Tuesday, June 17, 2008

Keynote address by UAW President Ron Gettelfinger to the 12th IMF World Auto Council Meeting, June 16, 2008, Sao Paulo, Brazil

As president of the International Metalworkers' Federation (IMF) Automotive Department and chair of this 12th IMF World Auto Council Meeting, allow me first to thank all of you for traveling to Sao Paulo. I would also like to express our appreciation to the CNM-CUT and the CNTM-Forca Sindical for hosting all of us while we are here.

We have gathered in Brazil to participate in honest and productive debate about how the international labor movement can respond effectively to the restructuring of the global auto industry. It is unquestionable that this is an enormous challenge but we must not yield because of the magnitude of this task. If we take the easy road and relent then this meeting will be recorded in history as nothing but a waste of time.

This is a critical time for our unions and it is also a critical moment in time for the auto industry. The rapid increase in gasoline prices and other energy costs, as well as escalating steel prices and the fact that many commodities have nearly doubled in price since December has had a major impact on the industry. These factors have increased political tensions in both the industrialized and developing worlds, and have also intensified economic pressures for structural changes in the auto industry worldwide.

Brazil has emerged as a major player in the global automotive sector, in both auto assembly and parts supply, as the two employer-association representatives indicated a moment ago. The state of Sao Paulo, particularly the Sao Barnardo do Campo (ABC) region, is home to many of the world's major automotive manufacturers. On Wednesday, delegates will have the opportunity to visit some of these manufacturing facilities, including plants operated by GM, Ford, Scania, Volkswagen and Mercedes Benz.

As a political movement, the Brazilian metalworkers' unions led the way in founding the Workers' Party (PT), which now has its leader, Lula, as president of the country. It was shortly after losing a finger working in an auto parts plant in 1966, that President Lula first became involved in union activities and political struggle. Unions from around the world derive hope and optimism from the Brazilian political experience. Workers in the United States hope to replicate Lula's success by electing a pro-worker, pro-union president, Sen. Barack Obama, on Nov. 4, 2008.

As a labor movement, the Brazilians are at the forefront of addressing the problems and difficulties of maintaining progressive democratic union organizations in the era of corporate restructuring and globalization. We welcome the increased role of Brazilian labor leaders in the affairs of the IMF, and for the very real contribution they make towards the economic advancements of autoworkers worldwide. Again, thank you for your efforts and for your hospitality in hosting this important conference.

The economic interests of workers and unions from the industrialized countries are now inextricably tied to the interests of automotive workers from Brazil and the rest of the newly developed industrialized world. We will either succeed or fail together in responding to the global restructuring of the auto sector by building union strength at the workplace, within our respective national political structures, and by exerting our influence over international trade and development agreements and policies. It has become rather commonplace to say that with globalization, international labor solidarity is now more critical than ever. Nevertheless, it is true. From Manaus to Moscow, Beijing to Brussels, South Carolina to South Africa, Wolfsburg to Tokyo and all points in between, the major auto producers are forcing their employees to work longer and harder for lower pay and benefits.

An increasing number of auto workers in both the developed and developing world are being denied their fundamental right to join a union and bargain collectively. More and more auto workers are being forced into precarious work situations. We have reached a crisis point in the industry. Today, not tomorrow, we must develop a pathway to build union strength at the major global auto producers and suppliers.

In the past there was a general perception that each of our respective national auto unions held opposing interests in the process of global restructuring. After all, General Motors, Ford, and Chrysler compete with the Japanese and European auto manufacturers for global market share and profits. That competition has only intensified with the global emergence of Korean producers such as Hyundai and Kia, of Indian manufacturers such as Tata Motors and Mahindra & Mahindra, and with the inevitable international expansion of Chinese auto companies such as the China FAW Group and Chery Automobile.

But with accelerating industry restructuring the nature of corporate competition has changed. Consolidation, joint ventures, production partnerships, and complex technical and supplier alliances are all examples of competitive restructuring that affect all of us usually in negative ways. Paradoxically, these trends have created greater areas of mutual interest between our unions.

In my address to the 11th IMF World Auto Council meeting in Dearborn, Mich., four years ago, I raised the issue of the emerging Chinese automotive industry and the suppression of worker and trade union rights in China. Although China was already a growing source of world auto production, there were no Chinese worker representatives present because the Chinese government did not permit the formation of democratic independent unions. It certainly would have been useful to have the viewpoint of Chinese auto workers included in our discussions.

Despite the growth of the Chinese automotive sector over the past four years, fostered in no small part by billions of dollars invested by American, European and Asian automakers, we meet here again today without Chinese worker representation. The reason is very simple; real trade unions are illegal in China, and thousands of Chinese autoworkers are subject to vicious exploitation. The Chinese minimum wage is still not enforced, and neither are basic health and safety regulations.

The availability of an enormous pool of non-union, Chinese workers has allowed the world's automakers to force down wages and working standards all over the world. While IMF affiliates may have differing perspectives about how to best engage Chinese workers and deal with this aspect of industry restructuring, we share the same goals: namely, to press the Chinese government to end its systematic suppression of worker rights, and to require the auto companies to adhere to basic labor standards if they are going to produce in China.

