Could public ownership save the Ford Plant?


Ford will close its assembly plant in St. Paul sometime after 2007, and, when it does, all the labor that went into building the plant, all the machinery that was built to assemble cars and trucks and (most importantly) all the skills that Minnesota workers learned to assemble a car will go up in smoke.

It seems a shame.

The Ford Assembly Plant in Highland Village produces one of the best trucks in the world. In 2005, the Ford Ranger pickup had 111 problems per 100 vehicles, making it second best in customer ranking and well below the 132 problems that were average for trucks in its class. There’s nothing wrong with the product and the way that it’s made. The problem is with management and the federal government.

For the past few years the United Auto Workers (UAW) has agreed to cut retiree health benefits, cancel pay raises, relax work rules and shorten break times to help productivity. And that hasn’t been enough.

A GM parts manufacturer, Magnequench Inc., was paying UAW workers $57,000 a year. They now make those parts in China and pay those workers $3,000 a year. At this point there is a 25 percent tariff on imported trucks from Thailand. Japan and Korea keep their markets closed to U.S. automotive products, and they use Thailand as a back door to move their products into the U.S. market. Isuzu and Mitsubishi have moved all their pickup truck production to Thailand. That’s 16 automotive assembly plants and 2,000 auto and truck parts plants. Nissan is considering the move.

Why is it that Asian cars make it into our market and we can’t crack theirs? Is someone at the top getting paid off to bankrupt American workers? Remember when Sweet Frankie Viola was named Most Valuable Player when the Twins won the World Series in 1987? He got a ton of money for making the television commercial that went, “Hey Frankie Viola, you just won the World Series. What are you going to do now?” and Frankie said, “I’m going to Disneyworld.” When Reagan and Bush the elder left their presidencies they should have said to the television cameras, “I’m going to Japan to collect my million dollars.” Both were celebrated in Japan and given a million dollars for making a speech that nobody understood. Bush, at least, had the decency to throw up at the Appreciation Dinner.

We need Fair Trade that doesn’t unfairly punish American workers.

Pension costs amount to about $1,500 per car produced in America. Much of that is medical benefits. We need a Single Payer Health Insurance Plan that covers everyone, similar to every other industrialized country in the world. Industry cannot be expected to carry the burden of health care benefits, and they have to begin demanding Single Payer from the federal government.

And Ford and the other auto makers need to catch up with technology. They’re still making the same truck and car engine they made 60 years ago. They need to move into experimental fuels like hydrogen, hybrids and electric cars. They need to work on ethanol technology. There’s a lot of room for improvement here, and American industry should be leading the way.

Even though the federal government doesn’t seem to want to help the situation, news of the St. Paul closing certainly caught the attention of the Minnesota State Legislature. Representative Michael Paymar’s district includes the Ford Plant:

“I was extremely disappointed that Ford gave up on St. Paul. They have been a good neighbor and and good employer. Despite the decline in sales of the Ranger, (which was not the fault of the auto workers), production of the truck was very efficient. My heart goes out to the workers. In my discussion with Ford officials, they seem to have closed the door on retooling the plant or producing another vehicle. The Legislature did pass a bill that I co-authored this session to set up a task force to look into adapting the plant for plug-in hybrid electric cars.

“I’ve also had conversations with Mayor Coleman about future uses for the plant and the land. It is important to me that the Highland Park neighborhood have wide input into future uses. I know some developers are salivating over the land, but I think we need to be methodical in our approach. While housing may be in the mix, I don’t want to rule out reuse of the plant especially given the fact that we have hydroelectric power from the river, the State (only 10 years ago) invested in a large training facility at the plant, and because the State should be encouraging manufacturing jobs that pay the kind of wages that Ford workers currently enjoy.”

Is there anything state and local governments could do to save the Ford Plant?

In the rust belt (Ohio and Pennsylvania) where the local steel plant or steel manufacturing plant was going bankrupt in many towns, the towns stepped in, bought the mill or factory and saved the jobs and the local economy. Bethlehem Steel has proposed, according to the Wall Street Journal, a nationalized steel industry (mainly because they can’t afford pension and health benefits). In some instances, municipalities have helped workers purchase and operate their own plant. Seymour Specialty Wire is worker-owned and competes aggressively with a privately-owned Minnesota wire manufacturer.

In the 1930s, when privately-owned subways in New York City were going bankrupt, the city stepped in and bought them out and continues to this day to operate probably the most efficient transit systems in the U.S. The Nabisco bakery in Pittsburgh employed 400 workers and was going to close. The city bought them out using their powers of eminent domain, and the industry has survived and is growing.

