Month: May 1998

Clueless In Seattle

No sooner had Boeing announced intent to move finishing work on its 737s to an idle plant in Long Beach, California, than representatives of the International Association of Machinists and Aerospace Workers (IAM) started wailing about losing jobs overseas.

Certainly, there have been serious job losses because of NAFTA and the cost-cutting, “downsizing” practices of U.S. corporations, but when a union cries wolf over a small step the company would take to rehire unionized employees, then you know that there are some very dim bulbs in charge of the IAM. The Boeing move will not put employees in the Puget Sound out of work and it will employ laid-off workers in Long Beach at old McDonnell Douglas plants. Furthermore, those workers are union employees, too, albeit members of the United Auto Workers.

If anything, this move, and the IAM’s overheated response, point to a failure of many trade unions to recognize that their first and foremost duty is to organize and build bridges with fellow workers, not to enhance their own, independent union. The IAM should have been working to unite with McDonnell Douglas workers as soon as the merger was announced, and fight for benefits and job protection for them as well; instead, the IAM has been happy to more or less ignore the McDonnell Douglas workers as long as no IAM members lose their jobs here. This is a clear example of how trade unions often act like major corporations to carve out and defend their own turf, regardless of how it may hurt the community as a whole.

Another example of this is the local IAM’s endorsement of reactionary Republican Rep. Jack Metcalf for Congress. A fatuous statement by Bill Johnson, the district president of the IAM, says it all: “We have always told our members we are a non-partisan organization, and this proves it.”

What it really proves is that trade unions like the IAM will support politicians on the very narrow issue of job protection, while ignoring the broader impact on the community of supporting such right-wing fanatics. The IAM endorsed Metcalf because he’s a critic of free trade (as many conservatives are) and he has “made a difference on a couple of votes” in the House. On the other hand, Metcalf has also earned high marks from the Christian Coalition, the U.S. Chamber of Commerce, and the National Federation of Independent Business. As a state senator, he had numerous, documented links with white supremacist groups. Obviously, it doesn’t bother the IAM to be in such company.

Trade union membership is declining for a reason. Unions must pull back from the politics of endorsing candidates who (in their eyes) are less horrible than the alternative, and must begin using their members’ dues to fund projects that will have more impact (and do much less damage) for their members and the community as a whole. If, for example, the IAM had fought as hard to save the jobs of 5,000 UAW workers in Long Beach and insisted that they be paid at the same rates as IAM workers and with the same benefits package, there wouldn’t be the current fear that Boeing would rehire these workers at lower wages to undercut the IAM. Furthermore, if the IAM had not allowed itself to be lulled by Boeing’s talk of moving those 5,000 jobs north to Seattle, there might not be such a heavy backlog still plaguing the commercial aircraft division. When Boeing Chairman Phil Condit announced the layoffs in Long Beach in April, the IAM could have resisted by pointing out that the company had more than enough work to spread around. Now, however, Boeing continues to pay out millions of dollars in late shipment fees to customers. That’s millions that it can’t pay to its workers; when the millions do come, they’ll get diverted to shareholders first. And Boeing will fight all the harder against pay increases when the next contract is up for renewal.

In short, someone at the IAM needs to get a clue. The message is simple: if you act like the boss, expect workers and the community to treat you the same way as they treat the boss–with contempt and distrust.

 

Indonesia Aflame

It was only a matter of time before Indonesian police opened fire on protesters. Months ago, when president-for-life Suharto gave in and adopted IMF austerity measures, students have been staging demonstrations on campuses in Jakarta and other major cities on the islands of Java and Sumatra. Until this past week, the demonstrations have all been peaceful, but after police shot and killed six students, riots have broken out in several cities.

The death of these students has coincided with two other events to precipitate the current “riots”: a drastic increase in food and fuel prices of 40-70% (part of the IMF “bailout package”), and Suharto’s jaunt to Egypt. The new price increases are in addition to ones imposed late last year, and they follow on the heels of major layoffs and wage cuts in state-run industries. Only an egomaniac like Suharto would expect people to sit at home and accept starvation.

