FIAT-Chrysler’s Historic Agreement a Sign of the Crisis

The Workers Always Pay the Price

Its all sorted and everything turned out fine ... well almost. FIAT will provide the American firm with the technology for the production of small vehicles with low petrol consumption, competitively priced and ecologically sound. This will give Chrysler an opening in the European and Southern African markets whilst FIAT gets access to NAFTA (the North American market of Canada the USA and Mexico). The agreement states that in the first phase of collaboration a new company will be created from the two car firms which will have all the positive assets of Chrysler without its debts. At the same time a “bad company” will be formed, onto which the debts, and the accumulated losses built up over the last few years by the US and Canadian governments, will be offloaded, thus allowing the company to survive and continue production.

The new shareholding will be subdivided thus; 55% held by the unions, 23% by the US Treasury; 20% by FIAT and 2% by the Canadian exchequer. The management board will have 9 members, 4 representing the US government, 3 FIAT and one each for the Canadian government and the unions.

If things go well, if the recovery of Chrysler really takes off a second phase would kick in which could see FIAT’s share climb to 35% and by 2013 to 51%. If things go to plan the end result will be the reorganisation of production of the new ecological car, based on FIAT technology, which they expect to succeed if the US and European distribution manages to dispose of 5 million units in all. These are the official figures on which the agreement is based. This technical data leads to a series of considerations.

A Shotgun Wedding

The first is that the “marriage” of the car firms is a result of the crisis in the real economy, in this case in the automobile sector which historically, and by its very economic nature, is suffering the most on the world market. The strategic inclination of the two car firms is not helped by a market choice based more or less on guesswork. The marriage is forced on them by the crisis since without it Chrysler would almost certainly disappear and FIAT would have to be downsized. For both of them there is a need to re-equip themselves in face of the competition with the two new giants (China and India) which are poised to invade the international car market. The crisis is more serious that it positively favours the process of concentration of capital both in the financial and productive sectors.

Capitalist analysts predict that through this process of oligopoly the car industry will end up being controlled by only 6 or 7 huge groups, the result of mergers, alliances and concentrations of production.

The State = Saviour of Last Resort

The second is that capitalism, when in trouble due to its regular, unhealthy and massive contradictions, goes into a period of economic recession and provokes the intervention of the state, that unique life belt (in the specific American example it has happily funded 10 billion dollars). It doesn’t matter if the big gurus of neo-liberalism were only yesterday were demonstrating their certainty and faith in the “free market” and today are running hurriedly to the shelter of the much-abused state, with hardly a flicker of regret. Capitalist crises, the deeper and the more serious they are, are capable of making the political economy on which they are created, the very contradictions which they brought about, look even more ridiculous. In the space of a morning everything can be overturned. First it was the law of the market which dictated everything now it is the state which has to stitch up the holes that the market created. But history teaches us that capitalism creates its own crises and decrees the social devastation which hits millions of workers whether you believe in private capitalism or state capitalism (even today still masquerading as socialism).

Its certainly not one style of management of capitalism which can halt the crisis but it is the crisis which imposes from time to time one administrative solution or another according to what capitalist interests need at any one time.

The Workers Always Pay

The third consideration is that those who will pay for this agreement are once again the carworkers who deliberately have been left out of the protocol of alliance between the two car firms. Thus President Obama has triumphantly announced the operation to save Chrysler has led to the saving of 30,000 jobs. That’s another way of saying that the operation has, and will have, social benefits for the workers who otherwise would end up on the streets. But the President himself was very careful to say that to allow the third largest car manufacturer in the USA to survive and continue to extort surplus value from its labour force, 28,000 more would remain at home “collateral victims” of the historical process of restructuring. The project indeed aims to reduce the present workforce of 58,000 to 30,000 with no hope of an alternative and with the usual “guarantees” for the union which moreover, with its pension fund, is the major shareholder of the new company.

That’s not all. Throughout the protocol framework which enshrines labour discipline they talk of reducing wages by 30% on average as the unavoidable condition for the re-launch of the Italo-american company. Take it or leave it, the only other alternative is a revival of class struggle against the new management and against those very unions who have given the “legal” cover greeted enthusiastically by one side and taken lightly on the other. And if that were not enough the workers are obliged to sign a basic agreement in which no operative of the company can strike before 2015 on pain of immediate dismissal. Working hours will be flexible according to the needs of the firm; it is expected that when fully operative the working day will be lengthened and that overtime will only be after 40 hours work a week. They also expect that there will be an increase of 35% in output through a speed up of the assembly line.

Throughout the protocol it also states that the workers have to give up some holidays in order that the firm can be re-launched because “everyone has to play their part by making sacrifices”!

The conclusion is the on both sides of the Atlantic they are united in order to return to the paradise of profits whilst the car workers will be plunged into a deeper circle of hell, that of perennial sacrifices. On the other hand under capitalism, particularly when it is in crisis, hell for some is the condition of paradise for others.


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