Mike Tait

On Thursday, August 22, Cadbury workers in Dunedin were hit by what the ODT called a “bittersweet bombshell” the loss of 145 jobs, or a quarter of the workforce over the next two years.

“Bittersweet Bombshell” sounds like the name for a new line of confectionery – chocolate-coated strychnine, perhaps. This new round of redundancies, following the loss of around 1400 jobs over two years, 700 in the last four months alone, is certainly a poison pill for the city.

Cadbury, the ODT, the Dunedin City Council, the Labour Party and even the trade unions all agree that the bitterness of the redundancies is sweetened by the promise of $51 million worth of spending on equipment.

Local job losses

In the past two years there have been announcements of around 1400 redundancies by seven major Dunedin companies, including Sealords, Wickliffe Press, Tamahine Knitwear, Fisher & Paykel and Cadburys.
In most of these cases, the job losses have been staggered. Sealords, Fisher & Paykel, Silver Fern Farms (Burnside freezing works) and Wickliffe all shut down their Dunedin factories piece by piece. At every stage, the establishment, including politicians, local government, business leaders and union bureaucrats, were ‘disappointed’ at the job losses but happy that more redundancies had been avoided.
The union bureaucrats, especially, were apparently blindsided by the job losses as most of these companies were thought to be “good employers”, with high rates of union coverage. Because of this, the union leaders (mainly from the Service and Food Workers Union and the Engineering, Printing and Manufacturing Union) were eager to believe that by sacrificing section after section of the workforce at each factory they were saving the rest of the jobs.
When Fisher & Paykel announced the closure of its Auckland plant in August, 2007, EPMU national secretary Andrew Little called on the government to do more to protect the business (which had already benefited from hundreds of thousands of dollars, if not millions, in local and central government rates relief, tax rebates, cheap or free loans and grants).
"We're now seeing a very serious and very desperate situation in manufacturing that will have flow-on effects for our economy and our society for years to come," he said.   He joined the Employers' and Manufacturers' Association in calling on the Government to pursue policies to nurture local manufacturers.  
After the announcement of the closure of the Mosgiel plant (which was also preceded by staggered layoffs) he was still making excuses for the bosses, saying, "most exporting manufacturers in NZ are struggling with a high US-NZ dollar but you can expect companies the size of Fisher & Paykel to work hard to keep jobs here."
The Service and Food Workers Union claimed the Cadbury layoffs were a bolt from the blue but almost exactly a year ago they were facing the same situation with the same company, as Cadbury shut down its Avondale, Christchurch, plant with the loss of 200 jobs. More than that, the Otago Daily Times reported not two months ago on rumours that Cadbury was considering restructuring.
The other thing that these layoffs have in common is the way that they are announced as if they are happening tomorrow and therefore there is nothing for unions (or anyone else) to do about it. This strategy serves to completely disarm any resistance, after which the firms often continue operating for as long as they want, even, as in the case of Fisher and Paykel, ramping up production.

World trends

Of all of these companies, only Fisher & Paykel has openly admitted it is shifting production to low wage countries (Thailand and Mexico).
Sealords shifted production to Nelson and while I have not found any evidence that they have shifted production to low wage countries, one week after they laid off a further 323 workers in Motueka, their rivals Talleys and Aotearoa Seafood applied to import 100 migrant workers claiming a tight labour market.  Even more bizarrely, Talleys actually exported fish to China for processing before re-importing it to New Zealand!
Cadbury's layoffs are part of a plan announced last year to layoff 7500 jobs internationally (out of 50'000 jobs) and close 15 per cent of their factories - but to increase producation in China and Poland (including outsourcing production).
This announcement came directly after a restructuring that took place between 2003 and 2007 which saw 6000 jobs lost and 30 plants closed.
In 2006, it outsourced much of its paperwork to India, China and Romania.
It must also be remembered that the advanced economies hold African cocoa producer countries in the most abject poverty by blocking any processing industry in those countries. As a result, barbaric conditions rule in the cocoa fields.