Suharto, his family, and his cronies have ruled Indonesia for 32 years, since 1966, when the CIA helped the Indonesian military slaughter the popularly-elected, socialist president Sukarno and thousands of his supporters. Since then, with the help of U.S. weapons and training, the Indonesian junta has killed hundreds of thousands of people in East Timor (one-third of the population) in a drive to develop the island’s off-shore oil fields. As recently as the early 1990s, the Indonesian military slaughtered and displaced indigenous people in Irian Jaya to protect the enormous Grasberg copper and gold pit mine on behalf of a U.S. mining corporation, Freeport McMoRan. In addition, Indonesian police and military have routinely jailed, tortured, and “disappeared” thousands of political dissidents throughout Suharto’s 32 year reign. So notoriously vicious was this repression, that foreign journalists and political analysts have assumed that the Indonesian population would never rise up in violence against Suharto for fear of military reprisals; Western politicians and economists have always hoped for a peaceful political referendum (in favor of a Suharto crony, of course), once Suharto dies or retires. But, of course, violence begets violence: Suharto won’t step down for fear of assassination or trial, and the Indonesian people have been brutalized for so long that they can’t and won’t stand for starvation on top of political repression.

So the future holds a violent collision of interests in Indonesia: Suharto has offered to retire, as long as the military protects him and the economic interests of his family, who through decades of corruption and nepotism own the most lucrative industries in Indonesia (oil, automobiles, spices, and banking interests). The protesters (workers as well as students) want Suharto, his family, and all his associates out of Indonesian politics forever, and probably want to confiscate most of their ill-gotten wealth. The IMF wants political stability so Indonesia will pay back its loans, and undoubtedly could care less how many people die in the process. Western political analysts are already searching among Suharto’s associates for a replacement–someone who will carry on the legacy of Suharto’s exploitation of the fourth most populous nation in the world.

 

Microsoft Hell

The local media, especially Seattle’s daily newspapers, have been focusing on an irritating non-story: “big government” vs. poor little Microsoft. Most Seattle residents would be surprised to hear that the Justice Department’s lawsuit against Microsoft and the impending release of Windows 98 has barely made the news in the rest of the country, for several reasons:

First of all, it’s taking the Justice Department forever to file the damn thing. While Microsoft has continued to violate the 1994 consent decree requiring the company to separate its Windows software from its applications software with complete impunity, Justice continues to fiddle. Last year’s ruling for Microsoft to offer a version of Windows 95 without Internet Explorer (the web browser) has been flagrantly ignored and has had no impact on Microsoft’s business practices or its bottom line. If anything, sales of Windows software (with the browser) have increased since then, and their main competitor (Netscape) has slipped from a dominant position (about 70-80% of the web browser market) to about a 40% share (and slipping every week), within the last year alone.

Likewise, the dozen or so state attorneys general, who were set to file lawsuits against Microsoft on behalf of consumers and software companies in their own states, are having second thoughts or deciding to wait and see what Justice does first–like a group of kids daring each other to be the first to stick his finger in the light socket. And although Microsoft is ramping up its lobbying efforts in D.C., those expenses are for other issues–namely, to keep high-definition TV out of the U.S. (Microsoft is heavily invested in Web TV technology, which is incompatible with high-definition TV). Clearly Microsoft understands that whatever the Justice Department decides, it will have little impact on its business. After all, Microsoft has been investigated continuously by one government department or another for most of this decade.

Yet the company is milking the situation for all it’s worth–it provides free publicity for Windows 98. Witness Microsoft’s teary-eyed claim that any delay in the release of Windows 98 will have disastrous effects on the computer industry and U.S. businesses in general. Utter bullshit, especially coming from a company that’s built its reputation on “vaporware”–software that’s announced and scheduled to be released on a certain date, yet either never materializes or is released a year or more late (like Windows 95). The fact is that Microsoft already has contracts with major computer manufacturers to load Windows software on over 90% of all computer systems sold in the U.S.–whether it’s Windows 95 or Windows 98 makes no difference. In fact, Microsoft could release a program called MS Hell and still be able to make a fortune from it. Or they could release nothing in 1998 and still see their profits increase. That’s how monopolies work.

