History

From THE FIGHTING MACHINISTS, A CENTURY OF STRUGGLE
by Robert G. Rodden

Changes and Challenges~
The '70's and Beyond

By the time Smith moved into Siemiller's seat at Grand Lodge the Go-Go years were gone. With troops slowly being pulled out of Vietnam, defense jobs began to evaporate back home. By the spring and summer of 1970 the Machinist was carrying weekly bulletins of escalating aerospace layoffs from East Hartford to Seattle. In June it headlined a report that the Pentagon was planning to wipe out still another 75,000 civilian jobs around the country.

By early July Seattle was being described as a "disaster area". At Boeing 60,000 employees, some with as much as twenty-eight years of service, were being laid off. A special report to the Machinist said:

How to Lose Industries and Alienate the Work Force

Steadily rising unemployment rekindled smoldering worker fears and resentments about the export of American jobs. In ever-increasing numbers U. S. companies were closing factories in American cities and shipping machinery and technology to low-wage areas in Asia and Latin America. The official publication of a business group calling itself the Development Authority for Tucson's Expansion advertised, "You don't have to go to Hong Kong, Taiwan, South Korea or Japan for low-cost, easily trainable foreign labor. It's available right here along the Mexico-Arizona border for as low as 30¢ an hour in virtually inexhaustible numbers." The hemorrhage of U. S. capital overseas was typified by the typewriter industry. In a period of less than three years Underwood and Royal plants were closed in Hartford and Remington Rand shut down its last factory in Elmira. The Machinist noted that before moving production of typewriters, adding machines an calculators to Scotland, France, Italy, the Netherlands and Brazil, Remington Rand employed 6,800 IAM members in Elmira.

As more and more industries headed for the exits, setting up low wage factories overseas to produce for high price markets in the U. S., the AFL-CIO began to reconsider its earlier support for the so-called "Kennedy Round" of trade negotiations in the early '60's. Not only were other countries blatantly denying U. S.-made goods access to their markets with various non-tariff barriers, but the promise of special trade adjustment benefits to workers made jobless by foreign imports had proven to be a hoax. The U. S. Tariff Commission rarely ruled any plant closing to be the result of foreign competition. Time after time throughout the 1960's the Machinist reported on cases of jobs that were wiped out by imports. But it took the Commission eight years to make its first affirmative finding on an IAM request for relief.

In mid-1970 the AFL-CIO asked Congress for "a thorough revision of U. S. . . . policies in . . . international trade and investment". Union lobbyists advocated repealing tax and tariff regulations that encouraged U. S. markets, curbing outflow of U. S. investments into foreign operations, regulating activities of U. S. companies with plants overseas, and regulating imports in industries significantly damaged by trade, preferably by voluntary agreements, but through quotas if necessary.

The effort to keep American jobs in the U. S. hit a stone wall of classical economic theory. Chorusing slogans extolling 19th Century theories "comparative advantage" intellectuals and academics urged Congress to sacrifice the interests of American workers to the profits of multinational corporations. Industries essential to America's prosperity and security were allowed to slip away one by one throughout the 1970's.

Obituary For An American-Built SST

Prospects for bringing the aerospace industry out of its tailspin seemed to depend on continued funding for a supersonic transport (SST) which Boeing began developing in the early '60's. Such a plane would be capable of cutting flying time almost in half between North America and Europe. The billions of dollars needed for further development of the two U . S. prototypes started in the early '60's were beyond the reach of private financing. In Europe the British and French governments had formed a consortium to build and SST known as the Concorde. In the Soviet Union a prototype known as the TU-144 was already in production. Though Kennedy had given the original go-ahead in 1963 and the Boeing prototype was well underway, continued SST production had become a highly controversial issue by 1970. Environmental groups such as the Sierra Club and Friends of the Earth stoked increasing public anxiety about the damage that might be done to the ozone layer by planes flying faster than sound at 60,000 feet.

Newspapers and magazines throughout the country fed fears that the SST would pollute the stratosphere, bring on a new ice age, melt the polar ice caps, cause skin cancer, deafen the public with sonic booms, burn up the earth with ultra violet radiation and disturb fish and wild life. Moreover, with so many other pressing human needs, many of labors' natural allies both in and out of Congress questioned the wisdom of investing billions of tax dollars so that a few privileged air travelers could jet across the Atlantic in four hours rather then eight.