The result would be an increase in Chinese autoworker wages, which would, in turn, benefit the rest of us. We are no longer able to effectively promote the economic interests of our members when the automakers are able to drive living standards down to the lowest common denominator set by China and other developing countries.

Again, the urgent and critical objective of this IMF Auto Council meeting must be to develop effective ways to build strong political labor organizations in China, Mexico, Thailand, and yes, in the United States and anywhere autoworkers are exploited because they lack effective union representation.

Although we come from different countries and cultures, speak different languages and have different perspectives on a wide variety of issues, our members increasingly work for the same employers and are confronted with the same company business/investment strategies and labor relations practices.

The initiative of employers to increase their profits at the expense of workers is a global phenomenon. It is not unique to any one country. Our response, in turn, must be a global response. Failure to act globally has disastrous consequences.

Allow me to reinforce this point by citing an example experienced by our union. Last month, the UAW concluded an 11-week strike against American Axle, a major supplier to GM, and to a lesser extent Chrysler and other auto assemblers.

American Axle, a profitable company, came into contract negotiations with the UAW with proposals to close facilities, and reduce wages by one half and to cut benefits in addition to numerous other take aways. The company forced a strike.

Axle was prepared for the strike and Wall Street analysts reported that the company was successfully dramatically ramping up production at its Silao, Mexico, plant and would be able to restore, at least in part, supplies to the GM plants in the United States that had closed due to a lack of axles. The UAW had reached across borders to the Mexican union in Silao hoping to meet with them to discuss the situation, and to explore ways we might assist each other in both the short-run and in longer-term efforts to build international solidarity. The Mexican union was also in negotiations with the company for a new wage agreement, and this was a great opportunity to work together to maximize the leverage that this situation presented.

Our efforts were unsuccessful, but the consequences are undeniable. Our membership was forced to accept an inferior agreement and our members are now earning far less than before. At the same time, the American Axle employees in Mexico received a much smaller wage increase than they would have if we had succeeded.

This is a perfect illustration of why we must collectively work to build strong unions in Mexico, China, and other low-wage nations of the world that now threaten the gains we have made for our members. We must convert our vision of international labor solidarity into effective strategic collective action if we are to respond to global auto restructuring.

The living standards of all of our members are affected by the same global economic trends: economic growth and development, employment and unemployment rates, income and wealth distribution, energy prices, environmental concerns, and international trade and investment flows.

The impact of these broad economic trends on manufacturing workers around the globe must be considered in our efforts to build solidarity and sustainability. How do these economic pressures affect our ability to organize workers and bargain higher wages and better benefits?

Over the past five years, economic growth in the U.S. has been substantially above that of many of the other industrialized countries. But that does not mean that all is well with American workers and union members. Far from it!

Gross Domestic Product figures say nothing about income distribution. The distribution of income and wealth in the United States, like many other countries, has gotten more unequal over the past two decades as globalization has eroded union strength. In short, industrial workers are not successfully capturing their fair share of global economic growth.

As an example, the pay gap between management and hourly workers in the United States is enormous, and growing. Last year, Fortune 500 CEOs in the U.S. made, on average, more that 364 times the average pay of U.S. workers. The average CEO pay for 2006 was $10.8 million. By comparison, in 1980, CEO's earned just over 40 times the pay of average American workers.

American managers and shareholders do quite well under globalization, but hourly employees are not receiving their fair share of economic growth.

Average wages for American autoworkers have not grown fast enough over the past decade to keep up with inflation. Rising health care and retirement costs, along with the broader forces of globalization, have limited the UAW's ability to negotiate inflation-adjusted increases for our members.

U.S. auto employment has declined drastically since the beginning of the decade; the years of the Bush administration's disastrous economic policies. Workers are now threatened by the recession and the financial crisis. The UAW faces more downsizing at GM, Ford, Chrysler, and many of their suppliers.

With the weak value of the U.S. dollar and the existence of severe obstacles to organizing new automotive facilities, America has become a low-wage haven for many Japanese, Korean, and European automakers. Labor laws and practices are stacked against workers and unions in these foreign name plate operations which tend to be located in the Southern, right-to-work (for less), part of the United States.

Nissan, for example, operates non-union plants in Tennessee and Mississippi, while Honda operates union-free in Ohio. Toyota has resisted unionization at its manufacturing operations in Alabama, Kentucky, Mississippi, Texas, West Virginia, and elsewhere. Hyundai/Kia has just opened a non-union plant in Georgia to go along with its assembly operation in Alabama. BMW operates union-free in South Carolina, as does Mercedes Benz in Alabama.

In the U.S. context, the shift from large SUV/light truck production to energy-efficient small car production mirrors the shift from well-paid union jobs to low-wage non-union production. For us, the issue of union organization cannot be separated from the theme of our third roundtable forum: How can we sustain a cleaner environment, union jobs and safe work in the automotive industry?