In case you don’t believe me, here’s a few facts and figures from Wall Street analysts, as quoted in last week’s Puget Sound Business Journal:

Sales of Windows 98 upgrades will account for only six percent of Microsoft’s business in the next year. Windows 98 sales will bring in about $630 million in revenues, but the company’s total sales will reach $17.6 billion.

In comparison, Windows 95, which provided major changes in the operating system software over Windows 3.1, accounted for 26 percent of the company’s sales in 1996.

The real money-maker for Microsoft is Windows NT, an operating system designed to compete with Unix. It’s been growing at a 75% rate in the past year and could bring in over $5 billion in 1998.

Microsoft recently released Windows CE, a new, stripped-down operating system for hand-held computers, that may eventually be installed in everything from cars to kitchen appliances.

And, in spite of its whining, Microsoft is rolling in dough. In 1996, the company began setting aside income to tide it over in years when it wouldn’t be able to release major upgrades. Currently it has $1.4 billion in cash set aside and no long-term debt, unlike most large companies (and most people I know). How did it amass this incredible pile of loot? Well, according to Fortune Magazine, Microsoft is the most profitable company in the U.S., with a 30.4% profit on its revenues for 1997 (the median profit for the top 500 companies in the U.S. is 4.9%). Look at it this way: because Microsoft has no competitors, it can charge whatever it wants for its software. If it had to take a smaller mark-up of, let’s say, only 10% (to be really generous), it would be charging around $77 for an upgrade to Windows 98, instead of $99. Yes, that extra cash is coming out of your pocket.

On top of all that, computer analysts who’ve previewed the new Windows 98 say it’s got very few new features over Windows 95, it doesn’t fix most of Windows 95’s bugs, and it’s even more of a memory hog. So if you want to upgrade, plan on buying new hardware. (Now you know why computer manufacturers are lining up to support Microsoft against the Justice Department!)

Welcome to MS Hell: the world of monopoly capitalism. In spite of what local newspapers and politicians (Senators Murray and Gorton) say, the government’s not really out to destroy Microsoft. It’s just belatedly responding to the dying gasps of Microsoft’s tiny competitors.

The Non-Organic Daily Corporate Special

Every April, Fortune Magazine trots out its annual list of the top 500 companies in the U.S. It makes for fun and enlightening reading, because it shows where we spend the most money. It’s not necessarily a sign of our values, so much as a sign of our needs and desires: needs imposed on us by economic realities, and desires manufactured by the advertising industry.

If you were to try to guess which companies made the number one and two slots, you might pick companies from the oil industry, banking or insurance companies, department store chains, agribusinesses, or healthcare conglomerates. Or you might guess it would be high-tech companies–computer manufacturers or software companies–maybe even a telecommunications firm or two. But, of course, you’d be wrong.

This year the list is topped by two automobile manufacturers: General Motors ($178 billion) and Ford Motor ($154 billion). They boosted their incomes by selling expensive, gas-guzzling sport utility vehicles.

Don’t despair! You already guessed who number three would be: Exxon ($122 billion). Those SUVs have to run on something. Other automobile-related companies that made the top 25 are: Chrysler at number seven ($61 billion), Mobil Oil at number eight ($60 billion), Texaco at number 12 ($45 billion), Chevron at 19 ($36 billion), and Amoco at 22 ($33 billion). Obviously, the auto/oil industries are what fuel U.S. corporate growth. Now you know why mass transit it so popular in the business community.

