And So They Fall – Unions and Workers

“The goal has been to create a borderless world for goods and finance while building fences with razor wire to keep workers in place.”

On January 3, 2014, the machinists union at Boeing voted to approve a new contract that undercuts many long fought for benefits. It was hardly a resounding “win” as the contract only squeaked through with 51% of the vote. Essentially the same (bad) deal had been voted down by the union in the fall. [1] However, the national union pushed through a new vote over the objections of local leaders. [2] Some might think that Boeing’s offer of bonuses for passing the contract are telling. Boeing originally offered a $10,000 bonus to be paid in 2016, and added an additional $5000 to be paid in 2020 (Jones, WSWS 1/4/13). Unfortunately, you have to still be working for Boeing at the time those bonuses are paid. While, it is assumed that those who voted for the contract were voting for job security over hard won benefits, the contract language is reportedly quite vague on those matters – particularly when it comes to construction of the new composite wings on the 777X.

President of District Lodge 750 of the Machinists Union, Tom Wroblewski, made the following statement regarding the contract (remember that the local had encouraged members to vote against it.):

“All along we knew that our members wanted to build the 777X, and that it was in Boeing’s best interest to have them do it,” he said. “We recommended that our members reject the offer because we felt that the cost was too high, in terms of our lost pensions and the thousands of dollars in additional health care costs we’ll have to pay each year.

Wroblewski (writing to Union members) also states something that could be echoed by every union in this day and age:

We faced tremendous pressure from every source imaginable in deciding how to vote today. Politicians, the media and others who had no right to get into our business, were aligned against us and did their best to influence your vote.

Indeed there was pressure, and huge forces are arrayed against unions (in the US and globally). Clearly the long term goal is to eliminate these “pesky” collectives that give workers a voice and actually create a “negotiating table” to sit at. Without unions, there would be no negotiation with employers.

Prior to workers unionizing, in the good old days” from a corporate perspective, the owners held all the cards. That was a time when: workers were trapped in corporate towns essentially forever to pay off their debt; back when owners could deal with agitating workers by simply hiring thugs to shut them up or kill them. This is what we are headed for. Does anybody really think that the hearts and wallet interests of most owners have changed?

High Level Union Busting

An outright war on unions has raged since the presidential union buster Ronald Regan took his stand against the Professional Air Traffic Controllers Organization (PATCO). As Joseph McCartin wrote in August of 2011:

THIRTY years ago today, when he threatened to fire nearly 13,000 air traffic controllers unless they called off an illegal strike, Ronald Reagan not only transformed his presidency, but also shaped the world of the modern workplace.

More than any other labor dispute of the past three decades, Reagan’s confrontation with the Professional Air Traffic Controllers Organization, or Patco, undermined the bargaining power of American workers and their labor unions. It also polarized our politics in ways that prevent us from addressing the root of our economic troubles: the continuing stagnation of incomes despite rising corporate profits and worker productivity.

What Reagan did was to give the presidential seal of approval to union busting. It was an apparent about-face for Reagan to go after unions. Ironically, Ronald Reagan is the only US president to have been in a union, and he served as president of the screen actors guild for six terms. This is why it was consistent for him to one, stand up for Solidarity (the labor union in Poland), and two speak out formally against Poland’s efforts to quash Solidarity (Jlanni, ThinkProgress, 2/25/11).

[IZQuotes]

During Reagan’s Christmas address in 1981 he chastised the Polish government for its efforts to suppress Solidarity. He stated:

“The Polish government has trampled underfoot the UN Charter and Helsinki accords. It has even broken the Gdańsk Agreement of 1980 by which the Polish government recognized the basic right of free trade unions and to strike.” [3]

Or his address at the statue of Liberty where he stated: “Where collective bargaining is forbidden, freedom Is lost.” [4]

As Reagan went after PATCO, one can imagine what the Poles felt as they watched Reagan destroy what they were fighting for, and what Reagan himself had praised.

Yet he went to war with PATCO, and what he started became on ongoing campaign against unions by “everybody.” Or as Wroblewski stated “tremendous pressure from every source imaginable.”

I know that unions have been largely removed from our nation’s textbooks from K through college. Students have virtually no idea of union history, nor what it has meant for this country and for workers. In fact, hand votes in my classes consistently showed that students thought workers were better off without unions; that individuals could negotiate better deals with employers. Naive? Yes. But that is the power of propaganda.