International competition

There are two major trends at work behind all of these layoffs, which talk of the high NZ dollar disguises because it is a superficial cause. These two trends are mechanisation and the international competition in the labour market.
International competition is something the ruling class has a love-hate relationship with. On the one hand, low wage economies can boost profits quickly and local businesses are mightily attracted by this but on the other hand, they resent other businesses also benefiting from this and fear social unrest at home. Protectionism has been a powerful rallying cry for sections of the ruling class, especially manufacturing, in New Zealand and internationally in the past and there is every indication that it is on the rise again.
For workers though, this approach is pure poison because it requires an alliance with ‘our’ bosses against foreign workers.
This alliance is fatal because in order to maintain it, workers organisations are open to constant blackmailing and must at all times avoid building the self-reliant, independent workers organisations that might spontaneously clash with the bosses.
We are living in a quite distinct period from the post-war boom and grasping this, understanding the transition is an essential prerequisite to having any kind of understanding of the challenges and political possibilities.
One feature of this period has been the opening up of former Stalinist state capitalist regimes to Western capitalism.
Whereas only 20 years ago the only real wage competition in the world was between the 500 million or so workers of the advanced industrialised countries of Europe, Japan, North America and Australasia (with competition between East and West mediated through an arms race, not trade competition), since the fall of the Berlin Wall in 1989, around 1.5 billion workers from the former state capitalist bloc have been added to the pool of labour that can be exploited by western capitalists.
This has resulted in windfall profits for the world’s ultra-rich.
This is often misleadingly called globalisation. It’s misleading because it is not an even process of investment but one focused on former state capitalist countries, which have relatively good infrastructure, and large, skilled and well-educated working classes. Whole swathes of the third world have been abandoned by all but the most predatory of industries (like Timor and the oil industry and the cocoa industry).
Underpinning this change is weakness in the system, not strength.
The collapse of the eastern bloc was due to stagnation in the world economy as a whole and to the long-term decline of the US relative to its rivals.
This decline and the opening up of the eastern bloc to western capitalism has created massive volatility.
Western governments may deplore the loss of jobs at home but they recognise that denying their own firms a place at the low-wage trough would result in capital flight and economic ruin. So they join the rush to exploit foreign labour even though this only increases the volatility.

Mechanisation

While the sharpening of international competition is specific to this period, mechanisation is nothing new. Indeed, it is one of the distinctive features of capitalism compared with other historical periods.
Karl Marx talked about the way that capitalism constantly revolutionised production in the Communist Manifesto. In fact, unlike other early socialists, like the Luddites (and many modern Greens) he saw the mechanisation of boring, dirty, heavy and dangerous work as something that could liberate us from drudgery. But he also recognised the terrible irony that for workers under capitalism, machines, which are made by workers, can steal their livelihoods.
He called this alienation, meaning that the product of our labour, because it is owned by someone else, becomes something which has power over us, something hostile and strange.
“The laborer becomes poorer the more wealth he produces, indeed, the more powerful and wide-ranging his production becomes. The laborer becomes a cheaper commodity the more commodities he creates. With the increase in value of the world of things arises in direct proportion the decrease of value of human beings.”
Workers should not be punished for mechanisation
So not only are workers in Dunedin seeing that because of international competition, as Bob Marley put it, “when you go to get some food, your brother got to be your enemy” but also that the profits that they have created for Cadburys are being reinvested to strip them of their jobs.
The only way that this makes sense is if you accept that business owners actually create the wealth – and this is nonsense. No amount of title deeds, capital, machines, or raw materials on their own can create any new wealth. The factors of production have to be brought together by people and made into something new. Human labour is distinct from all other factors of production because it can create new value.
To punish workers for creating this value by removing their jobs is obviously unjust. Of course, Cadburys and the other companies will weep crocodile tears over the injustice but claim they have no choice – the market forces them into it.
As one Cadbury suit said, “This is a very difficult process. The Quakers who founded Cadbury were very paternalistic and very good business people. We will treat our people well and with respect in the belief that what we are doing is good for the 85% of them that remain with us.”
But just because Cadburys, F&P and the rest of the corporate muggers have no choice, that doesn’t mean we have no choice. It’s wrong that we should be punished for creating wealth for them and we can fight it. But the only way to do this is through international working class solidarity – never through the nation state.