But the State and the City of St. Paul won’t act on their own. The workers at the Ford Plant have to want to continue working at their jobs strongly enough to demand that their local governments support them.

In the early 1990s Argentina was experiencing the inevitable hangover from the high-flying spending of the neoliberals. The major capitalists took the money and ran. One hundred thirty billion dollars left the country, and the International Monetary Fund ended up owning the country. Many of the smaller capitalists got caught up in the expansion and couldn’t keep up the payments once the currency was devalued. They abandoned their factories and declared bankruptcy.

How did that work in Argentina? By what kind of trick and sleight of hand did international capitalists end up owning the country? It’s quite simple. They came in and loaned money at a nice rate of interest, then they convinced the government to devalue the currency, then people who were producing things got paid less for their products, so they couldn’t pay back the loans, and the banks and the IMF ended up owning the country.

But workers in Argentina were not content to let their jobs be taken from them by some international monetary manipulation. When many of the capitalists abandoned their factories, workers moved in and kept operating them.

Marcela Valente of Inter Press Service News Agency reported on some of the developments in Argentina:

The Brukman textile factory, abandoned by its owners in late 2001, currently employs 62 people, of whom 50 are women. Before the owners finally fled the heavily indebted company, it had reached the point where the women working there were paid a mere five pesos, or two dollars, a week.”

The struggle to keep the factory from being shut down permanently dragged on from late 2001 to late 2003, and led to clashes with the police, forced evictions, and attempts to manipulate the protest for political purposes.

Finally, through successful organization and a series of appeals to the courts, the women were able to get the factory back up and running normally. In the interim, three factory workers became pregnant and gave birth, and the other women raised funds to cover their medical expenses and maternity leaves.

Now each worker takes home around 600 pesos ($205) a month, and new staff are being hired.

The president of the cooperative is Elena Caliba. Her position does not entail working any less than the others or receiving a higher salary, nor is she authorized to adopt any decisions on her own.

“It means a lot more responsibility, because as well as working (on the machines), we have to deal with all the accounting, paperwork and sales,” she told IPS.

The company is finally out of the red. “Every time we make a sale, first we cover expenses and taxes, and then we divide up the rest,” she explained.

A similar situation was described by Liliana Correndo, from the cooperative formed to recover the Israelite Hospital in Buenos Aires. Founded in the early 1900s, the hospital received donations from the Jewish community throughout many decades, and at one time employed 1,200 people. But beginning in the mid-1990s, a series of poor management decisions gradually ran it into the ground, while charitable contributions dried up.

In 2004, the courts declared the hospital bankrupt. “At that point there were 400 of us working here, but a lot of people left, and at the time the cooperative was created, there were less than 160 of us,” recalled Correndo, who was and continues to be an administrative employee at the hospital.

Since that time, the staff has grown once again to a total of almost 250 workers. The cooperative was formed by nurses, lab technicians, and cleaning and administrative staff. The vast majority of them are women. “The doctors are not members of the cooperative, they’re employees of the cooperative, and earn more than we do,” noted Correndo.

After the doctors’ fees, debt payments, taxes and expenditures on supplies are covered, there is enough left over for each employee to take home up to 150 pesos (around 50 dollars) a week, at most. “But in a few months we’ll start earning between 250 and 300 pesos a week, which will be amazing,” remarked Correndo.

Between 2003 and 2004, the employees of the Israelite Hospital worked for almost a year without pay, even though the hospital had been declared bankrupt and they had officially been laid off.

Despite the bankruptcy, the abandonment by its directors and the lack of salaries, the hospital continued to provide its urgently needed services.

Correndo does not believe that this hospital is run better simply because there are women in charge. She knows that the threat of corruption is ever present. But she also knows that there is a big difference between being a mere employee and actually managing the facility, and therefore knowing exactly how much money is coming in, how much is going out to cover expenses, and how much will be left over for wages.

Tom Gibb for BBC News reports:

The workers of the San Justo glassworks in Buenos Aires never thought about owning their company, until it went bankrupt four years ago.

It was just one of thousands of businesses that sank as Argentina’s once prosperous economy went into meltdown, pushing almost half the population below the poverty line.

Today a new furnace where the red hot glass is melted is burning. The factory is one of more than 100 “recovered businesses” which are now putting themselves forward as an alternative business model for the country.

When the factory went bankrupt, a group of the workers faced with losing their jobs barricaded the factory gates for almost a year to stop the machinery being taken away.

