unionized trucking companies in the United States.
The idea that Yellow’s demise was an inevitable and unfortunate event is a farce and is aimed at disarming the working class. Yellow is partly owned by the United States government and its investors are some of the wealthiest and most powerful financial organizations in the world. Yellow did not destroy 30,000 jobs because it had no other choice, but because Wall Street and the entire capitalist class demanded that workers pay the price for corporate profits.
It is worth noting that Yellow controlled 10 percent of the LTL market with revenues near $5 billion. Its shuttering has shifted a mass volume of freight to other companies and prices have risen as a result. Rival companies and their investors will enjoy profiting from Yellow’s fall while 30,000 workers are now out of a job.
The collapse of Yellow and the vulture circling of Wall Street is a warning to the working class as a whole, especially as 340,000 UPS workers begin voting on a sell out contract that fails to meet their demands. The capitalist class is prepared to annihilate jobs on a mass scale to bolster their profits and suppress labor unrest.
Auto companies threaten jobs, as UAW bureaucracy seeks to head off opposition with demagogic “members’ demands”
To discuss joining the autoworkers rank-and-file committee network, fill out the form at the end of this article. Sign up for text message updates on the Big Three contract fight by texting AUTO to (866) 847-1086.
Seeking to head off the growing determination by 170,000 US and Canadian autoworkers for an all-out struggle to win back decades of concessions from the Big Three automakers, United Auto Workers President Shawn Fain presented limited information about the UAW’s supposed “demands” to the companies this week. Contracts for 150,000 Ford, General Motors and Stellantis workers in the UAW expire on September 14, and agreements for another 20,000 Canadian workers in Unifor at the Big Three expire September 18.
Fain’s self-described “reform” administration is well aware that it is sitting on a powder keg of pent-up anger among workers. The UAW’s leaders know they are widely viewed with wary hostility by workers, who despise the pro-corporate union bureaucracy of which Fain and his lieutenants are the longtime representatives. Every action UAW officials are taking is aimed at blocking a movement of workers developing outside their control.
Accordingly, Fain’s administration—with the assistance of staffers from the pseudo-left Democratic Socialists of America—has adapted its public relations strategy surrounding the formal opening of contract talks, seeking to present the bureaucracy as being “back in the fight” and staging a number of publicity stunts, such as declining to shake executives’ hands at the opening of negotiations.
In a Facebook Live video on Tuesday, Fain announced what he said were the UAW’s contract proposals to companies.
The UAW’s so-called “members’ demands” are a series of measures which are widely supported and called for by rank-and-file workers but which have been given up by the UAW bureaucracy in concessions to the companies in previous contracts: the restoration of cost-of-living raises (COLA); the elimination of tiers; the return of defined-benefit pensions for all workers; the increase of current retirees’ pay; the reintroduction of retiree medical benefits; and the end of the abuse of temps.
The UAW is reportedly proposing a 46 percent general wage increase, according to a report in the Detroit News Friday. It is also said to be “seeking” a 32-hour work week at 40 hours pay, Automotive News reported.
“These aren’t my demands,” Fain said in his Facebook Live video Tuesday, in comments intended for his corporate listeners. “These come straight from the membership.”
Autoworkers undoubtedly are determined to achieve a breakthrough and major advances in wages, benefits and working conditions. But the presentation of the “members’ demands” by Fain was of a dishonest, demagogic character, since the UAW leadership has absolutely no intention or strategy to achieve these measures.
The UAW president knows that the companies are dead set on imposing the costs of the transition to electric vehicles onto the workers and that they are seeking to carry out historic attacks on jobs and working conditions, dwarfing even the scale of the 2009 restructuring of the auto industry.
The hard line of corporate management was made clear in several statements by the companies this week.
General Motors arrogantly rejected the possibility of restoring things such as COLA and pensions out of hand. “The breadth and scope of the Presidential Demands, at face value, would threaten our ability to do what’s right for the long-term benefit of the team.” By “team,” of course, GM means not its workforce but rather its extravagantly paid executives and large investors.
