Labor Advocate Online

Week In Review

A Weekly Column by Bill Onasch
July 2, 2006

Happy Holidays in North America
Best wishes to all on extended holiday observing Canada Day (July 1) and U.S. Independence Day (July 4). We plan to skip our news posting on Tuesday, July 4.

Ballast Released
The auto job buyouts exceeded everyone’s estimates—35,000 at General Motors, about a quarter of the current union workforce, and 12,600 at Delphi, nearly half of the UAW membership at that bankrupt spin-off. Good jobs, gone for good.

For a majority it meant taking an early retirement. But many, still supporting families, saw it as a calculated risk of a soft landing now, instead of seemingly inevitable termination under perhaps harsher conditions later. For them it was undoubtedly a reluctant decision, fraught with anxiety.

But not everyone felt saddened or stressed by the destruction of so many of the dwindling species of “middle class” jobs; some were positively elated. James P. Womack gushed to the New York Times, “This is a big, big hunk of ballast over the side.”

Dr Womack is chairman and cofounder of the Lean Enterprise Institute, a “nonprofit”outfit that advises companies around the world on becoming “lean.” They’re not talking Jenny Craig or South Beach. Their model enterprise is Toyota, both its Japanese and transplant operations. Earlier this year Womack wrote in the Wall Street Journal, “Ford and GM's factories are now good enough to compete in terms of labor productivity and quality. They just can't support employees with no work in ‘job banks’ and unsustainable pension and healthcare benefits for retirees as the companies continue to shrink.”

With 47,000 imminent departures, the job bank will soon get flushed out. But the human “ballast” surviving with pension and health care life vests clearly, from the good doctor’s point of view, need to be sent on to Davy Jones’ Locker to make GM competitive.

As the leaning enterprisers feel wind in their sails from lightened galleys a familiar pirate ship appears on the horizon. Commissioned by the Renault-Nissan Alliance, it’s captain is Kirk Kerkorian. Estimated by Forbes to be the 19th richest man in America, Kerkorian amassed his first fortune through land deals with certain civic minded developers in old Las Vegas, before going on to become a prominent hotel and casino tycoon in his own right. Through his personal company, Tracinda Corp., he’s continued to gamble with other peoples money and lives in various venues over the past half-century.

This boardroom Black Beard is no stranger to the auto industry. Becoming Chrysler’s largest shareholder in the early Nineties, he partnered up with Lee Iacocca in a failed hostile takeover. He made his peace—along with a pile of money—with the “merger of equals” that united Daimler Benz and Chrysler. (Later he filed an unsuccessful law suit against the German lads who embarrassed him by speaking of the deal as die Uebernahme—the takeover—and who made clear they were first among equals.)

As the faint hearted have abandoned what was long the ultimate Blue Chip, Kerkorian has now become the largest holder of GM stock, gathering up nearly ten percent at bargain prices. He insisted on and received a spot on the board for a Tracinda representative and started making public proposals for the world’s number one automaker to become much leaner and meaner. Now he is demanding that GM join the Renault-Nissan Alliance, accepting their tough love approach to go beyond shedding a few pounds to positively emasculating the industry giant.

Whether this gambler has the juice to pull off forcing GM into this new global partnership—or whether this is just another buy low, sell high scam—remains to be seen. What’s for sure is that no good will come from any of this for the workers and retirees who are considered so much bilge water.

Collateral Damage In War On Immigrants
Despite an inspector general’s report that concluded that there was little Medicaid fraud involving undocumented immigrants, Rep. Charles Whitlow Norwood Jr. (R-Ga.)sponsored a successful bill that he claimed would halt “the outright theft of Medicaid benefits by illegal aliens.” The law, which went into effect July 1, requires the more than fifty million receiving some form of Medicaid assistance to prove they are citizens, or legal resident aliens.

This mean spirited law has an impact far beyond denying health care to immigrants without papers. The Washington Post writes,

“Critics fear that the provision will have the unintended consequence of harming several million U.S. citizens who, for a variety of reasons, will not be able to produce the necessary paperwork. They include mentally ill, mentally retarded and homeless people, as well as elderly men and women, especially African Americans born in an era when hospitals in the rural South barred black women from their maternity wards.”

Really Tough Competition
Genentech, a biotechnology company, announced a breakthrough in stopping, and even reversing, effects of wet macular degeneration, the leading cause of blindness in those over 65. A new injectable drug, Lucentis, has won FDA approval.

Not part of the announcement is that Lucentis is a derivative of a drug long used to fight cancer, Avastin. While not FDA approved for eye disorders many ophthalmologists have been legally and successfully using Avastin to treat wet macular degeneration through “off label usage.” Though Genentech manufactures the drug under both names they oppose FDA approval of Avastin by ophthalmologists.

It seems the profit motive is the explanation for this apparently illogical stand. Though neither drug is cheap, the dosages involved in eye injections of Avastin cost about twenty dollars compared to an estimated price tag of two thousand dollars for the “breakthrough” Lucentis.

New ‘Know Your Rights’
Thanks to Doug Bonney for providing a new
Know Your Rights article, The Minimum Wage Myth. Doug, a Kansas City area labor and civil liberties attorney, has long been the labor law editor of theKC Labor site  and also does Know Your Rights features on the Heartland Labor Forum radio show.

As usual, much of the material for this column came from articles posted on the
Daily Labor News Digest.

That’s all for this week.


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