FROM FINANCE TO INDUSTRY: THE CRISIS IN AUTO - Part 1

The profits from U.S. industry were relatively high in the years leading up to the crisis of 2007-08 and balance sheets were generally strong, which limited the depth of the economic collapse brought on by the crisis. But there were important exceptions to this generalization, the most significant of which was the auto industry. For some time before the crisis, General Motors, Ford, and Chrysler — once the "Big Three" but now less respectfully tagged as the "Detroit Three" — had watched their market share and profits plummet. Overall economic uncertainty, coupled with the sensitivity of auto sales to the freezing up of credit and to the type of speculation that pushed up oil prices in the winter of 2007-8, drove consumers from showrooms. The very survival of the U.S.-based auto companies was suddenly in jeopardy.

Of all 20th century industries, the auto sector had best captured the sway of capitalism and the rise of American dominance over the world market. The assembly line showed off capitalism's remarkable productive potential and the automobile flaunted capitalism's consumerist possibilities. At mid-century, with Europe and Japan emerging from the devastation of war, 80 percent of the world's cars traveled on North America roads. In this context, catching up to the U.S. example became a common aspiration across the developed capitalist countries.

For those who built the cars and trucks, the fruits of the assembly line were not, of course, automatically passed on. That only came as workers organized to challenge the unilateral power of their employers. The United Auto Workers (UAW) achieved its breakthrough and inspired others through the creative sit-down strikes and by introducing to this iconic industry the principle of industrial unionism — a form of unionism representing the unskilled as well as the skilled and uniting workers across companies. In the growth years after the war, the proudest achievement of the UAW and then the Canadian Auto Workers (CAW) — even to the point of trading off workplace rights — was winning what was essentially a private welfare state. Over and above their wage increases, workers achieved the security of a range of benefits, of which healthcare and pensions were the most significant.

In the seventy-seven years before the fateful events of 2008, General Motors (GM) was the largest of the large in the auto industry. During that long reign, the aphorism attributed to GM President Charlie Wilson — "What's good for General Motors is good for the country" — seemed, in spite of its arrogance, apt.72 As early as the 1920s, GM had pioneered the multidivisional corporation — a form of corporate organization that allowed for both the centralization (of planning) and the decentralization (of execution) that was so crucial to facilitating the post-war omnipresence of global corporations.

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