They slept under canvas through the worst of the winter, while a lawyer argued their case in court.

The hardest thing was that many of their families, who did not have enough to eat, did not support the venture.

“We had to fight with our families, who did not believe in this. They would tell us to go find a job,” says Leonicio Eloy Arias, who has worked at the factory for more than 20 years.

The workers claimed in court that because they had not been paid for months, they should have first right to the machinery and factory site.

Eventually, a judge gave them permission to restart the furnaces.

Today the 38 workers at the glassworks are once again making glass car headlights, exporting these as spare parts to other countries in South America.

They have managed to make enough profit to reinvest some of it in new machinery. And they earn about $500 a month, a good wage for Argentina and one that equals the best period when the factory was in private hands.

Andres Gaudin for Third World Traveler reports:

The factory is not an isolated success.

The National Movement of Recovered Factories boasts more than 100 businesses that went bankrupt during the crisis, but are now up and running, employing some 10,000 people.

Not all of these are factories.

They include a hotel, a meat-processing plant which exports beef to Europe, a hospital and one of the oldest shipyards in the country.

The Astilleros Navales Unidos stands at the entrance to the system of waterways that snakes from Buenos Aires for thousands of kilometers all the way to Paraguay in the heart of South America.

While a few takeovers have had to fight lengthy battles with former owners, at the shipyard they have received full support.

“It was very hard for me to close my business,” says former owner Raul Podetti.

“It was my entire life’s work. But now I have the pleasure of seeing it reborn. What the workers have done is valiant. They deserve support.”

This movement in Argentina has not been led by Marxist revolutionaries, it has been a spontaneous eruption of the workers themselves. The non-ideological understanding and motivation of ordinary people like Alicia Equivel, an administrative worker at CIS, a bus body shop is typical: “When we occupied the plant, there wasn’t much to think about: either we acted to run things for ourselves, without an employer to solve all the problems, or we became unemployed for good, in a country where once you have lost your job you don’t get it back.

Thank God we didn’t make a mistake.”

Is something like this possible in St. Paul with the Ford Assembly Plant? What would the government think about that? When asked about it, Michael Paymar said, “I haven’t heard anything from the union or the city about purchasing the plant, but I suppose it’s feasible. We have two years to work this out, so I’m open to anything that might preserve good-paying union jobs.”

Rob McKenzie, the President of Local #879 at the Ford Plant isn’t quite as hopeful: “I’d be all for it if I thought it could work, but running an assembly plant is a lot different from running a steel mill. We’re dependent on a complex system of distributors. I don’t know if Ford would want to help out a competitor.”

“But what if we could work out something cooperatively with Ford?” I asked.

“I guess that would be OK, but I’ve got a responsibility to the workers at Ford to not give them false hopes. I don’t want to build them up for a big disappointment. We have to be working on early retirement and buyouts, retraining and education. I just see the plant closing. This plant has the capacity to produce 180,000 trucks a year. Last year it produced 125,000, and it’s been falling every year.”

What would happen if the State of Minnesota and the City of St. Paul purchased the Ford Plant from Ford? Would it be economically feasible for the plant to assemble parts from Ford and other automotive and truck manufacturers? According to the State of Minnesota Department of Administration spend analysis system, Minnesota purchased 1,036 automobiles, trucks and vans in 2005. City and County governments in Minnesota would probably purchase another 5,000 vehicles every year. That’s still a long way from the 125,000 currently being produced. But heavy trucks, truck tractors, buses and fire trucks require a lot more time, and the final product is worth more than a pickup truck. Also, there could easily be a market for those kinds of vehicles in neighboring states, especially if they had engines that used alternative fuels.

There are 1,750 hourly employees at the St. Paul Ford Plant and about 200 salaried employees. Some of them might welcome early retirement buyouts. If Ford bought out half the employees with pensions, then maybe the other half would want to continue producing cars and trucks for the State of Minnesota using that equipment and facility. Would that reduced work staff and a mix of products mean that the plant could be viable just producing cars and trucks for government agencies? The plant is on temporary layoff now, from May 22 to June 4. Temporary layoffs are common, particularly with slumping sales of the Ranger. Certainly, working for the State would offer a measure of stability to that workforce, and sensible planning could mean regular paychecks.

Isn’t this at least worth considering? Shouldn’t the State of Minnesota and the City of St. Paul undertake a feasibility study to examine possibilities of public ownership of the assembly plant? They’re doing it out East. They’re doing it in Argentina. Why can’t we do it here?