Back to Boeing and the most recent contract

Just a month prior to the fateful January vote, the NW Labor Press wrote about the November 13, 2013 vote with the headline “In a Stand for the Middle Class, Machinists reject Boeing Offer.” In fact, in that November vote, 67% of Lodge 751 (Everette, Wa.) and 74% of Lodge 63 (Gresham, Or) voted to reject the mid-term contract that Boeing was pushing. What was that offer? According to the Press:

Specifically, in exchange for a promise of keeping production in Washington, Boeing wanted to convert the defined benefit pension system as of Nov. 1, 2016, to a 401(k)-style savings plan (this from a company whose CEO is on track to receive a pension worth more than $250,000 per month). It wanted to raise the share of health care costs workers paid by more than 30 percent over the life of the contract. It would have required at least 16 years for a newly hired Machinist to move from the bottom of the pay scale to the top (it currently takes six-and-a-half years). And it would have limited wage increases to 1 percent every other year to 2024. Maximum hourly pay tops out at $35.25.

The modifications reportedly would have saved Boeing about $2 billion over the eight-year contract. The company recently posted historically high quarterly revenue and profit figures. And shortly after the contract vote, Boeing announced it had pre-orders of 259 777X aircraft worth more than $95 billion.

What Boeing actively threatened was to move production of the 777X out of Washington all together. Boeing’s wish list was long and very expensive. According to the Seattle Times (and others) that list covered (not exhaustively) everything from a rail spur to the site and highway access for the facility, to a landing strip with length and capacity for the 777 and 747 jumbo cargo, space to build a 4.2 million square foot equipped factory (estimated cost $10 billion), all infrastructure improvements, help with recruiting and training a workforce, and tax incentives. For all of that, Boeing promised 8500 direct jobs by the time peak production was in play.

This is a breath taking “wish list,” and one that breaks the back of other projects that states and localities have – such as low income housing. So, for example, Missouri was bidding for the Boeing contract and stopped funds for thirty-one low income housing projects in order to scrape up money for Boeing’s tax incentives (St. Louis Post Dispatch, 12/16/13). [5]

This “list” gives you some idea at the breadth of the deals that are being wrangled in the halls of government for Boeing and for others corporations (such as the Nike deal in Oregon where they got guaranteed tax rates). [6] [7] This hacking away at the housing projects really doesn’t even come close to making up the well over $10 billion in outlays that Boeing was asking for.

Of course, there are other political and corporate interests involved, such as Republicans who want to gut all public works and social welfare programs. So in Missouri, for example, David Leib reported:

“The senators wanted to offset the new Boeing tax breaks with reductions to Missouri’s existing tax credits, which waive more than $500 million annually in would-be revenues. Those lawmakers have been trying unsuccessfully for years to pare back tax credits for the developers of low-income housing and historic buildings, which together accounted for about 43 percent of all tax credits redeemed last year.”

Such tax credits provide incentives for developers to build in areas, or for populations, who would be otherwise excluded because the would-be inhabitants haven’t the resources to make those projects profitable.

The “holding,” or even cancellation, of programs such as low income housing are just one of the many costs to the people for meeting the extortionist demands of big business.

Essentially, Boeing said to states (and potential sites) “You pay for everything, and we will give you controlled (right to work) jobs. Oh yeah, and we want a tax break on our profits as well.” Talk about sweet deals. It is right up there with the no-bid, cost plus contracts that characterized the Bush administration in the Iraq and Afghanistan wars.

This begs the question of whether 8500 jobs are worth the huge economic and social cost. This is particularly true when Boeing (or other big companies) can just as easily walk away to another “suitor” if it feels the “winner” isn’t lucrative enough. Such arrangements are “devil deals.” The soul is sold for a figmentary promise of one’s “desires.”

David Lieb offers an interesting analysis of the impacts Missouri even bidding for the Boeing site. The state demonstrated a willingness to offer a lucrative deal to big businesses wanting to set up in Missouri. The long sought after removal of tax credits for developers constructing low income housing was accomplished. It gives strength to the legislative bid to have Missouri join the ranks of “right to work” states. I would agree with Lieb’s analysis in that regard. States are desperate for jobs, and the corporate agenda runs deep. We see it at all levels of government. Unfortunately, that agenda doesn’t really go anywhere.

