On Benedict Arnold CEOs

Jordan Barab has an excellent post at FDL explaining the significance of the janitor's strike.  SEIU has situated itself as a fast growing union because it is unionizing fast-growing service industries that cannot be exported.  There's another strike going on around the country against Goodyear that represents the flip side of what SEIU is doing.  The United Steelworkers is trying to protect good-paying jobs from large economic forces and bad faith management.

Here's the simple story.  Goodyear is shutting down a factory and moving production offshore while cutting pension benefits to retirees, even though it promised to do neither in 2003 when its workforce agreed to accept wage, pension, and health care concessions.  The company isn't doing particularly well, though it is profitable.  Part of its core business is reducing costs, and the executives see a big cost sink in the form of what they perceive as overpaid American workers.  It has borrowed $1B to make it through the strike; indeed breaking strikers in America might at this point be considered Goodyear's core competency.

Goodyear spokesman Keith Price said the new debt offering "is an indicator of investor confidence in our ability to manage our way through the remaining period of the strike. We are ramping up production using salaried and temporary workers and increasing imports from our international operations to ensure we can serve our customers."

The problem isn't that Goodyear needs to reduce costs; that's a function of globalization and bad policy choices (more on that later).  The problem is that Goodyear just gave multimillion dollar bonuses to executives and broke a good faith agreement with its labor force.  The CEO of the company, Robert Keegan, does not have an easy set of choices, but he has made the one that shows himself to be nothing more than a moral traitor.  Keegan is a father of two, a Bush-donor, and a strong supporter of the Ohio Republican Party.  He's asking middle class workers to sacrifice their livelihood so he can lie to them and get rich, a form of economic violence that should not go unnoted.  He's a very bad man, though not unusual as such in the spoiled and coddled executive suites of what was once a reasonably ethical corporate America.

The two strikes we've seen are two sides of the same coin.  Both the lowly paid janitors and the laid off Goodyear workers are part of a large group of poor and increasingly insecure workers.  Keegan on the other hand is part of a small group of dominant, stateless, rich, and unaccountable global elites.  This class is composed of CEOs, billionaires, financiers, celebrities, and the tax attorneys and luxury purveyors that cater to them.  It is a dangerous group that pays no taxes and lives in a different legal and physical world with separate schools, food, drink, laws, and medical possibilities.  I had an argument with my family last night about globalization and this class of individuals, and tried unsuccessfully to point out that it is our country's policy choices that lead to this situation.  Our tax code is built to coddle these people and their children, our energy policy is designed to force American dependency on energy sources owned by these elites, and our media reinforces the selfish values these people purvey.  Robert Keegan is one of these people.

We have to come to grips with the Keegan's of the world, and figure out how to embarrass them into moral behavior and tax them into responsibility.  There's no other way forward.  We must also begin to change the policy choices that lead to outsourcing, excess speculation, and excessive energy use, three problems that are tied together in a fundamental knot.  The way globalization happens is not inevitable, we do have choices, and these choices are not just at the margins.  The janitors in Houston have proved that.  So has Robert Keegan, in taking bonuses as he tries to destroy thousands of families that are not his.  And so have the banks that underwrote the billion dollar bond issue to help Keegan, and the Tom Friedman's of the world that pretend that there are no choices except the death of the middle class.  The United Steelworkers are also fighting, working to preserve the livelihood of their members.  

I'm going to continue watching the convulsions of the labor movement, as I expect more turmoil in the wake of these elections and the successful janitor's strike.  A different America is making itself known, and it is one the Keegan's of the world would prefer stay out of their gated communities and mansions.

Tags: Goodyear, Labor, Robert Keegan (all tags)



Re: On Benedict Arnold CEOs

Matt, excellent piece.  

I love the metaphor of "economic violence" and think it is something that we need to build upon and reinforce going forward.

I have a close friend in the SEIU also talked about the globalization of workers efforts for economic fairness and justice as the perfect and inevitable countermove to corporate globalization to evade it.

Thanks for your continued commitment to and insights on this topic.

by alivingston 2006-11-22 07:21AM | 0 recs
Re: On Benedict Arnold CEOs

waiting for my job to be outsourced. I'll go from a very good salary to half - if I'm lucky. That will surely be good for the economy. of IBM.

by zappatero 2006-11-22 07:23AM | 0 recs
Re: On Benedict Arnold CEOs

When the US imposes the general revenue tarriff permitted under the WTO, it should include the same rate of tax in net income outflows by US corporations.

by BruceMcF 2006-11-22 10:18AM | 0 recs
Here, Here!

And these poor moral values are so insidious, if we work for a corporation, you have to internalize them to fit into the culture. You have to talk about tax cuts like it's some kind of panacea. You have to pretend that homeless people are lazy and don't want to work. You have to treat any concept that would favor workers against the "owners" as purely socialist and incompatible with the culture.

by JohnGor0 2006-11-22 07:29AM | 0 recs
Re: On Benedict Arnold CEOs

What I wonder is when management goes back on agreements why the union can't sue for Breach of Contract.