In a thinly veiled threat against workers’ jobs, it continued, “We think it’s important to protect U.S. manufacturing and jobs in an industry that is dominated by non-unionized competition.”
Stellantis and Ford, meanwhile, both responded to the release of the UAW’s contract proposal in more guarded language, while reiterating their intention to collaborate with the UAW apparatus in achieving “competitiveness,” which invariably entails attacks on workers.
Ford wrote that it would pursue “creative solutions during this time when our dramatically changing industry needs a skilled and competitive workforce more than ever.”
Stellantis wrote that it would “work constructively and collaboratively with the UAW to find solutions that will result in a contract that is competitive in the global market,” claiming it was “not seeking a concessionary agreement.”
Earlier this week, however, Stellantis issued a letter clearly seeking to threaten and intimidate workers. In an underlined passage, Chief Operating Officer Mark Stewart wrote that the contract negotiations would “impact your future and that of your family and community,” and later insisted that the company had to “have flexibility in how we run our operations.”
The UAW knows that any sign that it is preparing to impose concessions on behalf of management will inflame opposition among workers. UAW officials are particularly concerned to create the appearance that they are not engaging in the type of closed-door talks with management that have previously produced brutal concessionary contracts backed by the UAW apparatus—including Fain himself, when he endorsed the historic attacks contained in the 2009 contract as a member of the UAW-Chrysler negotiating team.
But there is already ample evidence the union bureaucracy is conspiring with the companies once again. The Fain administration completely sold out the first major strike under its watch, forcing a concessions contract on hundreds of Clarios battery workers in Ohio in June, after workers had twice voted to reject it.
During Fain’s Facebook Live video Tuesday, he falsely praised the tentative agreement reached between the Teamsters and UPS as “ending tiers.” In fact, the Teamsters’ deal has provoked outrage among workers for introducing a new tier division among part-time workers and keeping their pay at poverty levels.
In perhaps the clearest sign that a sellout is being prepared, Fain’s administration has been coordinating closely with the Democratic Party and the Biden administration—political representatives of the corporate and financial aristocracy and proven enemies of the working class. Fain has praised a letter by Democratic senators claiming to support higher wages for EV battery workers. But virtually all of the senators voted to ban a strike by railroad workers last year and impose a contract rail workers were voting against.
Biden, for his part, was vice president during the Obama administration’s restructuring of the auto industry, which entailed a catastrophic decline in workers’ living standards.
The UAW bureaucracy does not have a strategy to win any of the demands it says it is making. Its overriding concern is securing its own institutional interests, including establishing new “joint” labor-management programs and getting dues-paying members at the EV battery plants, while attempting to keep a lid on the seething opposition among workers.
Underlying all of Fain’s rhetoric about “corporate greed” is an attempt to divert anger from the objective source of the problems workers face—capitalism—while promoting the illusion that the corporations’ profit interests can be reconciled with workers’ interests, if only executives’ “greed” can be reined in. Describing a proposal for a “Working Families Protection Program” to pay workers for “community service and other things” during layoffs, Fain said Tuesday, “Companies can still make a healthy profit, and it’ll keep our communities healthy also.”
Autoworkers are on a collision course with the corporations, the Biden administration and the UAW bureaucracy.
The critical task is for workers to seize the initiative now and develop their own organizational structures—rank-and-file committees at each factory, stretching across every department and shift, and linking up with auto parts workers and other sections of workers, including UPS workers and striking actors and writers.
The International Workers Alliance of Rank-and-File Committees (IWA-RFC) is working to assist workers in building committees and forming communication networks across the plants in the US, Canada, Mexico and internationally. Such committees will form the basis for workers to resist and overcome the pro-corporate conspiracies of the UAW bureaucracy and prepare a real fight to win workers’ demands, including preparations for an industry-wide strike across North America.
Employment report for July shows decline in US job creation under impact of rate hikes
The US employment report for July released Friday showed that 187,000 jobs were created last month, fewer than the 200,000 that had been predicted. The news initially sent stock prices higher, as investors welcomed the indication that continuing interest rate hikes by the US Federal Reserve were beginning to deflate the demand for labor and undercut workers’ wage demands.