Let’s take just one item from the wish list – giving Boeing a tax break essentially into perpetuity. If Boeing isn’t paying taxes then government (and government services) have to be funded elsewhere. That place is workers. Unfortunately, there is a limit on how much tax the people can bear, and so the only option left is to reduce or eliminate critical services and functions of government. Funding for food, health, and housing programs are cut or eliminated. Funding for police, fire, roads, and parks are cut or eliminated. Funding for oversight and research also cut. This goes with an agenda that has become all too familiar. It is part of the “privatization” (corporatization) movement where government outsources its functions to private industry. This is not proving to serve the people very well, but it does contribute to the vast transfer of wealth from the people to corporations, and from the 99.8% to the .2%.

On the corporate side of the equation, Boeing predictably argues “competition” and global price pressures. Just how disingenuous can it get? Boeing and Airbus are far ahead of any other competitors – including McDonnell Douglas – and Boeing is number 1. According to an Oregonian article by Jim Manning (1/03/2014), Boeing is projected to have profits $4.5 billion in 2013 on a revenue of $85 billion, and expects at least five percent growth for the next 20 years. This is despite the hit that Boeing has taken on its Lithium Ion battery problems in the 787. However, those problems have been partially attributed to Boeing losing oversight as it engaged in greater outsourcing.

That should have thrown flags all over the place as Boeing wanted to move away from its “expensive” skilled workforce to a “right to work” untrained workforce elsewhere in the nation. But in this corporate-vision-skewed-world such connections are rarely made.

The Auto Industry as a Corollary

What happened with the Machinists at Boeing is not dissimilar to the pressures placed on auto workers. Namely, the pressures to give up pay and benefits to match or beat competition – sometimes global competition. As Manning notes in his article:

The company on Thursday urged the workers to voluntarily accept the benefit cuts and wage changes. Boeing’s message: Their future employment may hinge on their acceptance of a grim new reality of heightened global competition.

“Our world has changed dramatically,” the company said. “Tight competition means the airplanes we are selling now are at significant discounts relative to those in the past. What we do today and tomorrow to better manage costs will have an impact on our earnings years down the road.”

Indeed, but who created that reality? It was not workers here or abroad. It was Boeing and all the other corporate interests and their governmental lackeys who did this. From NAFTA to GATT and the WTO (and a slew of follow-on global agreements), to the current push for the Trans-Pacific Partnership (TPP). [8] The goal has been to create a borderless world for goods and finance while building fences with razor wire to keep workers in place. The goal has been to force workers compensation and rights lower and lower, and safety and environmental standards lower and lower. All of this with the goal of climbing profits. An example of this is the Boeing contract where workers are limited to a wage increase of 1% every other year while Boeing projects its profit growth at 5% a year. Meanwhile, workers have lost their pension benefits (which now go in the hands of the financiers) and have to pay up to 30% of insurance costs. So this corporate run world is feeding on the blood of the workers and other people – like those desperately waiting for low income housing.

With the auto workers union, the pressure was on to have them reduce their wages and benefits to those of the non-union workers at Toyota plants in Kentucky. What the auto companies have done (and continue to do) to autoworkers, Boeing is doing to the Machinists as well.

A Bit of Auto Industry History

After the acceleration of destroying manufacturing in the U.S. with the passage of NAFTA in 1994, Ford and GM cut 30,000 jobs and closed fourteen plants in North America. This came after five years of cuts that destroyed 140,000 jobs between the big three US auto makers (DemocracyNow, 1/27/06). While declining profits were listed as the cause of the closures, it seems pretty clear that there was plenty of profit for those at the top.

Meanwhile, enter Toyota manufacturing in the US. While it had a brief business deal with a GM joint venture, it has largely been able to fight off worker unionization (Mattera, Corporate Research Project). Toyota used union construction workers to build its Kentucky facility, but has fought off unions in the production arena. It is clear that Toyota was engaging in activity to keep wages low from a company memo that got leaked in 2007. Essentially, the Toyota strategy was to close its one union wage plant (NUMMI) and peg its wages to the prevailing wages of the states where their plants are located (Wired, 4/2/07). Since, wages are relatively low in places such as Kentucky, this would represent a significant cost saving for Toyota.

Enter the “recession” (aka depression) that was finally acknowledged in 2008, and the request by the Big 3 (Ford, GM, and Chrysler) for a bailout. This is a bailout they received (and which at this time is almost “paid back”). However, that bailout had tremendous implications not only for autoworkers, but also for unions and workers in general.

