President Obama’s Automotive Task Force seems intent on steering GM into irrelevancy as a provider of quality jobs and as a central economic resource for the nation.
The narrowness of the Task Force’s thinking is appalling. Given that GM plant could be converted to producing badly-needed tanks and other military equipment during World War II, why is it impossible to imagine a conversion to high-mileage cars, buses, and high-speed mass transit equipment? This concept of a new GM would bring together Obama’s proclaimed goals of reviving consumer spending and building a "green economy."
(I have written about the dire consequences of the Task Force strategy in the April 2009 Z magazine and a forthcoming piece in The Progressive, as well as on several recent blog posts. I also highly recommend Harley Shaiken’s "Motown Blues" in the Spring, 2009 issue of Dissent.)
Decades of GM’s ruthless and profit-driven mis-management set the stage for the current catastrophe already afflicting US factory towns. The cumulative impact of General Motors’ disastrous corporate strategies is inflicting new levels of pain in communities that once provided the skilled workers and substantial tax concessions and other subsidies essential to GM’s past success.
GM embarked on a strategy to out-source heavily to low-wage plants in Mexico during the 1980’s, becoming the "numero uno" private employer until being displaced by Wal-Mart. This massive shift of production from the US converted family-supporting work into subsistence-level jobs in Mexico. By 1989, as shown Michael Moore’s vivid and powerful documentary "Roger & Me," about the impact of GM’s relocations on his hometown of Flint, Mich., GM’s strategy was already producing deep and widespread devastation for families and communities that had relied upon GM for decades.
Moving into the 1990’s, GM became increasingly dedicated to deriving massive profits from the contemporary version of slave labor in Mexico, the production of gas-guzzling SUVs, and its financial arm GMAC. The SUVs–which provided a profit of about $10,000 each compared to $1,000 or less for smaller cars, provided a gushing torrent of profits to GM.
GM squandered the 1990’s and the early 2000’s, using its substantial profits to boost its stock price, inflate bloated executive salaries and stock options, introduce new gas-guzzlers like the Hummer while tenaciously fighting off mileage standards, and expand its empire in low-wage nations like Mexico, and China, where it tripled its production capacity.
GM management fatally rejected alternative courses. Instead of investing in research on new technologies like the electric car, it drew a curiously abrupt halt to an experiment that was showing some promise. Rather than vigorously promoting a single-payer health care plan (GM plants in Canada save $4 per worker per hour on health-care costs over US factories), GM added two drug-company executives to its board and essentially abandoned the fight for health care reform in the US, as Morton Mintz documented in The Nation. A single-payer health care system could have saved it $1,500 a vehicle in the US, but GM’s corporate strategy seemingly involved "seceding" from the US and shifting work to Mexico and China.
By the time the Wall Street meltdown occurred, triggering the biggest economic crisis in eight decades, General Motors had already slashed its production workforce by about 85% since the 1990 distribution of Michael Moore’s "Roger & Me" documentary about his hometown of Flint. The consequences of GM’s decisions, now deepened sharply by the Great Recession that has sent car sales plummeting for both GM and its stronger foreign competitors, are visible in the cities and small towns that once made GM the world’s most powerful corporation.
Detroit, once the "MotorCity," has an official unemployment rate of 22%. In place of a vibrant community that brought together dazzling technology with hard-working, skilled workers of every race and nationality, Detroit now stands as a city of ghostly vacant factories, boarded-up homes, and vast acres of scarred turf where other factories, homes, and stores once stood. Detroit gave birth to the modern labor movement, injected new energy into the civil rights and anti-war movements of the 1960’s (a story told in the classic Detroit I Do Mind Dying by Dan Georgakas and Marvin Surkin) , and has continued –even its weakened state–to be a center of resistance to the notion that a decent society can be built by rote obedience to the dictates of an increasingly brutal market. Detroit produced not just cars but also a remarkably vibrant culture and made enormous contributions to popular music, from former Ford worker John Lee Hooker’s blues, Mitch Ryder and the Detroit Wheels’ blue-eyed soul, the revolution-minded MC5, the rock of Bob Seeger, and of course the Motown sound that brought forth the Supremes, Smokey Robinson and the Miracles, the Four Tops, the Temptations, Martha and the Vandellas, and Marvin Gaye.
