On Overproduction
Would any reader like to
discuss the importance of overproduction in the recurring crisis in capitalism?
For some time I have been trying to make sense of the constant reports in their
press of the problem of overproduction, last year in the Financial Times
a long report on China spoke of the difficulties experienced by Pilkingtons
because of excess production. Here is a so-called Communist country suffering
the same as any nation in the West with production increasing faster than the
market can absorb it. This week in my place of work I was given a photocopy of
an article from the Times newspaper by a fellow worker which was headed
"Dunlop to cut jobs in UK tyre production", 650 jobs were to go at
Birmingham and 770 to at Newbridge, Edinburgh.
The article went on to say that
Dunlop "blamed" excess capacity for the sackings almost as though it
had sneaked up on the directors of Dunlop without them noticing. If the
management is so out of touch with what is produced by their factories then it
is time for them to be disciplined by the workers especially the redundant
ones, and the inept management be given the grand order of the boot.
If one raises the issue at a
Union branch meeting (mine is the AEEU) it is never taken seriously but then it
is not Union officials that are made redundant. I would appreciate any
discussion on this subject.
Yours Fraternally
WDIE Reply
WDIE reported on the plans of the Dunlop tyre
monopoly to eliminate 650 jobs at its Fort Dunlop plant in Birmingham in issue
No.5, January 14.
The first thing to draw attention to here is the objective
reality of what happened with Dunlop, because this shows that the problem we
are dealing with is not that of lack of planning in the enterprise, incompetent
management, or monopoly capitalists who are out of touch with their market. It
demonstrates that the aim of production is the most important question, and
raises furthermore the question of the aim and direction of the economy itself.
What is the aim of an economy? In which direction is it headed? What is its
motive force?
The elimination of 38 per cent of the workforce at Fort
Dunlop demonstrates the processes of competition and monopolisation at work,
and how the intensification of one gives rise to the intensification of the
other. The Dunlop company is not some self-contained enterprise, unconnected,
unrelated to any other, getting on with the business of making tyres to fulfil
the needs of society for tyres on cars, lorries and so on. Point one is that it
is a subsidiary of Simitomo Rubber Industries Ltd (SRI) of Japan. It was taken
over in 1984. SRI produces tyres, sporting goods (golf balls) and other rubber
related products. Tyres accounted for 79% of SRI’s revenue in 1998. This
total revenue for that year amounted to 653,524 million Japanese yen
(£3,773 million). Its profit margin was 1.94%. The company has 53
consolidated subsidiaries, of which Dunlop in Birmingham is the one in Britain.
SRI itself is part of Sumitomo Group of companies, a conglomerate covering the
chemical, coal, construction, metal product manufacturing and aerospace
industries. In addition, underlining how the financial oligarchy is the
controlling force, the group contains banks, insurance, financial and property
companies. There are around 52 companies in the group.
However, the story does not end there. In September last
year, SRI entered a series of joint ventures in North America, Europe and Japan
with Goodyear Tire & Rubber Co. Goodyear’s revenue was US$9,328.7
million (£3,862.7 million) in the period which ended in September, though
in each of 1996 and 1997, it had been half as much again. Tyres accounted for
82% of 1998 revenues.
Of course, the history prior to the takeovers and joint
ventures has been one of the most intense competition between these tyre
giants. Clearly in the 1980s, Dunlop was swallowed up in this process, and Fort
Dunlop itself became a shadow of its former self.
With its alliance with Sumitomo, Goodyear boasted that it
regained its global tyre industry leadership, regaining the position it had
held for more than seven decades. Goodyear became the dominant partner, i.e. it
controlled the Sumitomo enterprises, in North America and Europe. In addition
it became SRI’s second-largest shareholder with a 10% interest in the
company. Goodyear will have a seat on SRI’s board of directors beginning
in March 2001. It made a cash payment of $936 million to SRI on concluding the
global alliance. With the addition of Dunlop, Goodyear, according to industry
estimates, now holds almost 22% of the $70 billion global tyre market. It now
employs more than 105,000 people worldwide. According to Goodyear’s
chairman, president and chief executive officer (one and the same person),
"One of our objectives is to be No. 1 or 2 in every market in which we
compete."
Having concluded this alliance and gaining control in
Europe, Goodyear is embarking on a Europe-wide "rationalisation
process". In an announcement on January 6, the company said: "The
Goodyear Tire & Rubber Company today took another step in its globalisation
plans with the announcement that it will integrate commercial truck tyre and
mould production within the company’s recently completed joint venture
with Sumitomo Rubber Industries Ltd in Europe. This move, which will result in
substantial cost savings and synergies for the Goodyear and Dunlop joint
venture, will involve the discontinuance of truck tyre production at the Dunlop
Tyres UK plant in Birmingham, England, and a production shift to other joint
venture plants in Europe. Mould production will move to Goodyear’s
facility in Luxembourg. This will result in the loss of 650 jobs at the plant,
which also produces passenger and racing tyres. The workforce of the Birmingham
facilities totals 1,700." The statement also mentioned that in November
1999, it had announced the closures of tyre plants in Argentina and Italy as
part of its global rationalisation plan.
(To be continued)