However, stocks fell in the late afternoon on reports of lower revenue for Apple. Stock prices were down overall for the week in the wake of Fitch’s downgrade of the US long term credit rating and a rate hike by the Bank of England.
The response of Wall Street once gain illustrates the socially retrograde nature of capitalism, where bad news for working people is considered a positive development by financial markets.
This view was expressed bluntly last week by Federal Reserve Chairman Jerome Powell, who said at a press conference, “What we’re looking for is a broad cooling in labor market conditions, and that’s what we’re seeing... By so many indicators, labor market demand is cooling.”
The jobs numbers do not reflect recent events, such as the bankruptcy of Yellow Freight, which overnight threw 30,000 out of work.
Despite the efforts of the Fed to undercut the ability of workers to press for wage increases, strike activity has risen in 2023, according to the Cornell University labor action tracker. While there were 17 strikes involving more than 2,000 workers in the year before July 31, 2022, this year that number has risen to 22. Over the most recent 12-month period, there have been 407 strikes at 656 locations, a 12 percent rise.
The Fed has persisted with its policy of interest rate rises despite a pronounced decline in inflation and the threat posed to the massively leveraged banking system by higher credit costs. Three of the four largest bank failures in US history took place this year due to the interest rate increases, which have caused a devaluation of US government securities held by banks as reserves.
However, the consensus in the markets is that things are not nearly bad enough for the working class. The report showed that wage growth continued at a 4.4 percent annual clip in July, too low to make up for years of cuts in real wages, but still too high as far as Wall Street is concerned.
The monthly employment report by the US Bureau of Labor Statistics showed a sharp fall in hiring by temporary help companies as well as retail trade and tech and information services. A cutback in temp hiring is a sign of a slowing economy. The number hours worked in July was also down, another sign of a slowing economy.
Employment in the key construction sector remained steady, while residential construction slowed under the impact of rising interest rates. Nonresidential construction increased, likely due to government handouts to corporations aimed at spurring electric vehicle production. The official unemployment rate fell slightly to 3.5 percent, near an historic low.
Investors took the slowdown in hiring as an indication that the US central bank may pause its interest rate increases at its next meeting on September 19-20. Since March of 2022, the Fed has raised interest rates a total of 11 times, driving rates to their highest level in 22 years.
While the rate hikes have been carried out in the name of fighting inflation, the real target is the working class. The rate hikes are part of a deliberate policy by the Biden administration aimed at driving up the unemployment rate to weaken the working class and undercut the growing strike movement in the US, which is part of a counteroffensive of the international working class spurred by record inflation. Wall Street wants to impose the cost of the massive Wall Street bailouts and the expanding war drive of US imperialism on the workers.
The interest rate increases are already having an impact on workers’ lives by driving up the cost of everything from home mortgages and car loans to credit card debt. On top of this comes the ending of the moratorium on student loan debt, with collections due to resume in September.
One of the clearest manifestations of the impact of this reactionary assault on the working class is the bankruptcy declaration by Yellow Freight earlier this week, an action that overnight threw 30,000 workers out of jobs. Given that half of Yellow’s $1.6 billion debt was held by the US government, the bankruptcy was a calculated decision by the Biden administration, undoubtedly coordinated with the Teamsters union bureaucracy.
The Biden administration has forged an alliance with the trade union bureaucracy to suppress strikes and hold down wages. This was shown at Yellow Freight, where the Teamsters union blocked a strike in order to ensure that the bankruptcy went ahead smoothly.
At UPS, the Teamsters have delivered a sellout contract tailored to the needs of management. The deal provides below-inflation pay raises and freezes the company’s contributions to pension plans covering the majority of drivers.
As a result of decades of betrayals by the trade union bureaucracy, the ratio of CEO pay to worker pay is at its second highest level in history, 272-1, according to the Economic Policy Institute. Meanwhile, productivity gains have outpaced wage rises by a ratio of 3.7-1 over the past 40 years, a period that has seen a vast enrichment of the super wealthy and a massive growth in social inequality.
No comments:
Post a Comment