Free trade vs protectionism

So far I have shown that the opening up of former state capitalist countries to western capitalism has dragged down wages which were already depressed by the stagnation of the western economies, especially the USA.
This intensification of international competition has two contradictory implications for the ruling classes (governments and business) in the advanced economies. On the one hand, the lure of vast profits draws our rulers into deeper engagement with low wage countries. On the other hand, this engagement destroys manufacturing in the west and will increase social unrest.
As you would expect, it is in the largest economies that this contradiction is most plain. The US and Chinese ruling classes are locked together like a couple unable to escape a co-dependent abusive relationship. The US needs Chinese investment to keep the dollar high, China needs the dollar high so it can keep a market for its products. Neither can break off without destroying themselves.
There are two responses possible to the US ruling class, protectionism or aggressive engagement. The invasion of Iraq and Afghanistan is increasingly looking like a failed attempt at the second.
NZ and Australian government attempts to bind the Pacific closer together is a similar response to concern at Chinese encroachment.
The alternative, which is often portrayed as left wing, is protectionism.
Sue Bradford, a Green MP and former Maoist, who is now arguably the most left-wing politician in parliament, responded to the F&P’s closure announcement (remember they are still operating at capacity) by blaming not the company that was off to exploit poor Thais and Mexicans but free trade agreements with China and Thailand, which “robbed kiwi workers jobs”.
Her party’s response to the predatory instincts of New Zealand bosses is to “Buy NZ Made” – a ridiculous idea. I like to buy NZ food, but I can’t buy NZ cars, or petrol, or electronics (of course, for many back-to-nature Greens that only confirms the rightness of the policy).
Of course, business supports this kind of foolery even while it invests in Asia.
The Alliance Party in the past also advocated protectionism, particularly in the shipping industry. They argued that the maritime union should cooperate with government and business to regulate the industry.
While we fully acknowledge there are many excellent activists in both parties and many left-wing people who hold protectionist views, it doesn’t change the fact that protectionism always requires cooperation with ‘our’ bosses against foreign competition but if there is one thing that these layoffs show – bosses are locked into the iron law of competition, not cooperation.
In the worst cases, protectionism encourages xenophobia, racism and militarism.

Workers can act internationally

International cooperation among workers, without any involvement of the state is the only way forward. This may seem terribly theoretical but it is actually more practical, concrete and immediate than any of the fake half-baked solutions offered by politicians,
Just fighting back through union struggle is the start. It’s at work that people have power (ironically, the more mechanised a workplace, the more power workers have), not as consumers.
That imposes a cost on the businesses. It punishes their bottom line for the pain they cause here and increases the price of labour internationally.
First, workers are not to blame for mechanisation – in fact, we deserve rewarding for it through upskilling or shorter hours for the same pay.
Second, no company has the right to leave this country to go to a low wage country. If a company is determined to do so, then they should pay redundancy payouts at penalty rates. Their profits have been made on our backs and often with tax breaks. They have no right to take any of that wealth out of the country.
This demand will be popular. It is the same idea as a penal rate, where the boss pays more for failing to employ another worker. Here, the redundancy payouts will discourage firms considering moving and by holding up the value of wages here, increase the price of labour internationally.
Third, workers here should force any company opening a plant overseas to allow union access and workplace inspections.
Fourth, the struggle never ends. If a company closes, workers can occupy the factory and reopen it as is happening right now in Venezuela. In the 1980s it was popular to blame unions for scaring capital away by going too far – it’s clear now what bullshit that was, as companies continue to leave despite the most docile, mild union bosses.

But what can a small group do?

Okay, let me be honest. It’s not easy for a small campus-based group in the South Island of New Zealand to reverse the global depression of wages by international working clas direct action. These are enormous trends.
But, on the other hand, the global struggle between labour and capital is right outside your door.
We are a propaganda group, not a political party. We don’t have any members in the SFWU at Cadburys who could lead a successful campaign against these cutbacks. But we can explain what is going on to thousands of people and that will lay the basis for a real workers party.