Huge $8.6bn loss at General Motors

Gate Gourmet locked-out worker PARMJIT bains addressing the conference
Gate Gourmet locked-out worker PARMJIT bains addressing the conference

GENERAL Motors (GM) bosses admitted on Thursday that their losses for 2005 were $8.6bn, their largest since 1992 when the board of directors was sacked and GM faced the prospect of going into bankruptcy protection. Financiers on New York’s Wall Street Stock Exchange have suggested that bankruptcy is a distinct possibility this year.

There have also been calls for US President George Bush to bail out the car giants, as happened with Chrysler in 1979, but he has told them they have to ‘develop a product that is relevant’.

The desperate situation facing the world’s largest manufacturing company and biggest car company is symptomatic of the huge world crisis of capitalism. That crisis is decimating manufacturing industry in the US, the leading imperialist state.

The major US vehicle-building multinationals, GM, Ford and DaimlerChrysler have axed 140,000 jobs, mainly in north America, since 2000.

Not only are American sales falling, but the US car giants are losing out to trade rivals at home and abroad. Toyota is expected to outstrip GM in car production this year, recording profits bigger than the $11bn made in 2004.

Only two months ago, GM announced it was slashing 30,000 jobs and closing up to 12 factories in north America in a desperate bid to curtail its huge losses.

GM is also liable for a charge of $2.3bn as a result of the bankruptcy of the car component maker, Delphi, a former GM subsidiary, where 4,000 workers have the right to return to GM, if Delphi goes under.

Last week, Ford embarked on a similar destruction of production with plans to shut 14 factories and get rid of 30,000 jobs in the US, Canada and Mexico, over the next six years.

The debacle which has hit the three US car giants, ushering in plant closures, sackings and draconian attacks on union pay contracts, particularly healthcare insurance provisions, is driving hundreds of thousands of workers into struggle.

The United Autoworkers (UAW) union leaders were in the Bankruptcy Court in the US yesterday challenging Delphi over plans to give executives $21.5m, while workers are told their union contracts with management are to be torn up.

Concerning Ford, the UAW said on Monday: ‘The UAW-represented workers affected by today’s action are covered by the job security programme and all other provisions and protections of the UAW-Ford National Agreement. Our union will rigorously enforce those programmes.’

The UAW leaders managed to force through changes to contracts demanded by GM and Ford at the end of last year, with a 61 per cent vote for the changes at GM, but barely a majority at Ford.

However, any new proposals from the car bosses, as a result of their accelerating crisis, will prove completely unacceptable to carworkers who are not prepared to give up the wages and conditions in their existing union contracts, for which they have fought tenaciously.

The battle lines are being drawn between the US car bosses and carworkers.

The UAW leadership, which has collaborated with GM and Ford chiefs for decades, is caught in the crossfire. It will certainly seek to ram down the throats of its members whatever the car giants offer, as they did last year.

This will put the UAW leaders on a collision course with hundreds of thousands of their members, who will not surrender their jobs and living standards.

Already rank and file groups in the UAW are demanding a struggle at Delphi and at GM, Ford and DaimlerChrysler plants, calling for strike action to defend jobs and union agreements, and the removal of their existing leaders.

The conditions exist for the development of a new revolutionary leadership in the US trade union movement.

This is necessary to defend what has been achieved through previous struggles and go forward, on the basis of socialist policies, to win job security, price-index-linked wages, the right to free universal healthcare and education.

In the present crisis gripping US capitalism, such a struggle is a revolutionary one, demanding a new leadership, that is the building of a revolutionary party, a section of the Trotskyist International Committee of the Fourth International.