Despite these objections, which were admittedly shared by many IAM members, the union's stake in jobs was too direct to be deflected by nebulous and unproven environmental fears. According to most estimates continued Congressional funding of the two prototypes already in production would insure 20,000 jobs immediately. In full supporting production the SST would mean an additional 150,000 production and supporting jobs in forty states. Red Smith and other IAM leaders were convinced, however, that more was at stake than the immediate fate of the Boeing SST. Smith argued that the future of America's technological lead in aerospace depended on continuation of SST production. As he said in a resolution submitted to and adopted by the AFL-CIO Executive Council

The Machinist editorially lamented the defeat, suggesting, among other things, that the vote to dump the billion dollars and nearly ten years of research and engineering already invested would be interpreted by the Kremlin as a vote to relinquish America's technological leadership as well as "a symptom of a new form of American isolation."

The defeat of the American-built SST left the future of commercial supersonic travel to the French and British consortium. However, by the time the Concorde was ready to go into service in 1976, the supersonic transport was already a superseded turkey. While environmental fears turned out to be unfounded, the Arab oil embargo dealt a fatal blow to the feasibility of commercial supersonic travel. When Kennedy originally gave the go-ahead in the early '60's, jet fuel cost 12¢ a gallon. By the time the first commercial SST flights were scheduled, aviation fuel had surged to more than a $1.00 a gallon. By the early 1980's the end of commercial supersonic travel was clearly in sight when both BOAC and Air France began cutting back schedules and cannibalizing parts for the few planes still flying.

Bailing Out Lockheed--And The Bankers

Before the dust from the fight to save the SST settled the IAM was plunged into an even more desperate crisis. Lockheed, the employer of tens of thousands of IAM members throughout the nation, was on the brink of bankruptcy. Although Lockheed was the Pentagon's primary contractor it became financially overextended while developing the L-1011 TriStar airbus. As part of a new generation of wide-bodied aircraft the TriStar was Lockheed's answer to Boeing's 747 and McDonnell Douglas's DC-10. The company's financial crisis was triggered by the bankruptcy of Rolls-Royce in Great Britain.

To insure British orders for its new L-1011, Lockheed agreed to purchase engines made in Great Britain by Rolls-Royce. When Rolls-Royce ran into engineering problems and could not deliver at the contract price it declared bankruptcy. With the jobs of thousands of English workers in jeopardy the British government agreed to assure completion of the engines at the contract price if the United States government would guarantee Lockheed's financial ability to take delivery when they arrived.

The bankruptcy at Rolls-Royce came on top of an existing severe cash squeeze at Lockheed. In addition to high development costs for the L-1011 several of the company's high risk defense contracts had recently turned sour. Already owing its bankers $400 million Lockheed needed another $250 million to go ahead with the TriStar. But no bank would risk that amount without an ironclad guarantee that the U. S. Treasury would make repayment if Lockheed could not. Such a guarantee was not unprecedented. Earlier in 1971 the federal government backed a $100 million loan to keep the Penn-Central Railroad running and a few years earlier Congress authorized such a guarantee for a $75 million loan to McDonnell Douglas.

The collapse of Lockheed would obviously spell disaster for 30,000 of the company's own employees. But shock waves of unemployment would also reverberate in at least 156 other communities in twenty-five states in which Lockheed's subcontractors were located.

Once again the IAM mobilized on many fronts to save a significant segment of its membership. In California Jim Quillin, president of District 727, led a symbolic march of some 4,500 Lockheed workers from the plant in Burbank to welfare offices in North Hollywood. He then flew to Washington to meet with California's Congressional delegation. The mayor of Marietta, Georgia, a member of Local Lode 709, led a group of his members on an overnight drive to Washington to present the Senate Judiciary Committee with 20,000 signatures affirming the community's faith in the company and its management.

In this struggle, as in the fight for the SST, Senator William Proxmire of Wisconsin led the opposition, claiming it was not the government's business to bail out companies that sink under the weight of their own mismanagement.*

Even without environmental issues to muddy the waters the legislation providing for emergency loan guarantees squeaked through Congress by only four votes. The federal government drove a hard bargain. While the loan guarantees cost the U. S. Treasury nothing and though the government's liability was fully protected by its lien on Lockheed's property, the Treasury eventually earned a tidy $27 million profit. The workers kept their jobs but in the end it was the bankers who made out like bandits. In addition to federal protection for the $400 million that was already owed, they received millions of dollars of interest on risk-free notes, more millions in commitment fees on money that was never loaned and still more in profits gained when their low cost warrants were exchanged for high priced stocks.

The Big Chill

In July, 1971, IAM delegates joined top trade union leaders from every part of the country to protest President Nixon's veto of a public works bill which Congress had passed in response to the worst unemployment in ten years. At a mass rally in Washington Red Smith, one of the principal speakers, demanded that reductions in defense spending be offset dollar for dollar by increases in programs meeting the nation's long-neglected public needs. He also flayed multinational corporations for exporting jobs needed by returning Vietnam veterans.