Is that something that's taken care of in agreements? Just de rigueur as it were?

by MNPundit 2006-11-22 07:37AM | 0 recs
Re: On Benedict Arnold CEOs

I am not sure, but I would not be surprised if the avenue available to them is the federal or state industrial relations system, which has been heavily undermined by Resident Bush(1).

(1. President Bush was elected as President once ... Resident Bush was selected as President twice.)

by BruceMcF 2006-11-22 10:20AM | 0 recs
simple fact

simple fact is that over 80% of Americas taxes are now paid by individual taxpayers, less than 12% paid by corporations.

about 20 years ago or so it was 40% corporations, 60% individual taxpayers.

by heyAnita 2006-11-22 07:37AM | 0 recs
Re: On Benedict Arnold CEOs

Looking over the financials, Keegan and his banks seem to be playing a questionable game.  Goodyear has made small profits the last two years, totalling less than half what they lost in 2003.  At the current rate, it will take six years of company profits just to pay off the amount they borrowed to fund the strike.  Stupid.

This is a stagnant market.  In fact, Goodyear's unit sales rose a measly 1.4% in 2005.  Increased sales of 7% relied mainly on the ability to charge more for a tire.  Whether that was a cause for the increase, Goodyear raised selling and general administration costs by $500 million in 2004 and kept them up in 2005.  So the cutbacks from the workers go to pay for what? TV ads and exec salaries, I would guess.

Keegan's background is uninspiring.  He's a marketing and finance guy with degrees from a third rate college and a second rate grad school.  His time has been spent mostly in marketing at Kodak.  So he screws up manufacturing without a manufacturing background.  His earlier efforts to promote "savings" ventures are prominently mentioned in the annual report but seem to have produced chump change in cost cuts.  He is also creating an extremely adversarial relationship with his own workers and their unions that is likely to get personal.  I've seen this at a slew of companies like Bethlehem Strrl and Eastern Airlines that wound up going belly up.

The best move may be to drive down the stock prices of companies that pull this crap.  That, even in the short term, would stop this in its tracks.  Ethicalutual funds, folks?

by David Kowalski 2006-11-22 08:12AM | 0 recs
Merry Fucking X-mas - Pink Slip for America

I think the captains of industry have forgotten what we had BEFORE the unions were a prominent force.  They called them the "dangerous classes".  During the Civil War draft riots in New York, they had Gatling guns stationed on top of the New York Stock Exchange to keep these people at bay.  No one was safe in the entire city.  Because of the exploitation of workers, they felt no loyalty or even pity for the ruling elites.  They went into their homes and looted them, including some of the most famous industrialists of the time.  In those days, the dynamiting of factories was a common event.  Pitched street battles took place.  In later years a transportation system was improved to allow people to live on cheaper land, making housing more affordable and to eliminate tenements and unhealthy living situations.  Unions afforded a decent wage, so people had a stake in their society and hope for the future.  The climate of fear the elites used to live in, the fear of the unwashed masses rioting and pillaging, gradually subsided.

I am not saying that time will come again.  But if you sever the ties that bind us together, you will introduce social instability.  If you have nothing to lose, you will vote for something that will change your situation.  If you have nothing to lose, you are encouraging the rise of worker radicalism once again.  

It gets worse, if you take the long haul, this kind of situation is unsustainable.  The United States cannot remain a superpower if we don't make anything.  Pushing around piles of money is not a recipe for success.  We cannot live off of the financial industry.  If it comes to that, the Chinese, the Europeans and other countries will take their yearly cut of our capital and we will start to diminish as our investments are consumed and we will begin to weaken.  Over time we may lose our ability to project power globally.  If we lose our status as a superpower, our economic house of cards will collapse.  We will have difficulty refinancing our debt, and our leverage on other countries will be nil.  In addition, there will be a huge power vacuum (much like what has happened when the Soviets collapsed) leading to global instability which is a terrible environment for economic growth because people are hesitant to invest.

The lack of loyalty of these American companies will not only lead to their destruction, but also that of the current economic order.  There is no point in having a million dollars if the dollar is worthless.  We will all live in the same shithole if we keep this up.

by pjv 2006-11-22 08:22AM | 0 recs
GREAT that someone's covering labor!

Unfortunately I have to run and can't more than scan this.  Deserves study and thought.

But would also like to know progressive labor's midterm hope list in terms of federal regulatory changes, etc., though it might have to wait on a new president.

Could connect with/be integrated with trade, tariff changes on the one hand and financial "services" regulation and anti-trust issues on the other.

A platform to run on?  Corporate elite would go crazy.