To round out the top 10 corporate criminals–er, corporate billionaires–we find: Wal-Mart stores at number four ($119 billion), General Electric at five ($91 billion), IBM at six ($79 billion), Philip Morris at nine ($56 billion), and AT&T at number ten ($53 billion). Department stores, military contracts, media conglomerates, computers, cigarettes, and telephones–all indispensable products of the modern age. You have to drop down the list to number 45 to find an agribusiness corporation (Conagra) and to number 50 to find a grocery store chain (Safeway). Costco squeezes in at 53, and Sara Lee (nutritious!) squeezes in at 61. Damn. The U.S. economy cannot live on bread alone.

But this list is ranked only by gross revenues–total income before expenses. When we look at the list of companies ranked by gross profit (what they made after expenses), we find many of the same suspects, just in different order, but with a few surprising additions. Here, Exxon is number one, followed by GE, Intel, Ford Motor, General Motors, Philip Morris, IBM, AT&T, Merck, and Coca-Cola, followed by a list of banks and insurance companies. Microsoft, which is ranked at only 137 on the revenue list, is number 15 on this list–an indication of how high the profit margins are on each software package the company sells.

Banks and insurance companies are extraordinarily profitable. The main offenders: State Farm, Chase Manhattan, Citicorp, BankAmerica (owns Seafirst), Allstate, Travelers Group, NationsBank, and Fannie Mae–all within the top 30, at an average of $3.3 billion in profits. And pharmaceutical companies really cleaned up, too: Merck, Johnson & Johnson, Bristol-Myers Squibb, Pfizer, Abbott Laboratories, and American Home Products all made the top 40, with an average profit of $3 billion last year (Merck was at $4.6 billion). But where the pharmaceutical companies really show their stuff is in the measure of highest returns on revenue–i.e., their profits as a percentage of their total revenues. Here the pharmaceutical industry out-sleazes every other industry with an average of 16.1% profit (the median is 4.9%). The main culprits are: Schering-Plough (21.3% profit), Merck (19.5%), Bristol-Myers Squibb (19.2%), Pfizer (17.7%), and Abbott Labs (17.7%). In fact, only three companies beat out Schering-Plough and Merck in this category. The leader was Microsoft, with 30.4% profit on revenues. Fortune, of course, is not the only prestigious business news publication that can compile a list. Here, then, is our very first annual Week Of Eat The State! Non-Organic Daily Lunch Specials for Washington State. Chow down!

Monday: Boeing. Number 11 on the Fortune 500 list, Boeing has the distinction of being the only company in the top 50 that shows a loss of $178 million, instead of an enormous profit. That, of course, is changing as you read this, as Boeing extracts a few billion more from taxpayer pockets! (Revenues $45.8 billion, loss -$178 million.)

Tuesday: Costco. A Taj Mahal built of shrink-wrapped packages of “dolphin-safe” tuna. It’s the place we sneak out of, enormous bags of pasta and bottles of laundry detergent clutched under each arm, hoping nobody from the local co-op sees us there. (Revenues $21.8 billion, profits $312 million.)

Wednesday: Microsoft. Rumor has it Windows 98 will be a big flop, with few new features and lots of bugs. Sound familiar? (Revenues $11.4 billion, profits $3.5 billion.)

Thursday: Weyerhaeuser. Every year they slip further down the list, as a few more trees disappear from our state and national parks. I wish they’d go extinct a little faster! (Revenues $11.2 billion, profits $342 million.)

Friday: Washington Mutual. The so-called “local bank” that continued its fondness for big mergers last year by gobbling up Great Western Financial (for $6.8 billion) to create the largest thrift in the U.S. Then it merged with H.F. Ahmanson, another thrift worth $9 billion. The headquarters are still here in Seattle, though. (Revenues $7.5 billion, profits $482 million.)

Saturday: Paccar. The truck company. Ever wonder where all those potholes came from? (Revenues $6.7 billion, profits $345 million.)

And finally:

Sunday: Nordstrom. They couldn’t have done it without our tax money! (Revenues $4.8 billion, profits $186 million.)

Bon appetit!

 

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