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From The Socialist newspaper, 28 January 2009

The crisis in manufacturing: Fighting for jobs and living standards

A FIGHTING socialist solution to the growing capitalist threat to workers' jobs and living standards is the only way forward for the trade union movement. The slaughter of jobs continues in 2009, following the crash of the banking system in 2008 that led to increased job losses, especially in the finance sector. But now the economic crisis is hitting home with a vengeance in the rest of the economy.

Bill Mullins

The car industry, in Britain and Europe as well as the USA, has entered new depths of recession. The Society of Motor Manufacturers and Traders (SMMT) has just announced that December's car production in the UK was 47.5% lower than it was in the same period in 2007. This is primarily due to the long Christmas shut-downs.

The SMMT also announced in January that the number of new cars sold in the UK in 2008 fell by 11.3% from 2007.

Honda will stop production at their Swindon plant in April and May. They had already planned to close the plant for February and March anyway as a result of the absolute decline in car sales.

The workers are expected to live on a much reduced pay packet throughout this four-month period. They will only get basic pay for the first two months and then 50% of this for the next two months. Even basic pay is a lot less than what they would get normally, which would include shift premiums which can equal up to 30% of basic pay.

All the main car companies have drastically reduced their production plans for 2009. In Europe as a whole car sales fell more than 20% in the last quarter of 2008 and are expected to fall another 20% in 2009. In the USA sales have fallen even more, by up to 40% already and Chrysler is not expected to exist by the end of the year. Chrysler has brought production to a halt in all its 30 USA plants and has no overseas plants to fall back on, unlike General Motors and Ford.

The US unions have been told that their members are expected to take drastic pay cuts and the company pension and health schemes are being cut back to the bone. The leaders of the United Auto Workers (UAW) union are in discussions with the bosses but it is clear that they will accept much of what is being proposed unless there is massive pressure on them from below.

Wage cuts

Already wage cuts are taking place in other companies. For example the Teamsters union has agreed with the second biggest hauliers in America, YRC, for their 40,000 members to take a 10% pay cut.

In Britain, Nissan in Sunderland has already announced that 1,400 jobs are to go and Jaguar/Landrover is getting rid of another 600 jobs. All these figures do not take into account that thousands of temporary contract and agency workers in these factories have already been sacked, both prior to Christmas and since, when their contracts were not renewed.

That has certainly been the case in the Ford Transit plant in Southampton, where a campaign by the National Shop Stewards Network (NSSN) managed to stop some of this happening. The agency workers saw what the campaign was doing to keep the factory open and took heart. At one stage they threatened to take strike action when the company tried to lay them off on £20 per day for a week and nothing thereafter. Instead they secured a more favourable deal.

Ford want to close the Southampton plant and send Transit van production to Turkey, but the battle continues to save the plant.

The euro commissioner for industry GŁnter Verheugan, at a meeting of ministers to discuss the crisis in the European car industry, pronounced a "brutal outlook" for the industry. He said that at the same time as ruling out any change to the EU rules that outlaw direct individual state aid to domestic car companies.

The meeting was Peter Mandelson's idea, who is under pressure from the car companies and unions to stomp up state aid for the industry in Britain. They were calling for £13 billion in state aid to be given to the car firms, which in the main are owned by overseas firms. The European car companies, along with the unions, are calling for a total state aid package of 46 million euros. It is clear that the European capitalists are reluctant to go down this road but it is not ruled out as the crisis deepens.

But what are the trade unions doing lining up with the bosses? We can see that in the USA state aid goes hand-in-hand with demands by the bosses and government for the workers to take cuts. Why don't the union leaders call for the government to take over the industry instead of giving the greedy bosses even more cash to line their pockets?

Tony Woodley and Derek Simpson, the joint general secretaries of Unite, the main union that organises the car industry in Britain, have greeted each new announcement of cut backs and falling production with calls for state aid. In response to Honda's four-month shut down, Simpson just indicated that the government should step in with assistance. It is clear that the union leaders are frightened to raise the idea of nationalisation.

Tied as they are to the Labour Party and government, the union leaders are afraid to raise nationalisation because the Labour Party leaders are fearful of being accused of bringing back 'old Labour'. The TUC has obviously decided that inaction is the best strategy for ensuring a Labour victory in the next general election. But the Labour leaders will be just as ineffectual in the face of economic crisis after a general election as they are now.


Brown was forced to nationalise some of the banking system after capitalist economists said that this was necessary. The ruling class knows that this "state capitalism" was required to save their financial system.

This has had the effect though of raising the idea with working people that the state takeover of companies that threaten to cut jobs is not only possible but the rational way forward.

There is a battle going on, sometimes behind the scenes and sometimes in the open, between the different wings of the ruling class. Financial capitalism is the dominant wing and whilst those capitalists were reluctantly forced to accept the intervention of the state to save the banking system, they do not want such aid to go any further.

The Financial Times (FT) opposed any state aid for manufacturing industry in an editorial last year when the American car companies first asked the Bush administration for aid. It has adopted the same attitude to the call for the British government to give state aid to the car industry. This led to Richard Lambert, the director of the bosses' organisation the CBI, running to the defence of manufacturing in general in a letter to the FT.

The CBI points out in other publications that manufacturing accounts for 16% of employment in Britain, around 2.6.million workers, yet another 2.4 million workers in the service sector are dependent on the manufacturing sector.