The UAW recognizes that it is ultimately our responsibility to organize these plants, and we are committed to doing so. But it will not only require U.S. labor law reform; the passage of the Employee Free Choice Act for starters, but also a comprehensive international organizing strategy. Over the next three days, we hope to discuss concrete ideas and case studies for implementing such a global organizing program.

Despite the weak value of the U.S. dollar and direct foreign investment in the American auto sector, the U.S. merchandise trade deficit was $815 billion in 2007, with $122 billion of that amount being in automotive products. The 2007 U.S. automotive trade deficit with Japan stood at $53 billion, $10 billion with South Korea, and $36 billion with our NAFTA trading partners, Mexico and Canada.

The UAW will continue to urge Congress and the new administration to adopt a different approach to international trade policy, one that can address the problems of global development and worker rights, rather than simply promoting the interests of global capital.

We appreciate the efforts of the IMF to build an international labor understanding and consensus on the complex issues of international trade and development. But the surface has only been scratched. The IMF and the international labor movement must become a force shaping an international trade regime that benefits workers and the poor. While these challenges are enormous, they must be achieved.

The UAW and the Korea Metalworkers' Union (KMWU) have worked together, for example, to build opposition to the proposed U.S.-Korea Free Trade Agreement (KORUS FTA) negotiated a year ago by the Roh and Bush administrations. We oppose the free trade agreement because it's a bad deal for workers everywhere.

American and Korean workers are not opposed to international trade and development, but we do oppose trade policies that weaken the power of unions to advance the interests and rights of their members.

And, the UAW will continue to fight against George Bush's tactics to pressure Congress into approving the U.S.-Colombia Free Trade Agreement as long as workers are being murdered for engaging in trade union activities. All of our members work for the most global of companies; for companies that both produce and sell their automotive products internationally. But the purchase and use of automobiles is not proportional to geographic size or national population.

As you would expect, Americans, Japanese, and Western Europeans are disproportionately large consumers of automobiles. The United States alone buys 55 percent of all international car imports. Japanese and German car companies earn nearly two-thirds of their net profits on international car exports and sales.

But as auto unions, we are not solely concerned with international vehicle consumption patterns. Our members' interests center on global production relationships and investment flows -- with global auto industry restructuring.

Although the various companies that employ our members are competitors, the nature of that competition has been altered by global cooperation agreements with each other and their suppliers. These companies compete in virtually every market in the world. General Motors, Ford, and Chrysler do not have any particular loyalty to the United States. I assume it is the same for the other auto companies and their home countries.

A little over a year ago, DaimlerChrysler announced the break up of the two companies. The German company Daimler retains approximately 20 percent ownership stake in Chrysler, with the remaining 80 percent owned by Cerberus Capital Management, a private equity firm. Chrysler continues to maintain alliances with Daimler, BMW, Hyundai, and Nissan.

Last month, Chrysler and Nissan unveiled plans to produce small cars and trucks for each other. Nissan will build a fuel-efficient small car for Chrysler in its Oppama, Japan plant. The cars produced at this plant that the UAW visited three weeks ago, will be sold in North America, Europe, and other global markets beginning in 2010. For its part, Chrysler will manufacture Nissan-designed pickups at its Saltillo, Mexico plant.

Some auto analysts believe that this deal opens the door for future Chrysler work with Renault, the French-based auto company with direct financial ties to Nissan.

At the same time, Chrysler is looking to build upon its relationship with Chery Automotive in order to expand its Chinese production capacity. Ford recently sold its Jaguar and Land Rover operations to Tata Motors, which will further boost the development and growth of the Indian automotive industry. Indeed, all of the major auto manufacturers are looking to move production to China, India, Russia, and other emerging markets.

Thus, it becomes increasingly difficult to talk about GM, Ford, and Chrysler as American companies; Renault, Daimler, BMW, and VW as European companies; or Toyota, Honda, and Nissan as Japanese companies. In the same sense, it is no longer meaningful or effective to talk about GM or Ford unions as American unions.

The relentless pursuit of increased sales and profits by the major auto producers has created new employment patterns around the globe. The use of sub-contracting, outsourcing and precarious employment practices has undermined union strength in the auto sector.

The IMF and its affiliated unions must forcefully demand, and build support for, the free exercise by autoworkers of their fundamental rights to form and join unions of their choice and to bargain collectively. We must demand of our common employers that they adopt organizing neutrality that would allow unionization in North America, Asia, Africa, or wherever they set up shop. Greater efforts can and must be made bilaterally, and coordinated multilaterally through the IMF. The time to increase that effort is now at this IMF Auto Council meeting. We must demand results from ourselves.

The unions represented at this conference share a common set of trade union principles and goals for protecting and promoting the interests of autoworkers worldwide. We must stand united and act together to support the rights of autoworkers everywhere to form and join unions, free from auto company interference and restrictions. We must more aggressively coordinate our solidarity activities and more forcefully press our employers to respect the basic labor rights of all of their employees regardless of where they live and work. The time for coordinated action is now.

The three upcoming roundtable forums organized by the IMF will generate concrete strategies and tactics for responding to global auto industry restructuring.

Thank you for your very kind attention and for your commitment to the worldwide labor movement.

Solidarity, Solidarity, Solidarity Forever!