Southern Insurrection: Destroying The Big 3 to Kill The UAW

Posted by AzBlueMeanie:

Eugene Robinson noted in a recent column that the Republican Party has positioned itself as being against unions, against America's domestic auto industry, against the blue-collar middle class — and also, incredibly, against the Rust Belt states that are home to UAW-represented auto plants and that also regularly tip the balance in presidential elections. Eugene Robinson – The Senate GOP Seems Set on Hastening the Death of Detroit

There are a multitude of historical reasons why Southern Republicans in particular have adopted this short-sighted and ultimately self-destructive strategy. Some recent commentaries (links below) help to explain the complexity and nuances of this issue. It is not the simple narrative that the mainstream news media is reporting.

For the past century, the South has had a development plan that relied upon poaching Northern industries to relocate to the South. Southern states used the lure of cheap land, government sponsored infrastructure and financial incentives and subsidies, and above all else, a pool of cheap labor that Southern states promised to keep that way with anti-union labor laws. The South enjoyed early success in luring away the textile industry from New England, and to a lesser extent, steel production and ship building. (The South, as well as the rest of the U.S., subsequently lost these industries to corporate globalism and free trade as these companies pursued cheaper labor in Asia).

Beginning in the mid-1980's, when corporate globalism and free trade became the watch words of conservative economic theory, foreign-owned auto manufacturers were encouraged to build domestic auto plants in the South, again with lucrative government incentives and subsidies, and the promise of cheap labor that would remain non-union. The development plan was a success.

Over the past 25 years, a second auto industry has emerged in the South: foreign-owned and non-union. Which brings us to today.

Southern Republicans are doing the bidding of these foreign-owned companies by trying to destroy  their American-owned competitors, "The Big 3" (General Motors, Ford and Chrysler). It is true that these companies have brought much of their misfortune upon themselves through a corporate culture of mismanagement. But there is something unseemly, even anti-American about watching these Southern Republicans doing the bidding of foreign-owned companies to destroy the American-owned auto industry and American jobs with it.

Their broader goal, however, is to kill the United Auto Workers Union (UAW), one of the last powerful unions still standing. The death of the UAW would likely hasten the demise of other less powerful unions. GOP: 'Action Alert – Auto Bailout' (GOP Memo: "Republicans should stand firm and take their first shot against organized labor…") This would bring joy to the dark hearts of Republicans, who have always had a visceral hatred for unions, because it is unions and the blue-collar middle-class they represent who have successfully campaigned against and defeated Republicans in elections.

If the UAW is killed, then the foreign-owned auto manufacturers in their states will be the only game in town and they can begin to reduce their employee wages and benefits to the prevailing compensation in the states in which they are located – substantially below the competitive wages and benefits they are currently paying to compete with the union shop auto plants in the North. Southern auto workers, who are indirectly enjoying the benefit of this unionized labor competition, will be the next workers targeted by their foreign-owned employers. (Maybe these Southern auto workers should consider the consequences before being so quick to condemn their Big 3 competitors to the graveyard.)

For a better understanding of this strategy I recommend that you read the following articles: Auto bailout's death seen as a Republican blow at unions – Los Angeles Times ; UAW busting, Southern style – Los Angeles Times ; Southern Comfort | Newsweek.com ; Salon.com | The economic Civil War.

The death of The Big 3 will not be limited to auto manufacturing plants in the Rust Belt. It will have a large mutiplier effect upon auto parts manufacturers and suppliers, auto dealerships, banks and lenders, and every business that relies upon the broader automotive industry. This could have catastophic consequences not just for the U.S. economy, but for the world economy as well. Potential GM bankruptcy catastrophic for economy "The lost GM output could easily lower GDP growth over a quarter by four percentage points or more. It would be a stunning blow to the U.S. economy," said Cary Leahey, senior managing director at Decision Economics in New York. "If you lose GM's…output for a period of time, you are talking about losses of $150 billion to $200 billion in GDP, just from GM alone," said Leahey.

"Motor vehicles and parts contributed $440.4 billion to the U.S. economy, unadjusted for inflation, in 2007, according to government data, roughly 3.2 percent of GDP."

"The impact on jobs would be equally devastating, analysts said. GM, Ford and Chrysler employ nearly 250,000 people directly and 100,000 more jobs at parts suppliers could hang on their survival. The companies say one in 10 U.S. jobs are tied to the auto sector, which adds up to several million."

"According to Gary Burtless, a senior fellow at the Brookings Instution in Washington, in mid-November there were roughly 2.1 million workers engaged in the production of vehicles, supplying parts and dealerships."

Then there is the multiplier effect upon the communities in which these businesses are located. "Burtless warned of major spills to other sectors not directly linked to the auto sector in the event of bankruptcy filings by both GM and Chrysler."

"You have to add a couple of 100,000 workers at banks, retail stores … which are in the communities where auto assembly, part plants and dealerships are located," he said.

Many American communities could be reduced to blighted ghost towns in a short period of time.

In addition, "GM [alone] has $36 billion in unsecured debt and another $6 billion owed to secured creditors." A default would exacerbate the current credit crisis, and quite possibly trigger a global depression.

An "orderly bankruptcy," as President Bush suggested on Thursday, would not prevent this result from occuring but likely would hasten it. Who is going to buy a car if you cannot trust that the manufacturer will still be in business ten, five, or even one year from now?

But Southern Republicans are willing to risk all of this, to destroy the domestic auto industry, to destroy related automotive industries and other businesses and the jobs of all the Americans whom they employ, to destroy American communities, and to throw the U.S. and possibly the world into a global depression, all to do the bidding of their corporate masters, the foreign-owned auto manufacturers in their states, in the hope of realizing their long-cherished dream of destroying the unions. Some might call this Southern insurrection against their fellow American citizens by conspiring with foreign-owned corporations to destroy American industries, American jobs, and the American economy "treason." (If we were at war with Germany and Japan it would be).

By the way, our own Senators Jon Kyl and John McCain voted with these treasonous Southern Republicans. "Country First" my ass!