Yet Detroit is a city in deep suffering, city is being de-populated and its grand buildings crumbling, and much of the blame can be laid at the feet of GM management.
Other cities once known as "GM towns" are also undergoing wrenching transformations.
§PLANNED SHRINKAGE: Flint, Michigan has unraveled further in the past 20 years, since "Roger & Me" was filmed there. It has been hammered by more losses in its economic base and population, which declined from 200,000 to 110,000. The result, after years of hollow claims by local politicians and business leaders that the good wages and benefits of the auto industry could be replaced with enough determination and "entrepreneurship" (translation: publicly-subsidized projects like a Hyatt Regency that failed rapidly), is that Flint is planning to systematically shrink the city so "the population would be condensed into a few viable areas, " the NY Times reported (4/22/09). "A city built to manufacture cars would be returned in large measure to the forest primeval."
The local county treasurer expressed the conventional wisdom on Flint‘s plight: "Decline is like gravity, a fact of life"–as if GM management decisions did not create the facts of decline.
§PONTIAC SPINNING OUT OF CONTROL: Pontiac, Mich. is also reeling from GM shutdowns. "As G.M. shed more than 3,000 jobs in Pontiac over the last two years, it compounded more than a decade’s worth of job and population loss," the NY times noted (3/5/09). Named an "All American City in 1976" because of its high rate of home owner ship and quality public schools, this city of 67,000 began a long, painful slide as GM relocated production. Now the city has been desolated by GM’s drop in sales during the current recession, and the continuing loss of jobs has meant a loss of population and declining resources at a time of heightened need. Pontiac‘s public schools–built for 20,000 students–have seen enrollment skid to 7,200, and half the current teachers are likely to be laid off next fall. The city is suffering a huge budgetary deficit and has been placed under emergency state control. GM’s announcement this week that it is dropping the Pontiac brand adds to the demoralization.
§JANESVILLE JOINS LIST OF VICTIMS: GM’s chickens have also come home to roost in Janesville, Wis., another mid-sized city (pop. 64,000) where GM was long the dominant employer. Employed peaked about 15 years back with 7,100 workers producing various SUV models (Yukon’s, Tahoe’s, and Suburban’s) in Janesville, but receded as GM built a plant with the identical product lines in Silao, Mexico where wages were well under 10% of UAW pay. But even as the demand for SUV’s began to erode due to concern about global warming and rising gas prices, the UAW was hopelessly shackled to management’s insane decision to keep churning out SUVs without developing any new product lines for the Janesville assembly plant. About 2,800 workers were employed by the time GM shut down the Janesville plant over 2008, completing the closing in December.
The ripple effect of the GM closing in Janesville ended the jobs of an additional 3,000 jobs at supplier plants in Janesville and nearby Beloit. Janesville‘s unemployment rate stands at 15.3% and Beloit–which has not recovered from the loss of the Beloit Corp. several years ago–finds itself with a 17.7% unemployment rate. The number of home foreclosure filings in the county covering both cities has nearly tripled, from 317 in 2000 to 911 in 2008.
The occurrence of family violence has also virtually tripled in just the past year, with the Anti-Violence Program’s shelter jumping from providing 232 nights of shelter in March 2008 to 640 in March 2008, according to AVP director Marilyn Harris. Such effects were quite predictable based on numerous studies which have shown domestic violence closely tracking mass layoffs and plant shutdowns.
Across the nation, mass unemployment literally generates enormous casualties like the battered family members in Janesville. As Occidental College political scientist Peter Dreier recently noted, each 1% rise in the national unemployment rate correlates with 47,000 deaths, half of them due to cardiac problems, and an additional 831 homicides.
Friedrich Engels wrote about the notion of "social murder," while Jesse Jackson in his historic 1988 presidential campaign spoke of "economic violence." These are fitting descriptions for the predictable results of decisions made by a tiny group of astronomically-paid executives, seeking only to maximize profits regardless of the human cost.