Auto giant General Motors filed for Chapter 11 yesterday in one of the largest bankruptcy cases in US history. Shortly after the filing, GM said it would close fourteen more plants, including seven in Michigan, and cut up to 21,000 more jobs. More than 2,000 car dealerships will be shut down, as well. After the factory closings, GM will have fewer than 40,000 workers buildings cars in the United States, one-tenth of a workforce that numbered nearly 400,000 in the 1970s. [includes rush transcript]
Guests:
Harley Shaiken, professor at UC Berkeley who specializes in labor and the global economy. His latest article is in the current issue of Dissent Magazine, called "Motown Blues: What Next for Detroit?"
Ralph Nader, longtime consumer advocate and former presidential candidate. His first book, Unsafe at Any Speed: The Designed-In Dangers of the American Automobile, published in 1965, took on General Motors and its Chevrolet Corvair model.
AMY GOODMAN: Auto giant General Motors filed for Chapter 11 yesterday in one of the largest bankruptcy cases in US history. Shortly after the filing, GM said it would close fourteen more plants, including seven in Michigan, and cut up to 21,000 more jobs. More than 2,000 car dealerships will be shut down, as well. After the factory closings, GM will have fewer than 40,000 workers buildings cars in the United States, one-tenth of a workforce that numbered nearly 400,000 in the 1970s.
Monday's bankruptcy filing caps a remarkable fall for the century-old company which was once the world's largest car manufacturer. After the filing, GM was removed from the group of thirty blue chip companies that comprise the Dow Jones Industrial Average, where it had been listed for the past eighty-three years.
Under the proposed restructuring plan, the US government will invest another $30 billion in GM and take ownership of 60 percent of the company. The Canadian government, a union health trust and current bondholders would own the rest.
On Monday, President Obama laid out his case for the nationalization of GM.
PRESIDENT BARACK OBAMA: We are acting as reluctant shareholders, because that is the only way to help GM succeed. What we are not doing, what I have no interest in doing, is running GM. GM will be run by a private board of directors and management team with a track record in American manufacturing that reflects a commitment to innovation and quality. They, and not the government, will call the shots and make the decisions about how to turn this company around.
AMY GOODMAN: President Obama also acknowledged the restructuring plan will result in dramatic downsizing and the loss of thousands more jobs.
PRESIDENT BARACK OBAMA: I will not pretend the hard times are over. Difficult days lie ahead. More jobs will be lost. More plants will close. More dealerships will shut their doors, and so will many parts suppliers. But I want you to know that what you're doing is making a sacrifice for the next generation.
AMY GOODMAN: Fritz Henderson, who will stay on as GM's chief executive for the time being, said that going forward, GM will be a new kind of auto manufacturer.
FRITZ HENDERSON: The GM that many of you knew, the GM that, in fact, had let too many of you down, is history. Today marks the beginning of what will be a new company, a new GM dedicated to building the very best cars and trucks, highly fuel-efficient, world-class quality, green technology development, and with truly outstanding design. And above all, the new GM will be rededicated in entirety as a leadership team to our customers.
AMY GOODMAN: Meanwhile, Chrysler, which entered bankruptcy April 30th, could now emerge as a new corporate entity owned by a UAW healthcare trust, the Italian automaker Fiat and the American and Canadian governments.
For more, we're joined by two guests. Harley Shaiken is a professor at UC Berkeley who specializes in labor and the global economy. His latest article is in the current issue of Dissent Magazine; it's called "Motown Blues: What Next for Detroit?" And joining us on the telephone from Washington, DC, longtime consumer advocate and former presidential candidate Ralph Nader. His first book, Unsafe at Any Speed: The Designed-In Dangers of the American Automobile, published in '65, took on GM and its Chevrolet Corvair model.
We welcome you both to Democracy Now! Professor Shaiken, let's begin with you. First, your response to the bankruptcy of GM?
HARLEY SHAIKEN: Well, it was quite an enormous shock, not a surprise. We knew it was coming. But there was something about a company of this size, visibility and iconic stature imploding like this that's quite extraordinary.
It's very costly for the US government. An additional $30 billion going into GM. But the real key issue here is not simply saving GM. That's a necessary but not a sufficient condition for a broader set of issues, which is a viable manufacturing base and viability in health for the communities and the tens of thousands of families who are directly caught in this crossfire.
AMY GOODMAN: And the government taking it over, being the majority shareholder, what does that mean now? And what should the government do?
HARLEY SHAIKEN: Well, the government has, in effect, nationalized GM. And President Obama has said that it is a reluctant act. And that's quite clearly what it is. But the government should not act as if it is a hedge fund. It should not be a reluctant shareholder. It clearly wants to see a viable competitive company at the end of the day, a world-class automaker that also meets some broader public standards on energy and the environment, as well as employment.
But the government, to do that, is going to need a broader set of policies that addresses those concerns as the route to viability and profitability for GM. That, in fact, is what virtually every other auto government in this sort of a situation is doing today. Whether it's a Christian Democratic government in Canada, such as—I mean, in Germany, such as Angela Merkel, whether it's the Canadian government, all other governments are raising these issues in terms of public funds for private restructuring. And I think that's a central challenge for the US government, as well.
In many ways, it is a thin line. There are going to be a lot of conflicting political pressures. But ultimately, this is an opportunity to really have a world-class automaker and meet some broader goals of great value to the public at the same time.
AMY GOODMAN: Ralph Nader, your response?
RALPH NADER: Well, first, we have to recognize the total autocratic, secretive way this bankruptcy was initiated. Congress, which in 1979 had thorough public hearings on the Chrysler bailout and a few years later on the structuring of the Conrail system, completely abdicated its role to the White House, that then allocated the role to a secret task force run by Wall Streeters and overseen by Timothy Geithner, Secretary of Treasury, and Larry Summers. And this is the predictable result of an autocratic, secretive process.
The common shareholders who own GM have been wiped out. They had no voice in Congress to discuss it. The auto suppliers, the auto dealers, consumer groups had no voice to discuss it in Congress. Workers had no actual voice in Congress, other than to tell Congress to lay low while the UAW was negotiating this deal, again, in private. So, we have a process which is very similar to the Chrysler process, which is a White House fiat to a bankruptcy court fiat to Fiat in Italy, if I may have a little play on words. But the bankruptcy process itself is extremely autocratic. Under Chapter 11, the judge keeps pounding the gavel and denying the claimants interventions and appeals on behalf of the combined force of the Obama task force and top brass in GM.
Now, why is this going to turn out bad? Because Obama has made the American taxpayer responsible for saving GM, to a level which will eventually reach $70 billion, but then he makes his government irresponsible by saying he doesn't want to run GM. Well, what if GM management continues to ship its production to China, which is the grand China strategy of GM from several years back, and unemployed workers and closed factories and, by consequence, closed dealers? Is Obama going to step aside?
So, you have so many questions, Amy, that aren't being answered. For example, are the China assets and unrepatriated profits of GM going to be included in the bankruptcy procedure, or are they going to be excluded? What about the act of closing dealers? Dealers don't cost manufacturers anything. The franchise agreement makes certain of that. So why are we further inconveniencing motorists, rupturing their relationship over the years with dealers that are closer to home and making them travel more and more? The answer is, the fewer dealers, the more likely the price of cars go up. So there are all kinds of reasons why this should go back to Congress for thorough House and Senate hearings, if Congress wanted to adhere to its constitutional duties.
http://www.democracynow.org/2009/6/2/ralph_nader_and_labor_professor_harley
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