Combine with single payer health and corporate America could be split (Insurance companies vs the rest who could dump health care costs), but the corporatist would be terrified with all the other issues that would be raised.

Sorry this is so Delphic and off the top of my head.

by Reptile 2006-11-22 08:45AM | 0 recs
Union needs wake up
If the unions want to be around in ten years they need to band together NOW. Goodyear can be a great example
1. Truckers, the union one's, stop hauling the product refuse the load 2.UAW tell your workers not to touch the tires let the auto maker go to someone else for tires 3. America wake up stop buying the product 4. Picket auto dealers who sell cars with Goodyear tires. 5. Operating engineers stop using Goodyear. 6. NASCAR fans let them know you do not want jobs sent overseas
This how you save jobs. This how you force a CEO out of his job. This how you make America strong.
by KevinB 2006-11-22 09:53AM | 0 recs
Re: Union needs wake up

National Solidarity Actions with Steelworkers Striking at Goodyear

The members of the United Steelworkers (USW) at the Goodyear Tire and Rubber Company are fighting for their working lives. On October 5 of this year, in response to unacceptable contract offers from the company, 15,000 members of the USW were forced to strike for job security and the guarantee of healthcare in their retirement. With their jobs on the line, members of the United Steelworkers are prepared to fight ONE DAY LONGER for justice for working families.

Now, in the eighth week of their strike, the Steelworkers are organizing actions at stores that sell Goodyear tires across the country. Come join members of the USW in getting the word out about their struggle and informing the public of the dangers of driving on tires produced during a labor dispute.

For more information, check out gkdsolidarityexpress.org

Major Goodyear Tire Store Actions for Saturday, Dec. 2

Columbus, Ohio area stores:
Goodyear Auto Service Center, 5015 N. High St., Columbus

Detroit (Redford), Michigan: 13955 Telegraph Road, 8 a.m.
Bay City, Michigan: meeting at USW Local 12075 hall (3510 James Savage Rd., Midland)
Bay City office (503 N. Euclid Ave., Suite 10, Bay City) at 9:30 a.m., arriving at Goodyear sites by 10a.m.
701 N. Euclid Avenue, Bay City (primary)
725 S. Saginaw Road, Midland (secondary)
Madison, Wisconsin:
608 E. Washington Street, 12 Noon
3773 E. Washington Street (near striking Goodyear local at Sun Prairie) 12 Noon

Regina, Canada
11 a.m. meet at USW office, 26-395 Park St.

Cherry Hill, NJ:
Just Tires, 408 Haddonfield Rd. (by the Cherry Hill Mall), 9am
Kenmore: NY 1795 Sheraton Dr., 9 am
Braintree, Mass.:
Sullivan Tire and Auto Service, 120 Ivory St., 3 p.m.
Sullivan Tire and Auto Service, 387 Common St

Montreal, Que. (details tba)

Ottawa, Ont.
Meet at 11 a.m., USW office, 2285 St. Laurent Blvd.

Fort Wayne, Ind., 4106 Coldwater Rd., 9 a.m.
Indianapolis (Speedway), Ind., 5970 Crawfordsville Rd., 10 am
Highland, 9500 Indianapolis Blvd., 10 a.m.
Hobart, Ind. (details tba)
Merrillville, Ind..(details tba)

Louisville, Ky. (Shively)
Goodyear Auto, 4900 Dixie Hwy, 10 a.m.

Birmingham, Al:
201 Roebuck, Plaza Drive, 9 am
1623 Montgomery Hwy, 9 am
Union City, TN (details tba)
Fayetteville, NC (details tba)

Allentown/Bethlehem (Whitehall) 1141 McArthur Rd., 10 a.m.

Topeka, Kansas 420 SW Croix (Topeka & Croix) 8 a.m.
5140 SW 21st St. (21st and Fairlawn Rd), 8 a.m.
Lincoln, Neb., Graham Tire Stores at 2121 Cornhusker Hwy and 6800 "O" St., 8 a.m.

Portland, Oregon
HB Tire Center, 4547 NE Sandy Blvd., Portland, 11 a.m.
& Division Tire, Division St.
Salt Lake City (Taylorsville): Anderson Tire, 4752 South Redwood Rd., 10:00am

Houston, Texas: Goodyear/Gemini Store, 1519 Fannin, 9 a.m.
Phillip's Tire, 2212 Mangum Rd., 9 a.m.
Tyler, Texas: Sam's Club, 2025 S Southwest Loop 323, 9 a.m.

by steelworker 2006-12-01 07:27AM | 0 recs
Re: On Benedict Arnold CEOs

Goodyear is one of the candidates in the Jobs with Justice "Grinch of the Year" contest to determine the national figure who has done the most harm to working families this year.  You can cast your vote at http://www.jwj.org/grinch.  Please spread the word!

by jobswithjustice 2006-12-08 10:39AM | 0 recs


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