With unemployment rising and inflation steadily eroding worker' purchasing power, Nixon went on a national TV hookup on the evening of Sunday, August 15, and dramatically unveiled what he call a "New Economic Policy." It provided for a total freeze on all wages and most prices for ninety days, as well as tax credits for industrial modernization and the classic Republican remedy for hard times--still more reduction in public spending. The next day the stock market jumped 32.9 points in the busiest session in history to that point.

When Nixon took to the airwaves on that Sunday in August, some 8,000 members of seventy IAM locals were on strike. Under the Presidents' new economic policy they were expected to disregard sacrifices already made, return to work and accept the terms and conditions against which they were striking.

In the next few fast-moving days, the IAM Executive Council publicly blasted Nixon for strike-breaking and for stacking the deck in favor of upper-income groups by failing to freeze profits, bonuses, stock options and other forms of executive compensation. While employers were happy to serve as a self-enforcing check on wages, government procedures for price control ranged from half-hearted to non-existent. In the weeks that followed members showered Grand Lodge with reports of merchants who went in and marked up prices between Sunday night when the President spoke and Monday morning when their stores opened. Two weeks later, in a Labor Day message broadcast nationally over the ABC radio network, Smith condemned, "The President's new economic gave plan (for being) weighted in favor of the rich, the powerful, the corporations and the bankers." He noted, "It is no wonder the stock market took off like a rocket the next day. Big business knows a good thing when they see it."*

The most pressing issue facing the Board was how to handle increases already negotiated but not in effect on August 15. But a number of other, equally thorny, issues had to be settled. In Utica, for example, Mohawk Airlines tried to claim that because of the freeze it had to deny members of District 147 deferred insurance, pension, vacation and cost-of-living improvements that were now due under the contract. In Omaha, Lodge 31 reported employers were using the freeze as an excuse to withhold previously negotiated contract improvements. And, in Little Rock, Arkansas, the business representative for District 156 exposed the fundamental unfairness of a Pay Board decision to hold wage increases to specific percentage limits. Noting that workers at Timex, the largest employer in Little Rock, received only $2.20 an hour, he protested, "It seems unrealistic, unfair, unjust to hold employees making $2.20 an hour down to the same amount of percentage increases as employees making $5.00 to $5.50 an hour."

In November the Machinist reported that inflation was continuing at the same pace as before the freeze. With little or no government control over prices, GST Gene Glover asked IAM members and their spouses to police local markets and report unjustified increases to Grand Lodge. Unfortunately, as the head of the Consumer Federation of America admitted, consumer price watches were an exercise in futility--since retailers rarely posted prices that were in effect on or before August 15.

With GVP William Winpisinger and GLR George Breitenstein assigned to handle wage cases and appeals for IAM locals, most members received benefits negotiated for them without  too much delay. The most important and far-reaching exception was in the aerospace industry where the President's freeze interrupted long, drawn-out negotiations with Lockheed, McDonnell Douglas and Boeing. When agreements were finally reached during Phase II, they were in line with patterns set in that year's round of contracts talks in steel, auto, and other major industries. And yet, without offering any reason for treating aerospace workers differently than those in other major industries, the five "public" members joined the five employer members in ordering a 51¢ wage increase rolled back 17¢ in the first year. Smith was outraged, accusing the Administration of betraying a tacit understanding that settlements negotiated in aerospace would be comparable to those negotiated earlier in similar industries. He protested that he only agreed to serve on the Pay Board because he had been assured "the gates would net be closed until all the cows were in the barn. " He directed General Counsel Plato Papps to file an appeal and fight it out in court.

Increasingly disgusted, Smith eventually decided the Pay Board was too heavily stacked against the workers. In March, 1972, he announced his resignation. Three of the other four labor members--all but Fitzsimmons--quickly followed suit. In a front page story the Machinist reported, "The walk-out capped five months of broken pledges, double talk, irrational and inconsistent acts, incompetence and delay that have disrupted collective bargaining in almost every industry." The impact of wage controls was reflected in corporate profits. In April, 1972, Business Week reported that "Corporations earned more money in the first quarter of 1972 than any previous three-month period in history."

Nixon's "New Economic Plan" staggered through two more "phases" before collapsing in what Fortune magazine called "confusion and defeat" in 1974. By that time members at McDonnell Douglas, Boeing and Lockheed had collected the 17¢ an hour wage increase they were supposed to have received in 1971--although it took twenty-six months, three weeks and six days before the fist backpay checks were finally issued. Altogether, 108,000 workers in St. Louis, Seattle, Palmdale, Torrence, Marietta and other aerospace centers divided more than $42 million dollars in amounts ranging from $75 to $350, depending on hours worked and overtime.

Just a Few Missing Fingers
Raucous Caucus in Los Angles
Gas Lines, Dim Outs and Slowdowns

History