The TUC has revealed that, whilst there has been a rapid decline in the role of manufacturing industry in the British economy, it is still responsible for half of all exports. In the West Midlands region it is responsible for 23% of all full-time jobs.

The region has 1,500 companies dependent on the car industry, employing some 115,000 workers and generating £13 billion in sales. The collapse of the industry would deal a death blow to the region.

With so many manufacturing jobs linked to the car industry, the ending of car production in Britain would virtually finish off the country's large-scale manufacturing base.

Wages in manufacturing are 20% higher than in other parts of the economy. But under the dominance of finance capitalism, the prospects for manufacturing remain bleak. British manufacturing is at the moment the sixth biggest in the world but by 2025 it will fall to the eighth biggest.

The TUC indicated last November in a paper entitled Manufacturing Matters that, despite the propaganda, the jobs heading to eastern Europe or Asia are not part of some 'natural' process. It is a deliberate policy of the British capitalists, who long ago gave up trying to compete with their overseas rivals.

Not exactly in those words, that would be too much to expect, but that is what the TUC means when it says "there is no inevitability about this", that is, jobs going east and manufacturing employment collapsing in the west.


This process was speeded up enormously under Thatcher's deliberate policy of de-industrialisation as a means of breaking the power of the unions and the organised working class. Thatcher's short-sighted policies, reinforced with gusto by the Blair-Brown governments, allowed foreign capitalists to take over British industry. In a time of crisis such as this, the 'parent' companies are likely to sacrifice their satellites and withdraw to their base, leaving workers to pay the price.

The TUC report in November last year demonstrated clearly that the British capitalist strategy continues to be one of ending manufacturing. Between 1998 and 2008 the number of manufacturing jobs in the 'old' EU countries, fell by 1.712 million but of this, Britain was responsible for 84%, some 1.432 million jobs.

In that 10-year period, countries like Italy and Spain increased their number of manufacturing jobs and Germany, the biggest economy in Europe, only lost some 143,000 jobs.

Of course in the new recession, these figures have gone into a massive downward spiral. But the point is still well made that British manufacturing was set on a course of decline, primarily by the financial capitalists, whose machinations have led to the latest banking crisis.

Now the bankers have been bailed out to the tune of billions of pounds but so far the plight of manufacturing industry has been neglected. Yet the promises of a rosy future for British capitalism as a centre for the financial and service industries are turning into ashes. Estimates are that London alone could lose 370,000 jobs by 2010 as a result of the banking collapse.

Whatever the differences between the various wings of the capitalist class, the trade unions should have an independent class programme and policy, not just meekly follow the call of capitalist manufacturers for government money.

This path, as is being discovered in the USA, means that union members are expected to make major concessions in their wage packets and working conditions. And the US car industry is still in dire straits.

When workers lose jobs in the car industry, they are unlikely to be able to find another job on similar wages. This is shown by the experience of those workers made redundant by Rover at Longbridge in 2005. Two-thirds of those who managed to find other jobs are on lower wages than they earned at Rover.

Capitalist class to blame

What is needed is for the union leaders to make a clear call that the crisis is not of the workers' making but is the fault of the capitalist class that owns vehicle-making and manufacturing as a whole.

The car industry throughout the capitalist world has been a source of massive profits for decades.

The American press has recalled that in the 1950s it was the unions that held the whip hand, primarily because of the huge domestic demand for American cars. The Washington Post on 20 December said: "In 1950, for example, General Motors reported record profits, declared the largest stockholder dividend in US corporate history and couldn't build cars fast enough.

"So when the United Auto Workers threatened to strike, the company agreed a landmark deal with pensions, a cost of living formula and cut-rate health insurance. Fortune magazine hailed it as 'the treaty of Detroit'".

In 1970 the leader of the UAW, Walter Reuther said: "We are without question, the strongest and most effective industrial union in the world... We have taken on the most powerful corporations in the world, and, despite their power and their great wealth, we have always prevailed".

What a far cry from those days when the same union prepares to sign a deal to give back most of these reforms.

The same could be said about the industry in Britain. The TGWU (now part of Unite) in the 1970s had two million members. Along with the engineering union, the AEEU, its strength was based around the car industry.

The unions should point out that the crisis is not of workers' making but wholly down to a system that produces goods for profit and not for need.

In the modern era and under a socialist plan of production, the skills of the workers in the car industry would be utilised to produce for the needs of society as a whole. This would include producing vehicles that do not damage the environment.

The key question facing workers in the car industry and manufacturing as a whole now is defending jobs and keeping factories open.

There is no inevitability about the collapse of the car industry in Britain. What matters is the fighting capacity of the trade union leadership, particularly at shop steward level.

The conference of car workers called by the NSSN in Birmingham on 14 February is therefore particularly important. There, reps from car factories around the country and abroad will hammer out the necessary policies to fight back against the threats to jobs and living standards.

The Socialist Party believes this programme should include:

Car industry in crisis

The National Shop Stewards Network (NSSN) meeting for car workers and those in ancillary industries:

Saturday 14 February 2009, 12-4pm,
The Birmingham and Midland Institute, Margaret Street, Birmingham B3 3BS.

Please encourage your union branch/workplace to sponsor this meeting and send delegates (£5 per delegate or visitor).

See also: or PO Box 58262, London N1P 1ET.

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In The Socialist 28 January 2009:


Defend jobs and services

Era of illusions in capitalism ending

The crisis in manufacturing: Fighting for jobs and living standards

No pay discrimination against young people

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