Shamus Cooke discussed the overall problems well with his 2008 article,” Time for Autoworkers to Fight Back.” He notes that the pressures at play impacts all unions and labor in general, even though the battle he focuses on is the situations of Detroit’s auto workers:

The corporate media is playing a consistent anti-union drumbeat, blaming union workers for state budget deficits and the ruin of U.S. auto companies.

Now, the federal government is working in tandem with the owners of the Big Three to extort the United Auto Workers (UAW), making the $17.4 billion bailout conditional on destroying workers’ wages and benefits.

This strategy is familiar to many union workers: a threat of a bankruptcy is used at the bargaining table like a gun to the head.

The workers are made to feel powerless since, if they want to keep their jobs, they must accept the companies’ — and now the government’s — demands.

Like Reagan’s legitimation of union busting with PATCO in 1986, Bush, then Obama, did exactly the same thing with the conditioning of the bailout on the backs of labor. It reinforces the (erroneous) propaganda that the problems of profitability faced by corporations (and the expense of government) is the awful union workers with their wages and benefits. Except, that sometimes the profits are just fine – even great – as with Boeing. It becomes quite clear that the issue is not profits directly, but to return workers to an effectively indentured state on a global scale.

Back to Boeing

Jeff Manning, in his Oregonian article, states without blinking:

The Machinists also enjoy benefit packages most Americans can only dream about, chief among them a traditional defined-benefit pension plan that guarantees a monthly income for the duration of their retirement.

A “traditional-defined” pension plan. Yeah, that is one of the important things that union workers fought for and won to the point that even non-union workers benefited (same with the 40 hour work week, sick leave, and more). Pensions (at least at modest and larger companies) provided pensions for their workers. That is what “tradition” means. Now, we have “the public” up in arms about the outrageous wages and benefits of union workers and how they are destroying the economy and “forcing” good jobs to go over outside the US. Instead of fighting to maintain and expand solid wages and benefits, “the public” helps attack them. Even “Obamacare” goes after the union workers with their so-called “Cadillac” medical coverage.

Thom Hartman states regarding the Detroit bankruptcy (another theft of union benefits among other things):

But over the past 30-plus years Detroit has been hit hard by the three-headed monster of the new American fire economy: free trade, union-busting, and bankster-run Ponzi schemes.

These forces are not just pertinent to Detroit, but the entire nation … even the entire world. The issue isn’t just unions, or even profitability. Look at the real costs of the Boeing “wish list” and it is breath taking. One has to wonder what it is that Washington state is doing to keep Boeing. You can be certain that it goes far beyond the union gutting that was accomplished on January 3, 2013. Boeing will be building a new facility for wing construction. They need the land, and the expected cost is about $4 billion (Gates, 1/4/14). If the “wish list” is any indication, Washington state is going to have to pony up big time.

At what point do we start raising the question “Can we afford these multinational corporations?” Hopefully before the entire world bows in submission.

NOTES:

[1] The Union comparison of the two contracts can be found at https://www.iam751.org/pages/t2013/Comparison_latest_offer.pdf.

[2] “Local officials of the International Association of Machinists and Aerospace Workers had urged their 30,000 members to oppose the deal, arguing that the proposal surrendered too much at a time of company profitability. They had opposed taking a vote at all but were overruled by national leaders in the Machinists union.”

[3] See video of address on YouTube.

[4] Here Reagan is praising the “brave workers of Poland” video.

[5] “Shortly after their meeting, Nixon told the Missouri Housing Development Commission to halt funding for a list of 31 low-income housing projects that the commission had already approved, including three in St. Joseph. The unprecedented “quiet order” is now in place until March 14, which means no interested party can lobby for their project, said Gerald McCush, community development manager for the city.

The projects in St. Joseph are: four new three-bedroom homes for seniors built by Community Action Partnership of Greater St. Joseph on South 20th Street; extensive renovations to Brookdale East Apartments, 3414 Messanie St., by Hughes Development Company; and rehab work to InterServ’s two affordable senior housing units at St. Francis, 1601 S. 38th St., and King Hill, 6010 King Hill Ave.” St. Louis Post-Dispatch, 12/16/13

[6] Nike got a 30 year guaranteed tax rate break in 2012 in a special session of the legislature called just for Nike Gaston, Oregonian, 12/19/2012.

[7] PDF of the exclusive agreement between Oregon and Nike.

[8] Bill Moyers has an excellent interview with Lori Wallach regarding these issues.